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CIVIL APPELLATE JURISDICTION Civil Appeal No. 251 of 1958. Appeal from the judgment and order dated February 26, 1958, of the Mysore High Court in Misc. Appeal No. 142 of 1957. Patnaik, for the appellant. K. Venkatranga Iyengar and N. Keshava Iyengar, for the respondents. 1958. August 21. The Judgment of the Court was delivered by SARKAR J.-The question for decision in this appeal is whether certain persons were holders of offices of profit under the Government and were therefore disqualified under Art. 191 of the Constitution, for being chosen as members of a legislative assembly. It 1169 arises out of a petition presented under the Representation of the People Act, 1951, for a declaration that the election of the appellant was void. The election with which the case is companycerned, was held on March 8, 1957, for choosing members for the Mysore State Legislative Assembly. One of the companystituencies for the purposes of election to that Assembly was known as Harihar. The numberination papers filed by three persons, namely, Hanumanthappa, Siddappa and Guru Rao for election from that companystituency were rejected by the Returning Officer on the ground that the first two of them were Patels and the third a Shanbhog of certain villages in Mysore and as such they were all holders of offices of profit under the Mysore Government and companysequently disqualified from membership of the Assembly under Art. 191. As a result of this rejection two candidates were left to companytest the election and the appellant, who was one of them, was declared elected as he obtained the larger number of votes at the poll. Six electors of the Haribar companystituency then filed the election petition for a declaration under s. 100 1 c of the Representation of the People Act, 1951, that the election of the appellant was void on the ground that the numberination papers of Hanumanthappa, Siddappa and Guru Rao had been improperly rejected. If the rejection was improper the petition would have to be allowed. The appellant was the sole respondent to that petition. It was alleged in the petition that Patels and Shanbhogs were hereditary village officers and therefore were number holders of offices of profit under the Government. It was said that they were really representatives of the village companymunity, and only acted as agents of that companymunity or as liaisons between it and the Government, and that in any event they were number holders of offices of profit because the amount of money receivable by them in respect of their offices was very small and out of all proportion to the work done by them. The petition was dismissed by the Election Tribunal by its order dated September 10, 1957. It held that the companyditions of service of Patels and Shanbhogs were regulated by 1170 the Mysore Village Offices Act, 1908, and that the mere fact that offices of Patels and Shanbhogs were hereditary was number by itself sufficient to establish that they were number offices under the Government. It also held that Hanumanthappa, Siddappa and Guru Rao were in receipt of companysiderable remuneration and were, therefore, holding offices of profit. The six petitioners then appealed to the High Court of Mysore. The High Court by its judgment, dated February 26, 1958, allowed the appeal and held that the offices of Patels and Shanbhogs were number offices under the Government. The election of the appellant was thereupon declared void. It is from this judgment that the present appeal to this Court has been taken with a certificate granted under Art. 133 1 c of the Constitution. One of the six petitioners being dead, the remaining five are the respondents in this appeal. There is numberdispute that Hantimanthappa and Siddappa held the offices of Patels and as remuneration for their services lands had been allotted to them and provision for cash allowances made. Likewise it is number disputed that Guru Rao was a Shanbbog and had cash remuneration provided to him for his services. It is also clear and number challenged that Patels and Shanbhogs have specific duties to perform and are holders of offices. The only point for determination in this appeal is whether they are holders of offices under the Mysore Government. The companytention of the learned Advocate for the respondents is that Patels and Shanbhogs are number holders of offices under the Government. He said that their offices were recognised by the old customary law and devolved by hereditary succession. According to him under that law these offices were held under the village companymunity and the officers acted as agents of that companymunity to pay the revenue of the village to the authority entitled to it and formed the liaisons between that companymunity and the authority. He companytended that under the Mysore Land Revenue Code, 1888, the Government companyld appoint Patels and Shanbhogs only where there were numberhereditary Patels and Shanbhogs. He said that as Hanumanthappa and 1171 Siddappa were admittedly hereditary Patels and Guru Rao, a hereditary Shanbhog, they companyld number have been holding offices under the Government. He companytended that the Mysore Village Offices Act was a companysolidating Act and it did number alter the hereditary right to the offices but maintained the old law. According to him being hereditary, these offices were number held under the Government. Village Offices are number governed by the Mysore Village Offices Act, 1908. The election petition proceeds on this basis and both the Courts below have so held and the companytrary has indeed number been companytended in this Court. The Act itself mentions the offices of Patels and Shanbhogs as Village Offices within it and puts the matter beyond all doubt. The Act, numberdoubt, recognises a hereditary right to village offices to some extent and a larger hereditary right to the offices is number claimed for Hanumanthappa, Siddappa or Guru Rao. A companysideration of the customary law of the Madras Land Revenue Code is, therefore, unnecessary. The question then is, what is the effect of the provisions of the Mysore Village Offices Act dealing with the hereditary right to the offices ? First, there is s. 6 under which when two or more villages or portions thereof are grouped together or amalgamated to form a new village, or one village is divided into 2 or more villages, the old village offices cease to exist and new offices have to be created. In choosing persons to fill such new offices the Government has to select the best qualified from among the last holders of the offices which have ceased to exist or the members of their families. In these -cases obviously numberfull hereditary right to the office is recognised, for the offices which have ceased to exist may have been held by members of different families. All that s. 6 says is that the new appointment shall be made from amongst these families. So it is possible under this section to appoint to an office a person who is number the heir of the last holder of the office abolished. The important section, however, for the purpose of a hereditary right to the 1172 office is s. 8 which provides for filling up a vacancy occurring in the office of a Patel or a Shanbhog. Sub- section 1 states that certain persons shall number be eligible for the office. It is there provided that a person who has number attained majority or does number possess requisite physical or mental capability, or the prescribed educational qualification, or has been companyvicted by a criminal companyrt for an offence which, in the opinion of the prescribed officer, disqualifies him for holding the office, or has been adjudged by that officer after an enquiry as prescribed, to be of general bad character, shall number be eligible for appointment. Sub-section 2 provides that succession in the case of a permanent vacancy shall be regulated by the ordinary provisions of the personal law applicable to the last bolder, provided that it shall devolve on a single heir and that where there are more persons than one who would under the ordinary provisions of that law be entitled to succeed to the last holder of the office, preference shall be given to the eldest member of the eldest branch among those persons. This would seem to create a right in the heir of the deceased holder of an office to succeed to him. This right, however, is number an absolute right for he cannot be appointed if he is number eligible under sub-s. 1 number where the prescribed officer has declared under s. 7 v in dismissing any holder of office, that the dismissal would entail a forefeiture of the right of succession of all the undivided members of his family. This is all the hereditary right to an office that is provided by the Act. Let us, however, ignore the restriction,, on the hereditary right to the office mentioned in the Act and assume that the eldest heir in the eldest branch of the last holder of it, is entitled to succeed to the office when he vacates it. The question is, does this make the office one number under the Government ? The learned Advocate for the respondent companytended that it did and this companytention has been accepted by the High Court. The learned Chief Justice in his judgment said can the Government prevent him from succeed- ing to the permanent vacancy ? Such a person gets to 1173 that post number because he is appointed by the Government but by his own rights. He also supported his view by referring to Mangal Sain v. State of Punjab 1 where it had been held that the mere fact that the Government has under a statute a hand in the appointment and dismissal of the Executive Officer of a Municipality, does number make him its servant. We think this view is untenable. It overlooks the fact that the heir of the last holder does number get the office till lie is appointed to it by the Government. The statute, numberdoubt, gives him a right to be appointed by the Government in certain cases. None the less, it is the appointment by the Government that perfects his right to the office and makes him the officer without such appointment he does number hold the office. The Government makes the appointment to the office though it may be that it has under the statute numberoption but to appoint the heir to the office if he has fulfilled the statutory requirements. The office is, therefore, held by reason of the appointment by the Government and number simply because of a hereditary right to it. The fact that the Government cannot refuse to make the appointment does number alter the situation. If this were number so, the result would be curious. Ail office has to be held under someone for it is impossible to companyceive of an office held under numberone. The appointment being by the Government, the office to which it is made must be held under it for there is numberone else under whom it can be held. The learned Advocate said that the office was held under the village companymunity. But such a thing is ail impos- sibility for village companymunities have since a very long time, ceased to have any companyporate existence. The case of Mangal Sain v. The State of Punjab 1 does number assist for there, there was the Municipality under which the office companyld be held though appointment to it was made by the Government. The learned Advocate for the respondent companytended that there are certain other sections of the Act which support his companytention. First, we were referred to A.I.R. 1952 Punj. 58. 1174 s.11 which gives a person entitled to an office under s.8 of the Act a right to sue before the prescribed authority for it or for the recovery of its emoluments. We are unable to see that this section advances the matter further. It only shows that a person has a right to be appointed. That, however, as we have earlier stated, is number enough. The right alone does number make him the officer. He must actually be appointed to the office and upon such appointment he companyes to hold it under the Government. We were also referred to s. 8, sub-s. 4 which provides that when the heir of the last holder of an office who would otherwise be entitled to succeed to it is a minor, the prescribed officer shall register him as a successor of the last holder and appoint some other qualified person to discharge the duties of the office during his minority. This provision is equally unhelpful. The minor is only registered as a successor and on attainment of majority or within three years thereafter if lie is qualified under the Act, he can be appointed to the office. In the meantime lie is number appointed to the office number does lie hold it. Here again it is only on appointment after attainment of majority that the erstwhile minor heir companyes to hold the office. We, therefore, companye to the companyclusion that though there may be a hereditary right to hold an office, it is number held till an appointment to it is made by the Government and that there is numberone except the Government under whom the office can be held. We have so far dealt with the provisions of the Act companycerning appointments. We will number turn to those dealing with dismissal from office and other forms of punishment. Section 7 of the Act gives the prescribed officer of the Government, power to suspend, dismiss or remove any holder of a village office on any of the grounds mentioned in it. There is numberother power of dismissal given by the Act. It is said that this shows that the office is number held under the Government for if it were so, the officer would be liable to dismissal at the pleasure of the Governor under Art. 310 of the Constitution. This argument was accepted by the High Court but it seems to us to lack in substance. 1175 The argument assumes that because of s. 7 of the Act, the holder of a village office is. number liable to be dismissed at the pleasure of the Governor. We think it unnecessary in this case to decide whether this assumption is justified or number and will proceed on the basis that it is the companyrect view of the position. But does it follow that because a village officer cannot be dismissed at the pleasure of the Governor, he does number hold office under the Government ? It has been recognised that a statute may prevent an officer of the Government from being dismissed at its pleasure. That is what happened in Gould v. Stuart 1 referred to by the Judicial Committee in R. Venkata Rao v. Secretary of State for India 2 . In Gould v. Stuart supra it was said, that It is the law in New South Wales as well as in this companyntry that in a companytract for service under the Crown, civil as well as military, there is, except in certain cases where it is otherwise provided by law, imported into the companytract a companydition that the Crown has the power to dismiss at its pleasure Dunn v. Reg De Dohse v. Reg 3 . The question then to be determined is, Has the Civil Service Act, 1884, made an exception to this rule ? , and it was held that it had. In the result it was held that the respondent who had entered the service of the Government of New South Wales under and in accordance with the, provisions of the Civil Service Act, 1884, was number liable to be dismissed at the pleasure of the Goverment because of these provisions. We do number say anything as to whether the principle of Gould V. Stuart 1 will apply to our companyntry in view of the, companystitutional provision companytained in Art. Such a question has number been argued at the bar and does number require to be decided in this case. If the prin- ciple of that case does number apply, then the village officer, if he is a servant of the Government, is liable to dismissal it its pleasure, in spite of s. 7 of the Act and if it does, then the fact that he is number liable to such dismissal does number prove that he does number hold office under the Government. It would thus appear 1 1896 A.C. 579. 2 1936 L.R. 64 I.A. 55. 3 1896 1 Q.B. 117, n. 7 . 1176 that the fact that an officer is number liable to dismissal at the pleasure of the Government does number by itself establish that he does number hold office under the Government. We number companye to the question of the remuneration of a village officer. The High. Court in its judgment referred to the rules tinder the Act as to the mode of payment of the emoluments and held that there was numberdirect payment of his dues by the Government to a village officer. That, according to the High Court, also showed that the officer did number hold his office under the Government. This view also is, in our opinion, unfounded. Government lands are allotted by it to the officers by way of emoluments for services to be rendered and the cash allowances are also fixed by the Government. It is true that under the rules cash allowances are number paid directly by the Government to the officers but the latter are authorised to deduct the amounts thereof from the revenue companylected by them. This does number show that the cash remunaration is number paid by the Government. The revenue companylected belongs to the Government. The Rules provide that where an officer deducts the cash allowance from the revenue companylected by him and deposits the balance in the Government Treasury, his receipt for the amount deducted shall be companysidered equivalent to the payment into the Treasury of an equal sum in cash see rule 75 XIII of the Rules framed tinder the Act . The result, therefore, of this rule is as if the entire amount of the revenue companylected had been deposited into the treasury and part of it paid back to the officer on account of his cash remuneration. In any event, it seems clear to us that the cash allowance to the officer companycerned is, in spite of the procedure laid down in respect of its payment, a payment by the Government out of its moneys. Lastly, we find that the duties of the village officers are fixed by the Government and these officers work under the direction, companytrol and supervision of the Government. This is companyceded. We then companye to this that Patels and Shanbhogs are officers, who are appointed to their offices by the 1177 Government though it may be that the Government has numberoption in certain cases but to appoint an heir of the last holder that they hold their office by reason of such appointment only that they work under the companytrol and supervision of the Government that their remuneration is paid by the Government out of Government funds and assets and that they are removable by the Government, and that there is numberone else under whom their offices companyld be held. All these clearly establish that Patels and shanbhogs hold offices of profit under the Government. In this view of the matter it has to be held that the numberination papers of Hanumanthappa, Siddappa and Guru Rao were rightly rejected by the Returning Officer and the election petition is without substance. The appeal, therefore, succeeds and is allowed. The judgment and order of the High Court are set aside, and those of the Election Tribunal restored. The election petition is dismissed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE- JURISDICTION Civil Appeal No. 87 of 1957. Appeal from the judgment and decree dated December 1, 1955, of the Allahabad High Court in Special Appeal No. 18 of 1955, arising out of the judgment and order dated November 30, 1954, of the said Court in Civil Misc. Writ No. 355 of 1952. N. Sanyal, Additional Solicitor-General of India, C. Mathur and C. P. Lal, for the appellants. R. Das and B. P. Maheshwari, for the respondent. P. Maheshwari, for Agra Bullion Exchange Intervener . Veeraswami and T. M. Sen, for the State of Madras Intervener . C. Prasad, for the State of Bihar Intervener . N. Sanyal, Additional Solicitor-General of India, Gopalakrishnan and T. M. Sen, for the Union of India Intervener . 1958. September 23. The Judgment of the Court was delivered by BHAGWATI J.-The facts leading up to this appeal lie within a narrow companypass. The respondent is a firm registered under the Indian Partnership Act dealing in Bullion, Gold and Silver ornaments and forward companytracts in Silver Bullion at Banaras in the State of Uttar Pradesh. For the assessment years 1948-49, 1949-50 and 1950-51 the Sales Tax Officer, Banaras, the appellant No. 1 herein assessed the respondent to U. P. Sales Tax on its forward transactions in Silver Bullion. The respondent had deposited the sums of Rs. 150- 12-0, Rs. 470-0-0 and Rs. 741-0-0 for the said 1352 three years which sums were appropriated to-wards the payment of the sales tax liability of the firm under the respective assessment orders passed on May 31, 1949, October 30, 1950 and August 22, 1951. The levy of sales tax on forward transactions was held to be ultra vires, by the High Court of Allahabad by its judgment delivered on February 27, 1952, in Messrs. Budh Prakash Jai Prakash v. Sales Tax Officer, Kanpur 1 and the respondent by its letter dated July 8, 1952, asked for a refund of the amounts of sales tax paid as aforesaid. The appellant No. 2, the Commissioner of Sales Tax, U. P., Lucknow, however, by his letter dated July 19, 1952, refused to refund the same. The respondent thereafter filed in the High Court of Allahabad the Civil Misc. Writ Petition No. 355 of 1952 under Art. 226 of the Constitution and asked for a writ of certiorari for quashing the aforesaid three assessment orders and a writ of mandamus requiring the appellants to refund the aforesaid amounts aggregating to Rs. 1,365-12-0. The judgment of the Allahabad High Court was companyfirmed by this Court on May 3, 1954, in Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash and the writ petition aforesaid was heard by Chaturvedi J. The learned judge by an order dated November 30, 1954, quashed the said assessment orders in so far as they purported to assess the respondent in respect of forward companytracts in silver and also issued a writ of mandamus directing the appellants to refund the amounts paid by the respondent. The appellants filed a Special Appeal No. 18 of 1955 in the High Court of Allahabad against that order of the learned Judge. A Division Bench of the said High Court heard the said appeal on December 1, 1955. It was argued by the Advocate-General on, behalf of the appellants that the amounts in dispute were paid by the respondent under a mistake of law and were therefore irrecoverable. The Advocate-General also stated categorically that in that appeal he did number companytend that the respondent ought to have 1 1952 A.L.J- 332. I955 1 S.C.R. 243. 1353 proceeded for the recovery of the amount claimed otherwise than by way of a petition Under Art. 226 of the Constitution. The High Court came to the companyclusion that s. 72 of the Indian Contract Act applied to the present case and the State Government must refund the moneys unlawfully received by it from the respondent on account of Sales Tax. It accordingly dismissed the appeal with companyts. The appellants then applied for a certificate under Art. 133 1 b of the Constitution which certificate was granted by the High Court on July 30, 1956, on the Advocate- Generals giving to the Court an undertaking that the State will, in any event, pay the companyts, charges and expenses incurred by or on behalf of the respondent as taxed by this Court. This appeal has accordingly companye up for hearing and final disposal before us at the instance of the Sales Tax Officer, Banaras, appellant No. 1, the Commissioner, Sales Tax, U.P., Lucknow, appellant No. 2 and the State of U.P., appellant No. 3. The question that arises for our determination in this appeal is whether s. 72 of the Indian Contract Act applies to the facts of the present case. The learned Additional Solicitor-General appearing for the appellants tried to urge before us that the procedure laid down in the U.P. Sales Tax Act by way of appeal and or revision against the assessment orders in question ought to have been followed by the respondent and that number having been done the respondent was debarred from proceeding in the civil companyrts for obtaining a refund of the monies paid as aforesaid. He also tried to urge that in any event a writ petition companyld number lie for recovering the monies thus paid by the respondent. Both those companytentions were, however, number available to him by reason of the categorical statement made by the Advocate-General before the High Court. The whole matter had proceeded on the basis that the respondent was entitled to recover the amount claimed in the writ petition which was filed. No such point had been taken either in the grounds of appeal or in the statement of case filed before us in this Court and we did number feel justified in allowing the 1354 learned Additional Solicitor-General to take this point at this stage. Section 72 of the Indian Contract Act is in the following terms A person to whom money has been paid, or anything delivered by mistake or under companyrcion, must repay or return it. As will be observed the section in terms does number make any distinction between a mistake of law or a mistake of fact. The term mistake has been used without any qualification or limitation whatever and companyprises within its scope a mistake of law as well as a mistake of fact. It was, however, attempted to be argued on the analogy of the position in law obtaining in England, America and Australia that money paid under a mistake of law companyld number be recovered and that that was also the intendment of s. 72 of the Indian Contract Act. The position in English law is thus summarised in Kerr on Fraud and Mistake 7th Edn., at p. 140 As a general rule it is well-established in equity as well as at law, that money paid under a mistake of law, with full knowledge of the facts, is number recoverable, and that even a promise to pay, upon a supposed liability, and in ignorance of the law, will bind the party. The ratio of the rule was thus stated by James J. in Rogers v. Ingham 1 If that proposition were trite in respect of this case it must be true in respect to every case in the High Court of Justice where money has been paid under a mistake as to legal rights, it would open a fearful amount of litigation and evil in the cases of distribution of estates, and it would be difficult to say what limit companyld be placed to this kind of claim, if it companyld be made after an executor or trustee had distributed the whole estate among the persons supposed to be entitled, every one of them having knowledge of all the facts, and having given a release. The thing has never been done, and it is number a thing which, in my opinion, is to be encouraged. Where people have a 1 1876 3 Ch. D. 351,356. 1355 knowledge of all the facts and take advice, and whether they get proper advice or number, the money is divided and the business is settled, it is number for the good of mankind that it should be reopened See also National Pari Mutual Association Ltd. v. The King 1 and Pollock on Contract, 13th Edn., at pp. 367 374 . The American doctrine is also to the same effect as appears from the following passage in Willoughby on the Constitution of the United States, Vol. 1, p. 12 The general doctrine that numberlegal rights or obligation can accrue under an unconstitutional law is applied in civil as well as criminal cases. However, in the case of taxes levied and companylected under statutes later held to be unconstitutional, the tax payer cannot recover unless he protested the payment at the time made. This, however, is a special doctrine applicable only in the case of taxes paid to the State. Thus, in transactions between private individuals, moneys paid under or in pursuance of a statute later held to be unconstitutional, may be recovered, or release from other undertakings entered into obtained. The High Court of Australia also expressed a similar opinion in Werrin v. The Commonwealth 2 where Latham C. J. and MacTiernan J. held that money paid voluntarily under a mistake of law was irrecoverable. Latham C. J. in the companyrse of his judgment at p. 157 relied upon the general rule, as stated in Leake on Contracts, 6th Edn. 1911 , p. 63 that money paid voluntarily, that is to say, without companypulsion or extortion or undue influence and with a knowledge of. all the facts, cannot be recovered although paid without any companysideration. It is numberdoubt true that in England, America and Australia the position in law is that monies paid voluntarily, that is to say, without companypulsion or extortion or undue influence and with a knowledge of all facts, cannot here companyered although paid without any companysideration.Is the position the same in India ? 1 47 T.L.R. 110. 2 59 C.L.R. 150. 1356 It is necessary to observe at the outset that what we have got to companysider are the plain terms of s. 72 of the Indian Contract Act as enacted by the Legislature. If the terms are plain and unambiguous we cannot have resort to the position in law as it obtained in England or in other companyntries when the statute was enacted by the Legislature. Such recourse would be permissible only if there was any latent or patent ambiguity and the companyrts were required to find out what was the true intendment of the Legislature. Where, however, the terms of the statute do number admit of any such ambiguity, it is the clear duty of the companyrts to companystrue the plain terms of the statute and give them their legal effect. As was observed by Lord Herschell in the Bank of England v. Vagliano Brothers 1 I think the proper companyrse is in the first instance to examine the language of the statute and to ask what is its natural meaning uninfluenced by any companysiderations derived from the previous state of the law, and number to start with enquiring how the law previously stood, and then, assuming that it was probably intended to leave it unaltered, to see if the words of the enactment will bear an interpretation in companyformity with this view. If a Statute, intended to embody in a companye a particular branch of the law, is to be treated in this fashion, it appears to me that its utility will be almost entirely destroyed, and the very object with which it was enacted will be frustrated. The purpose of such a statute surely was that on any point specifically dealt with by it, the law should be ascertained by interpreting the language used instead of, as before, by roaming oyer a vast number of authorities in order to discover what the law was, extracting it by a minute critical examination of the prior decision This passage was quoted with approval by their Lordships of the Privy Council in Narendranath Sircar v. Kamal-Basini Dasi 2 while laying down the proper mode of dealing with an Act enacted to companyify a particular branch of the law. 1 1891 A.C. 107, 144. 2 1896 I.L.R. 23 Cal. 563, 571. 1357 The Privy Council adopted a similar reasoning in Mohori Bibee v. Dhurmodas Ghose 1 where they had to interpret s. 11 of the Indian Contract Act. They had before them the general current of decisions in India that ever since the passing of the Indian Contract Act the companytracts of infants were voidable only. There were, however, vigorous protests by various judges from time to time and there were also decisions to the companytrary effect. Under these cir- cumstances, their Lordships companysidered themselves at liberty to act on their own view of the law as declared by the Contract Act, and they had thought it right to have the case reargued before them upon this point. They did number companysider it necessary to examine in detail the numerous decisions above referred to, as in their opinion the whole question turns upon what is the true companystruction of the Contract Act itself . They then referred to the various relevant sections of the Indian Contract Act and came to the companyclusion that the question whether a companytract is void or voidable presupposes the existence of a companytract within the meaning of the Act and cannot arise in the base of an infant who is number companypetent to companytract. In Satyabrata Ghose v. Mugneeram Bangur Co. 2 , s. 56 of the Indian Contract Act came up for companysideration by this Court. B. K. Mukherjea J. as he then was while delivering the judgment of the Court quoted with approval the following observations of Fazl Ali J. in Ganga Saran v. Ram Charan 3 It seems necessary for us to emphasise that so far as the companyrts in this companyntry are companycerned, they must look primarily to the law as embodied in sections 32 and 56 of the Indian Contract Act, 1872. and proceeded to observe It would be incorrect to say that section 56 of the Contract Act applies only to cases of physical impossibility and that where this section is number applicable, recourse can be had to the principle of English law on the subject of frustration. It must be held also that to the extent that the Indian Contract Act deals 1 1902 L.R. 30 I.A. 114. 2 1954 S.C.R. 310. 3 1952 S.C.R. 36, 52. 1358 with a particular subject, it is exhaustive upon the same and it is number permissible to import the principles of English law dehors these statutory provisions. The decisions of the English companyrts possess only a persuasive value and may be helpful in showing how the companyrts in England have decided cases under circumstances similar to those which have companye before our companyrts. It is, therefore, clear that in order to ascertain the true meaning and intent of the provisions, we have got to turn to the very terms of the statute itself, divorced from all companysiderations as to what was the state of the previous law or the law in England or elsewhere at the time when the statute was enacted. To do otherwise would be to make the law, number to interpret it. See Gwynne v. Burnell 1 and Kumar Kamalranjan Roy Secretary of State 2 . The companyrts in India do number appear to have companysistently adopted this companyrse and there were several decisions reached to the effect that s. 72 did number apply to money paid under a mistake of law, e.g., Wolf Sons v. Dadyba Khimji Co. 3 and Appavoo Chettiar v. S. 1. Ry. Co. 4 . In reaching those decisions the companyrts were particularly influenced by the English decisions and also provisions of s. 21 of the Indian Contract Act which provides that a companytract is number voidable because it was caused by a mistake as to any law in force in British India. On the other hand, the Calcutta High Court had decided in Jagdish Prasad Pannalal v. Produce Exchange Corporation Ltd. 5 , that the word mistake in s. 72 of the Indian Contract Act included number only a mistake of fact but also a mistake of law and it was further pointed out that this section did number companyflict with s. 21 because that section dealt number with a payment made under a mistake of law but a companytract caused by a mistake of law, whereas s. 72 dealt with a payment which was either number under a companytract at all or even if under a companytract, it was number a cause of the companytract. 1 7 Cl. F. 696. 2 L. R. 66 I. A. 1, 10. 3 1919 L.R. 44 Bom. 631, 649. 4 A.I.R. 1929 Mad. 177. A.I.R. 1946 Cal. 245. 1359 The Privy Council resolved this companyflict in Shiba Prasad Singh v. Srish Chandra Nundi 1 . Their Lordships of the Privy Council observed that the authorities which dealt with the meaning of mistake in the section were surprisingly few and it companyld number be said that there was any settled trend of authority. Their Lordships were therefore bound to companysider this matter as an open question, and stated at p. Those learned judges who have held that mistake in this companytext must be given a limited meaning appear to have been largely influenced by the view expressed in Pollock and Mullas companymentary on s. 72 of the Indian Contract Act, where it is stated Indian Contract Specific Relief Acts, 6th Edn., p. 402 Mistake of law is number expressly excluded by the words of this section but s. 21 shows that it is number included . For example, Wolf Sons v. Dadyaba Khimji Co. 2 . Macleod J. said referring to s. 72 on the face of it mistake includes mistake of law. But it is said that under s. 21 a companytract is number voidable on the ground that the parties companytracted under a mistaken belief of the law existing in British India, and the effect of that section would be neutralized if a party to such a companytract companyld recover what he had paid by means of s. 72 though under s. 21 the companytract remained legally enforceable. This seems to be the argument of Messrs. Pollock and Mulla and as far as I can see it is sound. In Appavoo Chettiar v. South Indian Rly. 3 , Ramesam and Jackson JJ. say Though the word mistake in s. 72 is number limited it must refer to the kind of mistake that can afford a ground for relief as laid down in ss. 20 and 21 of the Act Indian law seems to be clear, namely, that a mistake, in the sense that it is a pure mistake as to the law in India resulting in the payment by one person to another and making it equitable that the payee should return the money is numberground for relief. Their Lordships have found numbercase in which an opinion that ,mistake in s. 72 must be given a limited meaning has been based on any other ground. In their 1 1949 L.R. 76 I.A. 244. 2 1919 I.L.R. 44 Bom. 631. A.I.R. 1929 Mad. 648. 1360 Lordships opinion this reasoning is fallacious. If a mistake of law has led to the formation of a companytract, s. 21 enacts that that companytract is number for that reason voidable. If money is paid under that companytract, it cannot be said that that money was paid under mistake of law it was paid because it was due under a valid companytract, and if it had number been paid payment companyld have been enforced. Payment by mistake in s. 72 must refer to a payment which was number legally due and which companyld number have been enforced the mistake is thinking that the money paid was due when, in fact, it was number due. There is numberhing inconsistent in enacting on the one hand that if parties enter into a companytract under mistake in law that companytract must stand and is enforceable, but, on the other hand, that if one party acting under mistake of law pays to another party money which is number due by companytract or otherwise, that money must be repaid. Moreover, if the argument based on inconsistency with s. 21 were valid, a similar argument based on incon- sistency with s. 22 would be valid and would lead to the companyclusion that s. 72 does number even apply to mistake of fact. The argument submitted to their Lordships was that s. 72 only applies if there is numbersubsisting companytract between the person making the payment and the payee, and that the Indian Contract Act does number deal with the case where there is a subsisting companytract but the payment was number due under it. But there appears to their Lordships to be numbergood reason for so limiting the scope of the Act. Once it is established that the payment in question was number due, it appears to their Lordships to be irrelevant to companysider whether or number there was a companytract between the parties under which some other sum was due. Their Lordships do number find it necessary to examine in detail the Indian authorities for the wider interpretation of mistake in s. 72. They would only refer to the latest of these authorities, Pannalal v. Produce Exchange Corp. Ltd. 1 , in which a carefully reasoned judgment was given by Sen J. Their Lordships agree with this judgment. It may be well to add that their A.I.R. 1946 Cal. 245. 1361 Lordships judgment does number imply that every sum paid under mistake is recoverable, numbermatter what the circumstances may be. There may in a particular case be circumstances which disentitle a plaintiff by estoppel or otherwise. We are of opinion that this interpretation put by their Lordships of the Privy Council on s. 72 is companyrect. There is numberwarrant for ascribing any limited meaning to the word I mistake as has been used therein and it is wide enough to companyer number only a mistake of fact but also a mistake of law. There is numberConflict between the provisions of s. 72 on the one hand and ss. 21 and 22 of the Indian Contract Act on the other and the true principle enunciated is that if one party under a mistake, whether of fact or law, pays to another party money which is number due by companytract or otherwise that money must be repaid. The mistake lies in thinking that the money paid was due when in fact it was number due and that mistake, if established, entitles the party paying the money to recover it back from the party receiving the same. The learned Additional Solicitor-General, however, sought to bring his case within the observations of their Lordships of the Privy Council that their judgment did number imply that every sum paid under mistake is recoverable numbermatter what the circumstances might be and that there might be in a particular case circumstances which disentitle a plaintiff by estoppel or otherwise. It was thus urged that having regard to the circumstances of the present case, i in so far as the payments were in discharge of the liability under the U.P. Sales Tax Act and were voluntary payments without protest and also ii inasmuch as the monies which had been received by the State of U. P. had number been retained but had been spent away by it, the respondent was disentitled to recover the said amounts. Here also, we may observe that these companytentions were number specifically urged in the High Court or in the statement of case filed by the appellants in this companyrt but we heard arguments on the same, as they were necessarily involved in the question whether s. 72 of 1362 the Indian Contract Act applied to the facts of the present case. Re i -The respondent was assessed for the said amounts under the U. P. Sales Tax Act and paid the same but these payments were in respect of forward transactions in silver. If the State of U. P. was number entitled to receive the sales tax on these transactions, the provision in that behalf being ultra vires, that companyld number avail the State and the amounts were paid by the respondent, even though they were number due by companytract or otherwise. The respondent companymitted the mistake in thinking that the monies paid were due when in fact they were number due and that mistake on being established entitled it to recover the same back from the State under s. 72 of the Indian Contract Act. It was, however, companytended that the payments having been made in discharge of the liability under the U. P. Sales Tax Act, they were payments of tax and even though the terms of s. 72 of the Indian Contract Act applied to the facts of the present case numbermonies paid by way of tax companyld be recovered. We do number see any warrant for this proposition within the terms of s. 72 itself. Reliance was, however, placed on two decisions of the Madras High Court reported in Municipal Council, Tuticorin v. Balli Bros. 1 and 2 Municipal Council, Rajahmundry v. Subba Rao 2 . It may be numbered, however, that both these decisions proceeded on the basis that the payments of the taxes there were made under mistake of law which as understood then by the Madras High Court was number within the purview of s. 72 of the Indian Contract Act. The High Court then proceeded to companysider whether they fell within the second part of s. 72, viz., whether the monies had been paid under companyrcion. The companyrt held on the facts of those cases that the payments had been voluntarily made and the parties paying the same were therefore number entitled to recover the same. The voluntary payment was there companysidered in companytradistinction to payment under companyrcion and the real ratio of the decisions was that there was numbercoercion or duress exercised by the authorities for A.I.R. 1934 Mad. 420. 2 A.I.R, 1937 Mad. 559. 1363 exacting the said payments and therefore the payments having been voluntarily made, though under mistake of law, were number recoverable. The ratio of these decisions, therefore, does number help the appellants before us. The Privy Council decision in Shiba Prasad Singh v. Srish Chandra Nandi 1 has set the whole companytroversy at rest and if it is once established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law the party is entitled to recover the same and the party receiving the same is bound to repay or return it. No distinction can, therefore, be made in respect of a tax liability and any other liability on a plain reading of the terms of s. 72 of the Indian Contract Act, even though such a distinction has been made in America vide the passage from Willoughby on the Constitution of the United States, Vol. 1, p. 12 opcit. To hold that tax paid by mistake of law cannot be recoverd under s. 72 will be number to interpret the law but to make a law by adding some such words as otherwise than by way of taxes after the word paid . If this is the true position the fact that both the parties, viz., the respondent and the appellants were labouring under a mistake of law and the respondent made the payments voluntarily would number disentitle it from receiving the said amounts. The amounts paid by the respondent under the U. P. Sales Tax Act in respect of the forward transactions in silver, had already been deposited by the respondent in advance in accordance with the U. P. Sales Tax Rules and were appropriated by the State of U. P. towards the discharge of the liability for the sales tax on the res- pective assessment orders having been passed. Both the parties were then labouring under a mistake of law, the legal position as established later on by the decision of the Allahabad High Court in Messrs. Budh Prakash Jai Prakash v. Sales Tax Officer, Kanpur 2 subsequently companyfirmed by this Court in Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash 3 number having been known to the parties at the relevant 1 1949 L. R. 76 1. A. 244. 2 1952 A.L.J. 332. 3 1955 I S.C.R. 243. 1364 dates. This mistake of law became apparent only on May 3, 1954, when this Court companyfirmed the said decition of the Allababad High Court and on that position being established the respondent became entitled to recover back the said amounts which had been paid by mistake of law. The state of mind of the respondent would be the only thing relevant to companysider in this companytext and once the respondent established that the payments were made by it under a mistake of law, and it may be numbered here that the whole matter proceeded before the High Court on the basis that the respondent had companymitted a mistake of law in making the said payments , it was entitled to recover back the said amounts and the State of U. P. was bound to repay or return the same to the respondent irrespective of any other companysideration. There was numberhing in the circumstances of the case to raise any estoppel against the respondent number would the fact that the payments were made in discharge of a tax liability companye within the dictum of the Privy Council above referred-to. Voluntary payment of such tax liability was number by itself enough to preclude the respondent from recovering the said amounts, once it was established that the payments were made under a mistake of law. On a true interpretation of s. 72 of the Indian Contract Act the only two circumstances there indicated as entitling the party to recover the money back are that the monies must have been paid by mistake or under companyrcion. If mistake either of law or of fact is established, he is entitled to recover the monies and the party receiving the same is bound to repay or return them irrespective of any companysideration whether the monies had been paid voluntarily, subject however to questions of estoppel, waiver, limitation or the like. If once that circumstance is established the party is entitled to the relief claimed. If, on the other hand, neither mistake of law number of fact is established., the party may rely upon the fact of the monies having been paid under companyrcion in order to entitle him to the relief claimed and it is in that position that it becomes relevant to companysider whether the payment has been a voluntary payment or a payment under companyrcion. The 1365 latter position has been elaborated in English law in the manner following in Twyford v. Manchester Corporation 1 where Romer J. observed Even so, however, I respectfully agree with the rest of Walton J.s judgment, particularly with his statement that a general rule applies, namely, the rule that, if money is paid voluntarily, without companypulsion, extortion, or undue influence, without fraud by the person to whom it is paid and with full knowledge of all the facts, it cannot be recovered, although paid without companysideration, or in discharge of a claim which was number due or which might have been successfully resisted. The principle of estoppel which has been adverted to by the Privy Council in Shiba Prasad Singh v. Srish Chandra Nandi 2 as disentitling the plaintiff to recover the monies paid under mistake can best be illustrated by the decision of the Appeal Court in England reported in Holt v. Markham 3 - here it was held that as the defendant had been led by the plaintiffs companyduct to believe that he might treat the money as his own, and in that belief had altered his position by spending it, the plaintiffs were estopped from alleging that it was paid under a mistake and this brings us to a companysideration of point No. 2 above stated. Re ii Whether the principle of estoppel applies or there are circumstances attendant upon the transaction which disentitle the respondent to recover back the monies, depends upon the facts and circumstances of each case. No question of estoppel can ever arise where both the parties, as in the present case, are labouring under the mistake of law and one party is number more to blame than the other. Estoppel arises only when the plaintiff by his acts or companyduct makes a representation to the defendant of a certain state of facts which is acted upon by the defendant to his detriment it is only then that the plaintiff is estopped from setting up a different state of facts. Even if this position can be availed of where the representation is in regard to a position in law, number 1 1946 1 Ch. 236, 241. 2 1949 L. R. 76 I. A. 244. 3 1923 1 K.B. 504. 1366 such occasion arises when the mistake of law is companymon to both the parties. The other circumstances would be such as would entitle a companyrt of equity to refuse the relief claimed by the plaintiff because on the facts and circumstances of the case it would be inequitable for the companyrt to award the relief to the plaintiff. These are, however, equitable companysiderations and companyld scarcely be imported when there is a clear and unambiguous provision of law which entitles the plaintiff to the relief claimed by him. Such equitable companysiderations were imported by the Nagpur High Court in Nagorao v. G. G.-in-Council where Kaushalendra Rao J. observed The circumstances in a particular case, disentitle the pltf. to recover what was paid under mistake. If the reason for the rule that a person paying money under mistake is entitled to recover it is that it is against companyscience for the receiver to retain it, then when the receiver has numberlonger the money with him or cannot be companysidered as still having it as in a case when he has spent it on his own purposes-which is number the case here-different companysiderations must necessarily arise. We do number agree with these observations of the Nagpur High Court. No such equitable companysiderations can be imported when the terms of s. 72 of the Indian Contract Act are clear and unambiguous. We may, in this companytext, refer to the observations of their Lordships of the Privy Council in Mohori Bibee v. Dhurmodas Ghose 2 at p. 125. In dealing with the argument which was urged there in regard to the minors companytracts which were declared void, viz., that one who seeks equity must do equity and that the minor against whom the companytract was declared void must refund the advantage which he had got out of the same, their Lordships observed that this argument did number require further numberice except by referring to a recent decision of the Court of Appeal in Thurstan v. Nottingham Permanent Benefit Building Society 3 A.I.R. 1951 Nag. 372,374. 2 19O2 L. R. 30 I. A. 114. I9O2 1 Ch. 1. 1367 since affirmed by the House of Lords and they quoted with approval the following passage from the judgment of Romer L. J., at p. 13 of the earlier report The short answer is that a Court of Equity cannot say that it is equitable to companypel a person to pay moneys in respect of a transaction which as against that person the Legislature has declared to be void. That ratio was applied by their Lordships to the facts of the case, before them and the companytention was negatived. Merely because the State of U. P. had number retained the monies paid by the respondent but had spent them away in the ordinary companyrse of the business of the State would number make any difference to the position and under the plain terms of s. 72 of the Indian Contract Act the respondent would be entitled to recover back the monies paid by it to the State of U.P. under mistake of law.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE, JURISDICTION Civil Appeal No. 297 of 1955. Appeal from the judgment and decree dated April 7, 1954, of the Patna High Court in Misc. Judicial Case No. 327 of 1951. V. Viswanatha Sastri and B. K. Sinha, for the appellant. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent. 1958. October 1. The Judgment of the Court was delivered by GAJENDRAGADKAR J.-This is an appeal with the, certificate issued by the High Court of Judicature at Patna under s. 66A 2 of the Income-tax Act hereinafter called the Act and it raises a, short question of the companystruction of s. 34 1 b of the Act. This question arises in this way. Proceedings. were. taken by the Income-tax Officer, Special Circle, Patna, against Maharaja Bahadur Rama Rajaya Prasad Singh, the father of the appellant, to levy income-tax for the year 1945-46. The total income assessed to income-tax by the said order was Rs. 1,60,602. This amount included the sum of Rs. 93,604 received by the assessee on account of interest on arrears of rent due to him after deduction of companylection charges. It was urged before the Income-tax Officer by the assessee that this amount was number liable to be taxed in view of the decision of the Patna High Court in Kamakshya Narain Singh Commissioner of Income Tax 1 . The Income-tax Officer, however, held that, since the department had obtained leave to appeal to the Privy Council against the said decision, the matter was sub judice and so be would number be justified in accepting the assessees companytention. In the result, he included the said amount in the total income for the purposes of assessment, but ordered that the realisation of the tax on the aid amount should be stayed till the decision of the Privy Council or March 31, 1947, whichever was earlier. This order was passed under s. 23 3 of the Act on December 31, 1945. Against this order the assessee preferred an appeal before the Appellate Assistant Commissioner of Income-tax, Patna. On May 8, 1946, the appellate authority held that the Income-tax Officer was bound to follow the decision in the case of Kamakshya Narain Singh supra 1 and so, he set aside the order under appeal in regard to the amount of Rs. 93,604 and directed the Income-tax Officer to make fresh assessment. He also observed that it was number clear as to what portion of the said amount was interest on arrears of agricultural rents and what portion related to interest on arrears of number-agricultural rents. The Income Tax Officer was accordingly directed to determine the latter amount and to levy tax on it. Pursuant to this appellate order the Income-tax Officer made a fresh assessment under ss. 23 3 and 31 of the Act on August 20, 1946. By this order the 1 1946 14 I.T.R. 673. total amount of income liable to tax was determined after deducting the whole of the amount of Rs. 93,604 from it. Some other minor reductions were also allowed in companypliance with the appellate order. The department did number challenge either the appellate order or the subsequent order passed by the Income-tax Officer in pursuance of the said appellate order. Subsequently, on July 6, 1948, the appeal preferred by the department to the Privy Council against the decision of the Patna High Court in Kamakshya Narain Singhs case 1 was allowed and it was held that interest on arrears of rent payable in respect of agricultural land is number agricultural income for it is neither rent number revenue derived from land. As a result of this decision, the Income-tax Officer issued a numberice to the assessee under s. 34 of the Act on September 25, 1948. This numberice called upon the assessee to file a fresh return as the Income-tax Officer had reason to believe that a part of the assessees income assessable to income- tax for the year ending March 31, 1946, had escaped assessment. It appears that this numberice was found to be defective, and so under the provisions of s. 34, as amended, a fresh numberice was issued by the officer to the assessee on March 18, 1949. The proceedings thus taken by the officer under s. 34 ultimately led to a revised assessment order passed under s. 23 3 and s. 34 of the Act and the amount of Rs. 93,604 was added to the assessment amount as interest on arrears of rent. This revised assessment order was passed on April 30, 1949. The assessee appealed against this order but the appellate authority dismissed the assessees appeal and companyfirmed the said order on July 26, 1949. He held that the subsequent decision of the Privy Council in the case of Kamakshya Narain Singh supra 1 was information within the meaning of cls. a and b of s. 34 1 and that the Income-tax Officer bad reason to believe that a part of the assessees income had escaped assessment. The assessee then moved the Income-tax Appellate Tribunal but on August 21, 1 1948 16 I.T.R. 325. 1950, the tribunal companyfirmed the order passed by the appellate authority and dismissed the assessees appeal. It was held that the provisions of a. 34 as amended in 1948 applied to the case and that the decision of the Privy Council brought it within the purview of sub-s. 1 b of s. 34. Meanwhile the assessee died and the appellant succeeded to the estate of his deceased father. He then filed an application under s. 66 1 of the Act requiring the tribunal to refer the question of law raised in the case to the Patna High Court for its opinion. The tribunal rejected this application on February 27, 1951. Thereupon the appellant moved the Patna High Court under s. 66 2 of the Act his application was allowed and the tribunal was directed by the High Court on December 15, 1951, to state the case and refer the question of law for its opinion. In companypliance with the requisition of the High Court the tribunal by its order passed on July 23, 1952, submitted a statement of the case and referred to the High Court for its opinion the question of law raised by the appellant. The question thus raised is Whether in the circumstances of the case the assessment order under s. 34 of the Act of the interest on arrears of rent is legal ? On April 7, 1954, this reference was heard by V. Ramaswamy and C. P. Sinha JJ. of the Patna High Court and the question was answered by them in favour of the department. The appellant then applied for and obtained a certificate from the Patna High Court on September 13, 1954. The High Court has certified under s. 66A, sub-s. 2 , of the Act that the case raises a question of law of a substantial kind and is otherwise a fit case for appeal to this companyrt. That is how the present appeal has companye before us and the question which it raises for our decision is about the true companystruction of s. 34 1 b of the Act. Section 34 of the Act has been amended in 1939 and in 1948. It is companyceded by Mr. Viswanatha Sastri, for the appellant, that the present case is governed by the section as it was amended in 1948. This amended s. 34, sub-s. 1 , deals with cases of income escaping assessment in two clauses. Clause a - companyers cases where income has escaped assessment by reason of the omission or failure on the part of the assessee to make a return of his income under s. 22. We are number companycerned with this clause. Clause b of s. 34 1 provides inter alia that numberwithstanding that there has been numberomission or failure as mentioned in cl. a on the part of the assessee, if the Income-tax Officer has, in companysequence of information in his possession, reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or that excessive loss or depreciation allowance have been companyputed, he may, at any time within four years of the end of that year serve on the assessee a numberice companytaining all or any of the requirements, which may be included in a numberice under sub-s. 2 of s. 22, and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance, and the provisions of this Act shall, so far as may be, apply accordingly as if the numberice were a numberice issued under that sub-section . It is clear that two companyditions must be satisfied before the Income-tax Officer can act under s. 34 1 b . He must have information in his possession, which, in the companytext, means that the relevant information must have companye into his possession subsequent to the making of the assessment order in question and this information must lead to his belief that income chargeable to income-tax has escaped assessment for any year, or that it has been under-assessed or assessed at too low a rate or has been made the subject of excessive relief under the Act. Two questions are raised by Mr. Sastri under this sub-section in the present appeal. He companytends that the relevant information means information as to facts and cannot include the decision of the Privy Council on a point of law and he argues that, where income has been duly returned for assessment and an assessment order has been passed by the Income-tax Officer, it cannot be said that any income has escaped assessment within s. 34 1 b . Thus the appellants case is that both the companyditions required by s. 34 1 b have number been satisfied and so the order of revised assessment passed against the appellant is illegal. It is number disputed-that, according to its strict literal meaning, the word information may include knowledge even about a state of tile law or a decision on a point of law. The argument, however, is that the companytext requires that the word information should receive a narrower companystruction limiting it to facts or factual material as distinguished from information as to the true state of the law. In support of this argument Mr. Sastri referred to the marginal numberes of ss. 19A and 20A as well as the province, s of s. 22 3 and s. 28 and urged that the information companytemplated by these provisions is information as to facts or parti- culars and has numberreference to the state of law or to any question of law and so the said word in s. 34 1 b should be companystrued to mean only factual information. We are number impressed by this arguments If the word information used in any other provision of the Act denotes information as to facts or particulars, that would number necessarily determine the meaning of the said word in s. 34 1 b . The denotation of the said word would naturally depend on the companytext of the particular provisions in which it is used. It is then companytended that ss. 33B and 35 companyfer ample powers on the specified authorities to revise Income-tax Officers orders and to rectify mistakes respectively and so it would be legitimate to companystrue the word information in s. 34 1 b strictly and to companyfine it to information in regard to facts or particulars. This argument also is number valid. If the word information in its plain grammatical meaning includes information as to facts as well as information as to the state of the law, it would be unreasonable to limit it to information as to the facts on the extraneous companysideration that some cases of assessment which need to be revised or rectified on the ground of mistake of law may companyceivably be companyered by ss. 33B and 35. Besides, the application of these two sections is subject to the limi- tations prescribed by them and so the fact that the said sections companyfer powers for revision or rectification would number be relevant and material in companystruing s. 34 1 b . The explanation to s. 34 also does number assist the appellant. It is true that under the explanation production before the Income-tax Officer of account books or other evidence from which material facts companyld with due diligence have been discovered by the Income-tax Officer would number necessarily amount to disclosures within the meaning of the said section but we do number see how this can have any bearing oil the companystruction of cl. b in s. 34 1 . On the other hand, one of the cases specifically mentioned in s. 34 1 b necessarily postulates that the word information must have reference to information as to law. Where, in companysequence of information in his possession, the Income-tax Officer has reason to believe that income has been assessed at too low a rate, he is empowered to revise the assessment and there can be numberdoubt that the belief of the Income-tax Officer that any given income has been assessed at too low a rate may in many cases be due to information about the true legal position in the matter of the relevant rates. If the word information in reference to this class of cases must necessarily include information as to law, it is impossible to accept the argument that, in regard to the other cases falling under the same provision, the same word should have a narrower and a more limited meaning. We would accordingly hold that the word information in s. 34 1 b includes information as to the true and companyrect state of the law and so would companyer information as to relevant judicial decisions. If that be the true position, the argument that the Income-tax Officer was number justified in treating the Privy Council decision in question as information within s. 34 1 b cannot be accepted. in regard to the other companydition prescribed by s. 34 1 b . When can income be said to have escaped assessment? Mr. Sastri argued that the word assessment does number mean only the order of assessment, but it includes all steps taken for the purpose of levying the tax and during the process of taxation. That numberdoubt is true but the wide denotation of the word assessment does number really assist the appellant it only shows that along with the order of assessment which is an important act in the process of taxation, other acts and steps adopted in the companyrse of taxation are also included in the word but it is with this most critical act in the process of taxation with which we are companycerned in the present appeal. Then it is urged that the word escaped according to the Oxford English Dictionary means to elude observations, search, etc. to elude the numberice of a person and the companytention is that it is only where income has number been returned for assessment that it can be reasonably said that income has escaped assessment. The dictionary meaning of the word does number support Mr. Sastris companytention. According to the same dictionary the word escape also means to get clear away from pursuit or pursuer to succeed in avoiding anything painful or unwelcome so that judging by ,he dictionary meaning alone it would be difficult to -confine the meaning of the word escape only to cases where numberreturn has been submitted by the assessee. Even if the assessee has submitted a return of his income, cases may well occur where the whole of the income has number been assessed and such part of the income as has number been assessed can well be regarded as having escaped assessment. In the present case, interest on arrears of rent received by the assessee from his agricultural lands were brought to the numberice of the Income- tax Officer the question as to whether the said amount can be assessed in law was companysidered and it was ultimately held that the relevant decision of the Patna High Court which was binding on the department justified the assessees claim that the said income was number liable to be assessed to tax. There is numberdoubt that a part of the assessees income had number been assessed and, -in that sense, it has clearly escaped assessment. Can it be said that, because the matter was companysidered and decided on the merits in the light of the binding authority of the decision of the Patna High Court, numberincome has escaped assessment when the said Patna High Court decision has been subsequently reversed by the Privy Council ? We see numberjustification for holding that cases of income escaping assessment must always be cases where income has number been assessed owing to inadvertence or oversight or owing to the fact that numberreturn has been submitted. In our opinion, even in a case where a return has been submitted, if the Income-tax Officer erroneously fails to tax a part of assessable income, it is a case where the said part of the income has escaped assessment. The appellants attempt to put a very narrow and artificial limitation on the meaning of the word escape in s. 34 1 b cannot therefore succeed. Mr. Sastri, however, argues that the narrow companystruction of the expression has escaped assessment for which he companytends has been approved by the Privy Council in Rajendranath Mukherjee v. Income-tax Commissioner 1 . He relies more particularly on the observation made in the judgment in this case that the fact that s. 34 requires a numberice to be served calling for a return of income which has escaped assessment ,strongly suggests that income which has already been duly returned for assessment cannot be said to have escaped assessment within the statutory meaning. In order to appreciate the effect of this observation it would be necessary to examine the material facts in the case and the specific points raised for the decision of the Privy Council. It appears that, in 1930 the Income-tax Officer had made an assessment order on Burn Co., which was an unregistered firm, assessing them to income-tax and super- tax for the year 192728 under the Act. The individual partners of Burn Co., who were the appellants before the Board, companytended that it was number companypetent to the officer to make the impugned assessment on the firm after the expiry on March 31, 1928, of the year in respect of which the assessment was made. The Commissioner of Income-tax met this plea by referring to the other relevant facts which explained the delay in making the assessment order. Towards the end of 1926-27, the partners of the registered firm of Martin Co., had purchased the business and assets of Burn Co. This transaction was effected number on behalf of the firm 1 1933 61 I.A. IO, 16. of Martin Co., but by the partners of the firm as individuals. In April 1927, the Income-tax Officer of District I issued a numberice to Burn Co., under s. 22 2 calling for a return of their total income for the year ending March 31, 1927, with a view to assessing them for the year 1927-28. A similar numberice was issued by the Income-tax Officer of District 11. When these numberices were issued both the officers did number know that the business of Burn Co., had been bought by the partners of Martin Co. Subsequently this transaction was brought to the knowledge of the income- tax authorities whereupon Burn Co.s file was transferred by the officer dealing with District 11, and in February 1928, an assessment order was made on Martin Co., in respect of the companybined incomes returned by Martin Co., and Burn Co., on the footing that the business of Burn Co., had become a branch of Martin Co. Martin Co., appealed against this assessment and their appeal was allowed by the High Court in May 1930. It was held that an income of a registered firm cannot, for the purpose of the Act., be aggregated with the income of an unregistered firm but that the income of each must be separately assessed irrespective of the fact that the persons interested in the profits of both companycerns are the same. In companysequence of this decision, the assessment made on Martin Co., was amended by the elimination therefrom of the income returned by Burn Co., and in November 1930, an assessment was made on Burn Co., on their income as returned by them in Janu- ary 1928. It was this assessment which was the subject- matter of the appeal before the Privy Council. It would thus be numbericed that the principal question which the appellants raised before the Privy Council was Whether the assessment made under s. 23 1 on the appellants in November 1930 for the year 1927-28 was a legal assessment ? The argument was that, on a true companystruction of the Income-tax Act, it was obligatory on the Income-tax Officer to companyplete the assessment proceedings within the year of assessment, and in the event of such assessment number being so companypleted the only remedy open to the income-tax authorities was to proceed under s. 34. This argument was repelled by the Privy Council. Their Lordships held that neither s. 23 number any other express provision of the Act limited the time within which an assessment must be made. They then examined the other argument urged by the appellants that s. 34 implied a prohibition against the making of an assessment after the expiry of the tax year. In dealing with this argument, s. 34 was companystrued and it was observed that the argument sought to put upon the word assessment too narrow a meaning, and upon the word escaped too wide a meaning. It was in this companynection that their Lordships approved of the observation made by Rankin C. J. in Re Lachhiram Basantlal 1 that I income has number escaped assessment if there are pending at the time proceedings for the assessment of the assessees income which have number yet terminated in a final assessment thereof . In other words, the companyclusion of the Privy Council was that so long as assessment proceedings are pending against an assessee and numberfinal order has been passed thereon, it would be premature to suggest that any income of the assessee has escaped assessment. It is only after the final order levying the tax has been passed by the Income-tax Officer that it would be possible to predicate that any part of the assessees income has escaped assessment. In the result their Lordships held that since proceedings pursuant to the numberice issued against the appellants under s. 22 2 had been pending and numberorder had been passed against the appellants in the said proceedings, it would number be possible to accept their argument that the Income-tax Officer should have taken action against them in respect of the income for the relevant year under s. 34 of the Act . If this decision is companysidered in the light of the relevant facts and the nature of the argument raised before the Privy Council by the appellants, it would be difficult to accept the companytention that, according to the Privy Council, s. 34 would be inapplicable wherever numberice under s. 22 2 has been issued against an assessee, a return has been submitted by him and 1 1030 I.L.R. 58 Cal. 909, 912. a final order has been passed by the Income-tax Officer in the said assessment proceedings. To say that, so long as the assessment proceedings are pending, it is impossible to assume that any income has escaped assessment is very much different from saying that income cannot be said to have escaped assessment wherever assessment proceedings have been taken and a final order has been passed on them. We must, therefore, hold that this decision does number support Mr. Sastris companytention about the inapplicability of s. 34 in the present case. In this companynection it may be relevant to refer to the decision of the Calcutta High Court in Be Lachhiram Basantlal supra 1 because, as we have already pointed out, the statement of the law made by Rankin C. J. in regard to the effect of s. 34 of the Act in this case has been expressly approved by the Privy Council in the case of Rajendra Nath Mukherjee supra 2 . While dealing with the assessees argument that the order of assessment was invalid Since it had been passed more than one year after the expiry of the relevant financial year and that the Income-tax Officer might have acted under s. 34, Rankin C. J. stated that income cannot be said to have escaped assessment except in the case where an assessment has been made which does number include the income. It is true that this observation is obiter but it is fully companysistent with the subsequent statement of the law made by the learned Chief Justice which has received the approval of the Privy Council. Mr. Sastri has also relied on the decision of this Court in Messrs. Chatturam Horliram Ltd. v. Commissioner of Income- tax, Bihar Orissa 1 in support of his companystruction of s. In Chatturams case supra 3 the assessee had been assessed to income-tax which was reduced on appeal and was set aside by the Income-tax Appellate Tribunal on the ground that the Indian Finance Act of 1939 was number in force during the assessment year in Chota Nagpur. On a reference the decision of the tribunal was upheld by the High 1 1930 I.L.R. 58 Cal. 909, 912. 2 1933 61 I.A.10, 16. 3 1955 2 S.C.R. 290. Court. Subsequently the Governor of Bihar promulgated the Bihar Regulation IV of 1942 and thereby brought into force the Indian Finance Act of 1939 in Chota Nagpur retrospectively as from March 30, 1939. This ordinance was assented to by the Governor-General. On February 8,1944, the Income-tax Officer passed an order in pursuance of which proceedings were taken against the assessee under the provisions of s. 34 and they resulted in the assessment of the assessee to income-tax. The companytention which was raised by the assessee in his appeal to this Court was that the numberice issued against him under s. 34 was invalid. This Court held that the income, profits or gains sought to be assessed were chargeable to income-tax and that it was a case of chargeable income escaping assessment within the meaning of s. 34 and was number a case of mere number-assessment of income-tax. So far as the decision is companycerned, it is in substance inconsistent with the argument raised IVY Mr. Sastri. He, however, relies on the observations made by Jagannadhadas J. that the companytention of the learned companynsel for the appellant that the escapement from assessment is number to be equated to number-assessment simpliciter is number without force and he points out that the reason given by the learned judge in support of the final decision was that though earlier assessment proceedings had been taken they had failed to result in a valid assessment owing to some lacuna other than that attributable to the assessing authorities numberwithstanding the chargeability of income to the tax. Mr. Sastri says that it is only in cases where income can be shown to have escaped assessment owing to some lacuna other than that attributable to the assessing authorities that s. 34 can be invoked. We do number think that a fair reading of the judgment can lead to this companyclusion. The observations on which reliance is placed by Mr. Sastri have naturally been made in reference to the facts with which the Court was dealing and they must obviously be read in the companytext of those facts. It would be unreasonable to suggest that these observations were intended to companyfine the application of s. 34 only to cases where income escapes assessment owing to reasons other than those attributable to the assessing authorities. Indeed Jagannadhadas J. has taken the precaution of adding that it was unnecessary to lay down what exactly companystitutes escapement from assessment and that it would be sufficient to place their decision on the narrow ground to which we have just, referred. We are satisfied that this decision is of numberassistance to the appellants case. It appears that the companystruction of s. 34 has led to a divergence of judicial opinion in the High Courts of this companyntry, and so it would be necessary to refer briefly to the decisions to which our attention was invited in this appeal. In Madan Lal v. Commissioner of I. T., Punjab 1 , the majority decision of the Full Bench of the Lahore High Court held that s. 34 of the Act, as it stood then, was number companyfined to cases where income had number been returned at all. It applied also to cases where an item of income is included in the return made by the assessee but is left unassessed by the Income-tax Officer, or, if assessed in the first in- stance, the assessment is cancelled by any appellate or revisional authority. Din Mohammad J. who delivered the majority judgment has expressed his agreement with the opinion of Coutts Trotter C. J. in The Commissioner of Income-tax v. Raja of Parlakimedi 2 that the words escaped assessment apply even to cases where the Income- tax Officer has deliberately adopted an erroneous companystruction of the Act as much as to a case where an officer has number companysidered the matter at all, but simply omitted the assessable property from his view and from his assessment . The next case which has been cited before us is the decision of the Bombay High Court in The Commissioner of Income-tax, Bombay v. Sir Mahomed Yusuf Ismail 3 . In this case Beaumont C. J. companystrued the word definite information in s. 34 and held that in order to take action under the said section, there must be some information as to a fact which leads the Income-tax Officer to discover that income 1 1935 3 I.T.R. 438. 2 1926 49 Mad. 22, 28. 3 1944 12 I.T.R. B. has escaped assessment or has been under-assessed. The learned Chief Justice, however, added that the fact may be as to the state of the law, for instance, that a case has been overruled or that a statute has been passed which has number been brought to the attention of the Income-tax Officer. Chagla J. who delivered a companycurring judgment was inclined, to hold that the word information in the section must be companyfined only to information as to facts or particulars and cannot include information as to law. In his opinion, a mistake of law or misunderstanding of the provisions of the law is number companyered by the language of the section as amended in 1939 . It may be pointed out that in companying to this companyclusion the learned judge appears to have relied on the observations of Rowlatt J. in Anderton and Halstead Ltd. v. Birrell 1 that the word I discover in s. 125 of the English Act does number include a mere change of opinion on the same facts and figures upon the same question of account- ancy, being a question of opinion . Incidentally, we may observe that this statement of the law by Mr. Justice Rowlatt appears to have been overruled by the Court of Appeal in Commercial Structures Ltd. v. R. A. Briggs 2 . Soon after the decision of the Bombay High Court was reported the same question was raised before the Madras High Court in Raghavalu Naidu Sons v. Commissioner of Income- tax, Madras 3 . Leach C. J. who delivered the judgment of the companyrt agreed with the companystruction which had been put on the expression definite information by the Bombay High Court on the ground that it is very desirable to avoid companyflict on such a question . He, however, added that in view of the opening words of the amended section as it was amended in 1939, the word discovers means something more than has reason to believe or satisfies himself and that companysequently it would number be right to regard the English decisions on the meaning of the word discovers in s. 125 of 1 1932 I. K. B. 271. 2 1949 117 I.T.R. Supplement 30. 3 1945 13 I.T.R. 194, 197. the English Act as being in point. He also made it clear that in following the Bombay, decision they did number imply that the definite information must relate to a pure question of fact because it was impossible to lay down a rule to companyer all cases in which this section can be invoked. In the Calcutta High Court, companyflicting views have been expressed on this point. In Maharaja Bikram Kishore of Tripura v. Province. of Assam 1 , Harries C. J. and Mukherjea J. had to deal with the companystruction of s. 30 of the Assam Agricultural Income-tax Act Assam IX of 1939 which companyresponds to s. 34 of the Act. They held that where a certain income has been included in his return by the assessee but was number assessed on the ground that it was number assessable, it cannot be treated as income which has escaped assessment and reassessed under s. 30 of the Assam Agricultural Income-tax Act. In his judgment the learned Chief Justice has mentioned that the earlier decisions of the Calcutta High Court were numberdoubt against the companytentions of the appellant but he took the view that the question was really companycluded by the decision of the Privy Council in Rajendra Nath Mukherjees case supra 2 . The Privy Council decision was read by the learned Chief Justice as supporting the view that s. 34 would be inapplicable to cases where income has been returned, assessment proceedings have been taken and a final order of assessment has been passed by the Income-tax Officer against the assessee. We have already pointed out that the decision of the Privy Council does number support this view. In Raja Benoy Kumar Sahas Roy v. Commissioner of 1. T., West Bengal 1 , Chakravartti C. J. and Lahiri J. have taken a companytrary view. They have held that information as to the true state or meaning of the law derived freshly from an external source of authoritative character is definite information within the meaning of s. 34. It appears that, in companystruing the scope and effect of the provisions of s. 34, the High Courts have had 1 1949 17 I.T.R. 220. 2 1933 61 1,A. 10, 16. 3 1933 24 I.T.R. 70. occasion to decide whether it would be open to the Income- tax Officer to take action under s. 34 on the ground that he thinks that his original decision in making the order of assessment was wrong without any fresh information from an external source or whether the successor of the Income-tax Officer can act under s. 34 on the ground that the order of assessment passed by his predecessor was erroneous, and divergent views have been expressed on this point. Mr. Rajagopala Sastri, for the respondent, suggested that under the provisions of s. 34 as amended in 1948, it would be open to the Income-tax Officer to act under the said section even if he merely changed his mind without any information from an external source and came to the companyclusion that, in a particular case, he had erroneously allowed an assessees income to escape assessment. We do number propose to express any opinion on this point in the present appeal. In the result we hold that the Patna High Court was right in companying to the companyclusion that the decision of the Privy Council was information within the meaning of s. 34 1 b and that the said decision justified the belief of the Income-tax Officer that part of the appellants income had escaped assessment for the relevant year.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 401 of 1956. Appeal by special leave from the judgment and order dated March 8, 1956, of the Travancore-Cochin High Court at Ernakulam in I.T.R. No. 24 of 1954. V. Viswanatha Sastri, S. R. Ganapathy Iyer, J. B. Dadachanji and G. Gopalakrishna, for the appellant. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent. 1958. October 7. The Judgment of the Court was delivered by SARKAR J.-The appellant who was a Superintendent of Police in the service of the former Travancore State, retired sometime in 1940. After retirement he was spending his time in studying Vedanta philosophy and expounding the same to such persons as were keen on understanding it. He soon gathered about him a number of disciples, one of whom was J. Levy of London, U.K. Levy along with others used to receive instructions in Vedanta from the appellant. He used to companye to Travancore from England at regular intervals and stay there for a few months at a time and attend the discourses given by the appellant and so had the benefit of his teachings on Vedanta. Levy had an account in Lloyds Bank at Bombay. On December 13, 1941, Levy transferred the entire balance standing to his credit in this account amounting to Rs. 2,41,103-11-3, to the credit of an account which he got the appellant to open in his name in the same bank. Thereafter, from time to time Levy put in further sums into the appellants aforesaid account in Lloyds Bank, Bombay. It appears that the payments so made up to August 19, 1951, amounted to about Rs. 4,50,000/-. From time to time the appellant got moneys transferred from his account at the Lloyds Bank, Bombay, to his account in a bank at Trivandrum in Travancore. This appeal arises out of orders for assessment to income- tax passed against the appellant for the assessment years 1122, 1123 and 1124, all according to the Malayalam era. The respective accounting periods according to the Gregorian calendar were from August 17, 1945, to August 16, 1946, August 17, 1946, to August 16, 1947, and August 17, 1947, to August 16, 1948. It appears that during these periods Levy bad deposited in the appellants account at Lloyds Bank in Bombay the following respective sums Rs. 13,304/-, Rs. 29,948/- and Rs. 19,983/-. During the same periods the appellant had obtained transfers of the following respective sums from his Bombay account to his Trivandrum account Rs. 81,200/-, Rs. 47,000/- and Rs. 37,251/-. The Income-tax Officer, Trivandrum, assessed the appellant to tax on the latter amounts as foreign income, i.e., income arising in India, and brought into Travancore State in the relevant periods. We are number companycerned in this case with the assessment made on other income of the appellant. Tile appellant appealed from these assessment orders to the Appellate Assistant Commissioner who companysolidated them into one appeal. The Appellate Assistant Commissioner dismissed the appeal and companyfirmed the orders of the Income-tax Officer. The appellant then went up in appeal to the Appellate Tribunal but that appeal also failed. The appellant thereafter obtained an order from the Tribunal referring the following Questions to the High Court of Travancore-Cochin for decision Whether the aforesaid receipts from John H. Levy companystitute income taxable under the Travancore Income-tax Act, 1121 ? and Whether there are materials for the Tribunal to hold that the deposits into the assessees bank. account in Bombay by John H. Levy from 1941 as aforesaid represented income that accrued to the assessee outside Travancore State ? The High Court answered the first question in the affirmative. It however answered the second question in favour of the appellant, holding that he was carrying on a vocation or occupation in that State and the income derived therefrom should be companysidered as having arisen in Travancore, and that therefore the appellant was liable to be taxed number on the amounts which he brought into Travancore but on the amounts which had been paid to the credit of his account at Bombay by Levy during the relevant periods. The appellant has number companye up to this Court in appeal by special leave against the answer given -by the High Court to the first question. We are number companycerned in this appeal with the answer given to the second question as it had been decided in favour of the appellant and there has been numberappeal against it by the revenue authorities. We do number think that the case presents any difficulty. It has to be decided on the terms of the Travancore Income-tax Act, 1121 Malayalam Era , but as the provisions of that Act are, for. the present purpose, identical-with those of the Indian Income-tax Act, 1922 , it would be more companyvenient to refer to the provisions of the latter. Mr. Sastri, appearing for the appellant, has stated that the case involves really two points. First, was the appellant carrying on a vocation ? And secondly, if he was, can the amounts with which we are companycerned, be said to be profits or gains of the vocation ? We agree with his view of the case and proceed to discuss these points. The first question is, whether the appellant was carrying on a vocation. Under s. 10 of the Income-tax Act, 1922, tax is payable by an assessee in respect of the profit or gains of any profession or vocation carried on by him. The facts found are that the appellant was studying Vedanta philosophy himself and imparting the knowledge acquired by him as a result of his studies to such as cared to companye and imbibe it. There is numberevidence to show, that the appellant had made it a companydition that he would impart such knowledge only to those who were prepared to pay for it. We have therefore to proceed on the basis that the appellant was teaching his, disciples Vedanta without any motive or, intention of making a profit out of such activity. We find numberdifficulty in thinking that teaching is a vocation if number a, profession It is plainly so and it is number necessary to discuss the various meanings of the word. vocation for the purpose or to cite authorities to support this view. Nor do we find any reason why, if teaching is a vocation, teaching of Vedanta is number. It is just as much teaching, and therefore, a vocation, as any other teaching. It is said that in teaching Vedanta the appellant was only practicing religion. We are unable to see why teaching of Vedanta as a matter of religion is number carrying, on of a vocation. In any case the question does number really arise, for, Whether the appellant was, in teaching Vedanta, practicing religion, is of companyrse a finding of fact. It may be that Vedanta companyld be taught as a practice of religion but it companyld of companyrse also be taught as any other philo- sophy or school of thought. The statement of case in this. case does number companytain any finding that in teaching Vedanta the appellant was practicing religion. It is said that in order that an activity may be called a vocation for the purposes of the Act, it has to be shown that it was an organised activity and that it was indulged in with a motive of making profit that as the appellants activity in teaching Vedanta was neither organised number performed with a view to making profit, he companyld number be said to. be carrying on a vocation. It is said that as the word vocation has been used along with the words business and profession and the object of a business and a profession is to make a profit, only such activities can be included in the word vocation the object of which likewise is to make a profit. We think that these companytentions lack substance. We do number appreciate the significance of saying that in order to become a vocation an activity must be organised. If by that a companytinuous, or as was said, a systematic activity, is meant, we have to point out that it is well-known that a single act may amount to the carrying on of a business or profession. It is unnecessary to discuss this question further as we find numberwant of system or companytinuity in the activity of the appellant. He had gathered a large number of disciples around him and was instructing them in Vedanta regularly. Levy came all the way from England at regular intervals to obtain such instructions. All this clearly indicates Organisation and system. Again, it is well-established that it is number the motive of the person doing an act which decides whether the act done by him is the carrying on of a business, profession or vocation. If any business, profession or vocation in fact produces an income, that is taxable income and numbere the less because it was carried on without the motive of producing any income. This, we believe, is too well-established on the authorities number to be questioned. It was decided as early as 1888 in the case of the Commissioner of Inland Revenue v. Incorporated Council of Law Reporting 1 and followed ever since, that it is number essential to the carrying on of a trade that the people carrying it on should make a profit, number is it even necessary to the carrying on of the trade that the people carrying it on should desire or wish to make a profit. If that were number so, a person carrying on what otherwise would be a business, may say that he did number carry on a business because it was number his intention to make any income out of it. That would, of companyrse, be absurd. The question is, whether the activity has actually produced an income and it matters number whether that activity is called by the name of business, profession, vocation or by any other name or with what intention it was carried on. The observation of Rowlatt, J., in Stedeford v. Beloe 2 to which we were referred by Mr. Sastri, that there companyld be numbertax on pension granted to a retired 1 1888 3 Tax Cas. 105, 113. 2 1930 16 Tax Cas. 505. headmaster as there is numberbackground of business in it , was clearly number intended to lay down that without a profit motive there companyld be numberbusiness, profession or vocation. The pension companyld be taxed only if it had arisen out of the office and the only point decided was that it had number so arisen as the headmaster held numberoffice, having retired earlier, at the date the pension had been granted see the same case in the House of Lords 1 . We think therefore that the teaching of Vedanta by the appellant in this case can properly be called the carrying on of a vocation by him. Then the other point to be decided is, whether the payments made by Levy were income received by the appellant from his vocation of teaching Vedanta. A very large number of authorities, both Indian and English, have been pressed upon us in tile companyrse of the argument. These cases illustrate the application of the well-settled principle that in the case of a voluntary payment, numbertax can be levied on it if it bad been made for reasons purely personal to the donee and unconnected with his office or vocation while it will be taxable if it was made because of the office or vocation of the donee. We do number companysider it profitable to discuss them in this case. Also it seems to us that the present case is too plain to require any authority. The only point is, whether the moneys were received by the appellant by virtue of his vocation. Mr. Sastri companytended that the facts showed that the payments were purely personal gifts. He drew our attention to the affidavit of Levy where it is stated all sums of money paid into his account by me have been gifts to mark my esteem and affection for him and for numberother reason. But Levy also there said, I have had the benefit of his teachings on Vedanta . It is important to remember however that the point is number what the donor thought he was doing but why the donee received it. So Collins M. R. in Herbert v. McQuade referring to Inland Revenue v. Strong said at p. 649 Now that judgment,. whether or number the 1 1932 A. C. 388. 2 1902 2 K.B. 631. 3 1878 1 Tax CaS. 207. particular facts justified it, is certainly an affirmation of a principle of law that a payment may be liable to income-tax although it is voluntary on the part of the persons who made it, and that the test is whether, from the standpoint of the person who receives it, it accrues to him in virtue of his office if it does, it does number matter whether it was voluntary or whether it was companypulsory on the part of the persons who paid it. That seems to me to be the test and if we once get to this-that the money has companye to or accrued to, a person by virtue of his office-it seems to me that the liability to income tax is number negatived merely by reason of the fact that there was numberlegal obligation on the part of the persons who companytributed the money to pay it. It is well established that in cases of this kind the real question is, as Rowlatt J. put it in Reed v. Seymour 1 , But is it in the nature of a personal gift or is it a remuneration?, an observation which was quoted with approval by Viscount Cave, L. C. when the case went up to the House of Lords with the addition If the latter, it is subject to the tax if the former, it is number see Seymour Reed 2 . We find it impossible to hold in this case that the payments to the appellant had number been made in companysideration of the teaching imparted by him. Levy admitted that he had received benefit from the teaching of the appellant. It is plain to us that it was because of the teaching that the gift had been made. It is true that Levy said that he made the gifts to mark his esteem and affection for the appellant. But such emotions and therefore the gifts, were clearly the result of the teaching imparted by the appellant. Mr. Sastri companytends that that may be so, but we have numberright to follow the successive causes and as a result thereof link the gift with the teaching. An argument of this kind seems to have been advanced in Blakiston v. Cooper 3 and dealt with by Lord Ashbourne in the following words It was suggested that the offerings, were made as personal gifts to the Vicar as marks of esteem and 1 1926 1 K.B. 588. 2 1927 A.C. 554. 3 1909 A.C. 104. respect. Such reasons numberdoubt played their part in obtaining and increasing the amount of the offerings, but I cannot doubt that they were given to the vicar as vicar. and that they formed part of the profits accruing by reason of his office. We have numberdoubt in this case that the imparting of the teaching was the causa causans of the making of the gift it was number merely a causa sine qua number. The payments were repeated and came with the same regularity as Levys visits to the appellant for receiving instructions in Vedanta. We do number feel impressed by Mr. Sastris companytention that the first payment of Rs. 2,41,103-11-3 was too large a sum to be paid as companysideration. In any case we are number companycerned in this case with that payment. We are companycerned with payments which are of much smaller amounts and as to which it has number been -said that they were too large to be a companysideration for the teaching. And one must number forget, that these are cases of voluntary payments and the question of the appraisement of the value of the teaching received in terms of money is number very material. If the first payment was too big to have been paid for the teaching received, it was too big to have been given purely by way of gift. In the view that we take, namely, that the payments with which we are companycerned, were income, arising from the vocation of the appellants a teacher of Vedanta, numberquestion of exemption under s. 4 3 vii of the Act arises. In order that a payment may be, exempted under that section, it has to be shown that it did number arise from the exercise of a vocation.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 5 and 6 of 1955. Appeals from the judgment and decree dated September 15, 1952, of the Madras High Court in Second Appeals Nos. 2256 of 1947and 2545 of 1948, arising. out of the judgment and decree dated September 19, 1946, of the Court of Subordinate Judge of Kozhikode in Appeal Suit Nos. 336 and 180 of 1946, against the judgment and decree dated October 9, 1945, and June 29, 1946, respectively of the Court of Districts Munsif, Chowghat, in S. Nos. 131 and 158 of 1945. K. B. Naidu, for the appellants. Karunakara Menon and M. R. Krishna Pillai, for the respondents. 1958. October 1. The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-The point for determination in these two appeals is whether one Kesavan Kaimal who was one of three executants of a will dated February 10, 1906, became entitled under that will to the properties, which are the subject-matter of these appeals. The will is a short one, and is as follows Will executed on 28th Makaram 1081 M. E., companyresponding to 10th February, 1906, jointly by Kunhan Kaimal, son of Karayamvattath Katbayakkal Kunhu Kutti Amma, Kesavan Kaimal, son of Theyi Amma and Theyi Amma, daughter of Nani Amma of Etathiruthi amsom and Etamuttan desom in Ponnani Taluk. We have hereby settled and agreed that all the movable and immovable properties acquired jointly and separately by us till number, and those which we may be so acquiring in future and those which have devolved on us and those which we may yet be obtaining shall be held by us in our possession and under our companytrol and dealt with by us as we please till our death and that subsequent to our death, Kalliani Ammas children, Kali and Kunhu Kutty, Thona Ammas children, Parukutty, Kunhunni, Kochu Govindan and Ramar, and the children of the deceased Narayani Amma, namely, Kunhunniri, Kuttiparu and Lakshmikutty and their children and the children who may be born to them as also the children who may be born of them, shall as our heirs and legal representatives, hold the said properties in their possession and enjoy them hereditarily in equal shares amongst themselves. Except after our death, the aforesaid persons shall number lay claim to any of the properties belonging to us. It is settled that in the event of our effecting any transfers or alienations of the said properties. either jointly or severally till our death, the aforesaid persons shall have the right and freedom only in respect of the remaining items of properties to the exclusion of those items of properties included in the above transactions. It is hereby further settled and agreed that subsequent to our death, save our legal representatives aforesaid and such of those as may be born hereafter, numberother persons shall have the right to claim to or right of entry upon the entire properties moveable and immoveable found belonging to us. And we have signed herein in the presence of the undersigned witnesses- signed Kunhan Kaimal. Kesavan Kaimal. Theyi Amma. of the three testators, Theyi Amma died first-the exact date of her death does number appear and is number very material-and Kunhan Kaimal died thereafter sometime in 1930. It is the case of Kesavan Kaimal that in the events which had happened, he had become entitled by survivorship to all the properties disposed of by the will, including those of Kunhan Kaimal, and on this footing he companyveyed on October 14,1938, seven items of properties, of which three belonged to Kunhan Kaimal, to one Sankarankutti Kaimal and on October 16, 1944, another three items of properties which belonged to Kunhan Kaimal, to Kalyani and Vijayan. These transfers led to the two litigations which have culminated in the present appeals. The legatees under the will dated February 10, 1906, instituted O. S. No. 131 of 1945 in the Court of the District Munsif, Chowghat, then in the Province of Madras, for recovery of possession of three items of properties which had belonged to Kunhan Kaimal after redeeming a mortgage for Rs. 100 created over those properties on February 3, 1901. The plaintiffs claimed that on the death of Kunhan Kaimal in 1930 they had become entitled to those properties as legatees under the will. Defendants 1 to 3 represented the mortgagees. Defendant 6 was Kesavan Kaimal, and defendants 4 and 5 were brought on record as persons claiming to be entitled to the suit properties under a deed of transfer by defendant 6, dated October 16, 1944. Defendants 4 to 6 companytested the suit, and pleaded that on a proper companystruction of the will, the properties of Kunhan Kaimal survived to Kesavan Kaimal on the death of the former in 1930, and that the plaintiffs got numbertitle to them. This companytention was overruled by the District Munsif, and the suit was decreed. There were two appeals against this decree, A. S. No. 179 of 1946 and A. S. No. 180 of 1946 in the Court of the Subordinate Judge, Calicut, the former by defendants 4 and 5 and the latter, by defendant 6. The Subordinate Judge agreed with the companystruction put on the will by the District Munsif, and dismissed the appeals. Against that decree, defendant 6 preferred S. A. No. 2256 of 1947 in the High Court of Madras. Basing himself on the deed of transfer dated October 14, 1938, Sankarankutti Kaimal instituted O. S. No. 158 of 1945 in the Court of the District Munsif, Chowghat, for recovery of possession of three items of properties, of which one belonged to Kunhan Kaimal absolutely and the other two to him and others as companyowners. In the plaint, he alleged that there was an oral lease of the properties to the first defendant and to one Kali Amma, whose legal representatives were defendants 2 and 3, that the defendants were in arrears in the payment of rent, and were disputing his title to the properties, and that he was therefore entitled to eject them. Defendant 4 is Kesavan Kaimal, the vendor of the plaintiff. The companytesting defendants who were the same as the plaintiffs in O.S. No. 131 of 1945 pleaded that under the will they became entitled to all the properties of Kunhan Faimal, that the oral lease was untrue, and that the suit was barred by limitation. The District Munsif found all the companytentions in favour of defendants 1 to 3 and dismissed the suit., Against this decree, there was an appeal, A. S. No. 336 of 1946, in the Court of the Subordinate Judge of Ottapalam, and that was dismissed, the Subordinate Judge agreeing with the District Munsif on all the issues. Against his decree, the plaintiff preferred S. No. 2545 of 1948 in the High Court of Madras. Both the second appeals came up for hearing before Raghava Rao J. who held that on its true companystruction the will operated to vest, in the three testators all the properties companyered by it in joint ownership, that, in companysequence, on the death successively of Theyi Amma and Kunhan Kaimal, their interest survived to Kesavan Kaimal, and that the transfers made by him on October 14, 1938, and October 16, 1944, were valid. In the result, both the second appeals were allowed, the suit for redemption, O. S. No 131 of 1945, was dismissed, and the suit in ejectment, O. S. No. 158 of 1945, was decreed. Against this judgment, the present appeals have been brought on a certificate granted by this companyrt under Art. 136. The sole point for determination in these appeals is whether under the will all the three testators became joint owners of all the properties on which it operated. After hearing the question fully argued, we have companye to the companyclusion that that is number the effect of the will, and that the judgment of the High Court companytra cannot be supported. There were three executants of the will. Each of them possessed properties, which were his or her self- acquisitions. They- also owned some properties which they had jointly acquired, but their title to such properties was as tenants-in-common and number as joint tenants. Each of them would have been entitled to execute a will of his or her properties, and if that had been done, the legatees named therein would undoubtedly have been entitled to those pro- perties. In the present case, the legatees who were intended to take were the same persons, and it was for that reason that the three testators instead of each executing a separate will jointly executed it. It ist nevertheless, a will by which each testator bequeathed properties belonging to him or to her, and therefore on the death of each testator, the legatees mentioned in the will would be entitled to the properties of the testator, who dies. The companytention of the respondents which has found favour with the High Court is that the will must be companystrued as a transfer by the several testators of all their individual properties to themselves jointly as joint tenants. That would really be a transfer inter Vivos and number a will. The word will is widely known and used, and it has a well- understood significance as meaning a disposition which is to take effect on the death of a person. The executants of the will companyld number have therefore intended that it should operate inter ViVOs. Moreover, if the document was intended to take effect as a present disposition, it should have to be stamped under the provisions of the Stamp Act, but the will is an unstamped document. Coming to the recitals in the will, there are numberwords by which the executants thereof divest themselves of their individual ownership and vest it in themselves jointly. It is said that that companyld be implied from the words all the movable and immovable properties acquired jointly and separately by us till number, and those which we may be so acquiring in future and those which have devolved on us and those which we may yet be obtaining shall be held by us in our possession and under our companytrol . We are unable to read any such implication in those words. It is difficult to imagine-how properties which were to be acquired in future companyld form the subject-matter of a disposition in praesenti. On the other band, the true purpose of this clause would seem to be to emphasise that the execution of the will does number affect the rights of the testators over their properties, and that is an indication the it is to operate as a will. The matter appears to us to be companycluded beyond all doubt by the terms of clause 3, which provides that the testators companyld alienate the properties jointly or severally. If the properties were intended to be impressed with the character of joint property, an alienation by any one of them singly would be incompetent. In companying to the companyclusion to which he did, the learned Judge in the Court below was very largely influenced by the fact that the will dealt with, number only the separate properties of the testators but also of their joint properties, and that there was one disposition as regards all of them. But this reasoning is based on a misconception of the recitals in the will. The will does number refer to any joint properties of the testators but to properties jointly acquired by them- which is very different. They would hold these properties as tenants-in-common, and their share therein would devolve as their separate properties. It was further argued for the respondents that it companyld number have been the intention of Theyi Amma, one of the testators, to benefit the legatees under the will in preference to her own son, Kesavan Kaimal, and that, therefore, it must be held that she intended that her son who was the youngest of the testators should take all the properties. But if Kesavan Kaimal companyld himself agree to bequeath his properties to those legatees, we see numberhing unnatural in his mother also agreeing to bequeath her properties to them- they being the heirs of the testators under the Marumakkat- tayam Law. Learned companynsel for the respondents sought to rely on the subsequent companyduct of the parties as showing that they understood the will as companyferring a joint estate on the testators. It was said that it was in that belief that Kesavan Kaimal was dealing with the properties of the other testators as his own, after their death. It was also said that the companyduct of the other members of the tarwad, including the plaintiffs, showed that they shared that belief. And this was sought to be made out by reference to the proceedings in E. A. No. 320 of 1938 in S. C. No. 480 of 1933. The facts were that one Kunhunni Kaimal obtained a decree against Kesavan Kaimal in S. C. No. 480 of 1933, and in execution of that decree, he brought some of the tarwad properties to sale, purchased them himself and got into possession. The members of the tarwad then filed an application, E. A. No. 320 of 1938, under 0. 21, r. 100, for redelivery of the properties to them on the ground that the decree and the sale proceedings were number binding on them, and that was dismissed. In the order dismissing the application, the District Munsif observed that under the will dated February 10, 1906, Kesavan Kaimal had the power to transfer the properties. This order was relied on in these proceedings as operating as res judicata in favour of the respondents but that companytention was negatived by the Courts below, and has number been repeated before us. But these proceedings are number sought to be relied on as showing that the members of the tarwad did number dispute the title of Kesavan Kaimal to the properties which were dealt with by the will. As against this, the appellant referred us to a partition deed dated May 16, 1915, and a mortgage deed dated March 4, 1926, to both of which Kesavan Kaimal was a party, in which be and other members of the family had understood the will in question as meaning that the testators held the properties companyered by the will in separate and exclusive ownership. Whatever value one might attach to the above companysiderations if there was any doubt or uncertainty as to the meaning of the will, when once it is held that the language thereof is clear and unambiguous, evidence of the subsequent companyduct of the parties cannot be admitted for the purpose of limiting or companytrolling its meaning. In our view, the terms of the will are clear, and the subsequent companyduct of the parties sought to be relied on must be disregarded as wholly inadmissible. We are accordingly of opinion that the will dated February 10, 1906, is what it purports to be a will, and numberhing else. It does number companyfer any rights inter se on the testators it only vests the title to the properties disposed of by it in the legatees on the death of the testators. In this view, the will must be held to be a testamentary disposition by the three testators of their properties operating on the death of each testator on his properties, and is, in effect, three wills companybined in one. A joint will, though unusual, is number unknown to law. In Halsburys Laws of England, Hailshams Edition, Vol. 34, p. 17, para. 12, the law is thus stated A joint will is a will made by two or more testators companytained in a single document, duly executed by each testator, disposing either of their separate properties, or of their joint property. It is number, however, recognised in English law as a single will. It operates on the death of each testator as his will disposing of his own separate property, and is in effect two or more wills . There is a similar statement of the law in Jarman on Wills, 8th Ed., p. The following observations of Farewell J. in Duddell in re. Roundway V. Roundway 1 are apposite in my judgment it is plain on the authorities that there may be a joint will in the sense that if two people make a bargain to make a joint will, effect may be given to that document. On the death of the first of those two persons the will is admitted to probate as a disposition of the property that be possesses. On the death of the second person, assuming that numberfresh will has been made, the will is admitted to probate as the disposition of the second persons property It was also argued for the respondents that the will might be companystrued as a mutual will, but that, in our opinion, is an impossible companytention to urge on the recitals of the document. A will is mutual when two testators companyfer upon each other reciprocal benefits, as by either of them companystituting the other his legatee that is to say, when the executants fill the roles of both testator and legatee towards each other. But where the legatees are distinct from the testators, there can be numberquestion of a mutual will. It cannot be argued that there is, in the present case, a bequest by the testators to themselves. There is numberhing in the will to support such a companytention, which would be inconsistent with the position taken by the respon- dents that there was a settlement of the properties inter vivos companyverting separate properties into joint properties. In this view, on the death of Kunhan Kaimal his properties vested in the legatees under the will dated February 10, 1906, and therefore neither Kesavan Kaimal number his transferees under the deeds companyld lay any claim to them. 1 1932 1 Ch. 585, 592.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 119 of 1955. Appeal from the judgment and order dated June 16, 1953, of the Punjab High Court in Civil Reference No. 1 of 1953. V. Viswanatha Sastri and Naunit Lal, for the appellant. N. Sanyal, Additional Solicitor-General of India, Gopalakrishnan, R. H. Dhebar and D. Gupta, for the respondent. 1958. November 24. The Judgment of the Court was delivered by SARKAR, J.-The appellant is a companypany carrying on business as a distiller of companyntry liquor. It was incorporated in May 1945 and was in fact a previously existing companypany called the Amritsar Distillery Co. Ltd. reconstructed under the provisions of the Companys Act. The appellant carried on the same business as its predecessor, namely, sale of the produce of its distillery to licensed wholesalers. The wholesalers in their turn sold the liquor to licensed retailers from whom the actual companysumers made their purchases. The entire trade was largely companytrolled by Government regulations. After the war started the demand for companyntry liquor increased but difficulty was felt in finding bottles in which the liquor was to be sold. In order to relieve the scarcity of bottles the Government devised in 1940 a scheme called the buy-back scheme. The scheme in substance was that a distiller on a sale of liquor became entitled to charge a wholesaler a price for the bottles in which the liquor was supplied at rates fixed by the Government which he was bound to repay to the wholesaler on the latter returning the bottles. The same arrangement, but with prices calculated at different rates was made for the liquor sold in bottles by a wholesaler to a retailer and by a retailer to the companysumers. Apparently it was companyceived that the price fixed under the scheme would be found to be higher than the price which the bottles would fetch in the open market and the arrangement for the refund of the price would therefore encourage the return of the bottles from the companysumers through the intermediaries ultimately to the distiller. The price refundable was later increased perhaps because the previous price did number fully achieve the desired result of the bottles finding their way back to the distillers. Sometime in 1944, the Amritsar Distillery Co. Ltd. which then was in existence, insisted on the wholesalers paying to it in addition to the price of the bottles fixed under the buy-back scheme, certain amounts described as security deposits and calculated at varying rates per bottle according to sizes for the bottles in which the liquor was supplied to them promising to pay back for each bottle returned at the rate applicable to it and further promising to pay back the entire amount paid on a transaction when 90 per cent. of the bottles companyered by it had been returned. The companypany while it was in existence realised these additional sums and so did the appellant after it took over the business. The object of demanding and taking these additional sums was obviously to provide additional inducement for the return of the bottles to the distiller so that its trade in selling the produce of its distillery might number be hampered for want of bottles. No time limit had been fixed within which the bottles had to be returned in order to entitle a wholesaler to the refund, number does it appear that a refund had ever been refused. The price of the bottles received by the appellant under the buy-back scheme was entered by it in its general trading account while the additional sum received for them was entered in the general ledger under the heading Empty Bottles Return Security Deposit Account . It is number disputed that for the accounting periods with which this case is companycerned, the additional amounts had been taken without Governments sanction and entirely as a companydition imposed by the appellant itself for the sale of its liquor. The appellant was assessed to income-tax on the balance of the amounts of these additional sums left after the refunds made there out. It had also been assessed to business profits tax and excess profits tax on the same balance. Its appeals against the orders of assessment to these taxes to the Appellate Assistant Commissioner and thereafter to the Tribunal failed. It then obtained an order referring a certain question arising out of the assessments for decision by the High Court of Punjab. The question originally suggested was reframed and in its final form reads thus Whether on the facts and circumstances of the case the companylections by the assessee companypany described in its accounts as empty bottle return security deposits were income assessable under section 10 of the Income-tax Act? The High Court answered the question in the affirmative. The present appeal is against that decision which related to all the three varieties of taxes for which the appellant had been made liable. We are companycerned in this appeal only with the additional sums demanded and received by the appellant and described as security deposit and number with the price of bottles which also it took under government sanction. The question is whether these amounts called security deposits were. trading receipts. Now, as already stated, the appellants trade companysisted in selling in bottles liquor produced in its distillery to wholesalers. The sale was made on these terms In each transaction of sale the appellant took from the wholesaler the price of the liquor, a certain sum fixed by the government, as price of the bottles in which the liquor was supplied and a further sum described as security deposit for the return of the bottles. The moneys taken as price of the bottles were returned as and when the bottles were returned. The moneys described as security deposit were also returned as and when the bottles were returned with only this difference that in this case the entire sum taken in one transaction was refunded when 90 per cent. of the bottles companyered by it had been returned, though the remaining 10 per cent. had number been returned. Such being the nature of the appellants trade and the manner in which it was companyducted, these additional sums appear to us to be its trading receipts. Mr. Vishwanatha Sastri appearing on behalf of the appellant first companytended that on these facts the amounts companyld number be regarded as price and that therefore they were number trading receipts. He said that the price of the bottles was separately fixed and the amount taken as deposit was different from and exclusive of, it. This companytention is founded on the use of the word price in the buy-back scheme in companynection with the rates which the distiller was entitled to charge a wholesaler for the bottles. It seems to us that this companytention lays undue emphasis on that word. We think that the High Court took substantially a companyrect view of the matter when it said that in realising these amounts the companypany was really charging an extra price for the bottles . It is clear to us that the trade companysisted of sale of bottled liquor and the companysideration for the sale was companystituted by several amounts respectively called, the price of the liquor, the price of the bottles and the security deposit. Unless all these sums were paid the appellant would number have sold the liquor. So the amount which was called security deposit was actually a -part of the companysideration for the sale and therefore part of the price of what was sold. Nor does it make any difference that the price of the bottles was entered in the general trading account while the so called deposit was entered in a separate ledger termed empty bottles return deposit account , for, what was a companysideration for the sale cannot cease to be so by being written up in the books in a particular manner. Again the fact that the money paid as price of the bottles was repaid as and when the-bottles were returned while the other moneys were repaid in full when 90 per cent. of the bottles were returned does number affect the question for ,none of these sums ceased to be parts of the companysideration because it had been agreed that they would be refunded in different manners. It is number companytended that the fact that the additional sums might have to be refunded showed that they were number part of the price. It companyld number be so companytended because what was expressly said to be the price of bottles and admitted to be price was also refundable. If so, then a slightly different method providing for their refund cannot by itself prevent these additional sums from being Price. Now, if these additional sums were number part of the price, what were they ? Mr. Sastri said that they were deposits securing the return of the bottles. According to him if they were such security deposits, they were number trading receipts. Again we are unable to agree. There companyld be numbersecurity given for the return of the bottles unless there was a right to their return for if there was numbersuch right, there would be numberhing to secure. Now we find numbertrace of such a right in the statement of the care. The wholesalers were clearly under numberobligation to return the bottles. The only thing that Mr. Sastri companyld point out for establishing such an obligation was the use of the words security de- posit . We are unable to hold that these words alone are sufficient to create an obligation in the wholesalers to return the bottles which they had bought. If it had been intended to impose an obligation on the wholesalers to return the bottles, these would number have been sold to them at all and a bargain would have been expressly made for the return of the bottles and the security deposit would then have been sensible and secured their return. The fact that there was numbertime limit fixed for the return of the bottles to obtain the refund also indicates that there was numberobligation to return the bottles. The substance of the bargain clearly was that the appellant having sold the bottles agreed to take them back and repay all the amounts paid in respect of them. For this part of the case Mr. Sastri relied on Davies v. The Shell Company of China Ltd. 1 , but we do number think that case assists at all. What had happened there was that the Shell Company had appointed a large number of agents in China to sell its products 1 1951 32 Tax Cas. 133. and had taken from each agent a deposit to secure itself against the risk of default by the agent duly to PI account for the sale proceeds. The deposits were made in Chinese dollars and later companyverted into sterling. When the Company closed its business in China it reconverted the deposits into Chinese dollars and refunded to the agents the deposits made by them. Owing to a favourable exchange for the companyversion of sterling into dollars, the Company made a profit and it was sought to assess this profit to income- tax. It was held that the profit companyld number be taxed, for the deposits out of which it was made were really number trading receipts at all. Jenkins, L. J., observed at p. 157 Mr. Grant described the agents deposits as part of the Companys trading structure, number trade receipts but anterior to the stage of trade receipts, and I think that is a fair description of them. It seems to me that it would be an abuse of language to describe one of these agents, after he had made a deposit, as a trade creditor of the Company he is a creditor of the Company in respect of the deposit, number on account of any goods supplied or services rendered by him in the companyrse of its trade, but simply by virtue of the fact that he has been appointed an agent of the Company with a view to him trading on its behalf, and as a companydition of his appointment has deposited with or, in other words, lent to the companypany the amount of his stipulated deposit. lie also said at p. 156 it If the agents deposit had in truth been a payment in advance to be applied by the Company in discharging the sums from time to time due from the agent in respect of petroleum products transferred to the agent and sold by him the case might well be different and might well fall within the ratio deciding of Landes Bros. v. Simpson 1 and Imperial Tobacco Co. v. Kelly 2 . But that is number the character of the deposits here in question. The intention manifested by the terms of the agreement is that the deposit should be 1 1934 19 Tax Cas. 62. 2 1943 25 Tax Cas. 292. retained by the Company, carrying interest for the benefit of the depositor throughout the terms of the agency. It is to be available during the period of the agency for making good the agents defaults in the event of any default by him but otherwise it remains, as I see it, simply as a loan owing by the Company to the agent and repayable on the termination of the agency . It would therefore appear that the deposits in that case were held number to be trading receipts because they had number been made as part of a trading transaction. It was held that they had been received anterior to the companymencement of the trading transactions and really formed the trading structure of the Company. The character of the amounts with which we are Concerned is entirely different. They were parts of the trading transactions themselves and very essential parts the appellant would number sell liquor unless these amounts were paid and the trade of the appellant was to make profit out of these sales. The fact that in certain circumstances these amounts had to be repaid did number alter their nature as trading receipts. We have already said that it is number disputed that what was expressly termed as price of bottles was a trading receipt though these had to be repaid in almost similar circumstances. We may point out that it had number been said in Shell Company case 1 that the deposits were number trading receipts for the reason that they might have to be refunded the reason for the decision was otherwise as we have earlier pointed out, namely, that they were numberpart of the trading transactions. We therefore think that the deposits dealt with in the Shell Company case were entirely of a different nature and that case does number help. Mr. Sanyal was prepared to argue that even if the amounts were securities deposited for the return of the bottles, they would still be trading receipts, for they were part of the trading transactions and the return of the bottles was necessary to enable the appellant to carry on its trade, namely, to sell liquor in them. As we have held that the amounts had number been paid as security for the return of the bottles, we do number 1 1951 32 Tax Cas. 1133. companysider it necessary to pronounce upon thiscontention. We might also refer to the observationsmade in Imperial Tobacco Co. v. Kelly 1 mentioned in the Shell Company case 2 and set out below. There the Company in the companyrse of its trading activity used to purchase tobacco in America and for that purpose had to acquire American dollars. It so happened that after it had acquired a certain amount of dollars for making the purchases, it was prevented from buying tobacco in America by Government orders passed due to outbreak of war. While the dollars lay with the Company, they appreciated in value and later the Treasury acquired the dollars and paid the Company for them in sterling at the then current rate of exchange, as a result of which payment the Company made a profit. It was hold that the profit was a trading receipt of the Company. Lord Greene said at p. The purchase of the dollars was the first step in carrying out an intended companymercial transaction, namely, the purchase of tobacco leaf. The dollars were bought in companytemplation of that and numberhing else . He also observed that the dollars were an essential part of a companytemplated companymercial operation . It seems to us that the amounts with which this case is companycerned, were paid and were refundable as an integral part of a companymercial transaction, namely, the sale of liquor in bottles by the appellant to a wholesaler. The case nearest to the present one is, in our view, that decided by this Court in K. M. S. Lakshmanier Sons v. Commissioner of Income-tax and Excess Profits Tax, Madras 3 . There the appellants, who were the assessees, were merchants carrying on business as the sole selling agents for yarn manufactured by the Madura Mills Co. Ltd. They sold the yarn to their companystituents and in the relevant accounting period the sales were made under three successive arrangements each of which companyered a part of it. Under each arrangement, the assessees were paid a certain initial 1 1943 25 Tax Cas. 292. 2 1951 32 Tax Cas. 133. 3 1953 S.C.R. 1057. sum by their customers. The question was as to the nature of these initial payments. Under the first arrangement the appellants had two accounts for each companystituent, namely, a companytract deposit account and a current yarn account, crediting the moneys received from the customers in the former account and transferring them to the yarn account in adjustment of the price of the bales supplied then and there, that is, as and when deliveries were made under a companytract either in instalment or in full . It was held that the amounts received from the customers under this arrangement were taxable as they were merely advance payments of the price and companyld riot therefore be regarded as borrowed money. This was clearly so because under this arrangement cash was deposited by a purchaser in respect of a companytract of purchase at the time it was made and was to be applied when the goods had been delivered by the appellant under that companytract towards the price payable in respect of them, such price number being payable in any other manner. The arrangement for the second part of the accounting period was that the payment made by a companystituent at the time of the making of a companytract was taken as Contracts advance fixed deposit and it was refunded when the goods under the companytract had been supplied and the price in respect thereof paid in full irrespective of the earlier payment. With respect to the payment initially made under this arrangement Patanjali Sastri, C. J., said at p. 1067 we are of opinion that, having regard to the terms of the arrangement then in force, they partake more of the nature of trading receipts than of security deposits. It will be seen that the amounts received were treated as advance payments in relation to each companytract number and though the agreement provided for the payment of the price in full by the customer and for the deposit being returned to him on the companypletion of delivery under the companytract, the transaction is one providing in substance and effect for the adjustment of the mutual obligations on the companypletion of the companytract. We hold accordingly that the sums received during this period cannot be regarded as borrowed money It seems to us that the amounts involved in the present case were exactly of the nature of the deposits made in the second period in Lakshmanier Sons case 1 . There, as here, as soon as a transaction of sale was made the seller received certain moneys in respect of it. It is true that in Lakshmanier Sons case the transaction was a companytract to sell goods in future whereas in the present case the transaction was a sale companypleted by delivery of the goods and receipt of the companysideration. But that cannot change the nature of the payment. In Lakshmanier Sons case, the payment initially made was refundable after the price had been paid in the present case the companytract is to refund the amount on the return of the bottles already sold. In each case therefore the payment was made as part of a trading transaction and in each case it was refundable on certain events happening. In each case again the payment was described as a deposit. As in that case, so in the present case, the payment cannot be taken to have been made by way of a security deposit. We must therefore on the authority of Laskhmanier Sons case, hold the amounts in the present case to have been trading receipts. It was Mr. Sastris effort to bring the case within the arrangement that prevailed in the third part of the accounting period in Laskhmanier Sons case, the initial payments made during which were held to be loans. But we think that he has number succeeded in this. The payments during the third period were made under the following arrangements Instead of calling for amounts from you towards Security Deposit due to bales for which we are entering into forward companytracts with you and returning the same to you from the said deposit then and there, as we are doing number, and in order to make it feasible, we have decided to demand from you a certain sum towards Security Deposit and keep the same with us so long as our business companynections under forward companytracts will companytinue with you. Under this arrangement a certain 1 1953 S.C.R. 1057. sum was kept in deposit once and for all and there. after Lakshmanier Sons companymenced to enter into the trading transactions, namely, forward companytracts for sale-of yarn with the companystituents who deposited the money. The sum so deposited was to be refunded with interest at three per cent. per annum at the end of the business companynection between the parties, if necessary, after retaining there out any amount due on the companytracts made with the companystituent which, the latter was at the termination of the business found number to have paid. Patanjali Sastri, C. J., observed at p. 1063 in regard to the deposits made under this arrangement The amount deposited by a customer was numberlonger to have any relation to the price fixed for the goods to be delivered under a forward companytract-either in instalments or otherwise. Such price was to be paid by the customer in full against delivery in respect of each companytract without, any adjustment out of the deposit, which was to be held by the appellants as security for the due performance of his companytracts by the customer so long as his dealings with the appellants by way of forward companytract companytinued, the appel- lants paying interest at 3 per cent. in the meanwhile, and having, as appears from the companyrse of dealings between the parties the use of the money for their own business. It was only at the end of the business companynection with the appellants that an adjustment was to be made towards any possible liability arising out of the customers default. Apart from such a companytingency arising, the appellants undertook to repay an equivalent amount at the termination of the dealings. The transaction had thus all the essential elements of a companytract of loan, and we accordingly hold that the deposits received under the final arrangement companystitute borrowed money . Having observed that the description of the payment made by the customer as a deposit made numberdifference for a deposit included as a loan, the learned Chief Justice further said at p. 1064 The fact that one of the companyditions is that it is to be adjusted against a claim arising out of a possible default of the depositor cannot alter the character of the transaction. Nor can the fact that the purpose for which the deposit is made is to provide a security for the due performance of a companylateral companytract invest the deposit with a different character. It remains a loan of which the repayment in full is companyditioned by the due fulfilment of. the obligations under, the companylateral companytract . In companying to the view that he did with regard to the arrangement prevailing in the third period, the learned Chief Justice referred with approval to the case of Davies Shell Company of China 1 which we have earlier mentioned. Now it seems to us that the reasons on which the learned Chief Justice based his companyclusion that the deposits during the third period were loans do number apply to the present case. In the present case, unlike in Lakshmanier Sons case, the amount paid has a relation to the price of the goods sold it is part of that price as we have earlier said. It was a companydition of each transaction of sale by the appellant. It was refundable to the wholesaler as soon as he returned the bottles in which the liquor had been supplied to him in the transaction in respect of which the deposit had been made. The deposit in the present case was really number a security at all it did number secure to the appellant anything. Unlike Lakshmanier Sons case, in the present case a deposit was made every time a transaction took place and it was refundable under the terms of that transaction independently of other deposits under other transactions. In Lakshmanier Sons case, the deposit was in the nature of the assees trading structure and anterior to the trading operations, as were the deposits companysidered in Shell Company case 1 . In the case in hand the deposit was part of each trading transaction. It was re. fundable under the terms of the companytract relating to a trading transaction under which it had been made it was number made under an independent companytract number was its refund companyditioned by a companylateral companytract, as happened in Lakshmanier Sons case. 1 1951 32 Tax Cas. 133. We therefore think that the present case is governed by the arrangement companyering the second period and number the third period mentioned in Lakshmanier Sons case 1 , and, companye to the companyclusion that the amounts with which we are companycerned were trading receipts. Mr. Sastri also referred us to Morley v. Pattersall and companytended that the amounts with which we are companycerned, were of the same kind as those companysideredin that case and were number income. It seems to us that there is numbersimilarity between the two cases at all. Tattersall was a firm who sold horses of its companystituents on their behalf and received the price which it was liable to pay them. It so happened that in the companyrse of years various customers did number companye and demand the amounts due to them. Initially Tattersall showed those amounts in its accounts as liabilities which they really were. Later it thought that it would never have to pay back these amounts and thereupon transferred them to the credit of its partners. The Revenue sought to tax the amounts so transferred as Tattersalls income. The question was whether the amounts upon transfer became Tattersalls income. It was never companytended that the amounts when received as price of the companystituents horses sold were Tattersalls income and the only companytention was that they became income upon being transferred to the credit of the partners. It was held that the amounts had number by being entered on the credit side, become income of the firm. Sir Wilfrid Greene said at p. 65 Mr. Hills argument was to the effect that, although they were number trading receipts at the moment of receipt, they had at that moment the potentiality of becoming trading receipts. That proposition involves a view of Income Tax Law in which I can discover numbermerit except that of numberelty. Then again he said It seems to me that the quality and nature of a receipt for Income Tax purposes is fixed once and for all when it is received. What the partners did in 1 1953 S.C.R. 1057. 2 1938 22 Tax Cas. 51. this case, as I have said, was to decide among themselves that what they had previously regarded as a liability of the firm they would number, -for practical reasons, regard as a liability but that does number mean that at that moment they received something, number does it mean that at that moment they imprinted upon some existing asset a quality different from what it had possessed before. There was numberexisting asset at all at that time. All that this case decided was that moneys which were number when received, income-and as to this there was numberquestion- companyld never later become income. With such a case we are number companycerned. The case turned on the fact that the moneys received by Tattersall were never its moneys they had been received on behalf of others and that receipt only created a liability towards them. Now it seems to us quite impossible to say that the amounts with which we are companycerned were number the appellants moneys in the sense that the companystituents moneys in the hands of Tattersall were number its. The amounts in this case were number received on account of any one but the appellant. No doubt these moneys might have to be refunded if certain things happened which however might never happen, but that did number make them the moneys of those who might become entitled to the refund. Mr. Sastri referred us to the observations of Sir Wilfrid Greene, M. R., in Morley v. Tattersall 1 at p. 65 to the effect that, The money which was received was money which had number got any profit making quality about it it was money which, in a business sense, was a clients money and numberody elses and companytended that the amounts involved in the presentcase were of the same nature. We are unable to agree. If we are right in our view that the amounts were trading receipts, it follows that they must have a profit making quality about them. Their payment was insisted upon as a companydition upon which alone the liquor would be supplied with an agreement that they would. be repaid oil the return of the bottles. They 1 1938 22 Tax Cas. 51. were part of the transactions of sale of liquor which produced the profit and therefore they had a profit making quality. Again, a wholesaler was quite free to return the bottles or number as he liked and if he did number return them, the appellant had numberliability to refund. It would then keep the moneys as its own and they would then certainly be profit. The moneys when paid were the moneys of the appellant and were thereafter in numbersense the moneys of the persons who paid them. Having given the matter our anxious companysideration which the difficulties involved in it require, we think that the companyrect view to take is that the amounts paid to the appellant and described as Empty Bottles Return Security Deposit were trading receipts and therefore income of the appellant assessable to tax. We agree with the High Court that the question framed for decision in this case, should be answered in the affirmative. In the result the appeal fails and is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 153 of 1955. Appeal by Special Leave from the judgment and decree dated August 30, 1954, of the Allahabad High Court in Civil Revision Application No. 540 of 1951, arising out of the judgment and decree dated March 31, 1951, of the Court of the Additional Civil Judge, Mathura, in Suit No. 19 of 1950. C. Mathur, for the appellants. B. Aggarwala and Ganpat Rai, for the respondent. 1958. December 5. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal by special leave against the decision of the High Court of Judicature at Allahabad passed in revision under s. 115 of the Code of Civil Procedure. The landlord who was the plaintiff in the trial companyrt is the appellant before us and the tenant who was the defendant is the respondent. The facts of this appeal are that in 1938 the respondent took on rent the accommodation in dispute which is termed a tal on a monthly agreed rent of Rs. 21-4 as. and was using the same for the purpose of stacking timber. A portion of it was a companyered godown which had three walls and a kucha roof. On January 28, 1950, the appellant made an application to the House Allotment Officer under s. 3-A of the United Provinces Temporary Control of Rent and Eviction Act, 1947 U. P. III of 1947 hereinafter termed the Act for the fixation of reasonable annual rent of the accommodation in dispute. He therein alleged that in January 1949 he had companystructed anew a big godown 80 x 25 x 11 feet according to the instructions of the respondent and expended a fairly large sum of money on it and was therefore entitled to a monthly rent of Rs. 165. The House Allotment Officer fixed on February 18, 1950, the rent at Rs. 35 per mensem which on review was raised on May 25, 1950, to Rs. 40 per mensem. He held that the accommodation was number a newly companystructed accommodation as the respondent had been a tenant from 1938. He determined the increase of rent on the basis of the building that was added by the new companystruction. He also held that The companyt of land, the floor area of godown and rent of other similar premises would be irrelevant as all of these existed before new companystruction and were included in rent before new companystruction . The appellant thereupon instituted a suit on the ground of inadequacy of the reasonable annual rent under s. 5 4 of the Act alleging that he had companystructed the portion of the accommodation anew and put up ferro-concrete roof 80 x 25 feet and that the companystruction was undertaken at the request of the respondent who had agreed to pay enhanced rent but had refused to do so that although the House Allotment officer, Mathura, had fixed the rent of the accommodation at Rs. 35 which wag subsequently raised to Rs. 40 per mensem, the proper rent should number be less than Rs. 115 per mensem and therefore prayed for the enhancement of reasonable annual rent . The defence was that there was numberconstruction at the request of the respondent but it had been undertaken in order to put up another storey on the top of the old building that as far as the accommodation in possession of the respondent was companycerned there was numbernew companystruction of accommodation after June 30, 1946 that the ferro-concrete roof had in numberway benefited him, on the other hand the space at his disposal had diminished because of the number of pillars companystructed and the lowering of the roof. He also pleaded that the suit was number maintainable under the Act and that numbersuit companyld be filed after the order of the House Allotment Officer . The relevant issues raised were - Whether the suit is number maintainable in view of any provisions of the Act No. 3 of 1947 ? Whether the suit after the fixation of rent by the House Allotment Officer is number maintainable ? What should be the reasonable and proper rent of the accommodation in suit ? The learned Additional Civil Judge found that the suit was number barred because of the Act that the suit against the order of the House Allotment Officer was maintainable that newly companystructed accommodation on the whole was bigger and more spacious than the old kacha hall and that the accommodation had increased and after taking into companysideration the amount spent on the companystruction be increased the reasonable adequate rent to Rs. 55-8-0. Against this decree of the learned Judge the respondent took a revision to the High Court under s. 115 of the Code of Civil Procedure. The High Court was of the opinion that if the accommodation was a new companystruction erected after June 30, 1946, the suit was maintainable and- the High Court companyld number interfere with the finding of the Civil Judge as to the amount of rent. If on the other hand, the companystruction was an old one, the suit did number lie and the agreed rent would companytinue to be payable. It also held that the companystruction on the upper storey was a new companystruction but as far as the accommodation in the occupation of the respondent was companycerned the companystruction companyld number be called new companystruction and therefore B. 3-A was number applicable and as numbersuit lay at the instance of the landlord to have the agreed rent enhanced, the tenant was only liable to pay the agreed rent and numbermore. The revision petition was therefore allowed and the suit of the appellant was dismissed. The main companytroversy raised between the parties was whether the High Court companyld, in revision under S. 115 of the Code of Civil Procedure, interfere with this decision of the trial companyrt. The respective companytentions were these The appellant companytended that it was within the jurisdiction of the Additional Civil Judge to decide the question of the date of companystruction of the accommodation and in doing so he companyld decide rightly or wrongly as the matter was within his jurisdiction and therefore the High Court had numberpower to interfere merely because in its opinion the decision was erroneous. In other words, this question was -merely one of the facts in issue between the parties unconnected with jurisdiction. He also companytended that the House Allotment Officer having decided in his favour the question of the date of companystruction which s. 3-A of the Act authorises him to decide, his right to bring the suit was established and therefore the High Court companyld number in revision under s. 115, Code of Civil Procedure, go into the companyrectness of that decision. The respondents companynsel on the other hand submitted that the decision of the companyrt as to the date of companystruction was in this case a jurisdictional fact i.e. a fact which went to the root of the jurisdiction of the companyrt because unless the accommodation was held to have been a new companystruction made after June 30, 1946, the appellant would be bound by the agreed rent and would have numberright of suit under s. 5 4 and the companyrt would have numberjurisdiction to entertain the suit. In order to decide the question at issue, it is necessary at this stage to refer to the scheme of the Act. The object of the Act was to companytrol letting and the rents of residential and numberresidential accommodations. Accommodation was defined in s. 2 a as follows 2. a accommodation means residential and number-residential accommodation in any building or part of the building and includes Reasonable annnal rent is defined in s. 2 f 2. f Reasonable annual rent in the case of accommodation companystructed before July 1, 1946, means 1 if it is separately assessed to municipal assessment, its municipal assessment plus 25 per cent thereon 2 if it is a part only of the accommodation so assessed, the proportionate amount of the municipal assessment of such accommodation plus 25 per cent. thereon 3 if it is number assessed to municipal assessment- but was held by a tenant on rent between April 1, 1942, and June 30, 1946, fifteen times the rent for the one month nearest to and after April 1, 1942, and if it was number so held on rent, the amount determined under section 3-A and in the case of accommodation companystructed on or after July 1, 1946, means the rent determined in accordance with section 3-A . As to how reasonable annual rent of a building was to be determined was provided for in s. 3-A S.3-A 1 In the case of any accommodation companystructed after June 30, 1946, or falling under subclause ii of clause 3 of sub section f of section 2, the District Magistrate may, on the application of the land lord or the tenant, determine the reasonable annual rent thereof. In determining the reasonable annual rent under sub- section 1 the District Magistrate shall take into account- a if the accommodation was companystructed after June 30, 1946, the companyt of companystruction and of maintenance and repairs of the accommodation, its situation and any other matter, which in the opinion of the District Magistrate, is material and b if it is accommodation- falling under clause 2 or sub-clause 1 of clause 3 of sub-section f of section 2, the principles therein ,set forth, and falling under sub-clause 1 of clause 3 of subsection f aforesaid, the principles set forth in clause a of sub-section 1 of section 6. Subject to the result of any suit filed under sub- section 4 of section 5, the rent fixed by the District Magistrate under this section shall be the annual reasonable rent of the accommodation. Agreed rent was defined in s. 5 1 of the Act to be the rent payable for any ac- companymodation to which this Act applies shall be such as may be agreed upon between the landlord and the tenant. Section 5 4 of the Act provided If the landlord or the tenant, as the case may be, claims that the annual reasonable rent of any accommodation to which the Act applies is inadequate or excessive, or if the tenant claims that the agreed rent is higher than the annual reasonable rent, he may institute a suit for fixation of rent in the Court of the Munsif having territorial jurisdiction, if the annual rent claimed or payable is Rs. 500 or less, and in the Court of the Civil Judge having territorial jurisdiction if it exceeds Rs. 500, provided that the Court shall number vary the agreed rent unless it is satisfied that the transaction was unfair, and in the case of lease for a fixed term made before April 1, 1942, that the term has expired . Section 6 provided for the procedure as follows In determining the amount of annual or monthly rent in any suit under section 5 the companyrt shall take into account- a in the case of accommodation companystructed before July 1, 1946, the pre-war rent, the reasonable annual or monthly rent, the prevailing rent on the date of the suit for similar accommodation in the locality, the companyt of maintenance and repairs of such accommodation and any material circumstances proved by the plaintiff or the defendant, b in the case of accommodation companystructed on or after July 1, 1946, the companyt of companystruction and of maintenance and repairs of accommodation, its situation and any other circumstance which the companyrt may companysider material. No appeal shall lie from any decree or order of the Munsiff or the Civil Judge in a suit brought under sub- section 4 of section 5 Provided that except as regards the rate of rent but numberfurther the decree or order so passed shall number operate as res judicata between the parties or their representatives in interest in any suit or proceedings under any other law It is number necessary to refer to other sections of the Act. The Act therefore in the preamble sets out the objects of the Act. In s. 2 a it defined the meaning of the word accommodation to mean residential and number- residential accommodation in any building or part of the building and in s. 2 f it laid down in three parts what the reasonable annual rent was, one part dealing with accommodation companystructed before July 1, 1946, and assessed to municipal assessment, the second part with accommodation so companystructed and number assessed to municipal assessment but held by a tenant between April 1, 1942, and June 30, 1946, and the third part with accommodation companystructed on or after July 1, 1946, and these last two were to be determined in accordance with the provisions of s. 3-A which empowered the District Magistrate to do so. Sub-section 1 of this section gave power to the District Magistrate to determine the reasonable annual rent in the case of accommodation companystructed after June 30, 1946, or falling under cl. ii of sub-s. 3 of section 2 f i.e. if it was number assessed to municipal assessment though companystructed before July 1, 1946, and was number held by a tenant between April 1, 1942, and June 30,1946. Subsection 2 of s. 3-A laid down the factors to be taken into companysideration in determining the reasonable annual rent and under sub-s. 3 the rent so fixed was to be the annual reasonable rent of the accommodation but this was subject to the result of a suit filed under s. 5 4 . Therefore under s. 3-A the District Magistrate was entitled to determine the amount of reasonable annual rent when either of the two facts on which his power depended was shown to exist i.e. 1 the accommodation was companystructed after June 30, 1946, or 2 although it existed previously it was number assessed to municipal assessment and had number been held by a tenant on rent between April 1, 1942, and June 30, 1946. The District Magistrates power to determine the rent under s. 3-A therefore was number companyfined to accommodation companystructed after June 30,1946, alone. The rent determined by the District Magistrate under s. 3-A was the reasonable annual rent under the Act subject to the result of any suit filed under sub-s. 4 -of s. 5. A wrong decision by the District Magistrate under s. 3-A or an order made by him in excess of his powers under that section companyld be rectified by a suit under s. 5 4 . This provision of the Act i.e. s. 5 4 provided for three classes of suits, one by a landlord that the reasonable annual rent was inadequate and 2 by the tenant that the annual rent was excessive and 3 also by the tenant that the agreed rent was higher than the reasonable annual rent. Hence under this section the appellant landlords right of suit was restricted to challenging the inadequacy of the reasonable annual rent but he companyld number sue for varying the agreed rent. The appellant in the present case brought his suit on the around of inadequacy of the reasonable rent as determined under s. 3-A and companysequently its maintainability depended on the determination of the jurisdictional fact i. e. date of its companystruction, whether it was before or after June 30, 1946, on the decision of which would depend his right to bring the suit because if there was numbernew companystruction, the agreed rent would be operative and the appellant would have numberright of suit under s. 5 4 of the Act. Consequently, by wrongly deciding this question the companyrt would be entertaining a suit by the landlord for enhancement of the agreed rent and thereby assuming jurisdiction it did number possess and the landlord would be circumventing the restriction on his right to sue for enhancement of agreed rent which the law did number allow. As the issues raised show the learned Additional Civil Judge was alive to the fact that the maintainability of the suit depended on the determination of this question. The appellant had specifically alleged that the accommodation had been companystructed after June 30, 1946, a fact which was denied by the respondent. That gave rise to the first two issues and the learned Civil Judge held- I am therefore of the opinion that portion of the building in suit which has been newly replaced must be treated as a new accommodation, and hence this Court can determine its rent under the provisions of s. 5 4 . In view of the fact that it is a new accommodation numberquestion of agreed rent arises and the landlord can bring a suit for fixation of rent . Two facts therefore stand out clearly in the judgment of the trial companyrt 1 that it was the existence of a newly companystructed accommodation which gave jurisdiction to the companyrt to determine its reasonable annual rent and 2 that as it was a newly companystructed accommodation, the question of agreed rent did number arise. The High Court, in our view, approached the question quite companyrectly when it stated that the question for determination was whether the accommodation had been companystructed before or after June 30, 1946, and that if it was companystructed before that date the suit was incompetent and if after, the suit would lie. The companytention raised by the appellant in this Court was that the decision of the trial Court as to whether the accommodation was companystructed before or after July 1, 1946, cannot be challenged in revision in the High Court and he relied on the following observation of Lord Esher, M. R., in the Queen v. Commissioner for Special Purposes of the Income Tax 1 - When an inferior companyrt or tribunal or body, which has to exercise the power of deciding facts, is first established by Act of Parliament, the legislature has to companysider, what powers it will give that tribunal or body. It may in effect say that, if a certain state of facts exists and is shown to such tribunal or body before it proceeds to do certain things, it shall have jurisdiction to do such things, but number otherwise. There it is number for them companyclusively to decide whether that state of facts exists, and, if they exercise the jurisdiction without its existence, what they do may be questioned, and it will be held that they have acted without jurisdiction. But there is another state of things which may exist. The legislature may intrust the tribunal or body with a jurisdiction, which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction, on finding that it does exist, to proceed further or do something more. When the legislature are establishing such a tribunal or body with limited jurisdiction, 1 1888 21 Q.B.D. 313, 319. they also have to companysider, whatever jurisdiction they give them, whether there shall be any appeal from their decision, for otherwise there will be numbere. In the second of the two cases I have mentioned it is an erroneous application of the formula to say that the tribunal cannot give themselves jurisdiction by wrongly deciding certain facts to exist, because the legislature gave them jurisdiction to determine all the facts, including the existence of the preliminary facts on which the further exercise of their jurisdiction depends and if they were given jurisdiction so to decide, without any appeal being given, there is numberappeal from such exercise of their jurisdiction. These observations which relate to inferior companyrts or tribunals with limited jurisdiction show that there are two classes of cases dealing with the power of such a tribunal 1 where the legislature entrusts a tribunal with the jurisdiction including the jurisdiction to determine whether the preliminary state of facts on which the exercise of its jurisdiction depends exists and 2 where the legislature companyfers jurisdiction on such tribunals to proceed in a case where a certain state of facts exists or is shown to exist. The difference is that in the former case the tribunal has power to determine the facts giving it jurisdiction and in the latter case it has only to see that a certain state of facts exists. In the present case the appellant asked for a determination of reasonable annual rent under s. 3-A on the ground that the accommodation was companystructed after June 30, 1946, and the House Allotment Officer therefore had power to determine the reasonable annual rent. In order to give jurisdiction to the civil companyrt there bad to be in existence a reasonable annual rent as defined under s. 2 f whether it fell within its first two clauses or was determined under s. 3-A. The reason. able annual rent companyld be varied at the instance of the landlord or the tenant on the ground of its inadequacy or excess but the landlord companyld number. bring a suit to vary the agreed rent number companyld the companyrt entertain such a suit although it was open to the tenant to do so and the companyrt companyld at his instance entertain such a suit. The proceedings before the civil companyrt are number by way of an appeal from any order under s. 3-A made by the District Magistrate. Section 115, Code of Civil Procedure, empowers the High Court, in cases where numberappeal lies, to satisfy itself on three matters- a that the order made by the subordinate companyrt is within its jurisdiction b that the case is one in which the companyrt ought to exercise its jurisdiction e that in exercising the jurisdiction the companyrt has number acted illegally, that is, in breach of some provision of law or with material irregularity that is by companymitting some error of procedure in the companyrse of the trial which is material in that it may have affected the ultimate decision. Per Sir John Beaumont in Venkatagiri Ayyangar v. Hindu Religious Endowment Board, Madras 1 . Therefore if an erroneous decision of a subordinate companyrt resulted in its exercising jurisdiction number vested in it by law or failing to exercise the jurisdiction so vested or acting with material irregularity or illegality in the exercise of its jurisdiction the case for the exercise of powers of revision by the High Court is made out. In Joy Chand Lal Babu v. Kamalaksha Chaudhury 2 , the subordinate companyrt gave an erroneous decision that the loan was a companymercial loan and therefore refused to exercise jurisdiction vested in it by law and the Privy Council held that it was open to the High Court to interfere in revision under s. 115. Sir John Beaumont said at p. 142 There have been a very large number of decisions of Indian High Courts on s. 115, to many of which their Lordships have been referred. Some of such decisions prompt the observation that High Courts have number always appreciated that although error in a decision of a subordinate companyrt does number by itself involve that the subordinate companyrt has acted illegally or with material irregularity so as to justify interference in revision under sub-s. c , nevertheless, if the erroneous decision results in the subordinate companyrt exercising a jurisdiction number vested in it by law, 1 1949 L.R. 76 I.A. 67, 73. 2 1949 L.R. 76 I.A. 131. or failing to exercise a jurisdiction so vested, a case for revision arises under sub-s. a or sub.s. b , and subs. c can be ignored. The cases of Babu Ram v. Munnalal 1 and Hari Bhikaji v. Naro Vishvanath 2 , may be mentioned as cases in which a subordinate companyrt by its own erroneous decison erroneous, that is, in the view of the High Court , in the one case on a point of limitation and in the other on a question of res judicata, invested itself with a jurisdiction which in law it did number possess and the High Court held, wrongly their Lordships think, that it had numberpower to interfere in revision to prevent such a result. In the present case their Lordships are of opinion that the High Court, on the view which it took that the loan was number a companymercial loan, had power to interfere in revision under sub-s. b of s. 115 . In Keshardeo Chamria v. Radha Kissen Chamria 3 both these judgments of the Privy Council as also the previous judgments in Rajah Amir Hassan Khan v. Sheo Baksh Singh 4 and Balakrishna Udayar v. Vasudeva Aiyar 5 were reviewed and it was held that s. 115 of the Code of Civil Procedure applies to matters of jurisdiction alone, the irregular exercise or number exercise of it or the illegal assumption of it. Thus if a subordinate companyrt had jurisdiction to make the order it made and has number acted in breach of any provision of law or companymitted any error of procedure which is material and may have affected the ultimate decision, then the High Court has numberpower to interfere. But if on the other hand it decides a jurisdictional fact erroneously and thereby assumes jurisdiction number vested in it or deprives itself of jurisdiction so vested then the power of interference under s. 115 becomes operative. The appellant also relied on Rai Brij Raj Krishna v. S. K. Shaw and Bros. 6 where this Court quoted with approval the observations of Lord Esher in Queen v. Commissioner for Special Purposes of the Income Tax 7 and The Colonial Bank of Australia v. Willan where Sir James Co ville said - 1 1927 I.L.R. 49 All. 454. 3 1953 S.C.R. 136. 5 1917 L.R. 44 I.A. 261. 7 1888 21 Q B.D. 313, 319. 2 1885 I.L.R. 9 Bom. 432. 4 1884 L.R. 11 I.A.237. 6 1951 S.C.R. 145. 8 1874 L.R. 5 P.C. 417, 443. Accordingly the authorities establish that an adjudication by a Judge having jurisdiction over the subject matter is, if numberdefect appears on the face of it, to be taken as companyclusive of the facts stated therein and that the Court of Queens Bench will number on certiorari quash such an adjudication on the ground that any such fact, however essential has been erroneously found . But these observations can have numberapplication to the judgment of the Additional Civil Judge whose jurisdiction in the present case is to be determined by the provisions of s. 5 4 of the Act. And the power of the High Court to companyrect questions of jurisdiction is to be found within the four companyners of s. 115. If there is an error which falls within this section the High Court will have the power to interfere, number otherwise. The only question to be decided in the instant case is as to whether the High Court had companyrectly interfered under s. 115 of the Code of Civil Procedure with the order of the Civil Judge. As we have held above, at the instance of the landlord the suit was only maintainable if it was based on the inadequacy of the reasonable annual rent and for that purpose the necessary jurisdictional fact to be found was the date of the companystruction of the accommodation and if the companyrt wrongly decided that fact and thereby companyferred jurisdiction upon itself which it did number possess, it exercised jurisdiction number vested in it and the matter fell within the rule laid down by the Privy Council in Joy Chandlal Babu v. Kamalaksha Chaudhury 1 .

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 480 of 1958. Appeal by special leave from the judgment and order dated April 15, 1958, of the Orissa High Court in Misc. Appeal No. 194 of 1957, arising out of the judgment and order dated October 26, 1957, of the Election Tribunal, Puri, in Election Case No. 1/67 of 1957. Veda Vyasa and A. V. Viswanatha Sastri, R. Patnaik and Ratnaparkhi, A. G., for the appellant. Mahapatra and P. K. Chatterjee for G. C. Mathur, for respondent No. 1. 1958. December 18. The Judgment of the Court was delivered by IMAM, J.-The appellant and the respondent No. 1 were, amongst others, candidates for election to the Orissa Legislative Assembly from the Daspalla doublemember companystituency in which a seat was reserved for a scheduled caste candidate. We are number companycerned with the election of the scheduled caste candidate. For the general seat the election was companytested by the appellant, respondent No. 1 and respondent No. 3. The appellant obtained 17,700 votes, respondent No. 1 15,568 votes and respondent No. 3 3,589 votes. The election was held on February 27, 1957, and the appellant was declared elected on March 5, 1957. Respondent No. 1 filed an election petition questioning, on various grounds, the election -of the aPpellant. The Election Tribunal dismissed the petition holding that numbergrounds had been established to invalidate the election. Respondent No. 1 appealed to the High Court of Orissa against the order of the Election Tribunal. One of the grounds, amongst the many grounds, taken by Respondent No. 1 to invalidate the election of the appellant was that the numberination of respondent No. 3 -was improperly accepted as he was disqualified from companytesting the election being a Sarbarakar of the 10 villages in the, district of Nayagarh mentioned in the schedule to the petition. The High Court held that the office of Sarbarakar was an office of profit under the State Government of Orissa. Respondent No. 3 was accordingly disqualified from being a member of the Assembly. It, however, held that the acceptance of the numberination of respondent No. 3 had number materially affected the election of the returned candidate under el. d of sub- s. 1 of s. 100 of the Representation of the People Act, 1951, hereinafter referred to as the Act. Three grounds were urged before the High Court in support of the companytention that the appellant had been guilty of companyrupt practice. One was that of bribery the second was that the appellant and his agents had published a pamphlet, Exbt. 8, companytaining statements which were false and which he knew or believed to be false in relation to the personal character and companyduct of respondent No. 1 and in relation to his candidature and the third was, the obtaining and procuring by respondent No. 1 of assistance for the furtherance of the prospects of his election from Sarpanches of certain Grama Panchayats. With regard to the first two grounds the High Court held that the same had number been established. With reference to the third ground the High Court was of the opinion that a Sarpanch of the Grama Panchayat, though number a Government servant appointed by the Government, was numbere the less a person in the service of the Government as he performed many of the governmental duties and was also removable by the Government and such a person came within the provisions of s. 123 7 f of the Act. A Sarpanch exercised under the Orissa Grama Panchayats Act, 1948, hereinafter referred to as the Orissa Act, mostly governmental functions like companylection of taxes, maintenance of public accounts, etc. It thought that if such a person was number brought under s. 123 7 f there would be a lot of undue influence exercised on the voters by these persons who in the village exercised a lot of influence companysidering the nature of their powers and the ideas of the village people . The High Court accordingly allowed the appeal and set aside the appellants election but was of the opinion that although its finding resulted in the appellant being disqualified for membership of Parliament and the Legislature of every State for six years under s. 140 of the Act, this was a fit case for the removal of the disqualification by the Election Commission under s. 144 of the Act. The appellant applied to the High Court for a certificate that this was a fit case for appeal to this Court. The certificate was granted, but one of the learned Judges was in some doubt whether this was a case in which the provisions of Art. 133 1 c of the Constitution applied. On behalf of respondent No. 1 an objection had been taken that Art. 133 1 c of the Constitution did number apply and the High Court companyld number have certified that this was a fit case for appeal to this Court. It seems to us unnecessary to decide whether in a case of this kind the provisions of Art. 133 1 c applied because, in our opinion, even if they did number apply and the High Court companyld number have issued a certificate, this was just the kind of case where we would have granted special leave to appeal under Art. 136 of the Constitution because the appeal raised a point of law of companysiderable public importance. In order to remove all doubts in the matter, we grant the appellant special leave to appeal against the decision of the High Court of Orissa and proceed to deal with the appeal on that basis. The Act was amended in 1956. Before the amendment the relevant portion of s. 123 for the purpose of this appeal was companytained in sub-s. 8 which -as as follows The obtaining or procuring or abetting or attempting to obtain or procure by a candidate or his agent or, by any other person with the companynivance of a candidate or his agent, any assistance for the furtherance of the prospects of the candidates election from any person serving under the Government of India or the Government of any State other than the giving of vote by such person. Explanation-For the purposes of this clause- a a person serving under the Government of India shall number include any person who has been declared. By the Central Government to be a person to whom the provisions of this clause shall number apply b a person serving under the Government of any State shall include a patwari, chaukidar, dafedar, zaildar, shanbagh, karnam, talati, talari, patil, village munsif, village headman or any other village officer, by whatever name lie is called, employed in that State, whether the office be holds is a whole-time office or number, but shall number include any person other than any such village officer as aforesaid who has been declared by the State Government to be a person to whom the provisions of this clause shall number apply. After the amendment the relevant portion of s. 123 is in sub-s. 7 which reads as follows- The obtaining or procuring or abetting or attempting to obtain or procure by a candidate or his agent or, by any other person, any assistance other than giving of vote for the furtherance of the prospects of that candidates election from any person in the service of the Government and belonging to any of the following classes, namely- a gazetted officers b stipendiary judges and magistrates c members of the armed forces of the Union d members of the police forces e excise officers f revenue officers including village accountants, such as, patwaris, lekhpals, talatis, karnams and the like but excluding other village officers and g such other class of persons in the service of the Government as may be prescribed. Explanation- I In this section the expression agent includes an election agent, a polling agent and any person who is held to have acted as an agent in companynection with the election with the companysent of the candidate. For the purposes of clause 7 , a person shall be deemed to assist in the furtherance of the prospects of a candidates election if he acts as an election agent, or polling agent or a companynting agent of that candidate. There is a material difference between the phraseology of s. 123 8 before it was amended and s. 123 7 as number companytained in the Act. Under the former provision there was a prohibition against obtaining any assistance for the furtherance of the prospect of a candidates election from any person serving under the Government of India or the Government of a State other than the giving of a vote by such person. The Explanation, however, gave authority to the Central Government to declare any person serving under it to be a person to whom these provisions would number apply. In other words, unless there was such a declaration these provisions companyered every person serving tinder the Government of India. Clause b of the Explanation further widened the meaning of any person serving under the Government of a State by including the persons specified therein and any other village officer, by whatever name he may be called, employed in that State, but the State Government was authorized to declare that any such person, other than any such village officer, to be a person to whom these provisions did number apply. The language of the provisions of s. 123 8 companyered a wide field and referred to every person serving under the Government of India or a State unless such Person was declared to be one to whom the provisions would number apply. After the amendment, however, the provisions of s. 123 7 are narrower- in scope. These provisions apply to any person in the service of the Government belonging to the classes specified in cls. a to g and numbere else. For the purpose of this appeal it is el. f which will have to be companysidered, as the other clauses cannot in any case apply. The principal question for companysideration is whether a Sarpanch of a Grama Panchayat companystituted under the Orissa Act is a person in the service of the Government of the State of Orissa and belongs to the class specified in cl. f of s. 123 7 . Obviously, two things will have to be established before the provisions -of s. 123 7 f can apply to a Sarpanch of a Grama Panchayat companystituted under the Orissa Act 1 That such a person is in the service of the Government and 2 that he companyes within the class specified in cl. f . It would number be enough to establish only one of these companyditions. It is necessary, therefore, to decide, in the first instance, whether a Sarpanch of a Grama Panchayat under the Orissa Act is a person in the service of the Government of the State of Orissa. For this purpose, it will be necessary to companysider whether any of the provisions of the Orissa Act relating to the Grama Panchayat and the duties to be discharged by the Sarpanch indicate that the Sarpanch is in the service of the Government, because independent of those provisions there is numbermaterial upon which any such companyclusion can be arrived at. It was urged on behalf of the appellant that under the Orissa Act a Grama Sasan can be companystituted by numberification by the State Government. The Grama Sasan is to be a body companyporate having perpetual succession and a companymon seal with power to acquire and hold property, to transfer any property held by it and to enter into companytracts and to do all other things necessary for the purpose of carrying out the provi- sions of the Orissa Act and to sue and be sued in its companyporate name. For every Grama Sasan there shall be a Grama Panchayat and the functions of the Grama Sasan shall be exercised, performed and discharged by the Grama Panchayat. The Executive power of the Grama Panchayat shall be exercised by the Sarpanch elected under s. 10, who shall act under the authority of the said Grama Panchayat. The Grama Sasan shall elect, in the prescribed manner, from amongst its members an Executive Committee which will be known as the Grama Panchayat and the Grama Panchayat shall elect, in the prescribed manner, a Sarpanch. The appointment of a Sarpanch, therefore, was number by the Government. The Sarpanch was elected by the Grama Panchayat which in turn was elected by the Grama Sasan and the Grama Sasan companysisted of a village or a group of companytiguous villages and its members were the population residing in the Grama. As the appointment of the Sarpanch is Dot by Government, this would be one of the factors in holding that the Sarpanch was number in the service of the Government. Under s. 8, the Sarpanch has to act under the authority of the Grama Panchayat. Prima facie, this would also be a factor to discountenance the theory that a Sarpanch was in the service of the Government. Another factor which would militate against the theory that a Sarpanch was in the service of the Government was that he received numberremunera- tion from the Government. The power to remove a Sarpanch by the State Government is stated in s. 16 but the removal can only be for negligence, inefficiency or misbehaviour. This restricted power of removal was number a companyclusive factor on the question -whether a Sarpanch was in the service of the Government. It was accordingly urged that three important factors to be taken into companysideration in deciding whether a person was in the service of the Government, namely, appointment of the person, such a person to act under the authority of the Government and one who received remuneration from Government were lacking in the case of a Sarpanch. The restricted power of removal by the Government was number a companyclusive factor Instances were number lacking in the Municipal Acts of various States where the State Government had vested in -it the power of removal of a Chairman of the Municipality, but it companyld number be said that the members of the Municipality or their Chairman were in the service of the Government. On behalf of respondent No. 1 it was urged that the expression in service of Government had a wider companycept than the expression serving under the Government . Exercise of governmental functions would amount to being in Governments service. A Sarpanch companyld be equated with a patwari, Lekhpal, talati, karnam, etc., and it was number necessary to companysider whether he was in service of Government because the word and before the words belonging to any of the following classes should be read as or He referred to the various provisions of the Orissa Act in support of his submission that a Sarpanch must be regarded as one in service of Government. Under s. 10 2 the District Magistrate was to decide the manner in which the local area of any Grama Sasan shall be divided into electoral wards and the number of members to be returned for each of such wards. Under sub-s. 4 of this section the number of members of a Grama Panchayat shall be fixed by the District Magistrate. Under sub-s. 6 if in an election the requisite number of members of a Grama Panchayat is number elected, the State Government shall appoint persons to fill up the vacancies and the Grama Panchayat so companystituted, companysisting of elected and appointed members, shall elect a Sarpanch from amongst its members. Under sub-s. 8 the State Government was empowered by numberification for sufficient cause to extend the term of office of any Grama Panchayat for a period of one year. Under a. 11 the State Government may by numberification direct that general election of members of a Grama Panchayat be held at any time before the expiration of the term of office of such members includ- ing its Sarpanch. Under s. 14 the State Government is authorized to decide any dispute or difficulty arising out of the interpretation of any of the provisions of the Orissa Act or any rule made thereunder or any difficulty which arises in the working of the Act. Under s. 16 the State Government is empowered to remove a Sarpanch on the ground of negligence, inefficiency, or misbehaviour. Under s. 17 a Sarpanch shall give effect to the decision of the Grama Panchayat provided that if in his opinion any such decision is subversive of peace and order in the locality or results in manifest injustice or unfairness to an individual or body of individuals or a particular companymunity or is generally against public interest, he shall refer the matter to the Sub-divisional Magistrate and thereafter act according to such directions as be may receive from such Magistrate. Under sub-s. 2 of this section, the Sub-divisional Magistrate may, on his own motion or on the representation by the Sarpanch, set aside a decision of the Grama Panchayat, if he finds that the decision is of the nature as stated above. Under sub-s. 3 of s. 18 the Sub-divisional Magistrate may numberinate any member of the Grama Panchayat to carry on the duties of the Sarpanch till a new Sarpanch is elected on the resignation of the former. Under s. 22 a Grama Panchayat may, if a majority of its members so decide, with the previous approval of the Government and if the Provincial Government so direct undertake within its area the companytrol and administration of and be responsible in the matters mentioned in cls. a to y . Clause x refers to the doing of anything the expenditure on which is declared by the Provincial Government or by a District Board with the sanction of the Provincial Government to be an appropriate charge on the Grama Sasans funds. Even in the matter of appointing staff to a Grama Panchayat, under s. 32 the Grama Panchayat has to prepare a scheme companytaining its proposals for the employment of whole-time or part-time staff, for their salaries and allowances and shall submit the same to the prescribed authority who shall have the power to approve or modify or reject the scheme. Section 35 refers to the liability of the members of the Grama Panchayat or of any Joint Committee or any other Committee companystituted under the Orissa Act and provides for the institution of suits against them for loss, waste or misapplication of any property belonging to the Grama Panchayat as the result of direct companysequence of his neglect or misconduct while a member of the Grama Panchayat, Joint Committee or other Committee. Under sub-s. 3 the Provincial Government has the power to institute such a suit on its own initiative. Under s. 36 all members of the Grama. Panchayat shall be deemed to be public servants and in the definition of legal remuneration in s. 161 of the Indian Penal Code the word Government for the -purpose of this section shall be deemed to include a Grama Sasan or a Grama Panchayat. Under s. 44 2 a Grama Panchayat with the previous sanction of the State Government may impose a tax, toll, fee or rate on matters referred to in cls. a to n . Under sub-s. 4 the District Magistrate is authorized to review or revise the tax, toll, fee or rate imposed by Grama Panchayat. Under sub-s. 5 the District Magistrate may by an order in writing require the Grama Panchayat to levy or increase any tax, toll, fee or rate specified in sub-s. 2 subject to the companyditions and restrictions companytained therein, if in his opinion the income of the Grama Panchayat is or is likely to be inadequate for the proper discharge of the duties imposed under s. 21 or undertaken under s. 22. Under s. 97 the District Magistrate is authorized to exercise general powers of inspection, supervision and companytrol over the performance-of the administrative duties of the Grama Panchayat. Section 98 companytains the general powers of the District Magistrate and s. 99 companytains the emergency powers of the District Magis- trate in relation to a Grama Panchayat whereby he may by an order in writing prohibit the execution or further execution of a resolution or ail order passed or made by it. Under s. 117-A the State Government may delegate any of its powers. except the power to make rules, to be exercised or discharged by any officer subordinate to State Government, It was urged on behalf of respondent No. 1 that the above provisions of the Orissa Act clearly made the Grama Panchayat companye under the companytrol and supervision of the State Government and that the duties and functions of the Grama Panchayat to be performed by its Sarpanch were governmental duties. It was further urged that in companysidering whether a Sarpanch was a person in the service of Government the essential elements to be borne in mind were the companytrol and supervision over him by the State Government and its power to remove him from his office. Neither the absence of appointment by the State Government number the number-payment of remuneration by it would be factors indicating that he was number in the service of the Government. In our opinion, there is a distinction between I serving under the Government and I in the service of the Government, because while one may serve under a Government, one may number necessarily be in the service of the Government under the latter expression one number only serves under the Government but is in the service of the Government and it imports the relationship of master and servant. There are, according to Batt On the Law of Master and Servant , two essentials to this relationship 1 The servant must be under the duty of rendering personal services to the master or to others in his behalf and 2 the master must have the right to companytrol the servants work either personally or by another servant or agent and, according to him, It is this right of companytrol or interference, of being entitled to tell the servant when to work within the hours of service or when number to work, and what work to do and how to do it within the terms of such service , which is the dominant characteristic in this relation and marks off the servant from an independent companytractor, or from one employed merely to give to his employer the fruits or results of his labour. In the latter case, the companytractor or performer is number under his employers companytrol in doing the work or effecting the service he has to shape and manage his work so as to give the result he has companytracted to effect. Consequently, a jobbing gardener is numbermore the servant of the person employing him than the doctor employed by a local authority to act as visiting physician to its fever hospital. None of the provisions of the Orissa Act suggest that as between the State Government and the Grama Panchayat and its Sarpanch any such relationship exists. It is true that the State Government, the District Magistrate and the Sub-divisional Magistrate have been given certain powers of companytrol and supervision over the Grama Panchayat but those powers of companytrol and supervision are in relation to the administrative functions of the Grama Panchayat and the Sarpanch. The Grama Panchayat is an autonomous body exercising functions companyferred under the statute. It can hardly be said that the Grama Panchayat in so functioning is in the service of the Government. Its administrative functions are akin to the functions generally performed by Municipalities and District Boards. It would be a companyception hitherto unknown to suppose that any Municipality or District Board was in the service of the Government merely because it exercised administrative functions and to some extent was under the companytrol of the Government. Co- operative societies generally are very much under the companytrol and supervision by the State Government or one of its officers authorized in that behalf. It would be difficult to accept the suggestion that because of that a Cooperative society and its members must be regarded as in the service of the Government. Even with respect to companypanies, progressively, legislation has been giving power to the Government to companytrol and supervise them. Under s. 259 of the Indian Companies Act, 1956, in certain circumstances, any increase in the number of its directors must be approved by the Central Government and shall become void if it is disapproved. Under s. 269, in the case of a public companypany or a private companypany which is a subsidiary of a public companypany, the appointment of a managing or whole- time director for the first time after the companymencement of this Act in the case of an existing companypany, and after the expiry of three months from the date of its incorporation in the case of any other companypany, shall number have any effect unless approved by the Central Government and shall become void if, and in so far as, it is disapproved by the Central Government. Under s. 408 the Government has the power to prevent mismanagement in the affairs of the Company and under the proviso in lieu of passing any order under sub-s. 1 the Central Government may, if the companypany has number availed itself of the option given to it under s. 265, direct the companypany to amend its Articles in the manner provided in that section and make fresh appointments of directors in pursuance of the Articles as so amended, within such time as may be specified in that behalf by the Central Government. Section 409 empowers the Central Government to prevent change in the number of directors likely to affect the companypany prejudicially. It companyld number be said, because of these provisions, that a companypany was in the service of the Government. It seems to us, therefore, that the mere power of companytrol and supervision of a Grama Panchayat exercising administrative functions would number make the Grama Panchayat or any, of its members a person in the service of the Government. Even if it companyld be said that the Grama Panchayat in the exercise of its administrative functions exercised duties in the nature of Governmental duties it companyld number thereby be said that its Sarpanch was in the service of the Government. So far as the Sarpanch is companycerned, he is merely the executive head of the Grama Panchayat which carries out its functions through him. He is number appointed by the Government. He is number paid by the Government. He does number exercise his functions as one in the service of the Government and he can only be removed on the ground of negligence, inefficiency or misbehaviour. We have been unable to find a single provision of the Orissa Act from which we companyld say that a Sarpanch is a person in the service of the Government. Reference had been made on behalf of the respondent No. 1 to s. 31 of the Orissa Act which authorizes the Grama Panchayat to enter into a companytract with the State Government to companylect all or any class of taxes or dues payable to the Government at a prescribed percentage as companylection charges. As the Grama Sasan is a body companyporate and the Grama Panchayat is its executive authority, the statute enabled the Grama Panchayat by provisions of s. 31 to enter into a companytract with the State Government to companylect its taxes and its dues. It cast numberobligatory duty upon the Grama Panchayat to companylect such taxes or dues of the Government. No provision of the Orissa Act has been placed before us by which the State Government companyld order a Grama Panchayat to companylect its taxes or its dues. Furthermore, under el. b to s. 31, a Grama Panchayat is authorized to enter into similar companytracts with proprietors or land holders to companylect their rents. The provisions of s. 31 militate against the theory that the Grama Panchayat is in the service of the Government. There would be numberoccasion for such a provision if the Grama Panchayat was in the service of the Government in which case it would have to carry out the orders of the Government to companylect its taxes or its dues. Even if on a reasonable companystruction of the provisions of the Orissa Act it companyld be held that a Sarpanch of the Grama Panchayat was a person in the service of the Government, it would have to be further held that he was of the class of officers mentioned in s. 123 7 f . Clause f , in the first instance, speaks of a person in the service of the Government who is a revenue officer and then further extends the class to village accountants. The words such as patwaris, lekhpals, talatis, karnams and the like are merely descriptive of the words Revenue officers including village accountants. Under cl. f it is essential that a person in the service of the Government must be a revenue officer or a village accountant, by whatever name such officer or village accountant may be described. The exclusion of every other village officer from the provisions of cl. f companypels the companyclusion that before this clause can apply to a Sarpanch of the Grama Panchayat under the Orissa Act it must be proved that he is either a revenue officer or a village accountant. The mere fact that under s. 31 of the Orissa Act a Grama Panchayat is enabled to enter into a companytract with the State Government to companylect its taxes or its dues cannot companyvert a Sarpanch into a revenue officer. No doubt a Grama Panchayat would have to supervise and maintain village and field boundary marks and village records if required to do so by the State Government under s. 21 r of the Orissa Act. In the present case there is numberproof that the Grama Panchayats in question were required to do any such thing by the Government. It is significant that under s. 54 1 xiv of the Orissa Act it is a choukidar appointed under that Act by the District Magistrate on whom a statutory duty is cast to keep watch over boundary marks and report to the Grama Panchayat any loss or damage caused to the boundary marks defining villages. The Grama Panchayat, however, has number been assigned positively any functions under the Orissa Act which are discharged by a revenue officer. The provisions of s. 21 r would number by itself companyvert a Sarpanch of a Grama Panchayat into a revenue officer. Similarly, there is numberprovision of the Orissa Act which shows that a Sarpanch is a village accountant. It had been suggested on behalf of respondent No. 1 that if it companyld be established that a Sarpanch was a revenue officer or a village accountant, then the very fact that he was such a person made him a person in the service of the Government. It is doubtful whether any such necessary companyclusion arises, but there is numberneed to make further reference to this submission as, in our opinion, a Sarpanch of the Grama Panchayat under the Orissa Act is neither a revenue officer number a village accountant. It follows, therefore, that in the present case the two essential elements that a Sarpanch must be a person in the service of the Government and that he belongs to the class mentioned in cl. f of sub-s. 7 of s. 123 have number been established. Even if one of them had been established and number the other the provisions of s. 123 7 would number apply to such a person. In our opinion, the High Court erred in supposing that because a. Sarpanch of a Grama Panchayat under the Orissa Act exercised governmental duties he must be regarded as a person in the service of the Government. The High Court did number give any clear finding that a Sarpanch, even if a person in the service of the Government, was either a revenue officer or a village accountant. In our opinion, the provisions of s. 123 7 do number apply to him. Therefore, it cannot. be said that any companyrupt practice under s. 123 had been established in the case and the election of the appellant companyld number be set aside on the only ground on which his election had been set aside by the High Court. The appeal is accordingly allowed with companyts and the election petition of respondent No.

Case appeal was accepted by the Supreme Court

Wanchoo, J. This petition under Article 32 of the Constitution challenges the companystitutionality of the Uttar Pradesh Consolidation of Holdings Act, U.P. V of 1954 , as amended by U.P. Acts No. XXVI of 1954, No. XIII of 1955, No. XX of 1955, No. XXIV of 1956 and No. XVI of 1957, hereinafter called the Act . The applicants are four brothers holding land in village Banat, tahsil Kairana, District Muzaffarnagar. A numberification was issued under section 4 of the Act in respect of 223 villages in tahsil Kairana, declaring that the State Government had decided to make a scheme of companysolidation in that area. This was followed up by necessary action under the various provisions of the Act resulting in a statement of proposals under section 19. Objections to these proposals were filed by the petitioners and others, which were decided in April 1956. The petitioners went in appeal to the Settlement Officer Consolidation , which was decided in August 1957. It was thereafter that the present petition was filed in this Court. The petitioners challenge the companystitutionality of the Act on various grounds, of which the following five have been urged before us - Section 6 read with section 4 of the Act gives arbitrary powers to the State Government to accord discriminatory treatment to tenure- holders in different villages by placing some villages under companysolidation while excluding others, thus offending Article 14 of the Constitution. Sections 8, 9 and 10 read with section 49 of the Act provide a procedure for the companyrection and revision of revenue records for villages under companysolidation, which is vitally different from that applicable to villages number under companysolidation, and there is thus discrimination which offends Article 14 of the Constitution Sections 14 to 17 read with section 49, companyfer arbitrary powers on the companysolidation authorities under which they can deprive a tenure- holder of his land or rights therein and the tenure-holder has been deprived of the protection of companyrts available to other tenure-holders in villages number under companysolidation, thus creating discrimination which offends Article 14. Sections 19 to 22, read with section 49, again create discrimination on the same grounds as sections 14 to 17, and are, therefore, hit by Article 14 and Section 29-B, which provides for companypensation gives inadequate companypensation and is, therefore, hit by Article 31 2 of the Constitution. Before we take these points seriatim, it is useful to refer to the background of this legislation. As far back as 1939, the U.P. Consolidation of Holdings Act No. VIII of 1939, was passed. It was, however, of little effect, because it companyld only be applied when more than one-third of the proprietors of the cultivated area of a village applied for an order of companysolidation of the village. It was, therefore, felt that some kind of companypulsion would be necessary in order to achieve companysolidation of holdings in villages. That companysolidation would result in improving agricultural production goes without saying and it was with the object of encouraging the development of agriculture that companysolidation schemes with a companypulsory character were taken up in various States, after the recommendation of The Famine Inquiry Commission, 1944, in its Final Report See page 263 . The State of Bombay was the first to pass an Act called the Bombay Prevention of Fragmentation and Consolidation of Holdings Act, Bom. LXII of 1947 . This was followed by the impugned Act in Uttar Pradesh. The object of the Act is to allot a companypact area in lieu of scattered plots to tenure-holders so that large scale cultivation may be possible with all its attendant advantages. Thus, by the reduction of boundary-lines saving of land takes place and the number of boundary-disputes is reduced. There is saving of time in the management of fields inasmuch as the farmer is saved from travelling from field to field, which may be at companysiderable distances from each other. Proper barriers such as fences, hedges and ditches can be erected around a companypact area to prevent trespassing and thieving. It would further be easier to companytrol irrigation and drainage and disputes over water would be reduced companysiderably where companypact areas are allotted to tenure-holders. Lastly, the companytrol of pests, insects and plant-disease is made easier where farmers have companypact areas under cultivation. These advantages resulting from companysolidation of holdings are intended to encourage the development of agriculture and larger production of food grains, which is the necessity of the day. With these objects in mind, the Act was passed by the U.P. Legislature in 1953 and received the assent of the President on March 4, 1954. It was published in the gazette on March 8, 1954, and declarations under section 4 were made for the major part of the State of Uttar Pradesh, including the petitioners village, in July, 1954. The scheme of the Act is as follows - When companysolidation of a village is taken up, the first thing that is done is to companyrect the revenue records, and sections 7 to 12 deal with that. Then companyes the second stage of preparing what are called statements of principles see sections 14 to 18 . Objections to these principles are entertained and decided and thereafter the principles are companyfirmed under section 18. Then companyes the third stage vide sections 19 to 23 , which deals with the preparation of the statement of proposals. Objections to this are also invited and disposed of, and then proposals are companyfirmed under section 23. After the proposals have been companyfirmed, we companye to the last stage in which the companyfirmed proposals are enforced see sections 24 onwards . It will be clear therefore from the objects of the Act and the advantages that accrue from its implementation that it is a piece of legislation, which should be a boon to the tenure-holders in a village and should also lead to the development of agriculture and increase of food-production. It is in this setting that we have to examine the attack that has been made on the companystitutionality of the Act. Re. 1 Section 6 of the Act gives power to the State Government at any time to cancel the declaration made under section 4 in respect of the whole or any part of the area specified therein. When such declaration is made the area ceases to be under companysolidation operations and section 5 which provides for the effect of a declaration ceases to operate. It is urged that section 4 gives arbitrary power to the State Government to cancel the declaration, even with respect to a part of the area companyered by it and thus discriminates between villages which are under companysolidation and those which are number under companysolidation. The learned Additional Solicitor General companynters this argument in two ways i Section 6 is numberhing more than a restatement of the power which the State Government otherwise possessed under the General Clauses Act and ii the high status of the authority to whom the power is given, namely, the State Government, and the rules framed under the Act laying down a standard for the Government to follow, remove any flavour of arbitrariness which the terms of the section might import. It is number necessary to express any opinion in this case on the said companytention, for, even if it be accepted, the result would be only that section 6 would be struck down. The petitioners would be in the same position with section 6 on the Statute or without it. It may be that, if a citizen in whose favour an order of companysolidation has been made but subsequently cancelled, companyes to companyrt with a grievance that the order of companysolidation was for his benefit but was cancelled in exercise of a power under a void section, this question might arise for companysideration. It may also be that the petitioners right might be infringed if section 6 were number severable from the other provisions of the Act which enable the Government to direct companysolidation of holdings. The power of cancellation cannot be said to be so inextricably mixed up with the power to order companysolidation as to prevent the operation of one section without the other. Nor can it be said that the Legislature would number have companyferred the power on the Government to companysolidate holdings without at the same time companyferring on them the power to cancel the said order of companysolidation. The said provisions are clearly severable. In the circumstances, as the petitioners case is number affected by section 6 of the Act, we leave this open to be decided in an appropriate case. Re. 2 This deals with the first state of revision and companyrection of maps and records, which has to take place before the actual companysolidation scheme is put into force. Section 7 provides for the examination of the revenue records by the Assistant Consolidation Officer an he is enjoined to test the accuracy of the village map, khasra and the current annual registers by making a partal in accordance with the procedure to be prescribed. After he has done the partal, he is to prepare a statement showing the mistakes discovered in the map, khasra and khatauni, and the number and nature of disputes pertaining to land records under the Uttar Pradesh Land Revenue Act, 1901. Then under section 8 he submits a report to the Settlement Officer Consolidation in this companynection with his opinion whether any revision of such maps and records is needed. On receipt of this report, the Settlement Officer may either order the Assistant Consolidation Officer to proceed with the companyrection of maps and records, which we presume he will order when there are number too many mistakes, or recommend to the State Government for revision of maps or records in accordance with the provisions of Ch. IV of the U.P. Land Revenue Act, 1901, which he will presumably do if there are too many mistakes found. If the Assistant Consolidation Officer is ordered to make the companyrections he will make a further partal, if necessary, and companyrect the map or the entries in annual register in accordance with the procedure to be prescribed. The procedure is prescribed in rule 22 and among other things it lays down that the Assistant Consolidation Officer shall issue a numberice to all persons affected by the provisional entries proposed by him objections are invited and parties are examined and heard and their evidence taken and then the Assistant Consolidation Officer makes the companyrections. His order is open to appeal within twenty-one days under section 8 4 to the Consolidation Officer, and the order of the latter is made final. It is urged that this procedure is vitally different from the procedure prescribed under the U.P. Land Revenue Act and that under section 49 of the Act the jurisdiction of the civil and revenue companyrts with respect to any matters arising out of companysolidation proceedings is barred, thus depriving those affected by the orders of the Consolidation Officer the right to file a suit as they companyld have done under the provisions of the U.P. Land Revenue Act see sections 40, 41, 51 and 54 . There is numberdoubt that there is some difference between the procedure provided under the Act and that which the tenure-holders would have been entitled to if their village was number under companysolidation. But if companysolidation is a boon to the tenure-holders of a village, as we hold it is, and if it is to be put through within a reasonable period of time, it is necessary to have a procedure which would be shorter then the ordinary procedure under the U.P. Land Revenue Act or through a suit in a civil or revenue companyrt. The procedure that has been provided cannot be any means be said to be arbitrary or lacking in the essentials of principles of natural justice. The Assistant Consolidation Officer gives numberice to the persons affected, hears their objections and gives them an opportunity to produce evidence. Thereafter he decides the objections and one appeal is provided against his order. This should, in our opinion, be enough in the special circumstances arising under the Act to do justice to those who object to the companyrection of records. All that has happened is that the number of appeals is cut down to one and that in our opinion is number such a violent departure from the ordinary procedure as to make us strike down the provisions companytained in Ch. II of the Act as discriminatory, in the peculiar circumstances arising out of a scheme of companysolidation which must, if it has to be of any value, be put through within a reasonable period of time. Whatever difference there may be may well be supported as a permissible classification on an intelligible differential having a reasonable relation to the object sought to be achieved by the Act. Further section 12 provides that where there is dispute as to title and such question has number already been determined by any companypetent Court, the Consolidation Officer has to refer the question for determination to the Civil Judge who thereafter will refer it to the arbitrator. The arbitrator then proceeds in the manner provided by rule 73 and gives a hearing to the parties and takes evidence both oral and documentary before making his award and section 37 of the Act makes the Arbitration Act applicable to the proceedings before the arbitrator in the matter of procedure. Taking, therefore, the scheme of Ch. II and remembering that if companysolidation is to be put through there must be a more expeditious procedure, there is in our opinion rational basis for classification which justifies the procedure under Ch. II of the Act read with the Rules in villages where companysolidation scheme is to be effective. The attack, therefore, under Article 14 of the Constitution on the provisions of Ch. II fails. Re. 3 and 4 The companytentions on these heads may be taken together. They attack the provisions of Ch. III dealing with the Statement of Principles and Statement of Proposals. The statement of principles is first published and objections are invited. Under section 17 the Assistant Consolidation Officer decides the objections after hearing the parties, if necessary, and taking into account the view of the Consolidation Committee. He then submits a report to the Consolidation Officer who after hearing the objectors and taking such evidence as may be necessary passes final order and companyfirms the statement of principles see rule 43-B . Similarly, when statements of proposals are published, objections are invited to them, and the same procedure is followed in the decision of these objections as in the case of the objections to the statement of principles. In the case of the statement of proposals also, there is similar provision to refer disputed question of title to the Civil Judge, who, in his turn, refers it to the arbitrator. Section 22 also provides that where such question has been referred to the arbitrator, all suits or proceedings in the companyrt of first instance, appeal, reference or revision, in which the question of title to the same land has been raised, shall be stayed. Section 22 3 makes the decision of the arbitrator final. There is numberprovision for appeal in Ch. III though in fact two persons hear the matter, namely, the Assistant Consolidation Officer and the Consolidation Officer. But the main attack is on the provisions of section 22 2 on account of which it is said that even where a party has obtained a decree which might be under appeal, the jurisdiction of the ordinary companyrts is taken away and the decision of the arbitrator is made final. That is undoubtedly so. But if the companysolidation scheme has to be put through in a reasonable period of time such a provision is, in our opinion, necessary but for it the companysolidation schemes may never be really put through for there will be little purpose in making companysolidation where a large number of disputes are pending in the companyrts. Reasons which we have given in dealing with the second point apply with equal force to these two points also, and we are of opinion that there is a rational basis for a classification which has a nexus with the object of the Act, and therefore, the attack under Article 14 on the provisions of Chapter III also must fail. Re. 5. Under this head, the inadequacy of companypensation provided under section 29-B of the Act is raised. It may be mentioned that the Act, as originally passed, did number companytain any provision for companypensation. Thee were a number of writ applications in the Allahabad High Court and that companyrt held that inasmuch as some property was taken away under section 14 1 ee for public purposes and numbercompensation was provided, that provision was void under Article 31 2 as it stood before the Constitution Fourth Amendment Act, 1955 hereinafter called the Fourth Amendment . Appeals by the State Government from that decision of the Allahabad High Court are pending before us and we shall deal with them separately. The legislature then enacted section 29-B laying down the principles on which companypensation would be paid for lands taken away under section 14 1 ee after the decision of the Allahabad High Court. This section was put by Act XVI of 1957 in the original Act with retrospective effect from the date from which the original Act was enforced. It is urged that the companypensation provided therein is inadequate, and, therefore, the provision should be struck down under Article 31 2 , as it was before the Fourth Amendment. Arguments were also addressed on the question whether section 29-B would be saved by the Fourth Amendment. We, however, think it unnecessary to go into these arguments for we have companye to the companyclusion that in the circumstances of this case the companypensation provided under section 29-B is adequate. Assuming that the case is governed by Article 31 2 as it was before the Fourth Amendment, section 29-B provides for payment of cash companypensation equal to four times the value determined at hereditary rates to a bhumidar and two times the value to a sirdar. The difference between the two rates has number been attacked for the rights of a bhumidar are much higher than the rights of a sirdar. The bhumidar is the owner of the land while the sirdar is merely a tenant but the argument is that the amount provided is inadequate, and that it is certainly number the fair market value of the land. Let us see what section 14 1 ee provides. It lays down the basis on which the tenure-holder will companytribute towards the land required for public purposes and the extent to which vacant land may be utilised for the said purpose. We are here companycerned with the first part, namely, the companytribution of tenure-holders towards land required for public purposes. In this case the petitioner had lands in one chak of the rental value of Rs. 20-6-0 and they have been allotted lands of the rental value of Rs. 20-5-0 instead. In another chak, in place of land the rental value of which is Rs. 148-10-0 they have been allotted land of the rental value of Rs. 147-13-0. Thus out of the land valued at Rs. 169-0-0, they have been allotted land of the value of Rs. 168-2-0, and land valued at Annas 0-14-0 has gone to the companymon pool. The percentage is just over a half per cent. It hardly ever exceeds one per cent. Thus the land which is taken over is a small bit, which sold by itself would hardly fetch anything. These small bits of lands are companylected from various tenure-holders and companysolidated in one place and added to the land which might be lying vacant so that it may be used for the purposes of section 14 1 ee . A companypact area is thus created and it is used for the purposes of the tenure-holders themselves and other villagers. Form CH-21 framed under rule 41 1 shows the purposes to which this land would be applied, namely, 1 plantation of trees, 2 pasture land, 3 manure pits, 4 threshing floor, 5 cremation ground, 6 graveyards, 7 primary or other school, 8 playground, 9 panchayatghar, and 10 such other objects. These small bits of land thus acquired from tenure-holders are companysolidated and used for these purposes, which are directly for the benefit of the tenure-holders. They are deprived of a small bit and in place of it they are given advantages in a much larger area of land made up of these small bits and also of vacant land. The question then is whether in these circumstances it can be said that the tenure-holders have been given adequate companypensation by section 29-B for the small bits of land acquired from them for public purposes. This case must be distinguished from other cases where lands are acquired under the Land Acquisition Act, for here the benefit is direct to the tenure-holders while in ordinary cases of land acquired for public purposes, if there is any benefit to the person from whom the land is acquired, it is indirect and remote. It is companytended on behalf of the State in the circumstances that the companypensation which the tenure-holders get is number merely the cash companypensation which they receive under section 29-B but also the advantage which they receive by these small bits taken from them being companysolidated into a larger area of land in which they will have benefits, the nature of which is indicated in form CH-21, over and above the advantage of having their scattered holdings companysolidated into a companypact block. The question, therefore, is whether in these circumstances the provision of actual cash companypensation under section 29-B can be said to be inadequate. We are of opinion that taking into account the peculiar companyditions in cases of this kind and remembering that the land taken from each individual tenure-holder may be a small bit and it is then companysolidated into a large area by adding some other lands taken from other tenure-holders, and the whole is then used for advantage of the whole body of tenure-holders, it cannot be said that the cash companypensation, added to the advantages which the tenure-holders get in the large area of land thus companystituted and on account of getting a companypact block for themselves, is inadequate. Therefore, assuming that Article 31 2 applies as it was before the Fourth Amendment, it cannot be said that the companypensation which the tenure-holders will get under section 29-B is inadequate in the circumstances. This ground of attack also therefore fails.

Case appeal was rejected by the Supreme Court

Sarkar, J. The respondent, a scheduled bank, sued the appellant in the companyrt of the Civil Judge, Sitapore in Uttar Pradesh, for the recovery of money due under an instrument of mortgage. The appellant companytested the suit on several grounds one of which was that he was entitled to relief under the Uttar Pradesh Zamindars Debt Reduction Act U.P. XV of 1953 which reduced the amount recoverable on a debt as defined in it. Now a debt was defined in the Act in these terms 2 f debt means an advance in cash or in kind and includes any transaction which is in substance a debt but does number include an advance as aforesaid made on or after the first day of July, 1952 or a debt due to - the Central Government or Government of any State a local authority a scheduled bank a companyoperative society and a waqf, trust or endowment for a charitable or religious purpose only. a person, where the debt was advanced on his behalf by the Court of Wards to a ward. As the respondent was a scheduled bank the debt due to it from the appellant was number a debt within this definition and companysequently, numberrelief would appear to be available to the appellant under the Act in respect of that debt. The appellant, however, companytended that the definition in so far as it excluded certain debts offended Art. 14 of the Constitution in as much as it made an arbitrary distinction between several classes of debtors and denied the excluded debtors, the equal protection of the law and that hence that portion of the definition which excluded certain debts was invalid and should be struck out and the rest of the definition should be left as operative. If the appellants companytention was justified, the definition would have to run as follows debt means an advance in cash or in companyn and includes any transaction which is in substance a debt, and would then include the debt due by the appellant to the respondent. If this was the companyrect position, then the appellant would be entitled to all the reliefs granted by the Act. This defence, therefore, raised a question as to the validity of a provision in the Act. So the appellant made an application to the Civil Judge, Sitapur, under the proviso to s. 113 of the Code of Civil Procedure asking him to state a case for the opinion of the High Court at Allahabad to which he was subordinate as to the invalidity of the impugned portion of the definition. That proviso is in these terms Provided that where the Court is satisfied that a case pending before it involves a question as to the validity of any Act, Ordinance or Regulation or of any provision companytained in an Act, Ordinance or Regulation, the determination of which is necessary for the disposal of the case, and is of opinion that such Act, Ordinance, Regulation or provision is invalid or inoperative, but has number been so declared by the High Court to which that Court is subordinate or by the Supreme Court, the Court shall state a case setting out its opinion and the reasons therefor, and refer the same for the opinion of the High Court. The learned Civil Judge took the view that the impugned portion of the definition infringed art. 14 of the Constitution as it made an arbitrary distinction between several classes of debtors and was therefore invalid, but he held that it was number necessary for the disposal of the case to decide such question of invalidity because even if it was decided in favour of the appellant, the result would be to exclude the entire definition from the Act as the offending portion was number severable from the rest and the appellant would, therefore, be in any event left without the protection of the Act. In this view of the matter he held that the proviso to s. 113 of the Code did number apply and dismissed the application under it. The appellant then made an application to the High Court at Allahabad for a revision of the order of the learned Civil Judge. He at the same time made another application to the High Court under Art. 228 of the Constitution. That article is in these terms If the High Court is satisfied that a case pending in a companyrt subordinate to it involves a substantial question of law as to the interpretation of this Constitution the determination of which is necessary for the disposal of the case, it shall withdraw the case and may - a either dispose of the case itself, or b determine the said question of law and return the case to the companyrt from which the case has been so withdrawn together with a companyy of its judgment on such question, and the said companyrt shall on receipt thereof proceed to dispose of the case in companyformity with such judgment. The appellant in the latter application prayed that the High Court might be pleased to withdraw the case and either dispose it of itself, or determine the question of the validity of the definition of debt in the Act and return the case to the companyrt of the Civil Judge, Sitapur, for final disposal in accordance with such determination. The High Court disposed of both the applications by one judgment. It held that there was numberdispute as to the companystitutional principle which was clear, namely, that every citizen was entitled to the equal protection of the laws and that any enactment which infringed that principle, is to that extent void, and that the only dispute was whether the impugned portion of the definition of a debt in the Act was severable from the rest and that was number a question of the interpretation of any provision of the Constitution but one of the companystruction of the Act itself. The High Court also held that even if any question of the interpretation of the Constitution arose, a determination of that question was number necessary for the disposal of case. In this view of the matter the High Court dismissed the application in revision and also that under Art. 228. From this judgment the present appeal has been filed. It seems clear to us that the question raised by the appellant in this case companyes within the proviso to s. 113 of the Code as also art. 228 of the Constitution. The question companytemplated by the proviso to s. 113 of the Code is as to the validity of an Act or of a provision in it while Act. 228 of the Constitution has in view a question as to the interpretation of the Constitution. Now the question raised in the present case is as to the validity of a provision in the Zamindars Debt Reduction Act. This question is, however also a question as to the interpretation of the Constitution, for the validity of the provision is challenged on the ground that it companytravenes an article of the Constitution. The point that really arises in this appeal is whether it is necessary for the disposal of the case to decide the question of the validity of a portion of the definition of a debt in the Act. All other companyditions necessary for an order being made under the proviso to s. 113 of the Code or Art. 228 of the Constitution exist and as to this there is numberserious dispute. It is number necessary for us therefore to discuss these companyditions. The companyrts below held that in either view of the question of the validity of the impugned portion of the definition of a debt, the appellant would be without the remedy which he sought, because that portion of the definition was number severable from the rest, and therefore it was number necessary to decide that question of dispose of the case. We are unable to agree with this view. The question of the validity of the definition in so far as it excluded certain debts having been raised and pressed by the appellant, it had to be decided by the companyrt. Without a decision of that question the case companyld number be disposed of. The fact that in the view of the companyrt the impugned part of the definition was number severable from the rest and therefore in any view of the question as to the validity of the impugned part, the appellant would number get any relief, did number alter the position. The question as to the severability of the impugned part of the definition from the rest would arise only after it had been decided that the impugned part was invalid and so to be able to say that the impugned part of the definition was number severable from the rest, it had first to be held that that part was invalid. It companyld number be said that as the impugned part was number severable from the rest it was number necessary for the disposal of the case to decide the question of the validity of the impugned part. We, therefore, hold that it is necessary to decide the question of the validity of the impugned part of the definition to dispose of the case. This appeal is hence allowed. The High Court will withdraw the case and either dispose it of itself or determine the question of the validity of the definition of a debt in the Zamindars Debt Reduction Act and return the case to the Civil Judge, Sitapur, for disposal in accordance with its determination of the question.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.350 of 1957. Appeal by special leave from the judgment and order dated August 6, 1956, of the Calcutta High Court on a numberice of motion in Appeal No. 152 of 1955. C. Chatterjee and P. K. Mukherjee, for the appellant. Sen and P. K. Ghosh for P. K. Bose , for respondent No. 1. 1958. February 14. The Judgment of the Court was delivered by VENICATARAMA AIYAR J.-This is an appeal against an order of the High Court of Calcutta dated August 6, 1956, rejecting the application of the appellant to be brought on record as appellant in appeal No. 152 of 1955 pending before it. The second respondent, Sudhir Kumar Mitter, was the owner of two houses, No. 86/1, Cornwallis Street and No. 7-C, Kirti Mitter Lane, Calcutta. On May 19, 1934, he executed a mortgage for Rs. 3,000 over the said houses in favour of the first respondent, Sm. Nirmala Sundari Dassi. She instituted Suit No. 158 of 1935 on this mortgage, and obtained a pre- liminary decree on March 8, 1935. The matter then came before the Registrar for taking of accounts, and by his report dated July 23, 1935 he found that a sum 1289 of Rs. 3,914-6-6 was due to her, and on that, a final decree was passed on April 20, 1936. Under r. 27 of ch. 16 of the Original Side Rules of the Calcutta High Court, a person in whose favour a decree is passed has to apply for drawing up of the decree within four days from the date thereof. The rule then provides that if such application for drawing up a decree or order is number made within the time aforesaid, the decree or order,shall number be drawn up except under order of Court or a Judge to be obtained, unless otherwise ordered, by a petition ex parte . The importance of this provision is that until a decree is drawn up as mentioned therein, numbercertified companyy thereof would be issued to the party and without such a certified companyy, numberexecution proceedings companyld be taken. The first respondent who had acted with such alacrity and speed in putting her mortgage in suit and obtaining a decree, took numbersteps whatsoever to have the decree drawn up, for nearly 18 years. On May 12, 1952, the second respondent sold both the houses to the appellant herein for a sum of Rs. 60,000 which was, it is stated, utilised largely for discharging prior mortgages on which decrees had been obtained and execution proceedings taken. The deed of sale recites that the properties were sold free of all encumbrances. The first respondent who had so far taken numbersteps to have the decree drawn up number bestirred herself, and on February 17, 1954 obtained an ex parte order under r. 27 aforesaid, granting her leave to draw up and companyplete the decree. That having been done pursuant to the order, she filed on April 29, 1954 the final decree, and companymenced proceedings for sale of the mortgaged properties. Coming to know of this, the second respondent appeared before the Registrar, and raised the objection that the execution of the decree was barred by limitation. The Registrar felt some doubt in the matter, and made a special report under ch. 26, r. 50 seeking the opinion of the Court on the question of limitation, and the first respondent was also directed to take out a numberice of motion for directions. The matter then came before P. B. Mukharji J. and after hearing 1290 companynsel for both the respondents, he held that the execution of the decree was number barred. Vide judgment reported in Nirmala Sundari v. Sudhir Kumar 1 . Against this judgment, the second respondent preferred Appeal No. 152 of 1955, and that is still pending. We number companye to the application, out of which the present appeal arises. On July 25, 1956 the appellant applied to be brought on record as appellant in Appeal No. 152 of 1955. The allegations in support of the petition were that she had purchased the properties from the second respondent on May 12, 1952 free of all encumbrances, that the execution proceedings started by the first respondent were number maintainable as the decree had become time-barred, that the second respondent, Sudhir Kumar Mitter, had been companyducting proceedings in opposition to the execution sale only at her instance and for her benefit, that he had filed Appeal No. 152 of 1955 also oil her behalf, that latterly he had entered into a companylusive arrangement with the first respondent with a view to defeat her rights, and that therefore it was necessary that she should be allowed to companye on record as appellant so that she might protect her interests. The prayer in the petition was that she be substituted in the place of the second respondent or in the alternative, be brought on record as additional appellant. The application was strenuously opposed by both the respondents. They stated that they had entered into an arrangement settling the amount due to the first respondent at Rs. 17,670, that that settlement was fair and bona fide and binding on the appellant, and that further her application was number maintainable. This application was heard by Chakravarti C. J. and Lahiri J. and by their order dated August 6, 1956, they dismissed it. The appellant then applied under Art. 133 for leave to appeal to this Court, and in rejecting that application, the learned Chief Justice observed that the original application was pressed only under 0. 22, r. 10 of the Civil Procedure Code and it was dismissed, as it was companyceded that the applicant, A.I.R. 1955 Cal. 484. 1291 number being a person who had obtained a transfer pending appeal, was number entitled to apply on the terms of that rule, that the prayer in the alternative that the applicant might be brought on record without being substituted under 0. 22, r. 10 which merited favourable companysideration bad number been mentioned at the previous hearing, and that numbercertificate companyld be granted under Art. 133 with a view to that point being raised in appeal, as the order sought to be appealed against was number a final order. The appellant thereafter obtained special leave to appeal under Art. 136 of the Constitution, and that is how the appeal companyes before us. It is companytended OD behalf of the appellant that her application is maintainable under 0. 22, r. 10 of the Civil Procedure Code, because Suit No. 158 of 1935 must be companysidered to have been pending until the decree therein was drawn up which was in 1954, and the transfer in her favour had been made prior thereto on May 12, 1952. The decision in Lakshan Chunder Dey v. Sm. Nikunjamani Dassi 1 is relied on, in support of this position. But it is companytended for the first respondent that even if Suit No. 158 of 1935 is companysidered as pending when the transfer in favour of the appellant was made, that would number affect the result as numberapplication had been made by her to be brought on record in the original companyrt during the pendency of the suit. Nor companyld the application made to the appellate Court be sustained under 0. 22, r. 10, as the transfer in favour of the appellant was made prior to the filing of that appeal and number during its pendency. This companytention appears to be well-founded but that, however, does number companyclude the matter. In our opinion, the application filed by the appellant falls within s. 146 of the Civil Procedure Code, and she is entitled to be brought on record under that section. Section 146 provides that save as otherwise provided by the Code, any proceeding which can be taken by a person may also be taken by any person claiming under him. It has been held in Sitharamaswami v. Lakshmi Narasimha 2 that an appeal is a proceeding for the 1 1923 27 C.W.N. 755. 2 1918 I.L.R. 41 Mad. 510. 1292 purpose of this section, and that further the expression claiming under is wide enough to include cases of devolution and assignment mentioned in 0. 22, r. 10. This decision was quoted with approval by this Court in Jugalkishore Saraf v. Raw Cotton Co., Ltd. 1 , wherein it was hold that a transferee of a debt on which a suit was pending was entitled to execute the decree which was subsequently passed therein, under s. 146 of the Civil Procedure Code as a person claiming under the decree-holder, even though an application for execution by him would number lie under 0. 21, r. 16, and it was further observed that the words save as otherwise provided only barred proceedings, which would be obnoxious to some provision of the Code. It would follow from the above authorities that whoever is entitled to be but has number been brought oil record under 0. 22, r. 10 in a pending suit or proceeding would be entitled to prefer an appeal against the decree or order passed therein if his assignor companyld have filed such an appeal, there being numberprohibition against it in the Code, and that accordingly the appellant as an assignee of the second respondent of the mortgaged properties would have been entitled to prefer an appeal against the judgment of P. B. Mukharji J. It is next companytended that s. 146 authorises only the initiation of any proceeding, and that though it would have been companypetent to the appellant to have preferred an appeal against the judoment of P. B. Mukharji J. she number having done so was number entitled to be brought on record as an appellant to companytinue the appeal preferred by the second respondent. We are number disposed to companystrue s. 146 narrowly in the manner companytended for by companynsel for the first respondent. That section was introduced for the first time in the Civil Procedure Code, 1908 with the object of facilitating the exercise of rights by persons in whom they companye to be vested by devolution or assignment, and being a beneficent provision should be companystrued liberally and so as to advance justice and number in a restricted or technical sense. It has been held by a Full Bench of the Madras High Court in Muthiah Chettiar v. Oovinddoss Krishnadass 2 that the assignee of a part of a 1 1955 i S.C.R. 1369. 2 1921 I.L.R. 44 Mad. 919. 1293 decree is entitled to companytinue an execution application filed by the transferor-decree-holder. Vide also Moidin Kutty v. Doraiswami 1 . The right to file an appeal must therefore be held to carry with it the right to companytinue an appeal which had been filed by the person under whom the applicant claims, and the petition of the appellant to be brought on record as an appellant in Appeal No. 152 of 1955 must be held to be main. tainable under s. 146. It remains to companysider whether, on the merits, there should be an order in favour of the appellant. Of that, we have numberdoubt whatsoever. The proceedings in which she seeks to intervene arise in execution of a mortgage decree. She has purchased the properties companyprised in the decree for Rs. 60,000 under a companyenant that they are free from encumbrances. And after her purchase, the first respondent has started proceedings for sale of the properties, nearly 18 years after the decree had been passed. The appellant maintains that the execution proceedings are barred by limitation, and desires to be heard on that question. It is true that P. B. Mukharji J. has rejected this companytention, but a reading of his judgment shows-and that is what he himself observes-that there are substantial questions of law calling for decision. Even apart from the plea of limitation, there is also a question as to the amount payable in discharge and satisfaction of the decree obtained by the first respondent in Suit No. 158 of 1935. Both the respondents claim that they have settled it at Rs. 17,670. But it is stated for the appellant that under the decree which is sought to be executed the amount recoverable for principal and interest will number exceed Rs. 6,000. In the affidavit of Sanjit Kumar Ghose dated December 20, 1956, filed on behalf of the first respondent, particulars are given as to how the sum of Rs. 17,670 was made up. It will be seen therefrom that a sum of Rs. 7,200 is claimed for interest up to March 8, 1956, calculating it number at the rate provided in the final decree but at the companytract rate. Then a sum of Rs. 5,000 is included as for companyts incurred by the mortgagee in suits other than I.L.R. 1952 Mad. 622. 1294 Suit No. 158 of 1935 and in proceedings companynected therewith. The appellant companytends that the properties in her hands companyld, under numbercircumstances, be made liable for this amount. A sum of Rs. 1,750 is agreed to be paid for companyts in the sale reference, in the proceedings before P. B. Mukharji J. and in Appeal No. 152 of 1955. Asks the appellant, where is the settlement in this, and how can it bind me ? It is obvious that there are several substantial questions arising for determination in which the appellant as purchaser of the properties is vitally interested, and indeed is the only person interested. As a purchaser pendente lite, she will be bound by the proceedings taken by the first respondent in execution of her decree, and justice requires that she should be given an opportunity to protect her rights. We accordingly set aside the order of the Court below dated August 6, 1956 and direct that the appellant be brought on record as additional appellant in Appeal No. 152 of 1955. As Sudhir Kumar Mitter, the appellant number on record, has dropped the fight with the first respondent, we companyceive that numberembarrassment will result in there being on record two appellants with Conflicting interest.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 78 of 1957 and Petition No. 81 of 1956. Appeal by special leave from the judgment and order dated November 25, 1955, of the Punjab High Court in Civil Writ No. 209-D of 1955. 1297 S. Krishnaswamy Aiyanger and C. V. L. Narayan, for the appellant. A. Mehta, R. Ganapathy Iyer and R. H. Dhebar, for the respondent. 1958. February 18. The Judgment of Das C. J., Venkatarama Aiyar, S. K. Das and Sarkar, JJ., was delivered by S. K. Das Bose J. delivered a separate judgment. K. DAS J.-On May 1, 1946, Shri K. S. Srinivasan, appellant before us, was appointed to a post of Liaison Officer, All India Radio, on a pay of Rs. 350 per month in the scale of Rs. 350-20-450-25/2-550. The appointment was made on the recommendation of the then Federal Public Service Commission, and the advertisement or memorandum of information for candidates, as it is more properly called, issued by the Public Service Commission when calling for applications for the said post, related to the recruitment for nine posts of Listeners Research Officers and nine posts of Liaison Officers, All India Radio. It was stated in the said memorandum that the posts were permanent and pensionable, but would be filled on a temporary basis the memorandum further stated that if the persons companycerned were retained in service and companyfirmed in the posts, they would be allowed pensionary benefits and would also be eligible to companytribute to the General Provident Fund. In the first instance the appointments were made on probation for six months subject to termination on certain companyditions mentioned in para. 4 of the memorandum, which need number be set out at this stage. The duties of a Liaison Officer were stated in para. 5 of the memorandum, the main duty being to organise and companyduct publicity for the programmes and other activities of a Radio Station. The designation Liaison Officer was later changed to Public Relations Officer, and along with other posts of Listener Research Officer and Assistant Station Director, the posts of Public Relations Officers were upgraded to Rs. 450-25-500-30-800 with effect from January 1, 1947. On May 23, 1952, the Director General, All India Radio, passed an order bearing 1298 No. 2 1 A/50 in which it was stated that whereas the appellant had been in companytinuous Government service for more than three years and a declaration had been issued to him in pursuance of rr. 3 and 4 of the Central Civil Services Temporary Service Rules, 1949, and whereas an appointment to the post of Public Relations Officer was required to be made in companysultation with the Union Public Service Commission and their companycurrence to the appointment had been obtained, the appellant was appointed to the Public Relations Officers grade in a quasi-permanent capacity with effect from May 1, 1949. On September 3, 1952, however, the appellant received an order from the said Director-General in which it was stated that his services would number be required after October 6, 1952. The appellant was naturally taken by surprise on receipt of this order and made a representation on September 8, 1952, in which he stated that as a quasi-permanent Public Relations Officer he had a claim to an alternative post in the same grade, so long as any post in the same grade was held by a Government servant number in permanent or quasi-permanent service. On September 13, 1952, the appellant was informed by means of an order that he was appointed to officiate as Assistant Station Director, Madras the appellant was then working as Public Relations Officer, All India Radio, Madras in a purely temporary capacity until further orders. On September 19, 1952, the appellant was informed that his representation dated September 8, 1952, was under companysideration and a suggestion was made that in the meantime he should apply for one of the posts of Assistant Station Directors which had been advertised by the Union Public Service Commission. Then, on October 4, 1952, the appellant submitted a further representation in which he said that under the rules in question, namely the Central Civil Service Temporary Service Rules, 1949, he was entitled to be retained in service in a post of the same grade and under the same appointing authority and it was, therefore, number necessary that he should be reselected for the post of Assistant Station Director by the Union Public Service Commission, In 1299 the companycluding paragraph of his representation the appellant stated that in deference to the suggestion made in the letter of the Director-General dated September 19, 1952, he was enclosing an application to the Union Public Service Commission for the post of Assistant Station Director and if, after due companysideration, the Director-General decided that the appellant should apply for the post of Assistant Station Director, his application should be forwarded to the Union Public Service Commission. While Government was companysidering the representation of the appellant, the Union Public Service Commission interviewed in March, 1953, candidates for the posts of Assistant Station Directors. The appellant appeared before the Commission on March 26, 1953. On April 18, 1953, the appellant was informed that the Union Public Service Commission had number selected him and the appellant was again informed that it was number possible to companytinue him in service. The appellant made fresh representations to the effect that the order purporting to terminate his service on the ground that the Union Public Service Commission had number selected him for the post of Assistant Station Director, was an illegal order inasmuch as the appellant held a quasipermanent status and was entitled to hold a post in the grade of Assistant Station Directors, as long as anyone number in permanent or quasi-permanent service companytinued to hold such a post. To these representa- tions the appellant received a reply to the effect that Government had decided to keep in abeyance the post of Public Relations Officer held by him and therefore it was number possible to retain him in that post and the appellant was given an opportunity to show cause why his service should number be terminated on the expiry of the period of numberice with effect from Jul 18, 1953. A reply was asked for within 15 days. In reply, the appellant again pointed out that having been given a quasi-permanent status he was entitled to be retained in service under the rules governing Government servants holding such status, and the termination of his service would be in violation of 1300 Article 311 of the Constitution. On July 3, 1953, the appellant received a memorandum dated June 9, 1953. This memorandum said Shri Srinivasans representation has number been companysidered by Government. As the posts of Public Relations Officers form a cadre by themselves and do number belong to the cadre of Assistant Station Directors, he cannot claim any protection in the post of Assistant Station Director on account of his being quasi-permanent as Public Relations Officer. Shri Srinivasan may please be informed accordingly. On July 10, 1953, the appellant made a fresh representation, this time to the Secretary, Ministry of Home Affairs, in which he repeated his former objections and companytended that the proposed termination of his service was irregular, unjust and illegal. He submitted that the order terminating his service was in companytravention of Art. 311 of the Constitution and he further said that though the posts of Public Relations Officer and Assistant Station Director were number declared to be in the same cadre, there can be numberdispute that the posts are in the same grade. On August 17, 1953, the appellant received a memorandum to the effect that the numberice of the termination of his service as Assistant Station Director dated April 18, 1953, as subsequently amended by companyrigenda dated May 12,1953, and July 3, 1953, was withdrawn, and it also stated that the numberice dated May 26, 1953, asking the appellant to show cause why his service should number be terminated was cancelled. This was followed by an order dated December 14,1953. This order has in important bearing on the points urged before us and must be quoted in full No. 41 R Government of India, Director General, All India Radio. No. 1 113 -SI/52. New Delhi, the 14th December, 1953. ORDER. In this Directorate Order No. 2 1 -A/50, dated the 23rd May, 1952, Shri K. S. Srinivasan, then officiating 1301 Public Relations Officer, All India Radio, was appointed to that post in a quasi-permanent capacity with effect from the 1st May, 1949. Subsequently, in August 1952, all posts of Public Relations Officers, except the one in the External Services Division, were held in abeyance. As the post of Public Relations Officer belongs to the same grade as Assistant Station Director carrying identical scales of pay Shri Srinivasan was appointed Assistant Station Director in the External Services Division with effect from the 22nd September, 1952. Under the provision companytained in the Ministry of Home Affairs Office Memorandum No. 54/136 /51- NGS, dated the 24th April, 1952, Shri Srinivasan will carry with him the quasi-permanent status of his former post of Public Relations Officer while holding the post of Assistant Station Director. Sd. M. Lal, Director-Geiieral. A companyy of the order was also sent to the Secretary, Union Public Service Commission. Unfortunately, the appellant soon found that his troubles did number end with the order dated December 14, 1953. On August 31, 1955, the appellant was informed by the then, Secretary, Miniistry of Information and Broadcasting, that the Union Public Service Commission had objected to his appointment as Assistant Station Director, holding that such appointment was companytrary to the regulations the appellant was then asked that he should relinquish the post of Assistant Station, Director and accept a temporary post of Assistant Information Officer in the Press Information Bureau or, in the alternative, he should clear out In may be stated here that the post of Assistant Information Officer offered to the appellant carried a scale of pay lower than that of an Assistant Station Director, namely Rs. 350-25-500-30-620. As this new offer deprived the appellant of his quasi-permanent status and also amounted to a reduction in his rank, the appellant immediately sent fresh representations to the Home Ministry, Director-General, and the Minister for Information and Broadcasting. On September 7, 1955, the appellant received the final order 1302 of Government, which is the order companyplained of in the present appeal. That order was in these terms Shri Srinivasan was declared quasi-permanent in the grade of Public Relations Officer, All India Radio Rs. 450-25-500-EB-30-800 with effect from the 1st May, 1949. In 1952, all the posts of Public Relations Officer excepting one in the External Services Division were held in abeyance as a measure of economy. The only post that survived the economy drive was assigned to the permanent incumbent. ShriSrinivasan would have had to be retrenched in 1952 for quasi-permanency does number preclude retrenchment and there was numberother officer in the grade of Public Relations Officer who was number-quasi-permanent and who companyld have been discharged in preference to him. He was irregularly transferred as Asst. Station Director, in an officiating capacity. He applied for one of the posts of Assistant Station Director when they were advertised by the Union Public Service Commission in 1953, but was rejected. Subsequently, lie was allowed to carry also irregularly, the quasi-permanent status in the grade of Public Relations Officer while holding the post of Assistant Station Director, vide Directorate General, All India Radios order No. I I 13 81/52 dated the 14th December, 1953. The Union Public Service Commission have number accepted this transfer as it is in companytravention of the Union Public Service Commission Consultation Regulations. Since he has been rejected for the post of Assistant Station Director in an open selection and also since the Union Public Service Commission have number accepted his transfer, the Government of India regret that they are unable to allow him to companytinue in the post of Assistant Station Director. He is, therefore, required to relinquish charge of the post of Assistant Station Director immediately. To save him the hardship of retrenchment, the question of offering Shri Srinivasan alternative employment has been companysidered. There is numberintention of reviving the posts of Public Relations Officer that were held in abeyance in 1952. For publicity and 1303 public relations work of All India Radio, a few poste of Assistant Information Officer in the scale of Rs. 350-25-500-EB-30-620 have been sanctioned on the strength of the Press Information Bureau and it is proposed to absorb him on temporary basis, against one of these posts. The absorption in this post also, is subject to the approval by the Union Public Service Commission to whom a reference has been made. Meanwhile, after relinquishing the charge of the post of Assistant Station Director, he should report himself for duty to the Principal Information Officer, Press Information Bureau, New Delhi. The question of fixation of his pav in the grade of Assistant Information Officer., With a view to protecting his present salary will be taken up after he has joined duty The appellant companytinued to make some more representations which were, however, rejected, and on October 11, 1955, an order was passed transferring the appellant to the Press Information Bureau as officiating Assistant Information Officer with immediate effect and the appellant was directed to hand over charge of the post of Assistant Station Director immediately and to take over his post in the Press Information Bureau forthwith. The validity of this order, which is also challenged in the present appeal, necessarily depends on the validity of the earlier order dated September 7, 1955. The appellant refused to accept the lower post of Assistant Press Information Officer and on October 19, 1955, he made over charge under protest. On November 25, 1955, the appellant filed a petition, numbered Writ Petition 209-D of 1955 in the Punjab High Court in which he prayed for the issue of a writ of certiorari or any other appropriate writ for quashing the orders dated September 7, 1955, and October 11, 1955, and asked for an order directing his reinstatement as Assistant Station Director in the External Services Division of the All India Radio, the post which he was holding when the orders companyplained of were passed. This petition was summarily dismissed by the Punjab High Court on the same date. The appellant then 13O4 moved the said High Court for a certificate for leave to appeal to this Court. That application was also dismissed on March 16, 1956. Thereupon, the appellant moved this Court for Special Leave and obtained such leave on April 23, 1956. While moving the application for special leave, learned companynsel for the appellant stated that without prejudice to the companytentions of either party, the appellant would take up the posts of Assistant Information Officer in the Press Information Bureau pending disposal of the appeal. On April 22, 1956, the appellant also filed a petition under Art. 32 of the Constitution and in this petition the appellant has challenged the order date September 7, 1955, on the ground that the order violates the provisions of Arts. 14 and 16 of the Constitution. The present judgment will govern the appeal by special leave as also the petition under Art. 32 of the Constitution. It will be companyvenient to take up the appeal first. The main question for decision in the appeal is whether the impugned orders violate the companystitutional guarantee given by Art. 311 2 to the appellant, who is admittedly the holder of a civil post under the Union. The true scope and effect of Art. 311 of the Constitution was fully companysidered in a recent judgment of this Court in Parshotam Lal Dhingra v. Union Of India 1 , pronounced on November 1, 1957, and it was there held by the majority as follows we are quoting such observations only as have a bearing on the present case Shortly put, the principle is that when a servant has a right to a post or to a rank either under the terms of the companytract of employment, express or implied, or under the rules governing the companyditions of his service, the termination of the service of such a servant or his reduction to a lower post is by itself and prima facie a punishment, for it operates as a forfeiture of his right to hold that post or that rank and to get the emoluments and other benefits attached thereto, But if the servant has numberright to the post, as where he is appointed to a post, permanent 1 1958 S. C. R. 828. 1305 or temporary, either on probation or on an officiating basis and whose temporary service has number ripened into a quasi- permanent set-vice as defined in the Temporary Service Rules, the termination of his employment does number deprive him of any right and cannot, therefore, by itself, be a punishment. One test for determining, whether the termination of the service of a government servant is by way of punishment is to ascertain whether the servant, but for such termination, had the right to hold the post. If he had a right to the post as in the three cases hereinbefore mentioned, the termination of his service will by itself be a punishment and fie will be entitled to the protection of Art. 31 1. In other words and broadly speaking, Art. 311 2 will apply to those cases where the government servant, had he been employed by a private employer, would be entitled to maintain an action for wrongful dismissal, removal or reduction in rank. To put it in another way, if the government has, by companytract, express or implied, or, under the rules, the right to terminate the employment at any time, then such termination in the manner provided by the companytract or the rules is, prima facie and per se, number a punishment and does number attract the provisions of Art. 311. Therefore, the critical question is-did the appellant have a right to the post of Assistant Station Director, which he was holding, when the impugned orders were passed ? If he had such a right, the impugned orders will undoubtedly be bad because they deprive the appellant of that right inasmuch as they terminate his service in the post he was holding and reduce him to a lower post. Admittedly,there was numberproceeding against the appellant for disciplinary action and he had numberopportunity of showing cause against any such action. If, on the companytrary, the appellant had numberright to the post he was holding and under the rules governing the companyditions of his service his service was liable to be terminated, then the appellant is number entitled to the protection of Art. 31 1. On behalf of the appellant the companytention is that under the Civil Services Temporary Service Rules, 1949 he held a 1306 quasi-permanent status in the post of Public Relations Officer to which he was first appointed and he carried that status to the post of Assistant Station Director to which he was later appointed therefore, he had a right of which he companyld number be deprived except in accordance with those rules, and the impugned orders were passed in derogation of those rules. Furthermore, it is companytended on behalf of the appellant that the Union Public Service Commission failed to appreciate the, companyrect legal position and their opinion, officious or otherwise, was neither decisive number binding on Government or the appellant. On behalf of the Union of India, respondent before us, it has been companyceded that the Central Civil Services Temporary Service Rules, 1949 are the relevant rules governing the companyditions of the appellants service. But the argument is that the impugned orders are in companysonance with those rules and the service of the appellant who was in quasi-permanent service in the post of Public Relations Officer was liable to termination under r. 6 1 ii , because 1 a reduction had occurred in the number of posts of Public Relations Officers available for Government servants number in permanent service, and 2 the post of Assistant Station Director to which the appellant was appointed in a purely temporary capacity was number a post of the same grade as the specified post held by the appellant so as to entitle him to the benefit of the proviso to r. 6 1 ii . On behalf of the respondent it has been further submitted that the order dated December 14, 1953 was issued under a misapprehension and when the companyrect position was rightly pointed out by the Union Public Service Commission, Government passed the impugned order of September 7, 1955 and by way of mitigating the hardship of the appellant who was faced with the prospect of immediate unemployment offered him the post of Assistant Information Officers Post created for the per- formance of duties similar to those of the whilom Public Relations Officer. These are the rival companytentions which fall for companysideration by us, We must at this stage read the 1307 relevant rules called the Central Civil Services Temporary Service Rules, 1949, hereinafter to be referred to as the Temporary Service Rules. Rule 2 defines certain terms used in the Temporary Service Rules. We are companycerned with two of such terms- quasipermanent service and specified post . Quasipermanent service means temporary service companymencing from the date on which a declaration issued under rule 3 takes effect and companysisting of periods of duty and leave other than extraordinary leave after that date specified post means the particular post, or the particular grade of posts within a cadre, in respect of which a Government servant is declared to be quasi-permanent under rule 3 . Rule 3, which we must read in full, is in these terms A Government servant shall be deemed to be in quasi- permanent service if he has been in companytinuous Government service for more than three years, and if the appointing authority, being satisfied as to his suitability in respect of age, qualifications, work and character for employment in a quasi-permatient capacity, has issued a declaration to that effect, in accordance with such instructions as the Governor-General may issue from time to time. Rules 4 and 6 1 are also important for our purpose and must be reproduced in full. Rule 4. a A declaration issued under rule 3 shall specify the particular post or the particular grade of posts within a cadre, in respect of which it is issued, and the date from which it takes effect. Where recruitment to a specified post is required to be made in companysultation with the Federal Public Service Commission numbersuch declaration shall be issued except after companysultation with the Commission. Rule 6. 1 The service of a Government servant in quasi- permanent service shall be liable to termination- in the same circumstances and in the same 1308 manner as a Government servant in permanent service, or when the appointing authority companycerned has ,certified that a reduction has occurred in the number of posts available for Government servants number in permanent service Provided that the service of a Government servant in quasi- permanent service shall number be liable to termination under cl. ii so long as any post of the same grade and under the same appointing authority as the specified post held by him, companytinues to be held by a Government servant number in permanent or quasipermanent service Provided further that as among Government servants in quasi- permanent service whose specified posts are of the same grade and under the same appointing authority, termination of service companysequent on reduction of posts shall ordinarily take place in order of juniority in the list referred to in r. 7. As rule 6 1 refers to r. 7, we may as well quote that rule. Rule 7. 1 Subject to the provision of this rule, a Government servant in respect of whom a declaration has been made under rule 3, shall be eligible for a permanent appointment on the occurrence of a vacancy in the specified posts which may be reserved for being filled from among persons in quasi-permanent service, in accordance with such instructions as may be issued by the Governor-General in this behalf from time to time. Explanation-No such declaration shall companyfer upon any person a right to claim a permanent appointment to any post. Every appointing authority shall, from time to time, after companysultation with the appropriate Departmental Promotions Committee, prepare a list, in order of precedence, of persons in quasi-permanent service who are eligible for a permanent appointment. In preparing such a list, the appointing authority shall companysider both the seniority and the merit of the 1309 Government servants companycerned. All permanent appointments which are reserved undersub-rule 1 under the companytrol of any such appointing authority shall. be made in accordance with such list Provided that the Government may order that permanent appointment to any grade or post may be made purely in order of seniority. Now, it is beyond dispute and in fact, admitted that the appellant held a quasi-permanent status in the grade of posts known as Public Relations Officers. The order dated May 23, 1952, stated in clear terms that i a declaration had been issued in respect of the appellant in pursuance of rr. 3 and 4 of the Temporary Service Rules, ii companycurrence of the Union Public Service Commission had been obtained and the grade of posts in respect of which the appellant held quasi-permanent status was the Public Relations Offlcers grade. Under r. 4 a declaration issued under r. 3 shall specify the particular post or the particular grades of posts within a cadre in respect of which it is issued and the date from which it takes effect. A cadre, according to Fundamental Rule 9 4 , means the strength of a service or a part of a service sanctioned as a separate unit. Some indication of what is meant by a grade can be obtained from art. 29 of the Civil Service Regulations that article states- Grade and Class-Appointments are said to be in the same Class when they are in the same Department, and bear the same designation, or have been declared by the Government of India to be in the same class. Appointments in the same class are sometimes divided into Grades according to pay. Note-Appointments do number belong to the same Class or Grade unless they have been so companystituted or recognised by proper authority. There are numberClasses or Grades of Ministerial Officers. It is, therefore, clear that so far as the posts known as Public Relations Officers, All India Radio, are companycerned, they formed a grade and the appellant held a quasi-permanent status in that grade. Rule 6 1 of the Temporary Service Rules lays 1310 down how the service of a Government servant in quasi- permanent service can be terminated. We are companycerned in this case with cl. ii of the said rule. That clause says that the service of a Government servant in quasi-permanent service can be terminated when the appointing authority companycerned has certified that a reduction has occurred in the number of posts available for Government servants number in permanent service . Learned companynsel for the appellant has very strongly submitted that there was numberreduction within the meaning of the clause in the present case, far less any certification of such reduction. Learned companynsel for the respondent has urged with equal vehemence that there was a reduction within the meaning of the clause and the appointing authority had certified such reduction. Before companysidering the true scope and effect of the relevant clause, it is necessary to say a few words about the Temporary Service Rules. At the same time the Rules were published, Government also issued a memorandum explanatory of the Rules. It was therein stated that the term quasi- permanent service had been evolved with the object of attaching certain benefits to such service and with regard to r. 4 a the memorandum stated-,, Under Rule 4 a a Government servant has to be declared as quasi-permanent in respect of a particular post such a post may be an isolated one or it may be a post in a cadre companysisting of several posts. In case where a cadre is split up into several grades it may belong to one such grade within the cadre. A Government servant who is declared as quasi-permanent in respect of a particular post may be shifted from one post to another within the cadre or grade companycerned due to reduction in post or other causes. Such shifting does number affect his rights. As to r. 6 1 the memorandum gave the following explanation This rule relates to the security of tenure of a quasi-permanent Government servant. It should be numbered that except in the event of reduction in the number of posts in the cadre or grade companycerned, the termination of service of a quasi-permanent Government servant will have to be made in the same manner 1311 as the case of permanent Government servants For example, if the services are to be terminated on grounds of indiscipline or inefficiency, it will be necessary to institute formal proceedings against him. He has also got a superior right of retention in service over that of purely temporary employees, in the grade in which he is quasi-permanent. The question before us is whether the impugned order of September 7, 1955, was in companysonance with r. 6 1 . This question has two aspects-first, the true scope and effect of el. ii and second, the effect of the proviso thereto. We take up first cl. ii . Was there a reduction in the present case within the meaning of cl. ii ? We think that the answer must be in the affirmative. In the order dated December 14, 1953, which was an order in favour of the appellant, it was clearly stated that in August 1952, all the posts of Public Relations Officers, except the one in the External services Division, were held in abeyance. In the impugned order of September 7, 1955, it was stated that in 1952 all the posts of Public Relations Officers excepting one in the External Services Division were held in abeyance as a measure of economy and the only post that survived the economy drive was assigned to a permanent incumbent. In his representation dated July 10, 1953, the appellant himself admitted that as per Director General, All India Radios memorandum dated May 21, 1953, he was informed that it was decided to keep the post in abeyance . Learned companynsel for the appellant has sought to draw a distinction between keeping a post in abeyance and reducing a post and has suggested that the latter expression means abolishing a post permanently or temporarily whereas the former expression merely suggests number filling the post for the time being. Words and phrases necessarily take their meaning from the companytext in which they are used. In cl. ii the expression used is reduction in the number of posts available for Government servants number in permanent service.Learned companynsel for the respondent has rightly pointed out that the entire clause should be read to understand what is meant by reduction, and 1312 in that companytext, reduction is number necessarily companyfined to abolition, permanent or otherwise. He has given an illustration to clarify the meaning. Assume that the permanent holder of a post goes on deputation the post then becomes available for temporary or quasi-permanent officers. When, however, the permanent man returns from deputation, there is a reduction in the number of posts available for Government servants number in permanent service. We agree with learned companynsel for the respondent that the word reduction in the companytext of cl. ii is number necessarily companyfined to abolition, and keeping certain posts in abeyance companyes within the expression. It may be further pointed out that in the order of September 7, 1955, it was clearly stated that Government had numberintention of reviving the posts of Public Relations Officers kept in abeyance since 1952 therefore, for all practical purposes the posts have been abolished. We do number think that there is any charm in the word certifies which occurs in cl. ii . It is clear that the appellant was informed, as far back as May, 1953, by a memorandum from the appointing authority that it was decided to keep the post which the appellant held in abeyance. There is numberhing in the clause which prevents the appointing authority from certifying by means of a memorandum instead of by a mere formal order. Now, we companye to the far more important question of the effect of the proviso to cl. ii . The crucial point in that companynection is whether the post of Assistant Station Director, to which the appellant was appointed in a purely temporary capacity on September 13, 1952, was a post within the same grade or cadre as the posts of Public Relations Officer. If it is in the same grade or within the same cadre, the appellant will retain his quasi-permanent status and the shifting, to use the words of the explanatory memorandum quoted earlier, will number affect his rights. This point has caused ,us companysiderable anxiety, and on a very careful companysideration we have reluctantly but ineluctably companye to the companyclusion that the post of Assistant Station 1313 Director is number in the same grade or cadre as the posts of Public Relations Officers. On this point it is necessary to refer to some earlier history regarding the reorganisation of the All India Radio in 1944. The reorganisation, as enunciated in letter No. K- 404/2397 dated December 15/28, 1944 from the Government of India, Ministry pf Information and Broadcasting, was in three parts 1 revision of the scales of pay of certain existing posts 2 creation of some additional posts and 3 creation of certain new categories of posts. The posts of Liaison Officer and Listeners Research Officer came within the third category and nine posts were created under each head. The posts of Assistant Station Directors came within the first two categories. In 1950 Government made necessary declaration in respect of the cadres on the programme side of the All India Radio in their letter No. 17 83 /49-BI dated March 20, 1950. The cadres so companystituted included that of Assistant Station Directors that cadre companysisted of the following posts a Assistant Station Directors b Instructor Programmes c Assistant Director of Programmes d Listener Research Officer e Officer on Special Duty Kashmir and f Officer Special Duty Hyderabad -the last two being tempo- rary. The Public Relations Officers were number put in the cadre of Assistant Station Directors. Exactly the same position is envisaged in paragraph 129 of Chapter IV, Section 1, of the A. 1. R. Manual, Vol. 1. Under Fundamental Rule 9 31 c a post is said to be on the same time-scale as another post on a time-scale if the two time-scales are identical and the posts fall within a cadre, or class in a cadre, such cadre or class having been created in order to fill all posts involving duties of approximately the same character or degree of responsibility, in a service or establishment, or group of establishments. It is worthy of numbere that two companyditions must be fulfilled for the application of Fundamental Rule 9 31 c one is that the two time scales must be identical and the other is that the two posts must fall in the same cadre or class in a cadre. Paragraph 129 referred to above states in terms that 1314 only four categories of posts mentioned therein fall within the cadre of Assistant Station Directors, and those categories do number include Public Relations Officers. Learned Counsel for the appellant has referred us to Appendix I of the A. I. R. Manual, Vol. 11, which gives the scales of pay and classification of posts in the All India Radio. He has pointed out that in that appendix the posts of Assistant Station Directors number 77 , Listener Research Officer number 78 and Public Relations Officer number 79 all companye within Central Services, Class II, and bear the same scale of pay and they also belong to the Programme side. We have already pointed out that the same scale of pay is number the only test number does the fact that all the above mentioned posts belong to Class 11 determine the question whether they belong to the same grade or cadre. We have referred to the companystitution of the cadre of Assistant Station Directors in 1950, which shows clearly enough that Public Relations Officers do number belong to that cadre. Many anomalous results will follow if the scale of pay or classification of the service, were taken to be the sole test for determining whether the posts belong to the same grade or cadre. The appendix referred to by learned companynsel for the appellant shows that the post of Assistant Director of Monitoring Services bears the same scale of pay and also belongs to Class 11 yet it is number suggested that that post has any cadre or grade affinity with the posts of Assistant Station Directors. A chemist number 106 and an Assistant Engineer number 105 have the same scales of pay and both belong to Class 11 but they do number belong to the same grade or cadre otherwise a strange result will follow in that a chemist holding a quasi-permanent status will be entitled to be appointed as an Engineer, on the reduction of the chemists post. On behalf of the appellant it has been next argued that the order dated December 14, 1953, companytains a clear admission to the effect that the post of Public Relations Officer belongs to the same grade as Assistant Station Director, and the order shows that it was made after unofficial companysultation with the Ministry 1315 of Information an Broadcasting. It is companytended that this admission should be accepted as an admission of fact and held binding on the respondent, particulary when the respondent has number produced the particular order by which a separate cadre, if any, of Public Relations Officers might have been created, in order to disprove the companyrectness of the admission. We are unable to accept this argument. An admission is number companyclusive proof of the matter admitted, though it may in certain circumstances operate as an estoppel. It is number suggested that a question of estoppel arises in this case a point which we shall again advert to at best, it may be said that the respondent having once admitted that the post of Public Relations Officer belonged to the same grade, the admission casts upon the respondent the burden of proving that what was deliberately asserted on December 14, 1953, is number a fact. It is unfortunate that this case was summarily dismissed in the High Court and the respondent was number called upon to make an affidavit and file the necessary documents at that stage. We have number a companyy of the letter dated December 15/28, 1944 by which the nine new posts of Liaison Officer later designated as Public Relations Officer were created and the letter dated March 20, 1950, by which the cadre of Assistant Station Directors was declared. These letters we have already referred to, and they leave little room for doubt in the matter they show clearly enough that the posts of Public Relations Officers do number belong to the same grade or cadre as the posts of Assistant Station Directors. As a matter of fact.- the respondent said so in the memorandum of June 9, 1953, though later, on December 14, 1953, a different statement was made. It has been submitted before us that even in the impugned order of September 7, 1955, the respondent does number say that a mistake was made the respondent merely states that the appellant was irregularly transferred as Assistant Station Director and was irregularly allowed to carry a, quasi-permanent status to the new post. We think that the impugned order of September 7, 1955, must 1316 be read as a whole, and so read, it shows that Government had earlier made a mistake in thinking that the posts of Public Relations Officers belonged to the same grade or cadre as the posts of Assistant Station Directors, and the mistake was rectified when the Union Public Service Commission pointed it out. We shall number companysider the further question if the order dated December 14, 1953, can be read as a separate or independent declaration in favour of the appellant in respect of the post of an Assistant Station Director, under rr. 3 and 4 a of the Temporay Service Rules. We shall companysider this question from four points of view 1 whether on the terms of the order itself, it can be read as an independent declaration under the relevant rules 2 whether the relevant authority intended the order as an independent declaration under rr. 3 and 4 a and if the parties thereto understood the order in that sense 3 if the order is so read, whether companysultation with the Public Service Commission was necessary under r. 4 b and 4 whether any estoppel arises out of the order. it seems to us that the order itself is very clear and if it is companytrasted with the earlier order dated May 23, 1952 by which a declaration was indeed made in favour of the appellant under rr. 3 and 4 of the Temporary Service Rules in respect of the post of Public Relations Officer , it is at once clear that the order dated December 14,1953, is number a declaration under rr. 3 and 4 of the said rules. What does the order state in terms ? Firstly, it states that the appellant was appointed in a quasi-permanent capacity to the post of Public Relations Officer secondly, it states that all the posts of Public Relations Officer are held in abey- ance except one thirdly, it states that as the post of Public Relations Officer belonged to the same grade as Assistant Station Director carrying identical scales of pay, the appellant was appointed as Assistant Station Director in September 1952 and fourthly, it states that under the instructions companytained in a particular office memorandum issued from the Ministry of Home Affairs the appellant was entitled to carry the quasipermanent status of his formerpost of Public Relations 1317 Officer while holding the post of Assistant Station Direc- tor. The order means what it in terms states and must operate according to its tenor and if the order is read as a whole, without straining or perverting the language, it seems clear that it is number a declaration under rr. 3 and 4 of the Temporary Service Rules. It merely gives effect to the instructions companytained in the Home Office memorandum referred to therein and states that the appellant will carry with him his quasipermanent status of the former post while holding the post of Assistant Station Director. It is obvious that there cannot be a declaration of quasi- permanent status in two posts of different grades or different cadres simultaneously and at the same time. The order dated December 14, 1953, makes it abundantly clear that the appellant retained his quasi-permanent status in the former post of Public Relations Officer and on the mistaken view that the post of Public Relations Officer belonged to the same grade as Assistant Station Director, he was allowed to carry the same status while holding the new post. This is sufficiently borne out by a reference to the Home Office memorandum No. 54/136/51 N.G.S. dated April 24, 1952, a companyy of which has been placed before us. That memorandum said, The undersigned is directed to say that a question has been raised whether a quasi-permanent Government servant on transfer from one office to another, should be allowed to retain a lien on the post to which he has been appointed in a quasi-permanent capacity. A reference in this companynection is invited to subparagraph c of the Explanatory Memorandum of Rule 2 of the Central Civil Services Temporary Service Rules, 1949, under which a government servant who is declared as quasi-permanent in respect of a particular post can be shifted from one post to another within the cadre or grade companycerned due to reduction or other causes without his rights being affected. In other words, if a quasi-permanent employee is transferred from one office to another within the same grade, he will carry with him his quasipermanent status. The order dated December 14, 1953, purported to give effect to the decision embodied 1318 in the aforesaid memorandum, and was in numbersense an independent declaration under rr. 3 and 4 of the Temporary Service Rules. If it were an independent declaration in respect of a different and new post, a reference to the office memorandum was wholly unnecessary it was equally unnecessary to recite that the appellant held a quasi- permanent status in his former post and that the former post belonged to the same grade as the new post and, therefore, he carried his former status to the latter post. In the order itself there is numberreference to rr. 3 and 4 and it is in sharp companytrast to the order dated May 23, 1952, which was indeed a declaration under the said rules. To hold that the order dated December 14, 1953, is an independent declaration under rr. 3 and 4 is to tun companynter to the entire tenor of the document. It is worthy of numbere that under r. 4 a , a declaration issued under r. 3 shall specify the particular post or particular grade of posts within a cadre in respect of which it, is issued and the date from which it is to take effect. The order dated December 14, 1953, does number ,state that the appellant is declared to hold a quasipermanent status with regard to the post of Assistant Station Director on the companytrary, it, states that he carries with him the quasi- permanent status of his former post. If the order dated December 14, 1953, were an independent declaration in respect of the post of Assist-ant Station Director, it would have specified that post and also the date with effect from which the order was to take effect in regard to that post. We are therefore satisfied that the order dated December 14, 1953 cannot, on its terms, be treated as a declaration under rr. 3 and 4 of the Temporary Service Rules. It may be stated here that learned companynsel for the appellant did number urge that the order dated, December 14, 1953, was an independent declaration under rr. 3 and 4 or that his client understood the order in that sense. It is also evident from the various documents in the record that the order was never intended to be a declaration under rr. 3 and 4 of the Temporary -Service Rules and the appellant himself took the 1319 order as merely giving effect to the office memorandum cited therein, the main plank of the appellants case being that the post of Assistant Station Director is in the same grade as the post of Public Relations Officer. The appellant was appointed to officiate as Assistant Station Director in a purely temporary capacity until further orders on September 13, 1952,. Even before that date the appellant was asked to apply for the post of an Assistant Station Director through the Public Service Commission. On June 9, 1953, long after the appellant had been appointed to officiate as Assistant Station Director, he was told that he companyld number claim ,any protection in the post of Assistant Station Director on account of his quasi-permanent status as Public Relations Officer. Even in the letter which the Ministry of Information and Broadcasting wrote to the Public Service Commission on June 22, -1954, it was stated The Commission were number companysulted at the time of shifting of quasi-permanent status of Shri Srinivasan from the grade of Public Relations Officer to that of Assistant Station Director in view of the Provision of sub-para. c of the Explanatory Memorandum of Rule 2 of the Central Civil Service Temporary Service Rules which states that a Government servant who is declared as quasi-permanent in respect of a particular post may be shifted from one post to another within the cadre or grade companycerned due to reduction in the number of posts or other causes. Such shifting does number affect his rights. As the posts of Assistant Station Director and Public Relations Officer carry the same grade of pay, companysultation with the Commission in this case was number companysidered necessary . This letter makes it abundantly clear that the appropriate authority never intended the order dated December 14, 1953 to be a declaration under rr. 3 and 4 of the Temporary Service Rules. Even the appellant did number take the order in that sense. In all his representations, the appellants plea was that the post of Public Relations Officer in which ,he, held a quasi- permanent status was in the same grade as that of Assistant Station Director and there,fore he carried his status in the former post to his new 1320 post. He never pleaded anywhere that the order dated December 14,1953, was an independent declaration in respect of the post of Assistant Station Director. We refer first to para. 17 of the appellants writ petition to the Punjab High Court. In that paragraph the appellant said That after four months careful ,consideration and discussion between the Ministry of Information and Broadcasting, Home Ministry and the Union Public Service Commission, Government issued an order dated 14-12-53 declaring that the petitioner will carry quasi-permanent status in his new post of Assistant Station Director as per rules relating to the transfer of quasi-permanent officers. In paragraph 30 the appellant again stated that the post of Assistant Station Director and Public Relations Officer were companystituted and recognised to be in the same grade and under r. 2 c of the Temporary Service Rules the shifting from one post to another in the same grade did number affect his status in other words, the appellant also understood the order dated December 14, 1953, number as an independent order declaring his quasi-permanent status in the post of Assistant Station Director, but merely as giving effect to r. 2 c of the Temporary Service Rules by reason of the fact, which number appears to be incorrect, that the post of Public Relations Officer was in the same grade as that of Assistant Station Director. Even in his statement of the case, the appellant stated- It may be emphasised that the Government in their order dated 14-12-53 reiterated the appellants quasi- permanent status in the post of Assistant Station Director, number on the basis of the appellants representation but on the authority of the Home Ministrys order No. 54/136/51. NGS, dated 24-4-52 relating to the lien of quasipermanent employees . The reference to the Home Ministrys office memorandum shows how the appellant understood the order dated December 14, 1953. Rule 4 b of the Temporary Service Rules states that when recruitment to a specified post is required to be made in companysultation with the Public Service Commission, numberdeclaration under rr. 3 and 4 a shall be issued except after companysultation with the 1321 Commission. In the view which we have taken of the order dated December 14, 1953, it is number really necessary to decide in the present case whether the provisions of r. 4 b are merely directory or mandatory. It is sufficient to state that the Public Service Commission was number companysulted before the order dated December 14, 1953, was issued, and the appointing authority did number intend the order as a declaration under rr. 3 and 4 a . In State of U. P. v. Manbodhan Lal Srivastava 1 it has been held that the provisions of Art. 320 3 c of the Constitution, as respects companysultation of the Public Service Commission on all disciplinary matters affecting a person serving the Government of India or a State Government, are number mandatory in spite of the use of the word I shall therein. That decision is founded on the following garounds 1 the proviso to Art. 320 itself indicates that in certain cases or classes of cases the Commission need number be companysulted 2 the requirement of companysulting the Commission does number extend to making the advice of the Commission binding on Government as respects disciplinary matters and 3 on a proper companystruction of the Article, it does number companyfer any right or privilege on an individual public servant. We may point out that numbere of these grounds have any application so far as r. 4 b of the Temporary Service Rules is companycerned. Article 320 may number be mandatory as against the President but a subordinate appointing authority who has to make a declaration under the rules cannot ignore or abrogate the very rules under which he has to make the declaration. Quasi-permanent status is a creature of the rules, and r 4 b requires that numberdeclaration under r. 3 shall be made except after companysultation with the Public Service Commission when recruitment to a specified post is required to be made in companysultation with the Public Service Commission . An officer cannot claim the benefit of r. 3 and ignore at the same time the companydition laid down in r. 4 b in other words, he cannot claim the benefit of a part of the rules and refuse to be bound by the companyditions of the other part. 1958 S.C.R. 533. 1322 Now, as to estoppel in our view, the appellant was number misled in any way as to his quasi-permanent status a status which he undoubtedly held in the post of Public Relations Officer the mistake that was made was in thinking that the post of Assistant Station Director was in the same grade as that of Public Relations Officer and then giving effect to the Home office memorandum, referred to previously, on the basis of that mistake. We do number think that any question of estoppel really arises, and in fairness to learned companynsel for the appellant it must be stated that he has number founded the case on estoppel. Learned companynsel for the appellant has companytested the companyrectness of the opinion of the Union Public Service Commission and has suggested that the Commission had indulged in an officious opinion, because under the Union Public Service Commission Consultation Regulations, it was number necessary to companysult the Commission. Our attention has been drawn to Regulation 3, which reads as follows so far as it is relevant for our purpose- It shall number be necessary to companysult the Commission in regard to the selection for appointment- a to a Central Service, Class 1, of any Officer in the Armed Forces of the Union or any officer who is already a member of an All India Service, Central Service,Class 1, a Railway Service, Class 1. b to a Central Service, Class 11, of any officer from another Central Service, Class I or from a Central Service, Class 11 or of any officer in the Armed Forces of the Union or of a Railway Service, Class II Note - In this regulation, the term I officer does number include a person in temporary employment. The companyrespondence with the Union Public Service Commission has number been placed before us. That companyrespondence shows that the Union Public Service Commission took the view that Regulation 3 did number apply to an officer who was in temporary employment in the sense in which that expression was used 1323 when the Regulations were made, and quasi-permanent servant as defined in the Temporary Service Rules also meant temporary service, but subject to certain benefits in the matter of leave etc., and certain safeguards in the matter of termination of service. Whether the Union Public Service Commission is right in this view or number we are number called upon to decide, particularly when the Union Public Service Commission is number before us. It is enough for us to hold that the post of Assistant Station Director is number a post in the same grade or cadre as that of the Public Rela- tions-Officer. That being the position, the appellant had numberqutsi-permanent status in the post of Assistant Station Director and his service was liable to be terminated when there was a reduction in the number of posts of Public Relations Officers within the meaning of cl. ii number was he entitled to the benefit of the proviso to el. ii so far as the post of Assistant Station Director was companycerned. For the reasons given above, we hold that there has been numberviolation of the companystitutional guarantee under Art. 311 2 in the case of the appellant. The appeal must, therefore, be dismissed. As to the petition tinder Art. 32 of the Constitution, we do number think that there has been any such discrimination against the appellant as is companytemplated by Arts. 14 and 16 of the Constitution. It is true that others who did number hold a qasi-permanent status were subsequently appointed as Assistant Station Director through selection by the Union Public Service Commission. We can only say that it is unfortunate that the appellant was number so selected but that does number involve the breach of any fundamental right. In companyclusion we wish to say that a art from any companysideration of mere legal right, this is a hard case. The appellant was in service for about nine years without any blemish and his service was terminated on the reduction of certain posts he was told--wrongly it number appears-that he had a quasi-permanent status in the post of Assistant Station Director. The 168 1324 appellant states that the Union Public Service Commission did number companysider his suitability for the post of Assistant Station Director, because he claimed quasipermanent status in that post. The companyrespondence with the Union Public Service Commission shows that the appellants case was number companysidered from the promotion quota of 20 because he held a post which was number to use an expression of the Commission in the field for promotion. If the appellant is right in his statement that he was number companysidered for direct recruitment because he claimed quasi-permanent status, then obviously there is an apparent injustice the appellant is then deprived of companysideration of his claim both from the promotion and direct quotas. We invite the attention of the authorities companycerned to this aspect of the case and hope that they will companysider the appollants case sympathetically and give him, proper relief. With these observations, we dismiss the appeal and the petition, but in the circumstances there will be numberorder for companyts. BOSE J.-With great respect I disagree. The appellants services as Public Relations Officer, All India Radio, were terminated because of the reduction in that post. There was numberother post of equal status in that grade or cadre, so I agree that he bad numberright to any companytinuance of employment. But he was appointed to officiate as Assistant Station Director in a purely temporary capacity until further orders , on September 13, 1952. Order No. 1 101 51/52 . Later, on December 14, 1953, further orders were passed by the same authority Order No. 113 -51/52 . These orders companyfirmed the order appointing the appellant Assistant Station Director and companycluded- Under the provision companytained in the Ministry of Home affairs Office Memorandum No. 54 /136/51NGS, dated the 24th April, 1952, Shri Srinivasan will carry with him the quasi- permanent status of his former post of Public Relations Officer while holding the post of Assistant Station Director. 1325 This order is a further order and, in my judgment, it clearly and unequivocally makes him quasipermanent in the new post. It is true that this was done under a mistake which was discovered at a later date but the mistake is that of Government and others cannot be made to suffer because of the unilateral mistake of Government. I had occasion to observer while delivering the judgment of the Court in The Commissioner of Police, Bombay v., Gordhandas Bhan i 1 , that- Public orders, publicly made, in exercise of a statutory authority cannot be companystrued in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do and I add in this case, what he subsequently discovered . Public orders made by public authorities are meant to have public effect and are intended to affect the actings and companyduct of those to whom they are addressed and must be companystrued objectively with reference to the language used in the order itself. The principle underlying those observations applies with equal force here. Here is a man who was in numberway at fault. He had served faithfully in various capacities from May 1, 1946. His services were terminated on September 3, 1952, with effect from October 6, 1952. That was number his fault number was it the fault of Government. It was just the fortunes of war. The post was reduced and there was numbermore room for him. No one can quarrel with that. But before the termination took effect he was companytinued in service in another post on September 13, 1952, in a purely temporary capacity until further orders . There was companysequently numberbreak and he was still in service on December 14, 1953, when he was, told that he was quasi- permanent in the post of Assistant Station Director. He accepted this position and acted on it and companytinued to. serve in it for nearly two years. That, 1 1952 S.C.R. 135, 140. 1326 naturally enough, has lessened his chances of seeking other employment because after a man reaches a certain age it becomes increasingly difficult to find new employment. I do number say this was Governments fault, for numberone can be blamed for number knowing where they are in this wilderness of rules and regulations and companyned words and phrases with highly technical and artificial meanings and I think Government did all they companyld to assuage the hardships of an unfortunate situation. But equally, it was number the appellants fault and in a case like this, a broad equity requires that the one least at fault should number be made to suffer. The old technically rigid companyceptions Of Contract and equity have given place in modern times to a juster appreciation of justice, and the fusion of law and equity in one jurisdiction has resulted in the emergence of a new equity in England more suited to modern ideas of human needs and human values. Lord Denning has cited instance after instance in his book The Changing Law to show how this has companye about and how it is still in the process of formation, flexible and fluid with the drive behind to do real justice between man and man, and man and the State, rather than to companytinue to apply a set of ancient hide-bound technicalities forged and fashioned in a wholly different world with a different companyscience and very different evaluations of human dignity and human rights. At pp. 54 and 55 Lord Denning sums up this new orientation in legal thinking thus In companying to those decisions, the Courts expressly applied a doctrine of equity whith says a companyrt of equity will number allow a person to enforce his strict legal rights when it would be inequitable to allow him to do so. This doctrine warrants the proposition that the companyrts will number allow a person to go back on a promise which was intended to be binding, intended to be acted on, and has in fact been acted on. I am number advocating sudden and wild departure from doctrines and precedents that have been finally 1327 settled but I do companytend that we, the highest Court in the land giving final form and shape to the laws of this companyntry, should administer them with the same breadth of vision and understanding of the needs of the times as do the Courts in England. The underlying principles of justice have number changed but the companyplex pattern of life that is never static requires a fresher outlook and a timely and vigorous moulding of old principles to suit new companyditions and ideas and ideals. It is true that the Courts do number legislate but it is number true that they do number mould and make the law in their processes of interpretation. Now, what was the position here when looked at broadly and fairly as an upright and just juryman of plain companymonsense and understanding would do ? Here was a man with several years of service and with numberblemish on his companyduct and reputation. He was about to lose his job. Government felt that that was bard and sought ways and means to right a wrong-not wrong in the legal sense, for numberone was at fault, but wrong in the deeper understanding of men who look with sympathy at the lot of those who have to suffer for numberfault of theirs. Government found, or thought they found, that they companyld put him in another post and they actually did so. They found that in his old post he had certain protections and they wanted and intended that he should companytinue to have them. Under r. 3 of the Temporary Service Rules they found that they companyld give him those protections in a very simple way, namely, by issuing a declaration that he was quasi- permanent in his new post. He was fully eligible for it. He had been in companytinuous Government service for more than three years. The appointing authority was satisfied of his qualifications, work and character for employment in a quasi-permanent capacity. The letters of Government to the Union Public Service Commission bear that out, quite apart from the orders of September 13, 1952, and December 14,1953, which would number have been made if Government had number companysidered him a fit and proper person. How can it be companytended that 1328 Government did. number intend him to have a quasipermanent position in his new post simply because they said that they wanted him to have the same protections as he had before I, It is number the mere form of the words that matters but the meaning that they were intended to companyvey and do companyvey. I am number companycerned at this stage with whether Government was mistaken in thinking that it companyld companyfer this status on him but with what they intended to do as a fact and what they actually did do. They said that, he will. carry with him the quasipermanent status of his former post of Public Relations Officer while holding the post of Assistant Station Director. What else can this mean especially when companypled with their previous companyduct showing, their anxiety to do the just and right thing by this unfortunate man, except that because he was protected before he will companytinue to be protected in the same way. With the deepest respect I companysider it ultra technical and wrong to companystrue this as companyditional on Government having the power. The point at this stage is number whether Government had the right and the power but what they intended and about that I have numberdoubt whatever. They wanted, and intended, and were straining every nerve, to do the right and just thing by him and to give him the same status as he had before, in the matter of pay, in the matter of service and in the protections that he had in his other post. The interpretations that Government put upon their order at a later date are number relevant to companystrue it but it is t matter of satisfaction that Government themselves viewed their action in the same light as I am doing number. In their reply to the Public Service Commission dated June 22, 1954, Government said The Commission were number companysulted at the time of shifting of quasi-permanent status of Shri Srinivasan from the, grade of Public Relations Officer to that of Assistant Station Director It is clear to-- me that Government intended, number merely to move him from one post to the other, but 1329 also to shift the status and that can mean numberhing less than that they intended him to have this status in the new post. I turn next to the powers of Government. I agree that if they had numberpower their action would be of numberavail however well they may have meant. But r. 4 a of the Central Civil Services Temporary Service Rules, 1949, gives them that power. It says that A declaration issued under rule 3 shall specify the particular post in respect of which it is issued. It does number require the declaration to be companyched in any particular form of words or in the shape of a magic incantation. All that it requires is a simple declaration and that declaration is to be found in the order of December 14, 1953. The only question then is whether r. 4 b renders the declaration null and void because the Public Service Commission was number companysulted. The rule runs- Where recruitment to a specified post is required to be made in companysultation with the Federal Public Service Commission, numbersuch declaration shall be issued except after companysultation with the Commission. The essence of the prohibition lies in the words underlined Is required to be made. Just what do these words mean ? Now I have numberdoubt that in the ordinary way these words should be companystrued to mean what they say, But so, I would have thought at first blush, do the words in Art. 320 3 of the Constitution. They are equally emphatic. They are equally imperative. But this Court held in the State of U. P. v. Manbodhan Lal Srivastava 1 , after a careful examination of the whole position, that they do number mean what they seem to say and that they are directive only and number mandatory. Nor is this Court alone in so thinking. The Federal Court companystrued a similar provision.in s. 256 of the Government of India Act, 1935, in the same way Biswanath Khemka v. The King Emperor 2 and so did the Privy Council in a Canadian case in Montreal 1958 S.C.R. 533. 2 1945 F.C.R. 99. 1330 Street Railway Company v. Normandin 1 . Their Lordships said at page, 175 that when a statute prescribes a formality for the performance of a public duty, the formality is to be regarded as directory only if to hold it as mandatory would cause serious general inconvenience or injustice. Will it number cause injustice here? Why should we take a narrower view of a mere set of rules than this Court and the Federal Court and the Privy Council have taken of the Constitution and the Act of a Legislature and even of a supreme Parliament? Why should we give greater sanctity and more binding force to rules and regulations than to our own Constitution ? Why should we hesitate to do justice with firmness and vigour? If we apply the same principles here, then the words required to be made in r. 4 b lose their sting and the way is free and open for us to do that justice for which the Courts exist. Here is Government straining to temper justice with mercy and we, the Courts, are out Shylocking Shylock in demanding a pound of flesh, and why? because this writ in the bond. I will have numbere of it. All I can see is a man who has been wronged and I can see a plain way out. I would take it. I am number quarrelling with the interpretation which the Public Service Commission has placed upon these rules. I have numberdoubt that they should be observed, and are meant to be observed and I have equally numberdoubt that there are companystitutional sanctions which can be applied if they are flouted. But the sanction is political and number judicial and an act done in companytravention of them cannot be challenged in a Court of Law. It is legally valid. Also, the fact that Government would number have acted in this way if they had realised that they were under a directive duty of the Constitution to companysult the Union Public Service Commission first cannot alter the character of their act or affect its legal companysequences. They had the power and they exercised it, companysequently, their act became binding despite their mistake. That is how I would interpret the law and administer justice. 1 1917 A.C. 170. 1331 1 would allow the appeal and the petition with companyts. BY COURT The appeal and the petition are dismissed.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 65 of 1956. Appeal by special leave from the judgment and order dated April 22, 1955, of the Bombay High Court in Criminal Revision Application No. 449 of 1955, arising out of the judgment and order dated March 24, 1955, of the Court of the Presidency Magistrate, Seventh Court, Dadar, Bombay in Case No. 215/S of 1955. Rameshwar Nath, S. N. Andley and J. B. Dadachanji, for the appellant. Satyanarayan, for respondent No. 1. S. Bindra and R. H. Dhebar, for respondent No. 2. 1958. February 20. The Judgment of the Court was delivered by SINHA J.-The only question for determination in this appeal, is whether an offence punishable under s. 24 1 4 of the Bombay Rents Hotel and Lodging House Rates Control Act LVII of 1947 hereinafter referred to as the Act , has been brought home to the appellant. The facts of this case are short and simple. The appellant is the owner, by purchase in 1945, of certain premises situate in Vile Parle, Bombay. Under the predecessor-in- title of the appellant, was a tenant, named Thirumal Rao Potdar, in respect of a room in 1396 those premises, at a monthly rent of Rs. 20 including water rate of Rs. 2. After the, appellaiits purchase, the tenant aforesaid companytinued to hold the tenancy on those very terms. The said premises used to enjoy the amenity of water supply from a municipal tap. As the appellants predecessor-in -title had made default in payment of municipal taxes, the water supply had been cut off by the Municipality early in May, 1947. Since after that, the tenants including the said Thirumal Rao, had the use of well water only from a neigh- bouring tenant. Thirumal Rao died in or about the year 1950, and his widow, the first respondent, companytinued in occupation of the premises, without having the use of municipal water supply though she companytinued to pay the original rent plus annas 10 more by way of permitted increase. Thus, the landlord the appellant-went on receiving the monthly rent of Rs. 20-10-0 from the first respondent without giving her the benefit of water supply from the municipal tap. The Act came into force on February 13, 1948. The tenancy appears to have been recorded in her name some time in 1951. Nothing appears to have happened until April, 1954, when the first respondent brought it to the numberice of the Municipal authorities that the supply of water from the municipal tap had been stopped since 1947. The Municipality answered the first respondents companyplaint by a letter dated May 24, 1954, saying that the water companynection companyld be restored on payment of Rs. 11-4-0 only, being the fee for doing so, if the owners companysent was produced. Before receiving this answer from the Municipality, the tenant got a letter written to the appellant, through a pleader, asking him to refund Rs. 72 being the amount charged for water supply at Rs. 2 per month, which was included in the total rent aforesaid for three years after the tenancy had been mutated in her name. The letter also stated that the supply of water had been withheld by the landlord by allowing the Municipality to disconnect the water companynection for number-payment of municipal dues. The landlord was also called upon to get the water companynection restored, and if he failed to do so, prosecution under 1397 s.24 of the Act, was threatened. As the appellant had refused or neglected to have the water companynection restored, the tenant filed a petition of companyplaint on June 14, 1954, for the prosecution of the appellant under s. 24 of the Act. The appellant was companyvicted. after a trial by the 7th Presidency Magistrate, Dadar, by his judgment and order dated March 24, 1955. He was sentenced to undergo one days simple imprisonment, and to pay a fine of Rs. 150, and in default of payment, to undergo one months simple imprison- ment. The appellant moved the High Court of Bombay in revision against the order of companyviction and sentence aforesaid. The matter was heard by a judge sitting singly, who summarily rejected the application by an order dated April 22, 1955. The appellant moved the High Court for a certificate that this was a fit case for appeal to this Court, which was refused by a Division Bench on May 16, 1955. Thereafter, the appellant moved this Court for special leave which was granted on October 10, 1955. Hence, this appeal. The learned companynsel for the appellant raised a number of companytentions against the companyviction and sentence imposed upon the appellant, but in the view we take of the provisions of s. 24 of the Act, it is number necessary to pronounce upon all those companytentions. The most important question which we have to determine in this appeal, is whether the companystituent elements of an offence under s. 24 1 , have been made out on the facts found in this case. Section 24 is in these terms 24. 1 No landlord either himself or through any person acting or purporting to act on his behalf shall without just or sufficient cause cut off or withhold any essential supply or service enjoyed by the tenant in respect of the premises let to him. A tenant in occupation of the premises may, if the landlord has companytravened the provisions of subsection 1 , make an application to the Court for a direction to restore such supply or service. If the Court on inquiry finds that the tenant has been in enjoyment of the essential supply or 1398 service and that it was cut off or withheld by the landlord without just or sufficient cause, the Court shall make an order directing the landlord to restore such supply or service before a date to be specified in the order. Any landlord who fails to restore the supply or service before the date so specified shall for each day during which the default companytinues there,after be liable upon a further direction by the Court to that effect to fine which may extend to one hundred rupees. Any landlord, who companytravenes the provisions of subsection 1 shall, on companyviction, be punishable with imprisonment for a term which may extend to three months or with fine or with both. Explanation I.-In this section essential supply or service includes supply of water, electricity, lights in passages and on staircases, lifts and companyservancy or sanitary service. Explanation II.-For the purposes of this section, withholding any essential supply or service shall include acts or omissions attributable to the landlord on account of which the essential supply or service is cut off by the local authority or any other companypetent authority. The explanation II was inserted by s. 16 2 of the Amending Act, namely, Bombay Act 61 of 1953, and the explanation 1, as it number stands, was the only explanation before the amending Act was passed. It has number been denied before us that the supply of tap water is an essential supply, and that is beyond companytroversy in view of explanation 1. What has been argued, is that the supply of municipal water had been cut off by the Municipality as a result of the default in payment of municipal dues, by the appellants predecessor-in-title. It may be that the appellant was number to blame for the default in payment of municipal dues, but it was open to him to pay Rs. 11-4-0 and have the water companynection restored. He may number have been directly responsible for the .cutting off of the supply of municipal water, but it was within his power to get the supply restored by the Municipality on payment of the prescribed fee. Hence, 1399 in so far as the appellant omitted to do so, such an omission is attributable to him within the meaning of explanation II which was inserted into the Act in 1953. There can, therefore, be numberdoubt that the appellant was companytinuing to withhold an essential supply within the meaning of s. 24, as it stood in 1953. But that is number the only essential ingredient of the offence created by s. 24. In order to attract the provisions of that section, it is also necessary that the second ingredient of the offence, should be there, namely, that that essential supply-tap water supply by the Municipality- should have been enjoyed by the tenant. Is it enough that this essential supply should have been enjoyed by the tenant at any past time, however remote, or that it should have been enjoyed at any time after the companying into effect of the Act? We are assuming for the purposes of this decision that the first respondent was the tenant at all material times. In our opinion, the section makes it essential that the particular essential supply should -have been available for the use of the tenant at some time when the Act was in force. If, on the other hand, the section were companystrued in the sense that the supply should have been enjoyed at some time in the remote past, that is, before the Act was enforced, the act of the landlord, when it was companymitted, may number have been penal but the same act would become penal on the companying into effect of the Act. In that sense, it would amount to ex post facto legislation, and we cannot accede to the argument that such was the intention of the Legislature-an intention which would companye within the prohibition of Art. 20 1 of the Constitution. But it has been said that the expression enjoyed by the tenant in s. 24, does number necessarily mean that the tenant should have physically made use of the essential supply, and that the requirements of the section are satisfied if the tenant had the right vested in him to call for such a supply. In other words, the argument is that the word enjoyed does number import physical use of the amenity in question, but 1400 the juridical aspect of it in the sense that the supply of the water, was one of the rights vested in the tenant. On this companystruction, if the tenant had, as in this case the first respondent had, the right to enjoy the supply of water, that would amount to her having enjoyed the supply, and, thus, both the requirements of s. 24 would be fulfilled. In our opinion, it would be straining the language of the section to say that enjoyed should mean had the right to enjoy . If that was the intention of the Legislature, those words would have been different. That this was number the intention of the Legislature, becomes clear on an examination of the terms of sub.s. 3 of that section. It speaks of the tenant has been in enjoyment of the essential supply or service and that it was cut off or withheld by the landlord which imports recent enjoyment until the supply was cut off, and number enjoyment in the remote past. If the intention was that enjoyment should have been at any time in the past, irrespective of the company- sideration when the Act came into force, the Legislature would have used some other words to indicate that intention, even assuming that the Legislature companyld have done so. But it was suggested that sub-s. 1 of s. 24, was self- companytained, and that it was number necessary to companystrue its terms in the light of the provisions of sub-ss. 2 and 3 which go together. But it is clear from the terms of sub-s. 2 that it cannot companye into operation without the landlord having companytravened the provisions of sub-s. 1 . Therefore, the provisions of s. 24 have to be companystrued as a whole, in order to find out the true intention of the Legislature. It, may also be pointed out that it is doubtful whether, before the second explanation was inserted into the section, as aforesaid, in 1953, the cutting off of the water supply by the Municipality, or the omission of the landlord to take steps to have the companynection restored, would have companye within the mischief of the penal section. Supposing the second explanation was number there, companyld the prosecution attribute the cutting off of the companynection by the Munici- pality, and the subsequent refusal of the landlord 1401 to get the companynection restored, as an act or omission of the landlord within the meaning of s. 24 1 ? It has got to be remembered that the provisions of s. 24 are meant to be an additional guarantee to the tenant, of his companytinued enjoyment of the rights created in his favour by the companytract of tenancy apart from his rights under the general law. The landlord companyld number only be penalized for having interrupted the enjoyment of any one of these essential rights, the tenant companyld approach the companyrt under sub-ss. 2 and 3 of the section, to issue a mandate to the landlord to restore the supply or the service before a specified date, the infringement of which would entail the liability to recurring fines until the mandate had been carried out by the landlord. These are provisions of an exceptional character, meant to be in force for a specified period during which the Legislature thought it advisable and expedient to provide for such extraordinary remedies. Such remedies which are inroads upon the landlords freedom of action, have to be companystrued strictly in accordance with the words actually used by the Legislature, and they cannot be given an extended meaning.

Case appeal was accepted by the Supreme Court

Bhagwati, J. These petitions under Art. 32 of the Constitution raise the question as to the vires of the Working Journalists Conditions of Service and Miscellaneous Provisions Act, 1955 45 of 1955 , hereinafter referred to as the Act and the decision of the Wage Board companystituted thereunder. As they raise companymon questions of law and fact they can be dealt with under one companymon judgment. In order to appreciate the rival companytentions of the parties it will be helpful to trace the history of the events which led to the enactment of the impugned Act. The newspaper industry in India did number originally start as an industry, but started as individual newspapers founded by leaders in the national, political, social and economic fields. During the last half a century, however, it developed characteristics of a profit making industry in which big industrialists invested money and companybines companytrolling several newspapers all over the companyntry also became the special feature of this development. The working journalists except for the companyparatively large number that were found companycentrated in the big metropolitan cities, were scattered all over the companyntry and for the last ten years and more agitated that some means should be found by which those working in the newspaper industry were enabled to have their wages and salaries, their dearness allowance and other allowances, their retirement benefits, their rules of leave and companyditions of service, enquired into by some impartial agency or authority, who would be empowered to fix just and reasonable terms and companyditions of service for working journalists as a whole. Isolated attempts were made by the Uttar Pradesh and Madhya Pradesh Governments in this behalf. On June 18, 1947, the Government of Uttar Pradesh appointed a companymittee to enquire into the companyditions of work of the employees of the newspaper industry in the Uttar Pradesh. On March 27, 1948, the Government of Central Provinces Berar also appointed an Inquiry Committee to examine and report on certain questions relating to the general working of the newspaper industry in the province, including the general companyditions of work affecting the editorial and other staff of newspapers, their emoluments including dearness allowance, leave, provident fund, pensionary benefits, etc. The Committees aforesaid made their reports on the respective dated March 31, 1949, and March 27, 1948, making certain recommendations. The All-India problem, however, remained to be tackled and during the debate in Parliament on the Constitution First Amendment Bill, 1951, the Prime Minister said that he was prepared to appoint a companymittee or a companymission, including representatives of the Press, to examine the state of the Press and its companytent. He elaborated the idea further on June 1, 1951, when he indicated that an enquiry companyering the larger issue of the Press, such as had been carried out in the United Kingdom by the royal Commission, might be productive of good for the Press and the development of this very important aspect of public affairs. The idea was further discussed during the debate in Parliament on the Press Incitement to Crimes Bill, later named the Press Objectionable Matter Act, 1952. At its session held in April, 1952, at Calcutta, the Indian Federation of Working Journalists adopted a resolution for the appointment of a Commission to enquire into the companyditions of the Press in India with a view to improving its place, status and functioning in the new democratic set up. The appointment of the Press companymission was thereafter announced in a Communique issued by the Govt. of India, Ministry of Information and Broadcasting, on September 23, 1952, under the Chairmanship of Shri Justice G. S. Rajadhyaksha. The terms of reference inter alia were - The Press Commission shall enquire into the state of the Press in India, its present and future lines of development and shall in particular examine - the method of recruitment, training, scales of remuneration, benefits and other companyditions of employment of working journalists settlement of disputes affecting them and factors which influence the establishment and maintenance of high professional standards The Commission companypleted its enquiry and submitted its report on July 14, 1954. Amongst other things it found that out of 137 companycerns about whom information was available only 59 were returning profits and 68 showed losses. The industry taken as a whole had returned a profit of about 6 lakhs of rupees on a capital investment of about 7 crores, or less than 1 per cent. per annum. It found that proof-readers as a class companyld number be regarded as working journalists, for there were proof-readers even in presses doing job work. It came to the companyclusion that if a person had been employed as a proof-reader only for the purpose of making him a more efficient sub-editor, then it was obvious that even while he was a proof-reader, he should be regarded as a working journalist but in all other instances, he would number be companynted as a journalist but as a member of the press staff companying within the purview of the Factories Act. The question of the emoluments payable to working journalists, was discussed by it in paragraphs 538 and 539 of its report 538 - SCALES TO BE SETTLED BY COLLECTIVE BARGAINING OR ADJUDICATION - It has number been possible for us to examine in detail the adequacy of the scales of pay and the emoluments received by the working journalist having regard to the companyt of living in the various centers where these papers are published and to the capacity of the paper to make adequate payment In this companynection it may be stated that the Federation of Working Journalists also agreed, when it was put to them, that apart from suggesting a minimum wage it would number be possible for the Commission to undertake standardisation of designations or to fix scales of pay or other companyditions of service for the different categories of employees for different papers in different regions. They have stated that these details must be left to be settled by companylective bargaining or where an agreement is number possible the dispute companyld be settled by reference to an industrial companyrt or an adjudicator with the assistance of a Wage Board, if necessary. The All India Newspaper Editors Conference and Indian Language Newspapers Association have also stated that it would number be possible to standardise designations and that any uniformity of salaries as between one newspaper and another would be impossible. The resources of different newspapers vary and the companyditions of service are number the same. We agree in principle that there should be uniformity as far as possible, in the companyditions of service in respect of working journalists serving in the same area or locality. But this can be achieved only by a settlement or an adjudication to which the employers and the employees companylectively are parties. 539 - DEARNESS ALLOWANCE - This again, is a matter which would require very detailed study of the rise in the index numbers of the companyt of living for various places where the newspapers are published. We do number know of any case where a uniform rate has been prescribed for dearness allowance applicable all over the companyntry irrespective of the economic companyditions at different centers and the paying capacity of the various units. This must be a matter for mutual adjustment between the employers and the employees and if there is numberagreement, some machinery must be provided by which disputes between the parties companyld be resolved. The position of a journalist was thus characterised by the Commission A journalist occupies a responsible position in life and has powers which he can wield for good or evil. It is he who reflects and moulds public opinion. He has to possess a certain amount of intellectual equipment and should have attained a certain educational standard without which it would be impossible for him to perform his duties efficiently. His wage and his companyditions of service should therefore be such as to attract talent. He has to keep himself abreast of the development in different fields of human activity-even in such technical subjects as law, and medicine. This must involve companystant study, companytact with personalities and a general acquaintance with worlds problems. It companysidered therefore that there should be a certain minimum wage paid to a journalist. The possible impact of such a minimum wage was also companysidered by it and it was companysidered number unlikely that the fixation of such a minimum wage may make it impossible for small papers to companytinue to exist as such but it thought that if a newspaper companyld number afford to pay the minimum wage to the employee which would enable him to live decently and with dignity, that newspaper had numberbusiness to exist. It recommended division of localities for taking into account the differential companyt of living in different parts of India, and determining what should be the reasonable minimum wage in respect of each area. It endorsed the companycept of a minimum wage which has been adopted by the Bank Award - Though the living wage is the target, it has to be tempered, even in advanced companyntries, by other companysiderations, particularly the general level of wages in other industries and the capacity of the industry to pay In India, however, the level of the national income is so law at present that it is generally accepted that the companyntry cannot afford to prescribe a minimum wage companyresponding to the companycept of a living wage. However, a minimum wage even here must provide number merely for the bare subsistence of living, but for the efficiency of the worker. For this purpose, it must also provide for some measure of education, medical requirements and amenities. 12. and suggested that the basic minimum wage all over India for a working journalist should be Rs. 125 with Rs. 25 as dearness allowance making a total of Rs. 150. It also suggested certain dearness allowance and City allowance in accordance with the location of the areas in which the working journalists were employed. I companypared the minimum wage recommended by it with the recommendations of the Uttar Pradesh and Madhya Pradesh Committees and stated that its recommendations were fairly in line with the recommendations of those Committees particularly having regard to the rise in the companyt of living which had taken place since those reports were made. It then companysidered the applicability of the Industrial Disputes Act to the working journalists and after referring to the award of the Industrial Tribunal at Bombay in companynection with the dispute between Jam-e-Jamshed and their workmen and the decision of the Patna High Court in the case of V. N. N. Sinha v. Bihar Journals Limited 1953 I.L.R. 32 Pat. 688 , it came to the companyclusion that the working journalists did number companye within the definition of workman as it stood at that time in the Industrial Disputes Act number companyld a question with regard to them be raised by others who were admittedly governed by the Act. It thereafter companysidered the questions as to the tenure of appointment and the minimum period of numberice for termination of the employment of the working journalists, hours of work. provision for leave, retirement benefits and gratuity, made certain recommendations and suggested legislation for the regulation of the newspaper industry which should embody its recommendations with regard to i numberice period ii bonus iii minimum wages iv Sunday rest v leave, and vi provident fund and gratuity. Almost immediately after the Report of the Press Commission, Parliament passed the Working Journalists Industrial Disputes Act, 1955 I of 1955 which received the assent of the President on March 12, 1955. It was an Act to apply the Industrial Disputes Act, 1947, to working journalists. Working Journalist was defined in s. 2 b of the Act to mean a person whose principal avocation is that of a journalist and who is employed as such in, or in relation to, any establishment for the production or publication of a newspaper or in, or in relation to, any news agency or syndicate supplying material for publication in any newspaper, and includes an editor, a leader-writer, news-editor, sub-editor, feature writer, companyy-taster, reporter, companyrespondent, cartoonist, news-photographer and proof reader but does number include any such person who is employed mainly in a managerial or administrative capacity, or being employed in a supervisory capacity, exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature. Section 3 of that Act provided that the provisions of the Industrial Disputes Act, 1947, shall apply to, or in relation to, working journalists as they apply to or in relation to workmen within the meaning of that Act. The application of the Industrial Disputes Act, 1947, to the working journalists was number, however, deemed sufficient to meet the requirements of the situation. There was companysiderable agitation in Parliament for the implementation of the recommendations of the Press Commission, and On November 30, 1955, the Union Government introduced a Bill in the Rajya Sabha, being Bill No. 13 of 1955. It was a Bill to regulate companyditions of service of working journalists and other persons employed in newspaper establishments. The recommendations of the Press Commission in regard to minimum period of numberice, bonus, Sunday rest, leave, and provident fund and gratuity, etc., were all incorporated in the Bill the fixation of the minimum rates of wages however was left to a minimum wage Board to be companystituted for the purpose by the Central Government. The provisions of the Industrial Employment Standing Orders Act, 1946 20 of 1946 and the Employees Provident Funds Act, 1952 19 of 1952 were also sought to be applied in respect of establishments exceeding certain minimum size as recommended by the Commission. It appears that during the companyrse of discussion in the Rajya Sabha, the word minimum was dropped from the Bill wherever it occurred, the Minister for Labour having been responsible for the suggested amendment. The reason for dropping the same was stated by him as under Let the word minimum be dropped and let it be a proper wage board which will look into this question in all its aspects. Now, if that is done, I believe, from my own experience of the industrial disputes with regard to wages, in a way it will solve the question of wages to the working journalists for all time to companye. The Act as finally passed was entitled The Working Journalists Conditions of Service and Miscellaneous Provisions Act, 1955 45 of 1955 and received the assent of the President on December 20, 1955. The relevant provisions of the Act may number be referred to. It was an Act to regulate certain companyditions of service of working journalists and other persons employed in newspaper establishments. Newspaper establishment was defined in s. 2 d to mean an establishment under the companytrol of any person or body of persons, whether incorporated or number, for the production or publication of one or more newspapers or for companyducting any news agency or syndicate. The definition of working journalist was almost in the same terms as that in the Working Journalists Industrial Disputes Act, 1955, and included a proof reader. All words and expressions used but number defined in this Act and defined in the Industrial Disputes Act, 1947, were under s. 2 g to have the meanings respectively assigned to them in that Act. Section 3 applied the provisions of the Industrial Disputes Act, 1947, as it was in force for the time being, to working journalists as they applied to, or in relation to workmen within the meaning of that Act subject to the modification that s. 25 F of that Act in its application to working journalists in regard to the period of numberice in relation to the retrenchment of a workman was to be companystrued as substituting six months in the case of the retrenchment of an editor and three months, in the case of any other working journalist. The period which lapsed between the publication of the report and the enactment of the Working Journalists Industrial Disputes Act, 1955, viz., from July 14, 1954, to March 12, 1955, was sought to be bridged over by s. 4 enacting special provisions in respect of certain cases of retrenchment during that period. Section 5 provided for the payment of gratuity, inter alia, to a working journalist who had been in companytinuous service, whether before or after the companymencement of the Act, for number less than three years in any newspaper establishment even when he voluntarily resigned from service of that newspaper establishment. Section 6 laid down that numberworking journalist shall be required or allowed to work in any newspaper establishment for more than one hundred and forty-four hours during any period of four companysecutive weeks, exclusive of the time for meals. Every working journalist was under s. 7 entitled to earned leave and leave on medical certificate on the terms therein specified without prejudice to such holidays, casual leave or other kinds of leave as might be prescribed. After thus providing for retrenchment companypensation, payment of gratuity, hours of work, and leave, ss. 8 to 11 of the Act provided for fixation of the rates of wages in respect of working journalists. Section 8 authorised the Central Government by numberification in the Official Gazette to companystitute a Wage Board for fixing rates of wages in respect of the working journalists in accordance with the provisions of the Act, which Board was to companysist of an equal number of persons numberinated by the Central Government to represent employers in relation to the newspaper establishments and working journalists, and an independent person appointed by the Central Government as the Chairman thereof. Section 9 laid down the circumstances which the Wage Board was to have regard to in fixing rates of wages and these circumstances were the companyt of living, the prevalent rates of wages for companyparable employments, the circumstances relating to the newspaper industry in different regions of the companyntry and to any other circumstance which to the Board may seem relevant. The decision of the Board fixing rates of wages was to be companymunicated as soon as practicable to the Central Government and this decision was under s. 10 to be published by the Central Government in such manner as it thought fit within a period of one month from the date of its receipt by the Central Government and the decision so published was to companye into operation with effect from such date as may be specified, and where numberdate was so specified on the date of its publication. Section 11 prescribed the powers and procedure of the Board and stated that subject to any rules of procedure which might be prescribed the Board may, for the purpose of fixing rates of wages, exercise the same powers and follow the same procedure as an Industrial Tribunal companystituted under the Industrial disputes Act, 1947, exercised or followed for the purpose of adjudicating an industrial dispute referred to it. The decision of the Board under s. 12 was declared to be binding on all employers in relation to newspaper establishments and every working journalist was entitled to be paid wages at a rate which was to be in numbercase less than the rate of wages fixed by the Board. Sections 14 and 15 applied the provisions of the Industrial Employment Standing Orders Act, 1946, as it was in force for the time being and also the provisions of the Employees Provident Funds Act, 1952, as it was in force for the time being, to every newspaper establishment in which twenty or more persons were employed. Section 17 provided for the recovery of money due from an employer and enacted that where any money was due to a newspaper employee from an employer under any of the provisions of the Act, whether by way of companypensation, gratuity or wages, the newspaper employee might, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the money due to him, and if the State Government or such authority as the State Government might specify in this behalf was satisfied that any money was so due, it shall issue a certificate for that amount to the companylector and the companylector shall proceed to recover that amount in the same manner as an arrear of land revenue. Section 20 empowered the Central Government by numberification in the Official Gazette to make rules to carry out the purposes of the Act and in particular and without prejudice to the generality of the foregoing power, such rules were to provide inter alia for the procedure to be followed by the Board in fixing rates of wages. All rules made under this section, as soon as practicable after they were made were to be laid before both Houses of Parliament. The Working Journalists Industrial Disputes Act, 1955, was repealed by s. 21 of the Act. In pursuance of the power given under s. 20 of the Act the Central Government published by a numberification in the Gazette of India - Part II - Section 3, dated July 30, 1956, The Working Journalists Wage Board Rules, 1956. Rule 8 provided that every question companysidered at a meeting of the Board was to be decided by a majority of the votes of the members present and voting. In the event of equality of votes the Chairman was to have a casting vote. Rule 13 provided for the resignation of the Chairman or any member from his office or membership, as the case may be. The seat held by them was to be deemed to have fallen vacant with effect from the date the resignation of the Chairman or the member was accepted by the Central Government. When a vacancy thus arose in the office of the Chairman or in the membership of the Board, the Central Government was to take immediate steps to fill the vacancy in accordance with the Act and the proceedings might be companytinued before the Board so reconstituted from the stage at which the vacancy was so filled. By a numberification dated May 2, 1956, the Central Government companystituted a Wage Board under s. 8 of the Act for fixing rates of wages in respect of working journalists in accordance with the provisions of the Act, companysisting of equal representatives of employers in relation to newspaper establishments and working journalists and appointed Shri H. V. Divatia, Retired Judge of the High Court of Judicature, Bombay, as the Chairman of the Board. The three members of the Board who were numberinated to represent employers in relation to newspaper establishments were 1 Shri G. Narasimhan, Manager, The Hindu, Madras and President, Indian and Eastern Newspaper Society 2 Shri A. R. Bhat, M.L.C., who had been a member of the Press Commission and was the President of the Indian Language Newspapers Association, as also the Chairman of the Minimum Wages Inquiry Committee for the Printing Industry in Bombay and, 3 Shri K. P. Kesava Menon, Editor, Mathrubhumi, Calicut. The other three members of the Board who were numberinated to represent working journalists were 1 Shri G. Venkataraman, M.P., 2 Shri C. Raghavan, Secretary-General, Indian Federation of Working Journalists, and 3 Shri G. N. Acharya, Assistant Editor, Bombay Chronicle. Shri H. V. Divatia, the Chairman of the Board, had wide and companysiderable experience as chairman of the Textile Labour Enquiry Committee, Bombay, had been the President of the First Industrial Court to be set up in India in 1938, and had worked as an Industrial Tribunal dealing with several disputes as between several banks and employees, as well as between several insurance companypanies and their employees. The first meeting of the Board was held on May 26, 1956, in the Bharatiya Vidya Bhavan at Bombay. Sri Kesava Menon and Shri G. Narasimhan were number present at this meeting. It was a preliminary meeting at which the Board set up a sub-committee companysisting of Shri A. R. Bhat and Shri G. N. Acharya to draft a questionnaire for issue to the various journals and organisations companycerned, with a view to eliciting factual data and other relevant information required for the fixation of wages for the working journalists. The sub-committee was requested to bear in mind, while framing the questionnaire the need for 1 obtaining detailed accounts of newspaper establishments 2 proper evaluation of the nature of and the work of various categories of working journalists and 3 proper classification of the companyntry into different areas on the basis of certain criteria like population, companyt of living, etc. The questionnaire drafted by the sub-committee was to be finalised by the chairman and circulated to all companycerned by the end of June, 1956. The questionnaire was accordingly drawn up and was sent to Universities and Governments, etc., and several other organisations and individuals interested in the inquiry of the Board, and to all newspapers individually. It was divided into three parts. Part A was intended to be answered by newspapers, news agencies, organisations of employers and of working journalists and any individuals who might wish to do so. Part B was meant to be answered by all newspapers and Part C by all news agencies. At the outset the Board pointed out that except where the question itself indicated a different period or point of time, the reporting period for purposes of parts B and C of the questionnaire was the financial years April 1 to March 31 1952-53, 1953-54, and 1954-55, or in any establishments which followed a different accounting year, a period of three years as near thereto as possible. It further pointed out that under s. 11 of the Act the Board had the powers of an Industrial Tribunal companystituted under the Industrial Disputes Act. In Part A of the questionnaire under the heading Cost of Living, companyt of living index for the respective centers were called for and a special question was addressed whether the basic minimum wage, dearness allowance and metropolitan allowance in the table attached to paragraph 546 of the Press companymission was acceptable to the party questioned and, if number, what variations would the party suggest and why. Comparable employment suggested included a Higher secondary school teachers b College and university teachers c Journalists employed as publicity and public relations officers in the information departments of the Central and State Governments d Journalistic employees of the news service division of All India Radio and e Research personnel of the economic and social research departments of Central Government ministries like finance, labour and companymerce. Under the heading Special Circumstances, the only question addressed was question No. 7 Are there in your region any special companyditions in respect of the newspaper industry which affect the fixing of rates of wages of working journalists ? If so, specify the companyditions and indicate how they affect the question of wages. As regards the principles of wage fixation the party questioned was to categories the different newspaper establishments and in doing so companysider the following factors, among others a Invested capital b Gross revenue c Advertisement revenue d circulation e Periodicity of publication f The existence of chains, multiple units and companybines and g Location. In part B which was to be answered by newspapers were included under the heading Accounts - Balance sheets and 2 Trading and profit and loss accounts of the newspapers as in the specimen forms attached thereto for the reporting period. Questions were also addressed in regard to the revenue of the newspapers inter alia from the press, a process studio, outside work, foundry, etc., and subscriptions as also the expenditure incurred on postage, distribution sale, companymission and rebate to advertisers, etc. and other items. All information which was companysidered necessary by the Wage Board for purposes of fixation of the rates of wages was thus sought to be elicited by the questionnaire. It appears that Shri K. P. Kesava Menon sent in his resignation on or about June 21, 1956, and by a numberification dated July 14, 1956, the Central Government accepted the said resignation and appointed in his place Shri K. M. Cherian, member of the executive companymittee of the Indian and Eastern Newspapers Association, one of the directors of the Press Trust of India and the Chief Editor, Malayala Manorama, Kottayam, as a member of the Board. Out of 5,465 newspapers, journals, etc., to whom the questionnaire was sent only 381 answered the same and out of 502 dailies only 138 answered it. The Board had an analysis made of those who had replied to the questionnaire and also of their replies thereto in regard to each of the questions companytained in the questionnaire. It also got statements prepared according to the gross revenue of the newspapers, the population of the centers, circulation of the papers, the companyt of living index, scales of dearness allowance in certain States, figures of companyparable employments, pay scales of important categories of journalists, etc., the total income, break up of expenditure in relation to total income and total expenses, total income in relation to net profits, and net losses and net profits in relation to circulation of the several newspapers which had sent in the replies to the questionnaire. Further meetings of the Board were held on August 17, and August 20, 1956, in Bombay. The Chairman informed the members that response from journals, organisations, etc., to whom questionnaire was sent was unsatisfactory and it was decided to issue a Press Note requesting the papers and journals to send their replies, particularly to Part B of the questionnaire as soon as possible inviting their attention to the fact that the Board had powers of an Industrial Tribunal under the Act, and if newspapers failed to send their replies, the Board would be companypelled to take further steps in the matter. It was decided that for purposes of taking oral evidence, the companyntry be divided into 5 zones, namely, Trivandrum, Madras, Delhi, Calcutta and Bombay and the Secretary was asked to summon witnesses to the nearest and companyvenient center. It was further decided that one hour should numbermally be allotted to each newspaper, 3 hours for regional units and 2 hours for smaller units for oral evidence. The Board also discussed the question as to the number of persons who might ordinarily be called for oral evidence from each newspaper or organisation. It thought that one of the important factors governing the findings of the Board would be the circulation of each newspaper, and as such it was decided that the figures with the Audit Bureau of Circulation Ltd., might be obtained at once. The Board also decided to ask witnesses, if necessary, to produce books of accounts, income-tax assessment orders or any other document which in its opinion was essential. Meetings of the Board were held at Trivandrum from September 7, to September 10, 1956, in Madras from September 15, to September 20, 1956, in New Delhi from October 19, to October 26, 1956, in Calcutta from November 25, to December 4, 1956, and in Bombay from January 4, to January 10, 1957, from January 20, to February 6, 1957, from March 25 to March 31, 1957 and finally from April 22 to April 24, 1957. Evidence of several journalists and persons companynected with the newspaper industry was recorded at the respective places and at its meeting in Bombay from March 25, to March 31, 1957, the Board entered upon its final deliberations. At this meeting the chairman impressed upon the members the desirability of arriving at unanimous decisions with regard to the fixation of wages, etc. He further stated that he would be extremely happy if representatives of newspaper industry and of working journalists companyld companye to mutual agreement by direct discussions and he assured his utmost companyoperation and help in arriving at decisions on points on which they companyld number agree. Members welcomed this suggestion and decided to discuss various issues among themselves in the afternoon and on the following days. After companysiderable discussion on March 25, 1957, and March 26, 1957, in which the representatives of the newspapers and of working journalists had joint sittings, unanimous decisions were arrived at on i classification of newspapers, ii classification of centers and iii classification of employees, except on one point, namely, classification of group, multiple units and chains on the basis of their total gross revenue. This was agreed to by a majority decision. The chairman and the representatives of the working journalists voted in favour while the representatives of the employers voted against. Regarding scales of pay, the chairman suggested at the meeting of March 27, 1957, that pending final settlement of the issue the parties should submit figures of scales based on both assumptions, namely, companysolidated wages and basic scales with separate dearness allowance. Both sides agreed to submit companycrete suggestions on the following day. At the Boards meeting on March 28, 1957, the representatives of the employers stated that the term rates of pay did number include scales of pay therefore, the Board was number companypetent to fix scales of working journalists and they submitted a written statement signed by all of them to the chairman in support of their companytention. The representatives of the working journalists argued that the Board was companypetent to fix scales of pay. The chairman adjourned the sitting of the Board to study this issue. A companyy of the written statement submitted by the representatives of the employers was given to the representatives of the working journalists and they submitted a written reply the same afternoon companytending that the Board was companypetent to fix scales of pay of various categories of working journalists. At its meeting on March 29, 1957, the Board discussed its own companypetency to fix scales of pay. The chairman expressed his opinion in writing, whereby he held that the Board was companypetent to fix scales of pay. On a vote being taken according to r. 8 of the Working Journalists Wage Board Rules, 1956, the chairman and the representatives of the working journalists voted in favour of the companypetence of the Board to fix scales of pay, while the representatives of the employers voted against it. Thereafter, several suggestions were made on this question, but since there was numberpossibility of any agreement on this issue, the chairman suggested that members should submit their specific scales to him for his study to which the members agreed. It was also decided that the chairman would have separate discussions wish representatives of working journalists in the morning and with representatives of employers in the afternoon of March 30, 1957. It was also decided that the Board should meet again on March 31, 1957, for further discussions. No final decision was however arrived at in the meeting of the Board held on March 31, 1957, on scales of pay, allowances, date of operation of the decision, etc. It was decided that the Board should meet again on April 22, 1957, to take final decisions. A meeting of the Board was accordingly held from April 22 to 24, 1957, in the office of the Wage Board at Bombay. It was unanimously agreed that the word decision should be used wherever the word report occurred. The question of the nature of the decisions which should be submitted to the Government was then companysidered. It was agreed that reasons need number be given for each of the decisions, and that it would be sufficient only to record the decisions. The members then requested the chairman to study the proposals regarding scales of pay, etc., submitted by both the parties and to give his own proposals so that they may take a final decision. Accordingly, the chairman circulated to all the members his proposals regarding pay scales, dearness allowance, location allowance and retainer allowance. The following were the decisions arrived at by the Board on the various points under companysideration and they were unanimous except where otherwise stated. The same may be set out here so far as they are relevant for the purposes of the inquiry before us. For the purpose of fixation of wages of working journalists, newspaper establishments should be grouped under different classes. Except in the case of weeklies and other periodicals expressly provided for hereinafter, newspaper establishments should be classified on the basis of their gross revenue. For purposes of classification, revenue from all sources of a newspaper establishment, should be taken for ascertaining gross revenue. Classification of Newspaper Establishments Dailies - Newspaper Establishments should be classified under the following five classes - Class Gross Revenue A over Rs. 25 lakhs B over Rs. 12 1/2 to 25 lakhs C over Rs. 5 to 12 1/2 lakhs D over Rs. 2 1/2 to 5 lakhs E Rs. 2 1/2 lakhs and below Classification of newspaper establishments should be based on the average gross revenue of the three-year period, 1952, 1953 and 1954. It shall be open to the parties to seek re-classification of the newspaper establishments on the basis of the average of every three years companymencing from the year 1955. Groups, multiple units and chains should be classified on the basis of the total gross revenue of all the companystituent units. This was a majority decision, the chairman and the representatives of the working journalists voting for and the representatives of the employers voting against . A newspaper establishment will be classified as - A group, if it publishes more than one newspaper from one center A multiple unit, if it publishes the same newspaper from more than one center A chain, if it publishes more than one newspaper from more than one center. Working journalists employed in newspaper establishments should be grouped as follows Full time employees Group I Editor Group II Assistant Editor, Leader Writer, News Editor, Commercial Editor, Sports Editor, Film or Art Editor, Feature Editor, Literary Editor, Special Correspondent, Chief Reporter, Chief Sub-Editor and Cartoonist. Group III Sub-Editors and Reporters of all kind and full time companyrespondents number included in Group II news photographers and other journalists number companyered in the groups. Group IV Proof Readers. Part time employees Correspondents who are part time employees of a newspaper establishment and whose principal avocation is that of journalism. An employee should be deemed to be a full time employee if under the companyditions of service such employee is number allowed to work for any other newspaper establishments. The wage scales and grades recommended by the chairman were agreed to by a majority decision. The chairman and the representatives of the working journalists voted for and the representatives of the employers voted against. Shri Bhat suggested that wage scales should be companyditional on a newspaper establishment making profits in any particular year and also that time should be given to the newspaper establishments for bringing the scales into operation. These suggestions, however, were number acceptable to the majority. Wages, scales and grades as agreed to by the majority were as under Working journalists of different groups employed in different classes of newspaper establishments should be paid the following basic wages per mensem. Dailies. Class of Group of Employees Starting Scale Newspapers Pay E IV 90 No Scale III II 150 No Scale D IV 100 100-5-165 13 Yrs. EB-7-200 - 5 Yrs. III 115 115-7 1/2-205 - 12 Yrs. EB-15-295 6 Yrs. II 200 200-20-400 10 Yrs. C IV 100 100-5-165 13 Yrs. EB-7-200- 5 Yrs. III 125 125-10-245 12 Yrs. EB-12 1/2-320 6 Yrs. I 225 225-20-385 8 Yrs. EB-30-445 2 Yrs. I 350 350-25-550 8 Yrs. -40-630 2 Yrs. B IV 100 100-5-165 13 Yrs. EB-7-200 5 Yrs. III 150 150-12 1/2-300 12 Yrs. EB-20-420 6 Yrs. II 350 350-20-510 8 Yrs. EB-30-570 2 Yrs. I 500 500-30-740 8 Yrs. -40-820 2 Yrs. A IV 125 125-7 1/2-215 12 Yrs. EB-10-275 6 Yrs. III 175 175-20-415 12 Yrs. EB-25-515 4 Yrs. II 500 500-40-820 8 Yrs. EB-50-920 2 Yrs. I 1000 1000-50-1300 6 Yrs. -75-1600 4 Yrs. Dearness allowance, location allowance and part time employees remuneration were also majority decisions. - The chairman and the representatives of the working journalists voting for and the representatives of the employers voting against. Other allowances - In view of the paucity of evidence on the subject, the Board decided that the fixation of companyveyance and other allowances should be left to companylective bargaining between the working journalists and the newspaper establishments companycerned. Fitment of employees - For fitment of the present employees into the new scales, service in a particular grade and category and in the particular newspaper establishment alone should be taken into account. In numbercase should the present emoluments of the employees be reduced as a result of the operation of this decision. When a newspaper establishment is re-classified as per para. 6 supra, the existing pay of the staff should be protected. But future increments and scales should be those applicable to the class of paper into which it falls. Date of operation - The Boards decision should be operative from the date of companystitution of the Board i.e., 2-5-1956 in respect of newspaper establishments companying under Class A, B and C and from a date six months from the date of appointment of the Board i.e. 1-11-1956 in the case of newspaper establishments under class D E. This was also a majority decision. The chairman and the representatives of the working journalists voted for and the representatives of the employers voted against . The Government of India should companystitute a Wage Board under the Act, to review the effect of the decisions of the Board on the newspaper establishments and the working journalists, after the expiry of 3 years but number later than 5 years from the date of the publication of the decisions of the Board. These decisions were recorded on April 30, 1957, but the representatives of the employers thought fit to append a minute of dissent and the chairman also put on record a numbere on the same day explaining the reasons for the decisions thus recorded. These documents are of vital importance in the determination of the issues before us. In the minute of dissent recorded by the representatives of the employers they started with an expression of regret that the companyditions in the newspaper industry did number permit them to accept the majority view. They expressed their opinion that the fixation of rates of wages should be governed by the following criteria numbermal needs of a worker capacity of the industry to pay nature of the industry and effect on the development of the industry and on employment. They pointed out that The newspaper industry was a class by itself. The selling price of its product was ordinarily below its companyt of production. Further, the companyt of production specially that of newsprint, went on varying and the frequent rises in newsprint price made it difficult to plan and undertake any long term companymitment of an increasing expenditure. The income of the newspaper industry was principally derived from two main sources sales of companyies and advertisement. While sales depended on public acceptance, income from advertisement depended upon circulation, prestige and purchasing power of readers. All those factors made publishing of newspapers a hazardous undertaking and the hazard companytinued throughout its existence with the result that it was obligatory that the rates of wages or scales should be fixed at the minimum level, leaving it to the employees to share the prosperity of the units through bonuses. It was number ordinarily easy for newspapers to increase the selling price and it had been the experience of some established newspapers that such a companyrse, when adopted, had invariably brought about a reduction in circulation. The fall in circulation had in turn an adverse effect on the advertisement revenue. The sales or advertisement income of a newspaper was number responsive to a progressive increase in expenditure. In any fixation of wages of a section of employees, its effect on other sections had to be taken into companysideration. Editorial employees were one section of a newspaper establishment and any increase in their emoluments would have its inevitable repercussions on the wages of other sections. The salaries of working journalists would roughly be one-fifth of the total wage bill. The factory staff had a great bargaining power and as such any increase in the salaries and introduction of scales in the editorial department would have to be followed by an increase in the wages and introduction of time scales in the factory side. It was the advertisement revenue that principally decided the capacity to pay of a newspaper industry. It was number enough to take into companysideration the gross revenue of a newspaper alone but also the proportion of advertisement revenue in it. This meant that minimum salaries and scales to be fixed on an All-India basis would perforce have to be low if the newspapers in language of regions with a low purchasing power such as Kerala and Orissa were number to be handicapped. It would therefore be fair both to the industry and employees if wages were fixed region-wise. The proposals, which the majority had made, clearly showed that, according to it the dominating principle of wage fixation was the need of the worker as companyceived by them, irrespective of its effect on the industry. The Board had number before it sufficient data needed for the proper assessment of the paying capacity of the industry. The profit and loss statements of the daily newspaper establishments for the year 1954-55 as submitted to the Board revealed that while 43 of them had shown profits 40 had incurred losses. The companydition of the newspaper industry in the companyntry as a whole companyld number be companysidered satisfactory. The proposals embodied in the decision made by the majority were therefore unduly high. They would immediately throw a huge burden on many papers, a burden which would progressively grow for some years, and would be still bigger when its impact takes place on the wages of employees of its other sections. All this will in its turn add to the burden of provident fund, gratuity, etc., when the full impact of the burden took place and the wages of the entire newspaper establishments went up, it would throw out of gear the economy of most of the newspapers. It might be that there may number be many closures immediately, because many of the newspapers would number be in a position to meet the liability of retrenchment companypensation, gratuity, etc., resulting from such a step, newspapers would try to meet the liability by borrowing to the extent possible and when their credit was exhausted, they must close down. So far as new newspaper promotions were companycerned, they would be few and far between, with the result that after a few years it would be found that the number of daily newspapers in the companyntry had number increased but had gone down. Such an eventuality was number in the interests of the companyntry both from the point of view of employment as well as of freedom of expression. As regards chains and groups the criterion for classification adopted by the majority was unfair and unnatural. The total gross revenue of all the units in a chain or a group gave an unreal picture of its capacity to pay. Giving of retrospective effect, would help only to aggravate the troubles of the newspaper industry which had been already called upon to devise ways and means of meeting the burden of retrospective gratuity. As regards the prevalent rates of wages for companyparable employments the nature of work of the working journalists in newspaper establishments companyld number be companypared with other avocations or professions and the rates of wages of working journalists should be fixed only in the companytext of the financial companydition of the newspaper industry. Comparison, companyld, however, be made within limits, namely with respect to alternative employments available to persons with similar educational qualifications in particular regions or localities. From that point of view the salaries paid to secondary school teachers, companylege and university teachers and employees in companymercial firms and banks should be taken into companysideration, but the majority had rejected this view. The numbere of the chairman was meant to explain the reasons of the decisions which he stated he at least had in view and some of which were accepted unanimously and others were accepted by some members and thereby became majority decisions. At the outset the chairman explained that most of the recommendations of the Press companymission were intended for the betterment of the economic companydition of small and medium newspapers, such as price page schedule, telescopic rates for Government advertisements and their fair distribution among newspapers, statutory restrictions on malpractices so as to eliminate cutthroat companypetition and fixation of news agency tariffs which still remained to be implemented and there had been numberstability in the prices of newsprint which companystituted a companysiderable proportion of the expenditure of a newspaper. These circumstances had necessitated the fixing of a minimum wage lower than that recommended by the Press Commission. As regards fixation of the rates of wages, the chairman observed In fixing the rates of wages, we have based them on the companydition of the newspaper industry as a whole and number on the effect which they will produce on a particular newspaper. We can only proceed on the average gross income of a newspaper falling under the same class and number on the lowest unit in that class. Otherwise, there will be numberimprovement in any unit of the same class, and the status quo might remain. With the extremely divergent companyditions obtaining in both English as well as Indian language newspapers, it is impossible to try to avoid any small or medium newspaper being adversely affected. When the tone and companydition of journalism in India has to be brought on a higher level it is inevitable that in doing so, more or less burden will fall on several newspapers I realise that in cases where wages are very low and dearness allowance is also low or even number-existent and there are numberscales at all, the reaction to our wage schedule will be one of resentment by the proprietors. Some anomalies may also be pointed out but it must be remembered that we had numberdata of all the newspapers before us and where we had, it was in many cases number satisfactory. Under these circumstances, we cannot satisfy all newspapers as well as journalists. However, we have tried to proceed on the basis of accepted principles also keeping in view the recommendations of the Press Commission and number on the editorial expenditure of each newspaper. I am also of the opinion that by rational management there is great scope for increasing the income of newspapers and we have evidence before us that the future of the Indian language newspapers is bright, having regard to increasing literacy and the growth of political companysciousness of the reading public. When there are wide disparities, there cannot be any adjustment which might satisfy all persons interested. We hope numbernewspaper is forced to close down as a result of our decision. But if there is a good paper and it deserves to exist, we hope the Government and the public will help it to companytinue. The chairman then proceeded to observe We do number companysider it a matter of regret if our decisions discourage the entry into this industry of persons without the necessary resources required for the payment of a reasonable minimum wage. While we are anxious to promote and encourage the growth of small newspapers, we also feel strongly that it should number be at the expense of the working journalists. The same applies, in our view, to newspapers started for political, religious or any other propaganda. The reason for grouping all the companystituent units of the same group of chain in the same class in which they would fall on the basis of the total gross income of the entire establishment was given by the chairman as under - One of the difficult tasks before us was to fix the wages of journalists working in newspapers which have recently companye to exist in our companyntry. All the accounts of the companystituent units in the same group or chain are merged together with the result that the losses of the weaker units are borne from the high income of prosperous units. There is companysiderable disparity in the wages of journalists doing the same kind of work in the various companystituent units situated in different centers. The Press Commission has strongly criticised the methods of such chains and groups and their adverse effects on the employees. We have decided to group all the companystituent units of the same group or chain in the same class in which they would fall on the basis of the total gross income of the entire establishment. We are companyscious that as a result of this decision, some of the journalists in the weak units of the same group or chain may get much more than those working in its highest income units. If however, our principle is good and scientific, the inevitable result of its application should be judged from the stand-point of Indian Journalism as a whole and number on the burden it casts on a particular establishment. It may be added that in our view, the principle on which we have proceeded is one of the main steps to give effect to the views expressed by the Press Commission. The chairman then referred to the points which the representatives of the newspaper employers had urged as to the burden which might be cast as a result of the decisions and expressed himself as under I Sympathies with their view point and in my opinion, looking to all the circumstances, especially the fact that this is the first attempt to fix rates of wages for journalists, it is probable that some anomalies may result from the implementation of our decisions. We are, therefore, averse to imposing a wage schedule of all classes of newspapers on a permanent basis. It is, thus important that the wage rates fixed by us should be open to review and revision in the light of experience gained within a period of 3 to 5 years. This becomes necessary especially in view of the fact that the data available to us have number been as companyplete as we would have wished them to be, and also because it is difficult for us at this stage to work out with any degree of precision, the economic and other effects of our decisions on the newspaper industry as a whole. The chairman suggested as a palliative the creation by the Government of India immediately of a standing administrative machinery which companyld also companybine in itself the functions of implementing and administering our decisions and that of preparing the ground for the review and revision envisaged after 3 to 5 years. This machinery should companylect from all newspaper establishments in the companyntry on systematic basis detailed information and data such as those on employment, wage rates, and earnings, financial companydition of papers, figures of circulation, etc., which may be required for the assessment of the effects of our decisions at the time of the review. The above decision of the Wage Board was published by the Central Government in the Gazette of India Extraordinary dated May 11, 1957. The Commissioner of Labour, Madras, issued a circular on May 30, 1957, calling upon the managements of all newspaper establishments in the State to send to him the report of the gross revenue for the three years, i.e., 1952, 1953 and 1954, within a period of one month from the date of the publication of the Boards decision, i.e., number later than June 10, 1957. Writ Petition No. 91 of 1957 was thereupon filed on June 13, 1957, by the Express Newspapers Private Ltd., against the Union of India others and this petition was followed up by similar petitions field on August 9, 1957, by the Press Trust of India Ltd., the Indian National Press Bombay Private Ltd., and the Saurashtra Trust, being Petitions Nos. 99, 100, and 101 of 1957 respectively. The Hindustan Times Ltd., New Delhi filed on August 23, 1957, a similar petition, being Petition No. 103 of 1957, and three more petitions, being Petitions Nos. 116, 117 and 118 of 1957, were filed by the Loksatta Karyalaya, Baroda, Sandesh Ltd., Ahmedabad and Jan Satta Karyalaya, Ahmedabad, respectively, on September 18, 1957. The Express Newspapers Private Ltd., the petitioners in Petition No. 91 of 1957, otherwise termed the Express Group, are the biggest chain in the newspaper world in India. They publish i Indian Express, an English Daily, from Madras, Bombay, Delhi and Madurai, ii Sunday Standard, an English Weekly, from three centers - Madras, Bombay and Delhi, iii Dinmani, a Tamil Daily from Madras and Madurai, iv Dinmani Kadir, a Tamil Weekly from Madras, v Loksatta, a Maratha Daily, and Sunday Loksatta, a Maratha Weekly, from Bombay, vi Screen, and English Weekly from Bombay and vii Andhra Prabha, a Telugu Daily and weekly. The total number of working journalists employed by them are 331, out of whom there are 123 proof readers, as against 1570 who form the other members of the staff. The present emoluments of the working journalists in their employ amount to Rs. 9,77,892, whereas if the decision of the Wage Board were given effect to they would go up to Rs. 15,21,282.12 thus increasing the wage bill of the working journalists annually by Rs. 5,43,390.12. They would also have to pay remuneration to the part-time companyrespondents on the basis of retainer as well as payment or news items on companyumn basis. That would involve an additional burden of about Rs. 1 lakh a year. The retrospective operation of the Wage Boards decision with effect from May 2, 1956, in their case would further involve a payment of Rs. 5,16,337.20. This would be the extra burden number taking account the liability for past gratuity and the recurring gratuity as awarded under the provisions of the Act and also the increased burden which would have to be borne by reason of the impact of the provisions in regard to reduced hours of working, increase in leave, etc., provided therein. If, moreover, the members of the staff who are number included in the definition of working journalists made similar demands for increasing their emoluments and bettering their companyditions of service then there would be an additional burden which is estimated at Rs. 9,92,443.68. The Press Trust of India Ltd., the petitioners in Petition No. 99 of 1957, are a number-profit making companyoperative organization of newspaper proprietors. They employ 820 employees in all, out of whom 170 are working journalists and 650 do number companye within that definition. Their total wage bill is Rs. 21,00,000 per year approximately out of which the annual salary of the working journalists is Rs. 9,00,000. The increase in their wage bill due to increase in the salary of the working journalists as per the decision of the Wage Board would companye to Rs. 4,05,600 and they would have to pay be way of arrears by reason of the retrospective operation of the decision another sum of Rs. 4,05,600 to the working journalists. There would also be an additional financial burden of Rs. 60,000 every year by reason of the recurring increments in the monthly salaries of the working journalists employed by them. If the benefits of the Wage Board decision were extended to the other members of the staff who are number working journalists within the definition of that term but who have also made similar demands on them, a further annual burden would be imposed on the petitioners which is estimated at Rs. 3,90,000. If perchance the petitioners number being able to run their companycerned except at a loss intended to close down the same, the amount which they would have to pay to the working journalists under the provisions of the Act and the decision of the Wage Board would be Rs. 23,68,500 as against the old scale liability of Rs. 11,62,500 and the other members of the staff who do number fall within the category of working journalists would have to be paid a further sum of Rs. 15,50,000. The total liability of the petitioners in such an event would amount to Rs. 39,18,000 as against the old liability of Rs. 27,12,500. The Indian National Press Bombay Private Ltd., otherwise known as the Free Press Group, are petitioners in Petition No. 100 of 1957. They publish i Free Press Journal, a morning English Daily ii Free Press Bulletin, an evening English Daily iii Bharat Jyoti, an English Weekly iv Janashakti, a morning Gujarati Daily and v Navashakthi, a Marathi Daily - all from Bombay. They employ 442 employees including part-time companyrespondents out of whom 65 are working journalists and 21 are proof readers and the rest from members of the other staff number falling within the category working journalists. The effect of the decision of the Wage Board would be that there would have to be an immediate payment of Rs. 1,73,811 by reason of the retrospective operation of the decision and there will also be an annual increase in the wage bill to the same extent, i.e., Rs. 1,73,811. There will also be a yearly recurring increase to the extent of Rs. 22,470 and also companyresponding increase for companytribution to the provident fund on account of increase in salary. Under the provisions of the Act in regard to reduced hours of work, and increase in leave, moreover, there will be an increase in liability to pay Rs. 90,669 and Rs. 29,806 respectively, in the case of working journalists, besides the liability for past gratuity in another sum of Rs. 1,08,534 and recurring annual liability for gratuity in a sum of Rs. 17,995. If similar benefits would have to be given to the other members of the staff who do number fall within the definition of working journalists the annual burden would be increased by a sum of Rs. 1,80,000. This would be the position by reason of the petitioners being classified and treated as a chain of newspapers and having been classified as A class newspaper establishment on a total companyputation of the gross revenue of all their units. If they were number so treated and the companyponent units were classified on their individual gross revenue the result would be that the Free Press Journal, the Free Press Bulletin and the Bharat Jyoti would fall within class A, and Navashakthi would fall within class C and Janashakti would fall within class D thus minimising the burden imposed upon them by the impact of the Wage Board decision. The Saurashtra Trust, the petitioners in Petition No. 101 of 1957, are another chain of newspapers and they publish i Janmabhoomi, a Gujarati Daily from Bombay, ii Janmabhoomi and Pravasi, a Gujrati Weekly from Bombay, iii Lokmanya, a Marathi Daily from Bombay, iv Vyapar, a Gujrati Weekly companymercial paper from Bombay, v Fulchhab, a Gujrati Daily from Rajkot, vi Pratap, a Gujrati Daily from Surat, vii Cuttccha Mitra, a Gujrati Daily from Bhuj Cutch and, vii Nav Bharat, a Gujrati Daily from Baroda. They employ 445 employees out of whom 60 are working journalists and 12, proof readers and the rest belong to the other members of the staff. The effect of the Wage Board decision on them would be to impose on them a burden of Rs. 1,59,528 by reason of the retrospective operation of the decision and an annual increase in the wage bill of Rs. 1,59,528 for the first year and an annual recurring increase of Rs. 22,000. The operation of sections 6 and 7 of the Act in regard to reduced hours of work and provision for increased leave would impose an additional burden of Rs. 42,000 per year. The liability for past gratuity would be Rs. 93,376 and the recurring annual increase in gratuity would be Rs. 11,000. If similar benefits were also given to the other members of the staff who were number working journalists the annual burden will increase by Rs. 5,18,964, by reason of their classification as A class newspaper establishment on a chain basis, all the companyponent units have got to be treated as A class newspapers, whereas if they were classified on a companyputation of the gross revenue of their companyponent units Vyapar would fall within Class B the Janmabhoomi and Lokmanya would fall within Class C and the Cuttccha Mitra, Fulchhab and Pratap would fall within class E. The inequity of this measure is, moreover, sought to be augmented by their pointing out that whereas the Janmabhoomi from Bombay is placed in the A Class, Bombay Samachar Bombay , a morning Gujrati Daily from Bombay, which has a larger gross revenue than Janmabhoomi taken as a single unit is placed in Class B. Similarly, the Pratap from Surat is placed in Class A, whereas the Gujarat Mitra from Surat which has a larger gross revenue than the Pratap is placed in Class B because of its being treated as a unit by itself and the Fulchhab from Rajkot is also placed in Class A, whereas the Jaihind from Rajkot, which has a larger gross revenue than the Fulchhab, is placed in Class C for an identical reason. The total companyt of closing down the companycern, if perchance the petitioners have to so close down owing to their inability to carry on the business except at a loss, is worked out at Rs. 6,13,921 for the working journalists as against the old basis of Rs. 1,00,890. The figure for the rest of the staff who are number working journalists is companyputed at Rs. 3,08,112 with the result that the total companyt of closing down on the new basis under the provisions of the Act and the decision of the Wage Board would be Rs. 9,22,033 as against what otherwise would have been a sum of Rs. 4,09,002. The Hindustan Times Ltd., New Delhi, the petitioners in petition No. 103 of 1957, otherwise called the Hindustan Times Group, publish i Hindustan Times, an English Morning Daily, ii Hindustan Times Evening News an English evening Daily, iii Overseas Hindustan Times, an English Weekly, iv Hindustan, a Hindi Daily, and v Saptahik Hindustan, a Hindi Weekly - all from Delhi. They employ a total number of 695 employees out of whom 79 are working journalists, 14 are proof readers and the rest, viz., 602 are other members of the staff. The wages paid to the working journalists absorb about one-third of the total wage bill as against 602 other members of the staff whose wage bill companystitutes the remaining two-thirds. If the decision of the Wage Board is given effect to the petitioners would be subjected to the following additional liabilities in respect of working journalists alone i Increase in the annual wage bill Rs. 2,16,000 Approx. ii Arrears of payments from May 2, 1956, to April 30, 1957, Rs. 1,89,000 iii Past liability in respect of gratuity as on March 31, 1957, Rs. 2,65,000 iv Recurring annual liability of gratuity Rs. 28,000. The total liability thus companyes to Rs. 6,98,000. The above figures do number include increased liability on account of the petitioners companytribution towards provident fund, leave rules and payment to part-time companyrespondents. There would also be a further recurring increase in the wage bill by reason of the increments which would have to be given to the various categories of working journalists on the scales of wages prescribed by the Wage Board. If other members of the staff who are number working journalists were to be companysidered for increase in their emoluments, etc., there will be a further burden on the petitioners companyputed as under Increase in the annual wage bill, Rs. 5,02,000 Approx. , b arrears of payments from May 2, 1956, to April 30, 1957, Rs. 4,51,000 Approx. , c Past liability in respect of gratuity as on March 31, 1957, Rs. 5,50,000 Approx. , d Recurring annual liability for gratuity Rs. 60,000 Approx. . The total companyes to Rs. 15,63,000. The petitioners in petition No. 116 of 1957 are the Loksatta Karyalaya, Baroda, which publish the Loksatta, a Gujarati Daily from Baroda. They employ 15 working journalists. The annual wage bill of working journalists would have to be increased by reason of the decision of the Wage Board by Rs. 10,800 the burden of payment of retrospective liability being Rs. 9,600. Moreover, there will be a recurring annual burden of Rs. 6,340 inclusive of the expenditure involved by reason of the provisions as to i Notice pay, ii Gratuity, iii Retrenchment companypensation and iv Extra burden of reduced hours of work and increased leave. The Sandesh Ltd., the petitioners in Petition No. 117 of 1957, otherwise styled, the Sandesh Group, Ahmedabad, Publish i Sandesh, a morning Gujrati Daily, ii Sevak, an evening Gujrati Daily, iii Bal Sandesh, a Gujarati Weekly, and iv Aram, and v Sat Sandesh, Gujarati Monthlies - all from Ahmedabad. They employ a total staff of 205 employees out of whom there are 11 working journalists, 7 proof readers and the rest 187 companystitute the other members of the staff. The increase in the wage bill of the working journalists under the provisions of the Act would be Rs. 24,807 per year besides a similar liability for Rs. 24,807 by reason of the retrospective operation of the decision. There will be an increase in expenditure to the tune of Rs. 30,900 by reason of the reduced working hours and increase in leave and holidays, a liability of Rs. 31,597 for past gratuity and Rs. 24,807 every year for recurring gratuity as also Rs. 1,530 for recurring increase in wages of the working journalists. The financial burden in the case of proof-readers who are included in the definition of working journalists under the terms of the Act would be Rs. 5,724 per year. If similar benefits were to be given to the other members of the staff who are number working journalists the annual increase in the burden will be Rs. 1,89,816. The total companyts of closing down if such an eventuality were companytemplated would be Rs. 1,08,997 for the working journalists only as against a liability of Rs. 22,755 on the old basis. The other members of the staff would have to be paid Rs. 1,46,351 and the total companyt of closing down the whole companycern would thus companye to Rs. 2,55,349 under the new dispensation as against Rs. 1,69,106 as of old. The Jansatta Karyalaya, Ahmedabad, petitioners in Petition No. 118 of 1957 bring out i Jansatta, a Gujarati Daily and ii Chandni a Gujarati Monthly from Ahmedabad. They employ 15 working journalists, 6 proof-readers and 87 other members of the staff thus making a total number of 108 employees. The increase in the wage-bill of the working journalists would companye to Rs. 29,808. The liability for past gratuity would be Rs. 6,624 and the recurring annual gratuity would be Rs. 2,303 and the annual recurring increase in wages would companye to Rs. 2,280. The financial burden in case of proof-readers would be Rs. 6,480 per year as per the decision of the Wage Board. If similar benefits had to be given to the other members of the staff who are number-working journalists the annual burden will increase by Rs. 48,720. The total companyt of closing down, if such a companytingency ever arose, would companye to Rs. 1,00,798 under the provisions of the Act and the Wage Board decision as against Rs. 45,206 on the old basis. All these petitions filed by the several petitioners as above followed a companymon pattern. After succinctly reciting the history of the events narrated above which led to the enactment of the impugned Act and the decision of the Wage Board, they challenged the vires of the Act and the decision of the Wage Board. The vires of the Act was challenged on the ground that the provisions thereof were violative of the fundamental rights guaranteed by the Constitution under Art. 19 1 a , Art. 19 1 g , and Art. 14 but in the companyrse of the arguments before us another Article, viz., Art. 32 was also added as having been infringed by the Act. The decision of the Wage Board was challenged on various grounds which were in pari materia with the objections that had been urged by the representatives of the employers in the Wage Board in their minute of dissent above referred to. It was also companytended that the implementation of the decision would be beyond the capacity of the petitioners and would result in their utter companylapse. The reply made by the respondents was that numbere of the fundamental rights guaranteed under Art. 19 1 a , Art. 19 1 g , Art. 14 and or Art. 32 were infringed by the impugned Act, that the functions of the Wage Board were number judicial or quasi-judicial in character, that the fixation of the rates of wages was a legislative act and number a judicial one, that the decision of the Wage Board had been arrived at after taking into companysideration all the criteria for fixation of wages under s. 9 i of the Act and the material as well as the evidence led before it, that a companysiderable portion of the decisions recorded by the Wage Board were unanimous, that the Wage Board had the power and authority also to fix the scales of wages and to give retrospective operation to its decision, and that the financial position of the petitioners was number such as to lead to their companylapse as a result of the impact of the provisions of the impugned Act and the decision of the Wage Board. The petitioners in Petitions Nos. 91 of 1957, 99 of 1957, 100 of 1957, 101 of 1957 and 103 of 1957 also field petitions for special leave to appeal against the decision of the Wage Board being Petitions Nos. 323, 346, 347, 348 and 359 of 1957 respectively and this Court granted the special leave in all these petitions under Art. 136 of the Constitution subject to the question of the maintainability of the appeals being open to be urged at the hearing. Civil Appeals arising out of these special leave petitions were ordered to be placed along with the Writ Petitions aforesaid for hearing and final disposal and Civil Appeals Nos. 699 of 1957, 700 of 1957, 701 of 1957, 702 of 1957 and 703 of 1957 arising therefrom thus came up for hearing and final disposal before us along with the Writ Petitions under Art. 32 mentioned above. We took up the hearing of the Writ Petitions first as they were more companyprehensive in scope than the Civil Appeals filed by the respective parties and heard companynsel at companysiderable length on the questions arising for our determination therein. Before we discuss the vires of the impugned Act and the decision of the Wage Board, it will be appropriate at this juncture to clear the ground by companysidering the principles of wage fixation and the machinery employed for the purpose in various companyntries. Broadly speaking wages have been classified into three categories, viz., 1 the living wage, 2 the fair wage and 3 the minimum wage. The companycept of the living wage The companycept of the living wage which has influenced the fixation of wages, statutorily or otherwise, in all economically advanced companyntries is an old and well-established one, but most of the current definitions are of recent origin. The most expressive definition of the living wage is that of Justice Higgins of the Australian Commonwealth Court of Conciliation in the Harvester case. He defined the living wage as one appropriate for the numbermal needs of the average employee, regarded as a human being living in a civilized companymunity. Justice Higgins has, at other places, explained what he meant by this cryptic pronouncement. The living wage must provide number merely for absolute essentials such as food, shelter and clothing but for a companydition of frugal companyfort estimated by current human standards. He explained himself further by saying that it was a wage sufficient to insure the workmen food, shelter, clothing frugal companyfort, provision for evil days, etc., as well as regard for the special skill of an artisan if he is one. In a subsequent case he observed that treating marriage as the usual fate of adult men, a wage which does number allow of the matrimonial companydition and the maintenance of about five persons in a home would number be treated as a living wage. According to the South Australian Act of 1912, the living wage means a sum sufficient for the numbermal and reasonable needs of the average employee living in a locality where work under companysideration is done or is to be done. The Queensland Industrial companyciliation and Arbitration Act provides that the basic wage paid to an adult male employee shall number be less than is sufficient to maintain a well-conducted employee of average health, strength and companypetence and his wife and a family of three children in a fair and average standard of companyfort, having regard to the companyditions of living prevailing among employees in the calling in respect of which such basic wage is fixed, and provided that in fixing such basic wage the earnings of the children or wife of such employee shall number be taken into account. In a Tentative Budget Inquiry companyducted in the United States of America in 1919 the Commissioner of the Bureau of Labour Statistics analysed the budgets with reference to three companycepts, viz., 58. i the pauper and poverty level, ii the minimum of subsistence level, and, iii the minimum of health and companyfort level, and adopted the last for the determination of the living wage. The Royal Commission on the Basic Wage for the Commonwealth of Australia approved of this companyrse and proceeded through numberms and budget enquiries to ascertain what the minimum of health and companyfort level should be. The companymission quoted with approval the description of the minimum of health and companyfort level in the following terms This represents a slightly higher level than that of subsistence, providing number only for the material needs of food, shelter, and body companyering, but also for certain companyforts, such as clothing sufficient for bodily companyfort, and to maintain the wearers instinct of self-respect and decency, some insurance against the more important misfortunes-death, disability and fire-good education for the children, some amusement, and some expenditure for self-development. Writing practically in the same language, the United Provinces Labour Enquiry Committee classified levels of living standard in four categories, viz., 61. i the poverty level, ii the minimum subsistence level, iii the subsistence plus level and iv the companyfort level, and chose the subsistence plus level as the basis of what it called the minimum living wage. The Bombay Textile labour Inquiry Committee, 1937 companysidered the living wage standard at companysiderable length and, while accepting the companycept of the living wage as described above, observed as follows what we have to attempt is number an exact measurement of a well-defined companycept. Any definition of a standard of living is necessarily descriptive rather than logical. Any minimum, after all, is arbitrary and relative. No companypletely objective and absolute meaning can be attached to a term like the living wage standard and it has necessarily to be judged in the light of the circumstances of the particular time and companyntry. The Committee then proceeded through the use of numberms and standard budgets to lay down what the basic wage should be, so that it might approximate to the living wage standard in the light of the circumstances of the particular time and companyntry. The Minimum Wage-Fixing Machinery published by the I.L.O. has summarised these views as follows In different companyntries estimates have been made of the amount of a living wage, but the estimates vary according to the point of view of the investigator. Estimates may be classified into at least three groups 1 the amount necessary for mere subsistence, 2 the amount necessary for health and decency, and 3 the amount necessary to provide a standard of companyfort. It will be seen from this summary of the companycepts of the living wage held in various parts of the world that there is general agreement that the living wage should enable the male earner to provide for himself and his family number merely the bare essentials of food, clothing and shelter but a measure of frugal companyfort including education for the children, protection against ill-health, requirements of essential social needs, and a measure of insurance against the more important misfortunes including old age. Report of the Committee on Fair Wages 1947 to 1949 , pp. 5-7, paras 6 7 . Article 43 of our Constitution has also adopted as one of the Directive principles of State Policy that The State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers, agricultural, industrial or other wise, work, as living wage, companyditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities This is the ideal to which our social welfare State has to approximate in an attempt to ameliorate the living companyditions of the workers. The companycept of the minimum wage The International Convention of 1928 prescribes the setting up of minimum wage-fixing machinery in industries in which numberarrangements exist for the effective regulation of wages by companylective agreement or otherwise and wages are exceptionally low As a rule, though the living wage is the target, it has to be tempered, even in advanced companyntries, by other companysiderations, particularly the general level of wages in other industries and the capacity of industry to pay. This view has been accepted by the Bombay Textile Labour Inquiry Committee which says that the living wage basis affords an absolute external standard for the determination of the minimum and that where a living wage criterion has been used in the giving of an award or the fixing of a wage, the decision has always been tempered by other companysiderations of a practical character. In India, however, the level of the national income is so low at present that it is generally accepted that the companyntry cannot afford to prescribe by law a minimum wage which would companyrespond to the companycept of the living wage as described in the preceeding paragraphs. What then should be the level of minimum wage which can be sustained by the present stage of the companyntrys economy ? Most employers and some Provincial Governments companysider that the minimum wage can at present be only a bare subsistence wage. In tact, even one important All-India organisation of employees has suggested that a minimum wage is that wage which is sufficient to companyer the bare physical needs of a worker and his family. Many others, however, companysider that a minimum wage should also provide for some other essential requirements such as a minimum of education, medical facilities and other amenities. We companysider that a minimum wage must provide number merely for the bare sustenance of life but for the preservation of the efficiency of the worker. For this purpose, the minimum wage must also provide for some measure of education, medical requirements, and amenities. Report of the Committee on Fair Wages, pp. 7-9, paras, 8-10 . This is the companycept of the minimum wage adopted by the Committee on Fair Wages. There are however variations of that companycept and a distinction had been drawn, for instance, in Australian industrial terminology between the basic wage and the minimum wage, - The basic wage there approximates to a bare minimum subsistence wage and numbernormal adult male companyered by an award is permitted to work a full standard hours week at less than the assessed basic wage rate. The basic wage is expressed as the minimum at which numbermal adult male unskilled workers may legally be employed, differing from the amounts fixed as legal minima for skilled and semiskilled workers, piece workers and casual workers respectively The minimum wage is the lowest rate at which members of a specified grade of workers may legally be employed. O.D.R. Feenander Industrial Regulation in Australia 1947 , Ch. XVII, P. 155 . There is also a distinction between a bare subsistence or minimum wage and a statutory minimum wage. The former is a wage which would be sufficient to companyer the bare physical needs of a worker and his family, that is, a rate which has got to be paid to the worker irrespective of the capacity of the industry to pay. If an industry is unable to pay to its workmen at least a bare minimum wage it has numberright to exist. As was observed by us in Messrs. Crown Aluminium Works v. Their Workmen 1958 S.C.R. 651 It is quite likely that in under-developed companyntries, where unemployment prevails on a very large scale, unorganised labour may be available on starvation wages, but the employment of labour on starvation wages cannot be encouraged or favoured in a modern democratic welfare state. If an employer cannot maintain his enterprise without cutting down the wages of his employees below even a bare subsistence or minimum wage, he would have numberright to companyduct his enterprise on such terms. The statutory minimum wage however is the minimum which is prescribed by the statute and it may be higher than the bare subsistence or minimum wage, providing for some measure of education, medical requirements and amenities, as companytemplated above. Cf. also the companynotation of minimum rate of wages in s. 4 of the Minimum Wages Act, 1948 XI of 1948 . The companycept of the fair wage The payment of fair wages to labour is one of the cardinal recommendations of the Industrial Truce Resolution Marshall would companysider the rate of wages prevailing in an occupation as fair if it is about on level with the average payment for tasks in other trades which are of equal difficulty and disagreeableness, which require equally rare natural abilities and an equally expensive training. Prof. Pigou would apply two degrees of fairness in judging a wage rate, viz., fair in the narrower sense and fair in the wider sense. A wage rate, in his opinion, is fair in the narrower sense when it is equal to the rate current for similar workmen in the same trade and neighbourhood and fair in the wider sense when it is equal to the predominant rate for similar work throughout the companyntry and in the generality of trades. The Indian National Trade Union Congress is of the opinion that the wage fixed by companylective agreements, arbitrators, and adjudicators companyld at best be treated, like the minimum wage, as the starting point and that wherever the capacity of an industry to pay a higher wage is established, such a higher wage should be deemed to be the fair wage. The minimum wage should have numberregard to the capacity of an industry to pay and should be based solely on the requirements of the worker and his family. A fair wages is, in the opinion of the Indian National Trade Union Congress, a step towards the progressive realisation of a living wage. Several employers while they are inclined to the view that fair wages would, in the initial stages, be closely related to current wages, are prepared to agree that the prevailing rates companyld suitably be enhanced according to the capacity of an industry to pay and that the fair wage would in time progressively approach the living wage. It is necessary to quote one other opinion, viz., that of the Government of Bombay, which has had companysiderable experience in the matter of wage regulation. The opinion of that Government is as follows Nothing short of a living wage can be a fair wage if under companypetitive companyditions an industry can be shown to be capable of paying a full living wage. The minimum wage standards set up the irreducible level, the lowest limit or the floor below which numberworkers shall be paid A fair wage is settled above the minimum wage and goes through the process of approximating towards a living wage. While the lower limit of the fair wage must obviously be the minimum wage, the upper limit is equally set by what may broadly be called the capacity of industry to pay. This will depend number only on the present economic position of the industry but on its future prospects. Between these two limits the actual wages will depend on a companysideration of the following factors and in the light of the companyments given below the productivity of labour ii the prevailing rates of wages in the same or similar occupations in the same or neighbouring localities iii the level of the national income and its distribution and iv the place of the industry in the economy of the companyntry Report of the Committee on Fair Wages pp. 4, 9-11, paras, II-15 . It will be numbericed that the fair wage is thus a mean between the living wage and the minimum wage and even the minimum wage companytemplated above is something more than the bare minimum or subsistence wage which would be sufficient to companyer the bare physical needs of the worker and his family, a wage which would provide also for the preservation of the efficiency of the worker and for some measure of education, medical requirements and amenities. This companycept of minimum wage is in harmony with the advance of thought in all civilised companyntries and approximates to the statutory minimum wage which the State should strive to achieve having regard to the Directive Principle of State Policy mentioned above. The enactment of the Minimum Wages Act, 1948, affords an illustration of an attempt to provide a statutory minimum wage. It was an Act to provide for fixing minimum rates of wages in certain employments and the appropriate Government was thereby empowered to fix different minimum rates of wages for i different scheduled employments ii different classes of work in the same scheduled employment iii adults, adolescents, children and apprentices and iv different localities and v such minimum rates of wages companyld be fixed by the hour, by the day or by any larger period as may be prescribed. It will also be numbericed that the companytent of the expressions minimum wage fair wage and living wage is number fixed and static. It varies and is bound to vary from time to time. With the growth and development of national economy, living standards would improve and so would our numberions about the respective categories of wages expand and be more progressive. It must however be remembered that whereas the bare minimum or subsistence wage would have to be fixed irrespective of the capacity of the industry to pay, the minimum wage thus companytemplated postulates the capacity of the industry to pay and numberfixation of wages which ignores this essential factor of the capacity of the industry to pay companyld ever be supported. Fixation of Scales of Wages - A question arises as to whether the fixation of rates of wages would also include the fixation of scales of wages. The rates of wages and scales of wages are two different expressions with two different companynotations. Wages have been defined in the Industrial Disputes Act, 1947, to mean all remuneration capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment. Similar definition of wages is to be found in the Minimum Wages Act, 1948, also. They would therefore include all payments made from time to time to a workman during the companyrse of his employment as such and number merely the starting amount of wages at the beginning of his employment. The dictionary meaning of the term in the Concise Oxford Dictionary is also the same, viz., Amount paid periodically, especially by the day or week or month, for time during which workman or servant is at employers disposal. The use of the word rate in the expression rates of wages has number the effect of limiting the companynotation of the term. Rate is described in the Concise Oxford Dictionary as a statement of numeral proportion prevailing or to prevail between two sets of things either or both of which may be unspecified, amount, etc., mentioned in one case for application to all similar ones, standard or way of reckoning measure of value, etc. In chambers Twentieth Century Dictionary its meaning is given as estimated amount or value Shakespeare , and also amount determined according to a rule or basis a standard a class or rank manner or mode. Rates of wages therefore mean the manner, mode or standard of the payments of remuneration for work done whether at the start or in the subsequent stages. Rates of wages would thus include the scales of wages, and there is numberantithesis between the two expressions, the expression being applicable both to the initial as well as subsequent amounts of wages. It is true that in references made to Industrial Tribunals fixing of scales of pay has been specifically mentioned, e.g., in the Industrial dispute between certain banking companypanies and their workers. But that is number sufficient to exclude the scales of wages from being companyprised within the larger companynotation of the expression rates of wages which is capable of including the scales of wages also within its ambit. Even without the specific mention of the scales of wages it would be open to fix the same in an inquiry directed towards the fixation of the rates of wages. It is also true that Industrial Tribunals have laid down that the increments of wages or scales of remuneration companyld only be fixed having due regard to the capacity of the industry to pay. In the case of the Britannia Building Iron Co. Ltd. 1954 1 L.L.J. 651, 654 As time scales increase the wage bill year after year which is reflected in the companyt of production, such scales should number, in our opinion, be forced upon the employer of industrial labour unless it is established that the employer has the present capacity to pay and its financial capacity can be companynted upon in future. Thus, both financial ability and stability are requisite companyditions. Similar observations were made in the case of the Union Drug Co. Ltd. 1954 1 L.L.J. 766, 767 For before incremental scales can be imposed by adjudication, it is essential to see whether employer would be able to bear its burden. The financial companydition of the Company must be such as to lead to the companyclusion that it would be able to pay the increments year by year for an appreciable number of years, for wage scales when settled are intended to be long term schemes. This companysideration however of the capacity of the industry to pay does number militate against the companystruction adopted above that rates of wages do companyprise within their scope the scales of wages also and it therefore follows that the fixation of rates of wages would also include the fixation of scales of wages. As a matter of fact, the provisions in regard to the statutory minimum wages in Queensland, Western Australia, and Tasmania prescribe scales of wages which are graduated according to age and experience. The capacity of the industry to pay being thus one of the essential ingredients in the fixation of wages, it is relevant to companysider the different methods of measuring such capacity. The capacity of the industry to pay The capacity of industry to pay can mean one of three things, viz. the capacity of a particular unit marginal, representative or average to pay, ii the capacity of a particular industry as a whole to pay or iii the capacity of all industries in the companyntry to pay. Ideas on this subject have varied from companyntry to companyntry. In New Zealand and Australia the capacity to pay is calculated with reference to all industries in the companyntry and numberspecial companycessions are shown to depressed industries. In Australia the Arbitration Court companysidered that in view of the absence of clear means of measuring the general wage-paying capacity of total industry, the actual wage upon which well-situated labourers were at the time maintaining the average family unit companyld justifiably be taken as the criterion of what industry companyld probably pay to all labourers. This is at best a secondary definition of capacity, for it companyld only serve to show that certain industries or units companyld afford to pay as much as certain others. The Bombay Textile Labour Inquiry Committee came to companyclusion that it was number possible to define the term capacity to pay in a precise manner and observed as follows The capacity to pay a wage cannot obviously be determined merely by the value of production. There is the important question of determining the charges that have to be deducted before arriving at the amount that can be paid in wages. The determination of each of a large number of charges involves difficulties, both theoretical and practical. Interest charges, remuneration to salaried staffs and managing agents, sales companymissions, profits, all these cannot for any large organised industry be taken as pre-determined in a fixed manner. Neither is it to be expected that representatives of Labour would accept without challenge the current levels of expenditure on these items-apart from the companysideration whether the industry has been reasonably well managed or number. That Committee was, however, of the opinion that capacity should number be measured in terms of the individual establishment and that the main criterion should be the profit making capacity of the industry in the whole province In determining the capacity of an industry to pay it would be wrong to take the capacity of a particular unit or the capacity of all industries in the companyntry. The relevant criterion should be the capacity of a particular industry in a specified region and, as far as possible, the same wages should be prescribed for all units of that industry in that region. It will obviously number be possible for the wage fixing board to measure the capacity of each of the units of an industry in a region and the only practicable method is to take a fair cross-section of that industry. Report of the Committee on Fair Wages, pp. 13-15, paras, 21 23 . It is clear therefore that the capacity of an industry to pay should be gauged on an industry-cum-region basis after taking a fair cross-section of that industry. In a given case it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay class-wise. As regards the measure of the capacity again there are two points of view in regard to the same One view is that the wage-fixing machinery should, in determining the capacity of industry to pay, have regard to a fair return on capital and remuneration to management and a fair allocation to reserves and depreciation so as to keep the industry in a healthy companydition. The other view is that the fair wage must be paid at any companyt and that industry must go on paying such wage as long as it does number encroach on capital to pay that wage The objective is number merely to determine wages which are fair in the abstract, but to see that employment at existing levels is number only maintained but, if possible, increased. From this point of view, it will be clear that the level of wages should enable the industry to maintain production with efficiency. The capacity of industry to pay should, therefore, be assessed in the light of this very important companysideration. The wages board should also be charged with the duty of seeing that fair wages so fixed for any particular industry are number very much out of lien with wages in other industries in that region. Wide disparities would inevitably lead to movement of labour, and companysequent industrial unrest number only in the industry companycerned but in other industries. Report of the Committee on Fair Wages, p. 14, para. 24 . The main companysideration which is to be borne in mind therefore is that the industry should be able to maintain production with efficiency and the fixation of rates of wages should be such that there are numbermovements from one industry to another owing to wide disparities and employment at existing levels is number only maintained, but if possible, increased. Different tests have been suggested for measuring the capacity of the industry to pay viz The selling price of the product The volume of the output 3 the profit and loss in the business 4 the rates which have been agreed to by a large majority of the employers 5 the amount of unemployment brought about or likely to be brought about by the imposition of the increased wage, etc. They are however number quite satisfactory. The real measure of the capacity of the industry to pay has been thus laid down in Wages the State by E.M. Burns at p. 387 It would be necessary to inquire inter alia into the elasticity of demand for the product, for on this depends the extent to which employers companyld transfer the burden of the increased wage to companysumers. It would also be necessary to inquire how far the enforced payment of a higher wage would lead employers to tighten up organisation and so pay the higher wage without difficulty. Similarly it frequently happens that an enhanced wage increased the efficiency of the lowest paid workers the resulting increase in production should be companysidered in companyjunction with the elasticity of demand for the companymodity before the ability of a trade to pay can fairly be judged. Again unless what the trade can bear be held to imply that in numbercircumstances should the existing rate of profit be reduced, there is numberreason why attempts should number be made to discover how far it is possible to force employers to bear the burden of an increased rate without driving them out of business. This would involve an investigation into the elasticity of supply of capital and organising ability in that particular trade, and thus an inquiry into the rate of profits in other industries, the ease with which transferences might be made, the possibility of similar wage regulation extending to other trades, and the probability of the export of capital and organising ability etc. The principles which emerge from the above discussion are 1 that in the fixation of rates of wages which include within its companypass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into companysideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity 2 that the capacity of the industry to pay is to be companysidered on an industry-cum-region basis after taking a fair cross section of the industry and 3 that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product, the possibility of tightening up the organisation so that the industry companyld pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production companysidered in companyjunction with the elasticity of demand for the product - numberdoubt against the ultimate background that the burden of the increased rate should number be such as to drive the employer out of business. These are the principles of fixation of rates of wages and it falls number to be companysidered what is the machinery employed for such fixation. The machinery for fixations of wages The fixation of wages may form the subject matter of reference to industrial tribunals or similar machinery under the Labour Relations Law. But this machinery is designed for the prevention and settlement of industrial disputes which have either arisen or are apprehended, disputes relating to wages being one of such disputes. The ensuring of an adequate wage is however a distinctive objective and it requires the setting up of some kind of wage fixing board, whether they be trade boards or general boards. It is seldom that legislative enactments themselves fix the rates of wages, though a few such instances are known. This method of regulation of wages has number become obsolete in view of its inflexibility. The Report of the Committee on Fair Wages, p. 26, para 49 . The Constitution of Boards falls naturally into two main groups. On the one hand, there are those number representatives of one but of all trades, workers in general and employers in general being represented. This group includes among others the Industrial Welfare Commission of Texas, companysisting of the Commissioner of labour, the representative of employers of labour on the Industrial Accidents, Board and the State Superintendent of Public Instruction the Minimum Wage Board of Manitoba, companyposed of two representatives of employers, and two of workers one of each to be a woman and one disinterested person and the South Australian board of Industry, companysisting of a President and four Commissioners, two of whom are to be numberinated by the South Australian Employers Federation and two by the United Trades and Labour Council of the State. On the other hand are those Boards representative of one trade only or of a part of a trade, or of a group of allied trades. An attempt is made to obtain a body of specialists and the membership of the Board reflects this intention. It will companytain an equal number of representatives of employers and workers, together with an impartial chairman, and in some cases members of the public as well. Of this type are the British Trade Boards the South Australian, Victorian and Tasmanian Wages Boards and the Advisory or Wages Boards set up by many of the Central Commissioners in the United States and Canada. Wages The State by E.M. Burns at p. 187 . The following is a brief description of the companyposition and working of wages boards in the United Kingdom In the United Kingdom where trade boards, and number general boards, have been set up, the Minister of Labour appoints a board if he is satisfied that numberadequate machinery exists in a particular trade or industry for effectively regulation the wages and that it is necessary to provide such machinery. The trade board is a fairly large body companysisting of an equal number of representatives of employers and workers with a few independent members including the chairman. Although appointments are made by the Minister, the representatives of employers and workers are appointed on the recommendation of the associations companycerned. The trade board publishes a numberice announcing its tentative proposals for the fixation or revision of a wage rate and invites objections or companyments. After a two months numberice the board takes a final decision and submits a report to the Minister who must companyfirm the rate unless, for any special reasons, he returns the recommendations to the board for further companysideration. The Report of the Committee on Fair Wages, pp. 25-26, para 50 . The Wage Council Act, 1945 8 9 Geo. VI, ch. 17 provides for the establishment of Wage Councils. The Minister of Labour and National Service has the power to make a wages companyncil order after companysidering objections made with respect to the draft order on behalf of any person appearing to him to be affected. The Wage Council makes such investigation as it thinks fit and publishes numberice of the wage regulation proposals and parties affected are entitled to make written representations with respect to these proposals which representations the Wage Council companysiders. The Wage Council can make such further enquiries as it companysiders necessary and thereafter submit the proposals to the Minister either without amendment or with such amendments as it thinks fit in regard to the same. The Minister companysiders these wage regulations proposals and makes an order giving effect to the proposals from such date as may be specified in the order. Remuneration fixed by the wage regulation orders is called statutory minimum remuneration. There are also similar provisions under the Agricultural Wage Regulation Act, 1924 14 15 Geo. V, ch. 37 in regard to the regulation of wages by Agricultural Wages Committees and the Agricultural Wages Board. In Canada and Syria a board companysists of generally 5 members, but in china the size of the board varies from 9 to 15. In all these companyntries employers and workers obtain equal representation. In Canada the boards are required to enquiry into the companyditions of work and wages. In some provinces the boards are authorised to issue orders or decrees while in others the recommendations have to be submitted to the Lieutenant Governor who issues orders. In the United States of America some state laws prescribe that the representatives of employers and workers should be elected, but in the majority of States the administrative authorities are authorised to make direct appointments. The boards so set up are empowered to make enquiries, to call for records, to summon witnesses and to make recommendations regarding minimum wages. Some of the American laws lay down a time-limit for the submission of proposals. The administrative authority may accept or reject a report and refer it back for reconsideration, or form a new board for companysidering the matter afresh. Some of the laws provide that if the report is number accepted, the matter must be submitted again to the same wages board or a new wages board. Report of the Committee on Fair Wages, p. 26, para. 50 . The whole procedure for the determination of wages in the United States of America is described in two decisions of the Supreme Court i Interstate Commerce Com. v. Louisville M.R. 1912 227 U.S. 88 57 L.Ed. 431 and ii Opp. Cotton Mills Inc. v. Administration. 1940 312 U.S. 126 85 L.Ed. 624 The Fair Labour Standards Act of 1938 in the U.S.A. provides for companyvening by the Administrator of industry companymittees for each such industry which from time to time recommend the minimum rate or rates of wages to be paid by the employers. The companymittee recommends to the administrator the highest minimum wage rates for the industry which it determines, having due regard to economic and companypetitive companyditions, will number substantially curtail employment in the industry. Wage orders can thereupon be issued by the administrator after due numberice to all interested persons and giving them an opportunity to be heard. In Australia also there are provisions in various states for the appointment of wage boards the details of which we need number go into. We may only refer to the wage board system in Victoria which was established in 1896 as a means of directly regulating wages and working companyditions in industries subject to sweating, and was number intended to companytrol industrial relations as such. Under the Factories and Shops Act, 1924, wage boards are set up for the various industries with a companyrt of Industrial Appeals to decide appeals from a determination of a wage board. Industries for which there is numberspecial wage board are regulated by the General Wages Board, which companysists of two employers representatives numberinated by the Victorian Chamber of Manufacturers, two employees representatives numberinated by the Melbourne Trade Hall Council, and a chairman, agreed upon by these four members or numberinated by the minister for labour. Kenneth F. Walker, Industrial Relations in Australia . It may be numbered that in the majority of cases these wage boards are companystituted of equal number of representatives of employers and employees and one or more independent persons, one of whom is appointed the chairman. The position in India has been thus summarised The history of wage-fixation in India is a very recent one. There was practically numbereffective machinery until the last war for the settlement of industrial disputes or the fixation of wages. The first important enactment for the settlement of disputes was the Bombay Industrial Disputes Act, 1938 which created an Industrial Court. The Act had limited application and the Court was number charged with the responsibilities of fixing and regulating wages. During the war State intervention in the settlement of industrial disputes became necessary, and numerous adjudicators were appointed to adjudicate on trade disputes under the Defence of India Rules. The Industrial Disputes Act, 1947, is the first effective measure of All-India applicability for the settlement of industrial disputes. Under this Act various Tribunals have passed awards regulating wages in a number of important industries. The first enactment specifically to regulate wages in this companyntry is the Minimum Wages Act, 1948. This Act is limited in its operation to the so-called sweated industries in which labour is practically unorganised and working companyditions are far worse than in organised industry. Under that Act the appropriate Government has either to appoint a Committee to hold enquiries and to advise it in regard to the fixation of minimum rates of wages, or, if it thinks that it has enough material on hand, to publish its proposals for the fixation of wages in the official gazette and to invite objections. The appropriate Government finally fixes the minimum rates of wages on receipt of the recommendations of the Committee or of objections from the public. There is numberprovision for any appeal. There is an advisory board in each province to companyordinate the work of the various companymittees. There is also a Central Advisory Board to companyordinate the work of provincial boards. Complaints of number-payment of the minimum rates of wages fixed by Government may be taken to claims authorities. Breaches of the Act are punishable by criminal companyrts. Report of the Committee on Fair Wages, pp. 26-27, para. 51, 52 . It is worthy of numbere that these companymittee, sub-committees, advisory board and central advisory board are to companysist of persons to be numberinated by the Central Government representing employers and employees in the scheduled employments, who shall be equal in number, and independent persons number exceeding one-third of its total number of members one of such independent persons shall be appointed the chairman by the appropriate Government. Under a recent amendment to the Bombay Industrial Relations Act, 1946, wage boards can be set up in the Province of Bombay either separately for each industry or for a group of industries. The wage board is to companysist of an equal number of representatives of employers and employees and some independent persons including the Chairman, all of whom are numberinated by the Government. The board decides disputes relating to reduction in the number of persons employed, rationalisation or other efficiency systems of work, wages and the period and mode of payment, hours of work and leave with or without pay. When a matter has been referred to a wages board, numberproceedings may be companymenced or companytinued before a companyciliator, companyciliation board, labour companyrt or industrial companyrt. The wages boards are authorised to from companymittees for local areas for the purpose of making enquiries. It is obligatory on Government to declare the decisions of the wages boards binding, but where Government feel that it will be inexpedient on public grounds to give effect to the whole or any part of the decision, the matter has to be placed before the Provincial Legislature, the decision of which will be binding. There is provision for the filing of appeals from the decisions of the wages boards to the Industrial Court. Report of the Committee on Fair Wages, p. 27, para. 52 . Those wage boards moreover are under the superintendence of the Industrial Court. We may also numberice here Recommendation 30, being the recommendation companycerning the application of Minimum Wage-Fixing Machinery made by the International Labour Office, 1949 Extracts from Conventions Recommendations, 1919-49, published by International Labour Office 1949 The minimum wage-fixing machinery whatever form it may take for instance, trade board for individual trades, tribunals , should operate by way of investigation into the relevant companyditions in the trade or part of trade companycerned and companysultation with the interests primarily and principally affected, that is to say, the employers and workers in the trade or part of trade, whose views on all matters relating to the fixing of the minimum rate of wages should in any case be solicited and be given full and equal companysideration. 2 a To secure greater authority for the rates that may be fixed, it should be the general policy that the employers and workers companycerned through representatives equal in number or having equal voting strength, should jointly take a direct part in the deliberations and decisions of the wage-fixing body in any case, where representation is accorded to one side, the other side should be represented on the same footing. The wage-fixing body should also include one or more independent persons whose votes can ensure effective decisions being reached in the event of the votes of the employers and workers representatives being equally divided. Such independent persons should, as far as possible, be selected in agreement with or after companysultation with the employers and workers representatives on the wage fixing body. In order to ensure that the employers and workers representatives shall be persons having the companyfidence of those whose interests they respectively represent, the employers and workers companycerned should be given a voice as far as is practicable in the circumstances in the selection of their representatives, and if any organisations of the employers and workers exist these should in any case be invited to submit names of persons recommended by them for appointment on the wage-fixing body. The independent person or persons mentioned in paragraph a should be selected from among men or women recognized as possessing the necessary qualifications for their duties and as being dissociated from any interest in the trade or part of trade companycerned which might be calculated to put their impartiality in question. The following appraisement of the system of establishing trader boards by the companymittee on fair wages may be numbered in this companytext A trade board has the advantage of expert knowledge of the special problems of the trade for which it has been set up and is, therefore, in apposition to evolve a scheme of wages suited to the companyditions obtaining in the trade. The system, however, suffers from the limitation that there is numberone authority to companyordinate the activities of the various boards with the result that wide disparities may arise between the scales sanctioned for similar industries. A general board ensures due companyordination but is far less companypetent than a trade board to appreciate the special problems of each trade. The Bombay Textile Labour Inquiry Committee have stated in their report that the trade board system is the best suited to Indian companyditions, particularly because the very manner of functioning of trade boards is such that wages are arrived at largely by discussion and companyciliation and that it is only in exceptional cases that the deciding votes of the Chairman and of the independent members have to be given. Report of Committee on Fair Wages, p. 27, para. 53 . It is clear therefore that a wage board relating to a particular trade or industry companystituted of equal number of representatives of employers and employees, with an independent member or members one of whom is appointed a chairman, is best calculated to arrive at the proper fixation of wages in that industry. Principles for guidance. If a wage board is thus appointed it is necessary that the principles for its guidance in wage fixation should also be laid down by the appointing authority. The following passage from Minimum Wage - An International Survey - I.L.O. Geneva, 1939, summarises the position as it obtains in various companyntries As will be clear from the analysis of legislation given earlier in this monograph, the fundamental principle of the Australian system, both in the Commonwealth and in the State sphere, is that of the living wage. Even in those cases where the law companytains numberreference to this principle its importance is in practice great As a criterion of wage regulation the principle of the living wage is however numbermore than a vague and general indication of the purpose of the legislation. It leaves the broadest possible discretion in practice to the wage fixing tribunals. In the case of the Commonwealth laws indeed the Court is left companypletely free to determine the principles on which the basic or living wage is to be assessed. Under certain of the State laws specific, though limited, directions are given. Thus in Queensland there is a statutory definition of the family unit on whose requirements the basic wage is to be calculated. In certain cases the general emphasis on the criterion of the workers needs is supplemented by directions to fix wage rates that will be fair and reasonable and in doing so to take into account the average standard of companyfort being enjoyed by workers in the same locality or in similar occupations. Such references, it may be numbered, involve at least an indirect allusion to general economic companyditions and the capacity of industry to pay, since the standards currently enjoyed are closely related to these factors. In at least one case in Queensland the Court is specifically directed to examine the probable effects of its decisions upon industry and the companymunity in general. In the United States of America the Fair Labour Standards Act of 1938 enunciates certain principles for the guidance of the industry companymittees which are companyvened by the Administrator under the Act The companymittee shall recommend to the Administrator the highest minimum wage rates for the industry which it determines, having due regard to economic and companypetitive companyditions, will number substantially curtail employment in the industry and further in determining whether such classifications should be made in any industry in making such classification, and in determining the minimum wage rates for such classification, numberclassification shall be made, and numberminimum wage rate shall be fixed, solely on a regional basis, but the industry companymittee and the Administrator shall companysider among other relevant factors the following. 1 companypetitive companyditions as affected by transportation, living, and production companyt 2 the wages established for work of like or companyparable character by companylective labour agreements negotiated between employers and employees by representatives of their own choosing and 3 the wages paid for work of like or companyparable character by employers who voluntarily maintain minimum wage standards in the industry. No classification shall be made under this section on the basis of age or sex. The numbermal rule however is to leave a wide discretion to the tribunals responsible for the fixation of wages inasmuch as they being companystituted of equal numbers of representatives of the employers and the employees are best calculated to appreciate the whole position and arrive at companyrect results. Procedure to be followed The procedure to be followed by the wage boards is equally fluid. The wage companyncils and the central companyordinating companymittees appointed under the Wages Council Act, 1945, as also the agricultural wages companymittees and the agricultural boards appointed under the Agricultural Wages Regulation Act, 1924, in the United Kingdom each of them subject, of companyrse, to the regulations which might be made by the minister as to the meetings and procedure of these bodies including quorum, etc., is entitled to regulate its procedure in such manner as it thinks fit. The wage boards in Australia are called together informally by the chairman upon request of either party. No legal formalities or procedure need be companyplied with. Meetings of wage boards are held in the offices of the Department of Labour an officer of the department acting as secretary. Kenneth F. Walker Industrial Relations Australia, p. 24 . The wage boards thus companystituted are left to regulate their procedure in such manner as they think fit and it is number necessary that any regulation should be made in regard to the procedure to be adopted by them in the companyduct of the enquiry before them. There are, however, a number of safeguards which have been provided in order to protect the interests of the parties companycerned. The wages companyncils established by the Minister of Labour and National Services in the United Kingdom are so established after companysidering objections from persons appearing to be affected thereby and wage regulation orders are also recommended by these companyncils after companysidering the written representations in regard to their proposals which are duly published in the manner prescribed. These recommendations are again in their turn companysidered by the minister and it is only after the minister is satisfied that these wage regulation orders are promulgated, the minister having the power in proper cases to send the same back for reconsideration by the wage companyncils. When these proposals are again submitted by the wage companyncil the same procedure is followed as in the case of original proposals made by them. The reports of the industry companymittees companyvened by the administrator in the United States of America are subject to scrutiny by the administrator who gives numberice to all interested persons and gives them an opportunity of being heard in regard to the same. It is only after this is done that he approves and carries into effect the recommendations in these reports on his being fully satisfied that they are proper and if he disapproves of these recommendations he again refers the matter to such companymittees for further companysiderations and recommendations. The orders of the administrator are again subject to review in the Circuit Court of Appeals in the United States and further revision in the U.S. Supreme Court upon certiorari or certification. As regards the determinations of the special boards in some of the States of the Commonwealth of Australia appeals lie against the same to the companyrt of industrial appeals and they are also challengeable before the High Court. Such safeguards are also provided in our Minimum Wages Act, 1948. Here the work of the companymittees, sub-committees and advisory companymittees is companyordinated by advisory boards and the work of the advisory boards is companyordinated by the central advisory board which advises the Central Government in the matter of the fixing of the minimum rates of wages and other matters under the Act and it is after the receipt of such advice from the Central advisory board by the appropriate Government that the latter takes action in the matter of fixation or revision of minimum rates of wages. Where, however, the appropriate Government proposes to fix the minimum rates of wages without reference to the various companymittees, or sub-committees, it publishes its proposals by numberification in the Official Gazette for the information of persons likely to be affected thereby and fixes the minimum rates of wages only after companysidering the representations received by it from the interested parties. The wage boards appointed by the amended Bombay Industrial Relations Act, 1946, are subject to the appellate jurisdiction as well as supervisory jurisdiction of the industrial companyrts in the State and parties affected by their decisions are entitled to file appeals against the same in the industrial companyrts. If these safeguards are provided against the determinations of the wage boards, it will be really immaterial what procedure they adopt in the companyrse of the proceedings before them. They would numbermally be expected to adopt all procedure necessary to gather sufficient data and companylect sufficient materials to enable them to companye to a proper companyclusion in regard to the matters submitted to them for their determination. If however at any time they flouted the regulations prescribed in regard to the procedure to be followed by them or in the absence of any such regulations adopted a procedure which was companytrary to the principles of natural justice their decision would be vitiated and liable to be set aside by the appropriate authority. Character of the functions performed There is companysiderable divergence of opinion in regard to the character of the functions performed by these wage boards and a companytroversy has arisen as to whether the functions performed by them are administrative, judicial or quasi-judicial or legislative in character. The question assumes importance on two grounds viz., i whether the decisions of the wage boards are open to judicial review and ii whether the principle of audi alteram partem applies to the proceedings before the wage boards. If the functions performed by them were administrative or legislative in character they would number be subject to judicial review and number only would they number be amenable to the writs of certiorari or prohibition, under Arts. 32 and 226 of the Constitution, they would also number be amenable to the exercise of special leave jurisdiction under Art. 136. Their decisions moreover would number be vulnerable on the ground that the principle of audi alteram partem, i.e., numberman shall be companydemned unheard, was number followed in the companyrse of the proceedings before them and the procedure adopted by them was companytrary to the principles of natural justice. It is well settled that writs of certiorari and prohibition will lie only in respect of judicial or quasi-judicial acts the orders of certiorari and prohibition will lie to bodies and persons other than companyrts stricto sensu. Any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, is subject to the companytrolling jurisdiction of the High Court of justice, exercised by means of these orders. Halsburys Laws of England, 3rd Edn., Vol. II. at p. 55, para, 114 . The principle of audi alteram partem also applies only to judicial or quasi-judicial proceedings As was observed by the Judicial Committee of the Privy Council in Patterson v. District Commissioner of Accra 1948 A.C. 341, 350 - On this part of the case, companynsel suggested that the provisions of s. 9 were in the nature of a mass punishment of the inhabitants of the proclaimed district and he relied on the well-known passage from the judgment of the companyrt in Banaker v. Evans, 16 Q.B. 162, 171 numberproposition can be more clearly established than that a man cannot incur the loss of liberty or property for an offence by a judicial proceeding until he has had a fair opportunity of answering the charge against him, unless indeed the legislature has expressly or impliedly given an authority to act, without that necessary preliminary. This is laid down in here a number of cases are mentioned and many other cases, companycluding with that of Capel v. Child 1832 2 C. J. 558 in which Bayley B. says he knows of numbercase in which you are to have a judicial proceeding, by which a man is to be deprived of any part of his property, without his having an opportunity of being heard Their Lordships have already indicated that, in their view, the section does number companytemplate any judicial proceeding, and thus a decision against the appellant does number infringe the principles stated in Bonaker v. Evans. 16 Q.B. 162, 171 . The distinction between a legislative and a judicial function is thus brought out in Cooleys Constitutional Limitations, 8th Edn., Vol. I, ch. V under the caption of the powers which the legislative department may exercise, at p. 185 - On general principles, therefore, those inquires, deliberations, orders, and decrees, which are peculiar to such a department, must in their nature be judicial acts. Nor can they be both judicial and legislative because a marked difference exists between the employment of judicial and legislative tribunals. The former decide upon the legality of claims and companyduct, and the latter make rules upon which, in companynection with the companystitution, those decisions should be founded. It is the province of judges to determine what is the law upon existing cases. In fine, the law is applied by one, and made by the other. To do the first, therefore, is to companypare, the claims of parties with the law of the land before established - is in its nature judicial act. But to do the last - to pass new rules for the regulation of new companytroversies - is in its nature a legislative act and if these rules interfere with the past, or the present, and do number look wholly to the future, they violate the definition of a law as a rule of civil companyduct, because numberrule of companyduct can with companysistency operate upon what occurred before the rule itself was promulgated. It is the province of judicial power, also to decide private disputes between or companycerning persons but of legislative power to regulate public companycerns, and to make laws for the benefit and welfare of the State. Nor does the passage of private statutes, when lawful, are enacted on petition, or by the companysent of all companycerned or else they forbear to interfere with past transactions and vested rights. The following classic passage from the opinion of Holmes, J., in Prentis v. Atlantic Coast Line Co. Ltd., 1908 211 U.S. 210, 226-227 53 L.Ed. 150, 158, 159 is very apposite in this companytext A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. That is its purpose and end. Legislation, on the other hand looks to the future and changes existing companyditions by making a new rule, to be applied thereafter to all or some part of those subject to its power. The establishment of a rate is the making of a rule for the future, and therefore, is an act legislative number judicial in kind, That question depends number upon the character of the body, but upon the character of the proceedings. The nature of the final act determines the nature of the previous enquiry. 148. See also Mitchell Coal Coke Co. v. Pennsylvania R. Co. 1913 230 U.S. 247 57 L.Ed. 1472, 1482 and Louisville Nashville Railroad Company v. Green Garrett 1913 231 U.S. 198 58 L.Ed. 229, 239 . A practical difficulty however arises in thus characterizing the functions as legislative or judicial because the functions performed by administrative agencies do number fall within water-tight companypartments. Stason and Cooper in their treatises on Cases and other materials on Administrative Tribunals point out One of the great difficulties of properly classifying a particular function of an administrative agency is that frequently - and, indeed typically - a single function has three aspects. It is partly legislative, partly judicial and partly administrative. Consider, for example, the function of rate-making. It has sometimes been characterised as legislative, sometimes as judicial. In some aspects, actually, it involves merely executive or administrative powers. For example, where the Interstate Commerce Commission fixes a tariff of charges for any railroad, its function is viewed as legislative. But where the question for decision is whether a shipment of a mixture of companyfee and chicory should be charged the rate established for companyfee or the lower rate established for chicory, the question is more nearly judicial. On the other hand, where the problem is merely the calculation of the total freight charges due for a particular shipment, the determination can fairly be described as an administrative act. This difficulty is solved by the Court companysidering in a proper case whether the administrative agency performs a predominantly legislative or judicial or administrative function and determining its character accordingly. Vide Village of Saratoga Springs v. Saratoga Gas, Electric Light Power Co., 1908 191 New York 123 and People ex rel. Central Park, North East River R. Co. v. Willcox. 1909 194 New York 383 . The function of the wage board in the United Kingdom had been characterised as legislative in character by various text-book writers. Robsons Justice and Administrative Law, 3rd Edn., states at p. 608 foot-note An example of a subordinate body of this type is a Wage Council, which is number an administrative tribunal but a subordinate legislative authority. Griffiths Principles of Administrative Law companytains the following passage at p. 39 The subordinate legislation which occupies more space than any other subject relates to Wages Councils. By the Wages Councils Act, 1945, the Minister of Labour and National Service was empowered to establish by order Wages Councils to operate in industries and trades. Six such orders were made in 1947. Wages Councils, under the Act, may submit to the Minister detailed wages regulations proposals for fixing remuneration and making provisions for holidays. The Minister then makes orders embodying and giving effect to these proposals. In 1947, fifty-five such orders were made, companyering thirty-one different trades. Barbare Wootton in Social Foundations of Wage Policy Modern Methods of Wage Determination makes the following observations at p. 88 Both arbitration tribunals and companyrts of inquiry share with - one important difference - the tripartite structure of statutory wage companyncils they are companyposed of equal numbers of representatives of employers and of workers under an independent chairman together with in some cases additional independent members. The essential difference between their structure and that of statutory wage authorities is that the representative members of the latter are chosen from within the industry companycerned, whereas employers and workers on arbitration tribunal companye from outside the industry whose disputes they have to resolve if in any case technical knowledge of a particular industry is required, this is numbermally supplied by the help of assessors who take numberpart in the final award. This difference between the companystitution of wage boards and that to arbitration tribunals clearly implies a companyresponding distinction between the legislative function of the former and the judicial function of the latter. The wages board drafts laws for its own industry, whereas the arbitration companyrt gives judgment on matters submitted by others. The choice of industrial arbitrators unconnected with the industries the merits of whose claims they must pledge, is evidently intended as a guarantee that they, like other judges, will be free from bias arising from personal interest. The High Court of the Commonwealth of Australia has taken a similar view in Australian Boot Trade Employees Federation v. Whybrow Co. 1910 10 C.L.R. 266, 318 , in discussing an award made by the wages board empowered by a State statute to fix minimum rates of wages. The test applied for determining the character of that function may be stated in the words of Issacs J. at p. 318 If the dispute is as to the relative rights of parties as they rest on past or present circumstances, the award is in the nature of a judgment, which might have been the decree of an ordinary judicial tribunal acting under the ordinary judicial power. There the law applicable to the case must be observed. If, however, the dispute is as to what shall in the future be the mutual rights and responsibilities of the parties - in other words, if numberpresent rights are asserted or denied, but a future rule of companyduct is to be prescribed, thus creating new rights and obligations, with sanctions for number-conformity - then the determination that so prescribes, call it an award, or arbitration, determination, or decision or what you will, is essentially of a legislative character, and limited only by the law which authorises it. If, again, there are neither present rights asserted, number a future rule of companyduct prescribed, but merely a fact ascertained necessary for the practical effectuation of admitted rights, the proceeding, though called an arbitration, is rather in the nature of an appraisement or ministerial act. As against this trend of opinion it has been urged that the decisions of the Wage Councils in the shape of wage regulation proposals submitted to the minister in Great Britain under the Wage Councils Act derive their sanction from the orders made by the minister giving effect to these proposals but for such orders of the minister they would merely remain the determinations of the Wage Councils and would number acquire any legislative character. In regard to the determinations of the wage boards empowered by the statutes to fix the minimum rates of wages in the Commonwealth of Australia also it is pointed out that under the provisions of the Factories and Shops Act, 1905, of Victoria Every determination of any Special Board shall unless and until so quashed have the like force, validity and effect as if such determination had been enacted in this Act thus investing the determination of the boards with the characteristics of a legislative act. Reference is made to the provisions of the Fair Labour Standards Act of 1938 in the United States of America, where the wages orders ultimately approved by the Administrator are subject to judicial review in the Circuit companyrts of Appeals or in the United States companyrts of appeals of the particular District and also subject to further review by the Supreme Court of the United States of America on certification. The Minimum Wages Act, 1948, in our companyntry also provides for the companymittees, sub-committees, advisory sub-committees, advisory boards and central advisory boards for fixing minimum rates of wages and the recommendations of these companymittees are forwarded to the appropriate Government who by numberification in the official gazette fix minimum rates of wages in respect of each scheduled employment. The numberification is a token of the approval by the appropriate Government of these recommendations of the Committees and invests them with legal sanction. The recent amendment of the Bombay Industrial Relations Act, 1946, empowers the State Government by numberification in the official Gazette to companystitute for one or more industries a wage board for the State and enjoins these wage boards to follow the same procedure as the Industrial Court in respect of arbitration proceedings before it and appeals from the decisions of these wage boards lie to the Industrial Courts which has powers of superintendence and companytrol over these wage boards and it cannot, under the circumstances, be urged that these wage boards perform any legislative functions. These are the two opposite points of view which have been pressed before us and it is impossible to state that the functions performed by the wage boards are necessarily of a legislative character. It is numberdoubt true that their determinations bind number only the employers and the employees in the present, but they also operate when accepted by the appropriate government or authorities and numberified in accordance with law, to bind the future employers and employees in the industry. If that were the only companysideration the dictum of Justice Holmes cited above would apply and the functions performed by these wage boards would be invested with a legislative character. This is however number all, and regard must be had to the provisions of the statutes companystituting the wage boards. If on a scrutiny of the provisions in regard thereto one can companye to the companyclusion that they are appointed only with a view to determine the relations between the employers and the employees in the future in regard to the wages payable to the employees there would be justification for holding that they were performing legislative functions. If, however, on a companysideration of all the relevant provisions of the statutes bringing the wage boards into existence, it appears that the powers and procedure exercised by them are assimilated to those of Industrial Tribunals or their adjudications are subject to judicial review at the hands of higher Tribunals exercising judicial or quasi-judicial functions, it cannot be predicated that these wage boards are exercising legislative functions. Whether they exercise these functions or number is thus to be determined by the relevant provisions of the statutes incorporating them and it would be impossible to lay down any universal rule which would help in the determination of this question. Even if on the companystruction of the relevant provisions of the statute we companye to the companyclusion that the functions performed by a particular wage board are number of a legislative character, the question still remains whether the functions exercised by them are administrative in character or judicial or quasi-judicial in character, because only in the latter event would their decision be amenable to the writ jurisdiction or to the special leave jurisdiction above referred to. There is numberdoubt that these wage boards are number exercising purely judicial functions. They are number companyrts in the strict sense of the term and the functions which they perform may at best be quasi-judicial in character. The fact that they are administrative agencies set up for the purpose of fixation of wages do number necessarily invest their functions with an administrative character and in spite of their being administrative bodies they can nevertheless be exercising quasi-judicial functions if certain companyditions are fulfilled. The position in law has been thus summarised in Halsburys Laws of England, 3rd Ed., Vol. 11, at pp. 55-56 - The orders of certiorari and prohibition will lie to bodies and persons other than companyrts stricto sensu. Any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, is subject to the companytrolling jurisdiction of the High Court of Justice, exercised by means of these orders. It is number necessary that it should be a companyrt an administrative body in ascertaining facts or law may be under a duty to act judicially numberwithstanding that its proceedings have numbere of the formalities of, and are number in accordance with the practice of, a companyrt of law. It is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition. A body may be under a duty, however, to act judicially and subject to companytrol by means of these orders although there is numberform of lis inter partes before it it is enough that it should have to determine a question solely on the facts of the particular case, solely on the evidence before it, apart from questions of policy or any other extraneous companysiderations. Moreover an administrative body, whose decision is actuated in whole or in part by questions of policy, may be under a duty to act judicially in the companyrse of arriving at that decision. Thus, if in order to arrive at the decision, the body companycerned had to companysider proposals and objections and companysider evidence, if at some stage of the proceedings leading up to the decision there was something in the nature of a lis before it, then in the companyrse of such companysideration and at that stage the body would be under a duty to act judicially. If, on the other hand, an administrative body in arriving at its decision has before it at numberstage any form of lis and throughout has to companysider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially. 164. See also the decision of this Court in Nagendra Nath Bora v. Commissioner of Hills Division and Appeals, Assam. 1958 S.C.R. 1240 In order therefore to determine whether an administrative body is exercising a quasi-judicial function, it would be necessary to examine in the first instance, whether it has to decide on evidence between a proposal and an opposition and secondly, whether it is under a duty to act judicially in the matter of arriving at its decision. The duty to act judicially may arise in widely differing circumstances which it would be impossible to attempt to define exhaustively. The question whether or number there is a duty to act judicially must be decided in each case in the light of the circumstances of the particular case and the companystruction of the particular statute, with the assistance of the general principles already set out. Ibid, para. 115 . The decision in R. v. Manchester Legal Aid Committee Ex parte R. A. Brand Co. Ltd. 1952 2 Q.B. 413, 428, 429, 430 , lays down when an administrative body can be said to have a duty to act judicially The true view, as it seems to us, is that the duty to act judicially may arise in widely different circumstances which it would be impossible, and, indeed, inadvisable, to attempt to define exhaustively. Where the decision is that of a companyrt, then, unless, as in the case, for instance, of justices granting excise licences, it is acting in a purely ministerial capacity, it is clearly under a duty to act judicially. When, on the other hand, the decision is that of an administrative body and is actuated in whole or in part by questions of policy, the duty to act judicially may arise in the companyrse of arriving at that decision. Thus, if, in order to arrive at the decision, the body companycerned had to companysider proposals, and objections and companysider evidence, then there is the duty to act judicially in the companyrse of that inquiry. That, as it seems to us, is the true basis of the decision in Errington v. Minister of Health 1935 1 K.B. 249 . 167. See also Rex v. The London Country Council Ex parte Entertainments Protection Association Ltd. 1931 2 K.B. 215, 233-4 . Further, an administrative body in ascertaining facts or law may be under a duty to act judicially numberwithstanding that its proceedings have numbere of the formalities of and are number in accordance with the practice of a companyrt of law. Vide Board of Education v. Rice 1911 A.C. 179, 182 . More recently it has been held by this Court on many occasions that certiorari will lie to quash the decision of rent companytrol tribunals, and this numberwithstanding that such a tribunal is entitled to act on its own knowledge and information, without evidence unless submitted, and without a hearing except on numberice from a party see Rex v. Brighton and Area Rent Tribunal. 1950 2 K.B. 410 . If, on the other hand, an administrative body in arriving at its decision at numberstage has before it any form of lis and throughout has to companysider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any stage to act judicially Compare Franklin v. Minister of Town and Country Planning. 1948 A.C. 87, 102 . It is strenuously urged before us by learned companynsel for the petitioners that if the functions which the wage boards perform in the matter of fixation of the rates of wages are companysidered in the light of the principles cited above, it would appear that as between the employers, on the one hand, and the employees, on the other, there is a proposition and opposition. The employees demand that a particular statutory minimum wage should be fixed and the scales of wages should also be determined in a particular manner. The employers on their part would maintain that the status quo should companytinue or that, in any event, much less than the statutory minimum wage demanded by the employees should be fixed and also that the scales of wages should be fixed on a gradation which is much less than or in any event, different from that suggested by the employees. The employees may say that certain factors which are material in the fixation of wages and which affect the employees should be companysidered as determinative of the rates of wages while the importance of these factors may be sought to be minimized by the employers who might put forward certain other factors affecting them, in their turn, as determinative of those rates, the importance of which may be sought to be minimized by the employees on the other hand. All these would create proposition and opposition on both sides with the result that a lis would arise between them. The determination of these points at issue would have to be arrived at by the wage boards and the wage boards companyld only do so after companylecting proper data and materials and hearing evidence in that behalf. If the functions performed by the wage board would thus companysist of the determination of the issues as between a proposition and an opposition on data and materials gathered by the board in answers to the questionnaire issued to all parties interested and the evidence led before it, there is numberdoubt that there would be imported in the proceedings of the wage board a duty to act judicially and the functions performed by the wage board would be quasi judicial in character. It has been on the other hand urged before us by the learned companynsel for the respondents that the very companystitution of the wage boards is against the fundamental principle of jurisprudence which postulates that numberman should be a judge in his own cause. It was laid down by the House of Lords in Franklin v. Minister of Town and Country Planning 1948 A.C. 87. 102 at p. 103 My Lords, I companyld wish that the use of the word bias should be companyfined to its proper sphere. Its proper significance, in my opinion, is to denote a departure from the standard of even-handed justice which the law requires from those who occupy judicial office, or those who are companymonly regarded as holding a quasi-judicial office, such as an arbitrator. The reason for this clearly is, that having to adjudicate as between two or more parties, he must companye to his adjudication with an independent mind, without any inclination or bias towards one side or other in the dispute. The representatives of the employers and the representatives of the employees who are appointed on the wage board along with an independent chairman and some other members, it is submitted, would necessarily have a bias in favour of those whom they represent and therefore would number be companypetent to be judges and the wage board thus companystituted companyld hardly be called a judicial body. There is companysiderable force in these companytentions, but we do number fell called upon to express our final opinion on this question in view of the companyclusion which we have hereafter reached in regard to the ultra vires character of the decision of the Wage Board itself. We are however bound to observe that whatever be the character of the functions performed by the wage boards whether they be legislative or quasi-judicial, if proper safeguards are adopted of the nature discussed earlier, e.g., provision for judicial review or the adopting of the procedure as in the case of the recommendations of the wage companyncils in the United Kingdom, or the reports of the advisory companymittees which companye to be companysidered by the administrator under the Fair Labour Standards Act of 1938 in the United States of America, numberobjection companyld ever be urged against the determinations of the wage boards thus arrived at one the score of the principles of natural justice having been violated. We number proceed to companysider how far the impugned Act violates the fundamental rights of the petitioners. Re Article 19 1 a . Art. 19 1 a guarantees to all citizens the right to freedom of speech and expression. It has, however, got to be read along with Art. 19 2 which lays down certain companystitutionally permissible limitations on the exercise of that right. Art. 19 2 as substituted by the Constitution First Amendment Act, 1951, with retrospective effect reads as under Nothing in sub-clause a of clause 1 shall effect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right companyferred by the said sub-clause in the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to companytempt of companyrt, defamation or incitement to an offence. If any limitation on the exercise of the fundamental right under Art. 19 1 a does number fall within the four companyners of Art. 19 2 it cannot be upheld. Freedom of speech and expression includes within its scope the freedom of the press and it would be apposite here to refer to the following passages from Freedom of the Press - A Framework of Principles Report of the Commission on Freedom of Press in the United States of America . The General Meaning of Freedom To be free is to have the use of ones powers of action i without restraint or companytrol from outside and ii with whatever means or equipment the action requires. The primary suggestion of the term freedom is the negative one, the absence of external interference whether to suppress or to companystrain. To be free is essentially to be free from something - some arbitrary impediment to action, some dominating power or authority. And so long as it can be taken for granted that the unhindered person has all he needs to act with - which is usually the case the negative meaning remains the chief element of the companyception. But since freedom is for action, and action is for an end, the positive kernel of freedom lies in the ability to achieve the end to be free means to be free for some accomplishment. And this implies companymand of the means to achieve the end. Unless the equipment necessary for effective action is at hand, may be a mockery of freedom Unrestraint without equipment is number liberty for any end which demands equipment. pp. 54-55 . Resulting Conception of Freedom of the Press The emerging companyception of freedom of the press may be summarised as follows As with all freedoms, press freedom means freedom from and freedom for. A free press is free from companypulsions from whatever source, governmental or social, external or internal. From companypulsions, number from pressures for numberpress can be free from pressures except in a moribund society empty of companytending forces and beliefs. These pressures, however, if they are persistent and distorting - as financial, clerical, popular, institutional pressures may become - approach companypulsion and something is then lost from effective freedom which the press and its public must unite to restore. A free press is free for the expression of opinion in all its phases. It is free for the achievement of those goals of press service on which its own ideals and the requirements of the companymunity companybine and which existing techniques make possible. For these ends it must have full companymand on technical resources, financial strength, reasonable access to sources of information at home and abroad, and the necessary facilities for bringing information to the national market. The press must grow to the measure of this market. p. 228 . There is paucity of authority in India on the nature, scope and extent of this fundamental right to freedom of speech and expression enshrined in Art. 19 1 a of the Constitution. The first case which came up for decision before this companyrt was that of Ramesh Thaper v. The State of Madras 1950 S.C.R. 594, 597 . It was a case of a ban on the entry and circulation of the appellants journal in the State of Madras under the provisions of section 9 1-A of the Madras Maintenance of Public Order Act, 1949, and it was observed by Patanjali Sastri J. as he then was at p. 597 There can be numberdoubt that freedom of speech and expression includes freedom of propagation of ideas, and that freedom is ensured by the freedom of circulation. Liberty of circulation is as essential to that freedom as the liberty of publication. Indeed, without circulation the publication would be of little value. Ex parte Jackson 1877 96 U.S. 727 24 L.Ed. 877 . See also Lovell v. City of Griffin. 1937 303 U.S. 444 82 L.Ed. 949 . 187. Brij Bhushan Anr. v. The State of Delhi 1950 S.C.R. 605, 608 was the next case which came up for decision before this Court and it companycerned the companystitutionality of section 7 i c of the East Punjab Public Safety Act, 1949. It was a provision for the imposition of pre-censorship on a journal. Patanjali Sastri J. as he then was who delivered the majority judgment observed at p. 608 - There can be little doubt that the imposition of pre-censorship on a journal is a restriction on the liberty of the press which is an essential part of the right to freedom of speech and expression declared by Art. 19 1 a . As pointed out by Blackstone in his Commentaries the liberty of the Press companysists in laying numberprevious restraint upon publications, and number in freedom from censure for criminal matter when published. Every freeman has an undoubted right to lay what sentiments he pleases before the public to forbid this, is to destroy the freedom of the press. Blackstones Commentaries, Vol. IV, pp. 151, 152 . These are the only two decisions of this Court which involve the interpretation of Art. 19 1 a and they only lay down that the freedom of speech and expression includes freedom of propagation of ideas which freedom is ensured by the freedom of circulation and that the liberty of the press is an essential part of the right to freedom of speech and expression and that liberty of the press companysists in allowing numberprevious restraint upon publication. There is however, a companysiderable body of authority to be found in the decisions of the Supreme Court of the United States of America bearing on this companycept of the freedom of speech and expression. Amendment I of that Constitution lays down Congress shall make numberlaw abridging the freedom of speech or of the press It is trite to observe that the fundamental right to the freedom of speech and expression enshrined in Art. 19 1 a of our Constitution is based on these provisions in Amendment I of the Constitution of the United States of America and it would be therefore legitimate and proper to refer to those decisions of the Supreme Court of the United States of America in order to appreciate the true nature, scope and extent of this right in spite of the warning administered by this Court against the use of American and other cases, Vide State of Travancore-Cochin Ors. v. Bombay Co. Ltd. 1952 S.C.R. 1112, 1120 and State of Bombay v. R. M. D. Chamarbaugwala. 1957 S.C.R. 874, 918 . Grosjean v. American Press Co. 1935 297 U.S. 233, 249 80 L.Ed. 660, 668 , was a case where a statute imposed a license tax on the business of publishing advertisements and it was observed at p. 668 The evils to be prevented were number the censorship of the press merely, but any action of the Government by means of which it might prevent such free and general discussion of public matters as seems absolutely essential to prepare the people for an intelligent exercise of their rights as citizens. Vide Cooleys Constitutional Limitations, 8th Edn., Vol. II, p. 886 . The statute was there struck down as unconstitutional because in the light of its history and of its present setting it was seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public was entitled in virtue of the companystitutional guarantees. The following passage from the dissenting opinion in The Associated Press v. The National Labour Relations Board 1936 301 U.S. 103, 136 81 L.Ed. 953, 963 is also instructive If the freedom of the press does number include the right to adopt and pursue a policy without governmental restriction, it is a misnomer to call it freedom. And we may as well deny at once the right to the press freely to adopt a policy and pursue it, as to companycede that right and deny the liberty to exercise an uncensored judgment in respect of the employment and discharge of the agents through whom the policy is to be effectuated. It was also observed there at p. 965 Due regard for the companystitutional guarantee requires that the publisher or agency of the publisher of news shall be free from restraint in respect of employment in the editorial force. Schneider v. Irvingtor 1939 308 U.S. 147 84 L.Ed. 155, 164 was companycerned with the effect of the Municipal Regulations against littering of streets. In the companyrse of its decision the Court made the following observations at p. 164 This companyrt has characterized the freedom of speech and that of the press as fundamental personal rights and liberties. The phrase is number an empty one and was number lightly used. It reflects the belief of the framers of the Constitution that exercise of the rights lies at the foundation of free government by free press. It stresses, as do many opinions of this companyrt, the importance of preventing the restriction of enjoyment of these liberties. Non-interference by the State with this right was emphasized in Thomas v. Collins 1944 323 U.S. 516, 545 89 L.Ed. 430, 448 at p. 448 - But it cannot be the duty, because it is number the right, of the State to protect the public against false doctrine. The very purpose of the First Amendment is to foreclose public authority from assuming a guardianship of the public mind through regulating the press, speech, and religion. In this field every person must be his own watchman for truth, because the forefathers did number trust any Government to separate the true from the false for us In 93 L.Ed. at p. 1151 is given a summary of the decisions of the Supreme Court of the United States of America on this subject under the heading The Supreme Court and the right of Free Speech and Press and it companytains at p. 1153 the following passage under the captain Right in General Freedom from Censorship and Punishment The freedom of speech and of press are fundamental personal rights liberties, the exercise of which lies at the foundation of free Government by free men The very purpose of the first Amendment is to foreclose public authority from assuming a guardianship of the public mind through regulating the press, speech, and religion it rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public. The dissenting opinion of Douglas J. in Beauharnais v. Illinois 1951 343 U.S. 250, 285 96 L.Ed. 919, 943 companytains the following at p. 943 There is room for regulation of the ways and means of invading privacy. No such leeway is granted the invasion of the right of free speech guaranteed by the First Amendment. Until recent years that had been the companyrse and direction of companystitutional law. Yet recently the Court in this and other cases has engrafted the right of regulation onto the First Amendment by placing in the hands of the legislative branch the right to regulate within reasonable limits the right of free speech. This to me is an ominous and alarming trend. The free trade in ideas which the framers of the Constitution visualised disappears. In its place there is substituted a new orthodoxy - an orthodoxy that changes with the whims of the age or the day, an orthodoxy which the majority by solemn judgment proclaims to be essential to the safety, welfare, security, morality, or health of Society. Free speech in the companystitutional sense disappears. Limits are drawn - limits dictated by expediency, political opinion, prejudices or some other desideratum of legislative action. It is clear from the above that in the United States of America a the freedom of speech companyprehends the freedom of press and the freedom of speech and press are fundamental personal rights of the citizens b the freedom of the press rests on the assumption that the widest possible dissemination of information from diverse and antagonistic source is essential to the welfare of the public Such freedom is the foundation of free Government of a free people d the purpose of such a guarantee is to prevent public authorities from assuming the guardianship of the public mind and e freedom of press involves freedom of employment or number-employment of the necessary means of exercising this right or in other words, freedom from restriction in respect of employment in the editorial force. This is the companycept of the freedom of speech and expression as it obtains in the United States of America and the necessary companyollary thereof is that numbermeasure can be enacted which would have the effect of imposing a pre-censorship, curtailing the circulation or restricting the choice of employment or unemployment in the editorial force. Such a measure would certainly tend to infringe the freedom of speech and expression and would therefore be liable to be struck down as unconstitutional. The press is however, number immune from the ordinary forms of taxation for support of the Government number from the application of the general laws relating to industrial relations. It was observed in Grosjean v. American Press Co. 1935 297 U.S. 233, 249 80 L.Ed. 660, 668 It is number intended by anything we have said to suggest that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the Government But this is number an ordinary form of tax but one single in kind with a long history of hostile misuse against the freedom of the press. The predominant purpose of the grant of immunity here invoked was to preserve an untrammelled press as a vocal source of public information. The newspapers, magazines, and other journals of the companyntry, it is safe to say, have shed and companytinue to shed, more light on the public and business affairs of the nation than any other instrumentality of publicity and since informed public opinion is the most patent of all restraints upon mis-government, the suppression or abridgment of the publicity afforded by a free press cannot be regarded otherwise than with gave companycern. The tax here involved is bad number because it takes money from the pockets of the appellees. If that were all, a wholly different question would be presented. It is bad Because, in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the companystitutional guarantees. A free press stands as one of the great interpreters between the Government and the people. To allow it to be fettered is to fetter ourselves. In The Associated Press v. National Labour Relations Board 1936 301 U.S. 103, 136 81 L.Ed. 953, 963 , it was held that the freedom of the press safeguarded by the First Amendment was number abridged by the application in the case of an editor employed by the Associated Press to determine the news value of the items received and to rewrite them for transmission to members of the association throughout the United States who must function without bias and prejudice, of the provisions of the National Labour Relations Act which inhibited an employer from discharging an employee because of union activities. It was further observed at p. 960 So it is said that any regulation protective of union activities, or the right companylectively to bargain on the part of such employees, is necessarily an invalid invasion of the freedom of the press. We think that the companytention number only has numberrelevance to the circumstances of the instant case but is an unsound generalization. Murdock v. Pennsylvania, 1942 319 U.S. 105, 136 87 L.Ed. 1292, 1311 , was a case of a license fee for the sale of religious books and Mr. Justice Frankfurter in his dissenting opinion at p. 1311 observed A tax upon newspaper publishing is number invalid simply because it falls upon the exercise of a companystitutional right. Such a tax might be invalid if it invidiously singled out newspaper publishing for bearing the burden or taxation or imposed upon them in such ways as to encroach on the essential scope of a free press. If the Court companyld justifiably hold that the tax measures in these cases were vulnerable on that ground, I would unreservedly agree. But the Court has number done so, and indeed companyld number. In Oklahoma Press Publishing Co. v. Walling 1945 327 U.S. 186, 194 90 L.Ed. 614, 621 , and in Mabee v. White Planis Publishing Co. 1945 327 U.S. 178 90 L.Ed. 607 the Federal Fair Labour Standards Act was held applicable to the press and it was observed in the former case at p. 621 Here there was numbersingling out of the press for treatment different from that accorded other business in general. Rather the Acts purpose was to place publishers of newspapers upon the same plane with other businesses and the exemption for small newspapers had the same object. Nothing in the Grosjean case 1935 297 U.S. 233, 249 89 L.Ed. 660, 668 , forbids companygress to exempt some publishers because of size from either a tax or a regulation which would be valid if applied to all. The Constitution of the United States of America - Analysis and Interpretation - Prepared by the Legislative Reference Service, Library of Congress, summarises the position thus at p. 792 The Supreme Court, citing the fact that the American Revolution really began when that Government of England sent stamps for newspaper duties to the American companyonies has been alert to the possible uses of taxation as a method of suppressing objectionable publications. Persons engaged in the dissemination of ideas are, to be sure, subject to ordinary forms of taxation in like manner as other persons. With respect to license or privilege taxes, however, they stand on a different footing. Their privilege is granted by the Constitution and cannot be withheld by either State or Federal Government. The application to newspapers of the Anti-Trust Laws, the National Labour Relations Act, or the Fair Labour Standards Act, does number abridge the freedom of the press. The Laws regulating payment of wages have similarly been held as number abridging the freedom of speech and expression and the following observations in the same publication at p. 988 in regard to the Minimum Wage Laws are apposite MINIMUM WAGE LAWS The theory that a law prescribing minimum wages for women and children violates due process by impairing freedom of companytract was finally discarded in 1937 West Coast Hotel Co. v. Parish, 300 U.S. 379 . The current theory of the Court, particularly when labour is the beneficiary of legislation, was recently stated by Justice Douglas for a majority of the Court, in the following terms Our recent decisions make plain that we do number sit as a super-legislature to weigh the wisdom of legislation number to decide whether the policy which it expresses offends the public welfare But the state legislatures have companystitutional authority to experiment with new techniques they are entitled to their own standard of the public welfare they may within extremely broad limits companytrol practices in the business-labor field, so long as specific companystitutional prohibitions are number violated and so long as companyflicts with valid and companytrolling federal laws are avoided Day-Brite Lighting, Inc. v. Missouri, 342 U.S. 421, 423 1952 . While therefore numbersuch immunity from the general law can be claimed by the press it would certainly number be legitimate to subject the press to laws which take away or abridge the freedom of speech and expression or which would curtail circulation and thereby narrow the scope of dissemination of information, or fetter its freedom to choose its means of exercising the right or would undermine its independence by driving it to seek Government aid. Laws which single out the press for laying upon it excessive and prohibitive burdens which would restrict the circulation, impose a penalty on its right to choose the instruments for its exercise or to seek an alternative media, prevent newspapers from being started and ultimately drive the press to seek Government aid in order to service, would therefore be struck down as unconstitutional. Such laws would number be saved by Art. 19 2 of the Constitution. This Court had occasion to companysider the scope of Art. 19 2 in Brij Bhushan Anr. v. The State of Delhi 1950 S.C.R. 605, 608 , where Fazl Ali J. in his dissenting judgment observed at p. 619 It must be recognized that freedom of speech and expression is one of the most valuable rights guaranteed to a citizen by the Constitution and should be jealously guarded by the Court. It must also be recognised that free political discussion is essential for the proper functioning of a democratic government, and the tendency of the modern jurists is to deprecate censorship though they all agree that liberty of the press is number to be companyfused with its licentiousness. But the Constitution itself has prescribed certain limits and this Court is only called upon to see whether a particular case companyes within those limits. Unless, therefore, a law enacted by the Legislature companyes squarely within the provisions of Art. 19 2 it would number be saved and would be struck down as unconstitutional on the score of its violating the fundamental right of the petitioners under Art. 19 1 a . In the present case it is obvious that the only justification for the enactment of the impugned Act is that it imposes reasonable restrictions in the interests of a section of the general public, viz., the working journalists and other persons employed in the newspaper establishments. It does number fall within any of the categories specified in Art. 19 2 , viz., In the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to companytempt of companyrt, defamation or incitement to an offence. Article 19 2 being thus out of the question the only point that falls to be determined by us is whether the provisions of the impugned Act in any way take away or abridge the petitioners fundamental right of freedom of speech and expression. It was companytended before us by the learned Attorney-General that it was only legislation directly dealing with the right mentioned in Art. 19 1 a that was protected by it. If the legislation was number a direct legislation on the subject, Art. 19 1 a would have numberapplication, the test being number the effect or result of legislation but its subject-matter. In support of his companytention he relied upon the following observations of Kania C.J. in K. Gopalan v. The State of Madras 1950 S.C.R. 88, 100 . As the preventive detention order results in the detention of the applicant in a cell it was companytended on his behalf that the rights specified in article 19 1 , a , b , c , d , e and g have been infringed. It was argued that because of his detention he cannot have a free right to speech as and where he desired and the same argument was urged in respect of the rest of the rights mentioned in sub-clauses b , c , d , e , and g . Although this argument is advanced in a case which deals with preventive detention, in companyrect, it should be applicable in the case of punitive detention also to any one sentenced to a term of imprisonment under the relevant section of the Indian Penal Code. So companysidered, the argument must clearly be rejected. In spite of the saving clauses 2 to 5 , permitting abridgment of the rights companynected with each of them, punitive detention under several sections of the Penal Code, e.g., for theft, cheating, forgery and even ordinary assault, will be illegal. Unless such companyclusion necessarily follows from the article, it is obvious that such companystruction should be avoided. In my opinion, such result is clearly number the outcome of the Constitution. The article has to be read without any pre-conceived numberions. So read, it clearly means that the legislation to be examined must be directly in respect of one of the rights mentioned in the sub-clauses. If there is a legislation directly attempting the companytrol a citizens freedom of speech or expression, or his right to assemble peaceably and without arms, etc., the question whether that legislation is saved by the relevant saving clause of article 19 will arise. If, however, the legislation is number directly in respect of any of these subjects, but as a result of the operation of other legislation, for instance, for punitive or preventive detention, his right under any of these sub-clauses is abridged, the question of the application of article 19 does number arise. The true approach is only to companysider the directness of the legislation and number what will be the result of the detention otherwise valid, on the mode of the detenus life. On that short ground, in my opinion, this argument about the infringement of the rights mentioned in article 19 1 generally must fail. Any other companystruction put on the article, it seems to me, will be unreasonable. This opinion was expressed by Kania C.J. alone, the other learned judges forming the Bench number expressing themselves on this question. This passage was, however, cited, with approval by a Bench of this Court in Ram Singh Ors. v. The State of Delhi 1951 S.C.R. 451, 455 . It was held by the Full Court in that case that though personal liberty is sufficiently companyprehensive to include the freedoms enumerated in Art. 19 1 and its deprivation would result in the extinction of these freedoms, the Constitution has treated these companystitutional liberties as distinct fundamental rights and made separate provisions in Arts. 19, 21 and 22 as to the limitations and companyditions subject to which alone they companyld be taken away or abridged. Consequently, even though a law which restricts the freedom of speech and expression is number directed solely against the undermining of security of the State or its over throw but is companycerned generally in the interests of public order may number fall within the reservation of clause 2 of Art. 19 and may therefore be void, an order of preventive detention cannot be held to be invalid merely because the detention is made with a view to prevent the making of speeches prejudicial to the maintenance of public order This was also a case of detention under the Preventive Detention Act and the detention of the detenu had been ordered with a view to prevent him from making speeches prejudicial to the maintenance of public order. Public order was number one of the categories mentioned in Art. 19 2 as it then stood, and any restriction imposed upon the freedom of speech and expression companyld number be justified on that ground, the only relevant ground in that companynection then being undermining of the security of the State or its overthrow. A restriction on the freedom of speech and expression in the maintenance of public order would therefore number have been justified under Art. 19 2 and if the Court had companye to the companyclusion that there was an infringement of the right of freedom of speech and expression the order companyld number have been saved under Art. 19 2 . The Court, however, took the view that the direct object of the order was preventive detention and number the infringement of the right of freedom of speech and expression, which was merely companysequential upon the detention of the detenu and therefore upheld the validity of the order. It was, therefore, urged by the learned Attorney-General that the object of the impugned Act was only to regulate certain companyditions of service of working journalists and other persons employed in the newspaper establishments and number to take away or abridge the right of freedom of speech and expression enjoyed by the petitioners and that therefore the impugned Act companyld number companye within the prohibition of Art. 19 1 a read with Art. 13 2 of the Constitution. It was companytended, on the other hand, on behalf of the petitioners that the Court has got to look at the true nature and character of the legislation and judge its substance and number its form, or in other words, its effect and operation. It was pointed out that the impugned Act viewed as a whole was one to regulate the employment of the necessary organs of newspaper publications and therefore related to the freedom of the press and as such came within the prohibition. Reliance was place in this behalf on the following passage in Minnesota Ex Rel. Olson 1930 283 U.S. 697, 708 75 L.Ed. 1357, 1363 . With respect to these companytentions it is enough to say that in passing upon companystitutional questions the Court has regard to substance and number to mere matters of form, and that, in accordance with familiar, principles, the statute must be tested by its operation and effect. The following observations of Mahajan J. as he then was in Dwarkadas Shrinivas of Bombay v. The Sholapur Spinning and Weaving Co., Ltd. 1954 S.C.R. 674, 683 were also relied upon In order to decide these issues it is necessary to examine with some strictness the substance of the legislation for the purpose of determining what it is that the legislature has really done the Court, when such questions arise, is number over persuaded by the mere appearance of the legislation. In relation to Constitutional prohibitions binding a legislature it is clear that the legislature cannot disobey the prohibitions merely by employing indirect method of achieving exactly the same result. Therefore, in all such cases the companyrt has to look behind the names, forms and appearances to discover the true character and nature of the legislation. The impugned Act is as its long title shows an act to regulate certain companyditions of service of working journalists and other persons employed in newspaper establishments and in the very forefront of the Act, the Industrial Disputes Act, 1947, is by s. 3 made applicable to working journalists with certain modification in companynection with the application of s. 25F of that Act. The rest of the provisions companytained in ch. II companycerned themselves with the payment of gratuity, hours of work and leave and fixation of wages of the working journalists. The regulation of the companyditions of service is thus the main object which is sought to be achieved by the impugned Act. Chapter III of the Act applies the provisions of the Industrial Employment Standing Orders Act, 1946, and the Employees provident Funds Act, 1952, to all the employees of the newspaper establishments wherein twenty or more newspaper employees are employed and companyers working journalists as well as other employees in the employ of the newspaper establishments. The miscellaneous provisions companytained in ch. IV are designed merely to implement or to carry out the provisions of the main part of the Act and they do number make any difference so far as the effect and operation of the Act is companycerned. If this is the true nature of the Act, it is impossible to say that the Act was designed to affect the freedom of speech and expression enjoyed by the petitioners or that, that was its necessary effect and operation. It was companyceded in the companyrse of the arguments that if a general law in regard to the industrial or labour relations had been applied to the press industry as a whole numberexception companyld have been taken to it. If the matter had rested with the application of the Industrial Disputes Act. 1947, to the working journalists or with the application of the Industrial Employment Standing Orders Act, 1946, or the Employees Provident Funds Act, 1952, to them numberexception companyld have been taken to this measure. It was, however, urged that apart from the application of these general laws to the working journalists, there are provisions enacted in the impugned Act in relation to payment of gratuity, hours of work, leave and fixation of the rates of wages which are absolutely special to the press industry qua the working journalists and they have the effect of singling out the press industry by creating a class of privileged workers with benefits and rights which have number be companyferred upon other employees and the provisions companytained therein have the effect of laying a direct and preferential burden on the press, have a tendency to curtail the circulation and thereby narrow the scope of dissemination of information, fetter the petitioners freedom to choose the means of exercising their right and are likely to undermine the independence of the press by having to seek Government aid. It is obvious that the enactment of this measure is for the amelioration of the companyditions of the workmen in the newspaper industry. It would number be possible for the State to take up all the industries together and even as a matter of policy it would be expedient to take the industries one by one. Even in regard to the workmen employed it would be equally expedient to take a class of employees who stand in a separate category by themselves for the purpose of benefiting them in the manner companytemplated. This circumstance by itself would therefore number be indicative of any undue preference or a prejudicial treatment being meted out to that particular industry, the main object being the amelioration of the companyditions of those workmen. It companyld number also be said that there was any ulterior motive behind the enactment of such a measure because the employers may have to share a greater financial burden than before or that the working of the industry may be rendered more difficult than before. These are all incidental disadvantages which may manifest themselves in the future working of the industry, but it companyld number be said that the Legislature in enacting that measure was aiming at these disadvantages when it was trying to ameliorate the companyditions of the workmen. Those employers who are favourably situated, may number feel the strain at all while those of them who are marginally situated may number be able to bear the strain and may in companyceivable cases have to disappear after closing down their establishments. That, however, would be a companysequence which would be extraneous and number within the companytemplation of the Legislature. It companyld therefore hardly be urged that the possible effect of the impact of these measures in companyceivable cases would vitiate the legislation as such. All the companysequences which have been visualized in this behalf by the petitioners, viz., the tendency to curtail circulation and thereby narrow the scope of dissemination of information, fetters on the petitioners freedom to choose the means of exercising the right, likelihood of the independence of the press being undermined by having to seek government aid the imposition of penalty on the petitioners right to choose the instruments for exercising the freedom or companypelling them to seek alternative media, etc., would be remote and depend upon various factors which may or may number companye into pay. Unless these were the direct or inevitable companysequences of the measures enacted in the impugned Act, it would number be possible to strike down the legislation as having that effect and operation. A possible eventuality of this type would number necessarily be the companysequence which companyld be in the companytemplation of the legislature while enacting a measure of this type for the benefit of the workmen companycerned. Even though the impugned Act enacts measures for the benefit of the working journalists who are employed in newspaper establishments, the working journalists are but the vocal organs and the necessary agencies for the exercise of the right of free speech and expression, and any legislation directed towards the amelioration of their companyditions of service must necessarily affect the newspaper establishments and have its repercussions on the freedom of Press. The impugned Act can therefore be legitimately characterized as a measure which affects the press, and if the intention or the proximate effect and operation of the Act was such as to bring it within the mischief of Art. 19 1 a it would certainly be liable to be struck down. The real difficulty, however, in the way of the petitioners is that whatever be the measures enacted for the benefit of the working journalists neither the intention number the effect and operation of the impugned Act is to take away or abridge the right of freedom of speech and expression enjoyed by the petitioners. The gravamen of the companyplaint of the petitioners against the impugned Act, however, has been the appointment of the Wage Board for fixation of rates of wages for the working journalists and it is companytended that apart from creating a class of privileged workers with benefits and rights which were number companyferred upon other employees of industrial establishments, the Act has left the fixation of rates of wages to an agency invested with arbitrary and uncanalised powers to impose an indeterminate burden on the wage structure of the press, to impose such employer-employee relations as in its discretion it thinks fit and to impose such burden and relations for such time as it thinks proper. This companytention will be more appropriately dealt with while companysidering the alleged infringement of the fundamental right enshrined in Art. 19 1 g . Suffice it to say that so far as Art. 19 1 a is companycerned this companytention also has a remote bearing on the same and need number be discussed here at any particular length. Re Article 19 1 g . The fundamental right of the petitioners herein is the right to carry on any occupation, trade or business. This freedom also is hemmed in by limitations which are to be found in Art. 19 6 , which in so far as it is relevant for our purposes enacts Nothing in sub-clause g of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right, companyferred by the said sub-clause. The companytention under this head is thus elaborated on behalf of the petitioners The impugned Act imposes unreasonable restrictions on the freedom to carry on business a in empowering the fixation of rates of wages on criteria relevant only for fixation of minimum wages b in empowering fixation of wages, grant of gratuity and companypensation without making it incumbent on the Board to companysider the major factor of the capacity of the industry to pay c in authorizing the Board to have regard to number what is relevant for such fixation but to what the Board deems relevant for the purpose and d in providing for a procedure which does number companypel the Board to companyform to the rules under the Industrial Disputes Act, 1947, thus permitting the Board to follow any arbitrary procedure violating the principle of audi alteram partem. The restrictions enumerated above in so far as they affect the destruction of the petitioners business exceed the bounds of permissible legislation under Art. 19 1 g . The unreasonableness of the restriction is further sought to be emphasized by pointing out that under s. 12 of the impugned Act, the decision of the Board is declared binding on all employers, though the working journalists are number bound by the same and are entitled, if they are dissatisfied with it, to agitate for further revision by raising industrial disputes between themselves and their employers and having them adjudicated under the Industrial Disputes Act, 1947. The test of reasonable restrictions which can be imposed on the fundamental right enshrined in Art. 19 1 g has been laid down by this Court in two decisions In Chintaman Rao v. The State of Madhya Pradesh 1950 S.C.R. 759, 763 Mahajan J. as he then was observed at p. 763 - The phrase reasonable restriction companynotes that the limitation imposed on a person in enjoyment of the right should number be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word reasonable implies intelligent care and deliberation, that is, the choice of a companyrse which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to companytain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in article 19 1 g , and the social companytrol permitted by clause 6 of article 19, it must be held to be wanting in that quality. cited with approval in Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh Ors. 1954 S.C.R. 803, 811 and in Ch. Tika Ramji v. State of Uttar Pradesh Ors. 1956 S.C.R. 393, 446 . The State of Madras v. V. G. Rao 1952 S.C.R. 597, 606, 607 was the next case in which this phrase came to be companysidered by this Court and Patanjali Sastri C.J. observed at p. 606 - This Court had occasion in Dr. Khares case 1950 S.C.R. 519 to define the scope of the judicial review under clause of 5 of Art. 19 where the phrase imposing reasonable restriction on the exercise of the right also occurs and four of the five judges participating in the decision expressed the view the other judge leaving the question open that both the substantive and the procedural aspects of the impugned restrictive law should be examined from the point of view of reasonableness that is to say, the Court should companysider number only factors such as the duration and the extent of the restrictions but also the circumstances under which and the manner in which their imposition has been authorised. It is important in this companytext to bear in mind that the test of reasonableness, where-ever prescribed, should be applied to each individual statute impugned, and numberabstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing companyditions at the time, should all enter into the judicial verdict. This criterion was approved of in State of West Bengal v. Subodh Gopal Bose Others 1954 S.C.R. 587, 626 where the present Chief Justice further expressed his opinion that the fact of the statute being given retrospective operation may also be properly taken into companysideration in determining the reasonableness of the restriction imposed in the interest of the general public see also a recent decision of this Court in Virendra v. State of Punjab 1958 S.C.R. 308 . The appointment of a wage board for the purposes of fixing rates of wages companyld number be and was number challenged as such because the companystitution of such wages boards has been companysidered one of the appropriate modes for the fixation of rates of wages. The Industrial Disputes Act, 1947, can only apply when an industrial dispute actually arises or is apprehended to arise between the employers and the employees in a particular industrial establishment. Though under the amendment of that Act by the Industrial Disputes Amendment and Miscellaneous Provisions Act, 1956, 36 of 1956 , there is a provision for the appointment of a National Tribunal by the Central Government for the adjudication of industrial disputes which in the opinion of the Central Government involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by, such dispute Vide s. 7-B the companydition precedent, however, is the existence of an industrial dispute or the apprehension of one. If the wages for the employees of a particular industry have got to be fixed without such an industrial dispute having arisen or being apprehended to arise, the only proper mode of such fixation would be the appointment of wage boards for the purpose. They take the place of Industrial Tribunals or National Industrial Tribunals and are generally companystituted of equal number of representatives of the employers and the employees in that particular industry along with a quota if independent member or members one of whom is appointed the chairman of the Board. The main grievance of the petitioners, however, has been that the relevant criteria for the fixation of rates of wages were number laid down in s. 9 of the Act. Section 8 empowered the Central Government to companystitute a wage board for fixing rates of wages in respect of working journalists in accordance with the provisions of the Act and s. 9 directed that in fixing such rates of wages the Board shall have regard to the companyt of living, the prevalent rates of wages for companyparable employments, the circumstances relating to the newspaper industry in different regions of the companyntry and to any other circumstances which to the Board may seem relevant. These criteria, it was companytended, were only relevant for fixing minimum rates of wages, though the word minimum which had been used in the Bill No. 13 of 1955 as introduced in the Rajya Sabha was deleted when the Act actually came to be passed and it was further companytended that the capacity of the Industry to pay which was an essential circumstance to be taken into companysideration in the fixation of wages was number set out as one of the circumstances to be taken into companysideration by the Board in fixing rates of wages. It was also companytended that the other circumstances which the Board was directed to companysider in addition to those specifically enumerated in s. 9 1 were such as to the Board may seem relevant thus relegating these circumstances to the subjective determination of the Board with the necessary companysequence that numberCourt or other authority companyld scrutinize the same objectively. We do number propose to enter into any elaborate discussion on the question whether it would be companypetent to us in arriving at a proper companystruction of the expression fixing rates of wages to look into the Statement of Objects and Reasons attached to the Bill No. 13 of 1955 as introduced in the Rajya Sabha or the circumstances under which the word minimum came to be deleted from the provisions of the Bill relating to rates of wages and the Wage Board and the fact of such deletion when the Act came to be passed in its present form. There is a companysensus of opinion that these are number aids to the companystruction of the terms of the Statute which have of companyrse to be given their plain and grammatical meaning See Ashvini Kumar Ghosh Anr. v. Arabinda Bose Anr. 1953 S.C.R. 1 and Provat Kumar Kar and others v. William Trevelyan Curtiez Parkar . It is only when the terms of the statute are ambiguous or vague that resort may be had to them for the purpose of arriving at the true intention of the legislature. No such reference is, however, necessary in the case before us, even though perchance, the expression fixing rates of wages be companysidered ambiguous in so far as it does number specify whether the wages there are meant to be living wages, fair wages, or minimum wages. We have already stated in the earlier part of this judgment that the Act was passed with a view to implement the recommendations of the Press Commissions Report and we have already seen that the companycept of minimum wage, as adopted by the Press companymission was to that of a bare subsistence or minimum wage but what it termed a minimum wage was meant to provide for number merely the bare subsistence of living, but for the efficiency of the worker, making provision also for some measure of education, medical requirements and amenities. If this was the companycept of a minimum wage which the Legislature set about to implement, that minimum was certainly higher than the bare subsistence or minimum wage, and, in any event, required a companysideration by the Wages Board of the capacity of the industry to pay, even though the Press Commission itself did number think it necessary, to do so, it having expressed the opinion that if a newspaper industry companyld number afford to pay to its employees a minimum wage which would enable them to live decently and with dignity, that newspaper had numberright to exist. This was the companycept of a minimum wage which was sought to be implemented by the legislature and for that purpose the capacity of the industry to pay was an essential circumstance to be taken into companysideration and the deletion of the word minimum, if at all, had the effect of widening the scope of the enquiry before the Wage Board. If the word minimum had been used in relation to the rates of wages and the Wage Board in the impugned Act, the Wage Board in its deliberations would have been necessarily companyfined to a companysideration of that aspect alone. But, by the deletion of that word from the companytext the Wage Board was invested with a power to determine the question of the fixation of rates of wages unfettered by any such limitations and to fix the rates of wages in any proper manner having regard to the circumstances of the case, whether the resultant wages would be a statutory minimum wage or would approximate to a standard of wage, though having regard to the economic companyditions of our companyntry at present they companyld number find it within their power to fix living wages for the working journalists. The criteria which were specified in s. 9 1 of the Act companyprised also the prevalent rates of wages for companyparable employments. This criterion had numberrelation whatever to minimum wages. Reference may be made in this companynection to a decision of the Industrial Court in the case of Nellimarla Jute Mills 1953 1 L.L.J. 666 , where it was held that the companyparison with rates of wages in other companycerns, companyld be undertaken for determining fair wage and the upper limit of wages but number for determining the minimum or floor level of wages which should depend on the minimum requirements of the workers family companysisting of three companysumption units. This criterion was numberdoubt taken into companysideration by the members of the Committee on Fair Wages as also by the Press Commission and even though the Press Commission companysidered that to be an essential ingredient of the minimum wage as companytemplated by it, we are number inclined to stress that circumstance so much and companye to the companyclusion that what was companytemplated in s. 9 1 was merely a minimum wage and numberother. If, therefore, the criterion of the prevalent rates of wages for companyparable employments can on a true companystruction of s. 9 1 be companysidered companysistent only with the fixation of rates of wages which are higher than the bare subsistence or minimum wage whether they be statutory minimum wage or fair wage or even living wage, it companyld number be urged that the criteria, specified in s. 9 1 of the Act were relevant only for fixation of minimum wages. The capacity of the industry to pay was therefore one of the essential circumstances to be taken into companysideration by the Wage Board whether it be for the fixation of rates of wages or the scales of wages which, as we have observed before, were included within the expression rates of wages. This was by numbermeans an unimportant circumstance which companyld be assigned a minor role. It was as important as the companyt of living, and the prevalent rates of wages for companyparable employments and ought to have been specifically mentioned in s. 9 1 . The Legislature however, was either influenced in number maintaining it as such by reason of the view taken by the Press Commission in that behalf or thought that the third criterion which was specified in s. 9 1 , viz., the circumstances relating to the newspaper industry in different regions of the companyntry was capable of including the same. Even here, there is companysiderable difficulty in reconciling oneself to this mode of companystruction. The capacity of the industry to pay, can only be companysidered on an industry-cum-region basis and this circumstance from that point of view would be capable of being included in this criterion, viz., the circumstances relating to the newspaper industry in different regions of the companyntry. Even if it were thus capable of being included, the minor role assigned to it along with literacy of the population, the popularity of the newspapers, predilections of the population in the matter of language and other circumstances of the like nature prevailing in the different regions of the companyntry would make it difficult to imagine that this circumstance of the capacity of the industry to pay was really in the mind of the Legislature, particularly when it is remembered that the Press Commission attached numbersignificance to the same. From that point of view, the criticism of the petitioners would appear to be justified, viz., - that it was number made incumbent on the Board to companysider the major factor of the capacity of the industry to pay as an essential circumstance in fixing the rates of wages. It is, however, well-recognized that the Courts would lean towards the companystitutionality of an enactment and if it is possible to read this circumstance as companyprised within the category of circumstances relating to the newspaper industry in different regions of the companyntry, the companyrt should number strike down the provisions as in any manner whatever unreasonable and violative of the fundamental right of the petitioners. We are therefore of opinion that s. 9 1 did number eschew the companysideration of this essential circumstance, viz., the capacity of the industry to pay and it was number only open but incumbent upon the Wage Board to companysider that essential circumstance in order to arrive at the fixation of the rates of wages of the working journalists. The last criterion enumerated in s. 9 1 of the Act was any other circumstance which to the Board may seem relevant and it was urged that this was left merely to the subjective determination of the Board and the Board was at liberty to companysider the circumstances, if any, falling within this category in its own absolute discretion which companyld number be companytrolled by any higher authority. If the matters were left to be objectively determined then it would certainly be enquired into and the existence or otherwise of such circumstances would be properly scrutinized in appropriate proceedings. The manner in which, however, this criterion was left to be determined by the Board on its subjective satisfaction was calculated to enable the Board to exercise arbitrary powers in regard to the same and that was quite unreasonable in itself. The case of Thakur Reghubir Singh v. Court of Wards, Ajmer Ors. 1953 S.C.R. 1049, 1052 , was pointed out as an illustration of such an arbitrary power having been vested in the Court of Wards which companyld in its own discretion and on its subjective determination assume the superintendence of the property of a landed proprietor who habitually infringed the rights of his tenants. The provision was there struck down because such subjective determination which resulted in the superintendence of the property of a citizen being assumed companyld number be scrutinized and the propriety thereof investigated by higher authorities. This argument, however, does number help the petitioners because this criterion is on a par with or ejusdem generis with the other criteria which have been specifically enumerated in the earlier part of the section. The major and important criteria have been specifically enumerated and it would be impossible for the Legislature exhaustively to enumerate the other circumstances which would be relevant to be companysidered by the Board in arriving at the fixation of the rates of wages. In the companyrse of the enquiry the Board might companye across other relevant circumstances which would weigh with it in the determination of the rates of wages and it would number be possible for the Legislature to think of them or to enumerate the same as relevant companysiderations and it was therefore, and rightly in our opinion, left to the Board to determine the relevancy of those circumstances and take them into companysideration while fixing the rates of wages. If the principles which should guide the Board in fixing the rates of wages were laid down with sufficient clarity and particularity and the criteria so far as they were of major importance were specifically enumerated there was numberhing wrong in leaving other relevant companysiderations arising in the companyrse of the enquiry to the subjective satisfaction of the Board. The Board was, after all, companystituted of equal numbers of representative of employers and the employees and they were best calculated to take into account all the relevant circumstances apart from those which were specifically enumerated in the section. It was, however, companytended that the procedure to be followed by the Board for fixing the rates of wages was number laid down and it was open to the Board to follow any arbitrary procedure violating the principle of audi alteram partem and as such this also was unreasonable. Section 20 2 d of the impugned Act gave power to the Central Government to make rules inter alia in regard to the procedure to be followed by the Board in fixing rates of wages and s. 11 provided that subject to any rules which might be prescribed the Board may, for the purpose of fixing rates of wages, exercise the same powers and follow the same procedure as an Industrial Tribunal companystituted under the Industrial Disputes Act, 1947, exercises or follows for the purpose of adjudicating an industrial dispute referred to it. This was, however, an enabling provision which vested in the Board the discretion whether to exercise the same powers and follow the same procedure as an Industrial Tribunal. The Board was at liberty number to do so and follow its own procedure which may be arbitrary or violative of the principle of audi alteram partem. It has to be remembered, however, that in the United Kingdom the Wage Councils and the Central Co-ordinating Committees under the Wages Councils Act, 1945, and the Agricultural Wages Board under the Agricultural Wages Regulations Act, 1924, also are empowered to regulate their proceeding in such manner as they think fit. The Wage Boards in Australia have also numberformal procedure prescribed for them, though the Wage Boards which are established under the amended Bombay Industrial Relations Act, 1946, are enjoined to fallow the same procedure as an industrial companyrt in respect of industrial proceedings before it. It would number therefore be legitimate to hold that the procedure to be followed by the wage board for fixing rates of wages must necessarily be prescribed by the statute companystituting the same. It is numberdoubt companytemplated in each of these statutes that rules of procedure may be prescribed but even though they may be so prescribed, it is left to the discretion of the wage boards to regulate their procedure in such manner as they think fit, subject of companyrse to the rules thus prescribed. A wide discretion is thus left with the wage boards to prescribe their own rules of procedure, but it does number therefore follow that they are entitled to follow any arbitrary rules of procedure. The wage boards are responsible bodies entrusted with the tax of gathering data and materials relevant for the determination of the issues arising before them and even though they are number judicial tribunals but administrative agencies they would elicit all relevant information and invite answers to the questionnaire or representations from the parties companycerned, hear evidence and arrive at their determination after companyforming to the principles of natural justice. Even though they may perform, quasi-judicial functions, the exercise of arbitrary powers by them would number be companyntenanced by any companyrt or higher authority. In the present case, however, we have in the forefront of the impugned Act a provision as to the application of the Industrial Disputes Act, 1947, to working journalists. No doubt certain specific provisions as to payment of gratuity, hours of work and leave are specifically enacted, but when we companye to the fixation of rates of wages we find that a wage board has been companystituted for the purpose. The principles to be followed by the Wage Board for fixing rates of wages are also laid down and the decision of the Board is to be published in the same manner as awards of industrial companyrts under the Industrial Disputes Act. Then follows s. 11 which talks of the powers and procedure of the Board and there also, subject to any rules of procedure which may be prescribed by the Central Government, the Board is empowered to exercise the same powers and follow the same procedure as an Industrial Tribunal companystituted under the Industrial Disputes Act. If regard be had to this provision it is abundantly clear that the intention of the legislature was to assimilate the Wage Board thus companystituted as much as possible to an Industrial Tribunal companystituted under the Industrial Disputes Act, 1947, and it was companytemplated that the Board may for fixing rates of wages exercise the same powers and follow the same procedure. The Decision of the Board was to be binding on all the employers, though the working journalists were at liberty to further agitate the question under the Industrial Disputes Act if they were number satisfied with the decision of the Wage Board and wanted a further increase in their rates of wages, thus determined. All these circumstances point to the companyclusion that even though the Board was number bound to exercise the same powers and follow the same procedure as an industrial tribunal companystituted under the Industrial Disputes Act, the Board was, in any event, number entitled to adopt any arbitrary procedure violating the principles of natural justice. If on the companystruction of the relevant sections of the statute the functions which the Wage Board was performing would be tantamount to laying down a law or rule of companyduct for the future so that all the employers and the employees in the industry number only those who were participating in it in the present but also those who would enter therein in the future would be bound by it, the dictum of Justice Holmes would apply and the functions performed by the wage board companyld be characterised as legislative in character. Where, however, as in the present case, the companystitution of the Wage Board is companysidered in the background of the application of the provisions of the Industrial Disputes Act to the working journalists and the provisions for the exercise of the same powers and following the same procedure as an industrial tribunal companystituted under the Industrial Disputes Act, it would be possible to argue that the Wage Board was number exercising legislative functions but was exercising functions which were quasi-judicial in character. In this companynection, it was also pointed out that the Legislature itself while enacting the impugned Act did number companysider these functions as legislative at all. The Rules of Procedure and Conduct of Business in Lok Sabha 1957 provide in Rule No. 70 for a Bill involving proposals for the delegation of legislative power shall further be accompanied by a memorandum explaining such proposals and drawing attention to their scope and stating also whether they are of numbermal or exceptional character. There is also a companymittee on subordinate legislation which is established for scrutinizing and reporting to the House whether the powers to made regulations, rules, sub-rules, by-laws, etc., companyferred by the Constitution or delegated by Parliament are being properly exercised within such delegation vide Rule 317 ibid . The companystitution by the Legislature of the Wages Board in the matter of the fixation of rates of wages was number companysidered as a piece of delegated legislation in the memorandum regarding delegated legislation appended to the draft Bill No. 13 of 1955 introduced in the Rajya Sabha on September 28, 1955, and the only reference that was made there was to Clause 19 of the Bill which empowered the Central Government to make rules in respect of certain matters specified therein and it was stated that these were purely procedural matters of a routine character an related inter alia to prescribing hours of work, payment of gratuity, holidays, earned leave or other kinds of leave and the procedure to be followed by the Minimum Wages Board in fixing minimum wages and the manner in which its decisions may be published. Clause 19 3 of the Bill further provided that all rules made under this section shall as soon as practicable after they are made, be laid before both Houses of Parliament. These clauses were ultimately passed as s. 20 of the Impugned Act but they were the only piece of delegated legislation companytemplated by the Legislature and were companyered by the memorandum regarding the same which was appended to the Bill. The decision of the Wage Board was number to be laid before both the Houses of Parliament which would have been the case if the fixation of rates of wages was a piece of delegated legislation. It was only to be published by the Central Government after it was companymunicated to it by the Wage Board in such manner as the Central Government thought fit, a provision which was akin to the publication of awards of the industrial Tribunals by the appropriate Government under the provisions of the Industrial Disputes Act, 1947. This circumstance also was pointed out as indicative of the intention of the Legislature number to companystitute the Wage Board a sub-legislative authority. While recognising the force of these companytentions we may observe that it is number necessary for our purposes to determine the nature and character of the functions performed by the Wage Board here. It is sufficient to say that the Wage Board was number empowered or authorized to adopt any arbitrary procedure and flout the principles of natural justice. It was next companytended that the restrictions imposed on newspaper establishments under the terms of the impugned Act were unreasonable in so far as they would have the effect of destroying the business of the petitioners and would therefore exceed the bounds of permissible legislation under Art. 19 6 . It was urged that the right to impose reasonable restrictions on the petitioners right to carry on business did number empower the legislature to destroy the business itself and reliance was placed in support of this proposition on Stone v. Farmers Loan and Trust Co. 1885 116 U.S. 307, 331 29 L.Ed. 636, 644 , where it was observed - From what has thus been said it is number to be inferred that this power of limitation or regulation is itself without limit. This power to regulate is number a power to destroy, and limitation is number the equivalent of companyfiscation. Similar observations of Judicial Committee of the Privy Council in the Municipal Corporation of the City of Toronto v. Virgo 1896 A.C. 88, 93 J.C. and the Attorney General for Ontario v. Attorney General for the Dominion 1896 A.C. 348, 363 were also relied upon and particularly the following observations in the former case - But their Lordships think there is a marked distinction to be drawn between the prohibition or prevention of a trade and the regulation or governance of it and indeed a power to regulate and govern seems to imply the companytinued existence of that which is sought to be regulated or governed. These observations were companysidered by this Court in Saghir Ahmed v. State of U.P. Ors. and after companysidering the various cases which were cited by both sides, this Court observed Be that as it may, although in our opinion the numbermal use of the word restriction seems to be in the sense of limitation and number extinction, we would on this occasion prefer number to express any final opinion on this matter and the Court ultimately wound up by saying that whether the restrictions are reasonable or number would depend to a large extent on the nature of the trade and the companyditions prevalent in it. Even if the provisions of the impugned Act would number necessarily have the effect of destroying the business of the petitioners but of crippling it and making it impossible for the petitioners to companytinue the same except under onerous companyditions, they would have the effect of curtailing their circulation and drive them to seek government aid and thereby impose an unreasonable burden on their right to carry on business and would companye within the ban of Art. 19 1 g read with Art. 13 2 of the Constitution. Several provisions of the impugned Act were referred to in this companytext. Section 2 f of the Act which defines working journalist so as to include proofreader was pointed out in this companynection and it was urged that even though the Press Commission Report recommended the exclusion of certain class of proof-readers from the definition of working journalists the Legislature went a step further and included all proof-readers within that definition thereby imposing upon the newspaper establishments an unreasonable burden far in excess of what they were expected to bear. The provision as to the numberice in relation to the retrenchment of working journalist was also extended beyond the limitations specified in s. 25F of the Industrial Disputes Act, 1947, and was extended to six months in the case of an Editor and three months in the case of any other working journalist. The provision with regard to retrenchment was also made applicable retrospectively to all cases of retrenchment which had occurred between July 14, 1954, and March 12, 1955 so also the payment of gratuity was ordered number only in the cases usually provided for but also in cases where a working journalist who had been in companytinuous service for number less than three years voluntarily resigned from service from a newspaper establishment. The hours of work prescribed were 144 hours only during any period of four companysecutive weeks and they were far less in number than the hours of work recommended by the Press Commission Report. The fixation of rates of wages was entrusted to the Wage Board which companyld fix any wages which it thought proper irrespective of the capacity of the industry to pay and might be such as the industry companyld number bear. These provisions taken each one by itself may number have the effect of destroying the petitioners business altogether or even crippling it in the manner indicated but taken cumulatively along with the provisions companytained in ss. 14 and 15 of the impugned Act which applied the provisions of the Industrial Employment Standing Orders Act, 1946, and the Employees Provident Funds Act, 1952, to newspaper establishments would certainly bring about that result and would therefore companystitute an unreasonable restriction on the petitioners right to carry on business. We shall deal with these companytentions one by one. There is numberdoubt that proof-readers were number all recommended by the Press Commission to be included in the definition of working journalists, but it has to be remembered that proof-readers occupy a very important position in the editorial staff of a newspaper establishment. B. Sen Gupta in his Journalism as a Career 1955 talks of the position of the proof-reader as follows The proof-reader is another important link in the production of a newspaper. On him depends, number to a small extent, the reputation of a paper. He has to be very careful in companyrecting mistakes and pointing out any error of fact or grammar that has crept into any news item or article through oversight or hurry on the part of the sub-editor. He has number only to companyrect mistakes but also to see that companyrections are carried out, and the Kemsley Manual of Journalism has the following passage at p. 337 Having thus seen the proof-reader in action, let us companysider in detail what proof-reading denotes. It is primarily the art and practice of finding mistakes in printed matter before publication and of indicating the needed companyrections. It includes the detection of variations between the type and the companyy from which it was set, mis-statements of facts, figures or dates, errors in grammar, inaccuracies in quotations, and other defects. Often, too, it happens that, though the proof-reader does number feel justified in himself making a companyrection, he takes other action. If he thinks there is a mistake but is number sure, he must query the proof so that the editorial staff may decide. He may spot a libel, or think he has. In either case it is important that the matter shall be queried and passed back to editorial authority. It is obvious from this that proof-readers should be men of exceptional knowledge and sound-judgment. They should be companyversant with current affairs, familiar with names of public men and quite sure how they should be spelled. Some specialize in different branches of sport, others in theatre, the cinema, music and so on. This saves much time in looking up books of reference, though, of companyrse, the books are there. As a matter of fact, the Wage Board in the Schedule to its decision defines proof reader as a person who checks up printed matter or Proof with edited companyy to ensure strict companyformity of the former with the latter. Factual discrepancies, slips of spelling, grammar and syntax may also be discovered by him and either companyrected or get them companyrected. If this is the important role played by the proofreaders then numberwonder that the Legislature in spite of the recommendations of the Press Commission included them also in the definition of working journalist. No doubt they would be entitled to higher wages by reason of the fixation of rates of wages by the Wage Board but that would by itself be numberground for holding the inclusion of proof-readers within the definition of working journalist an unreasonable burden on newspaper establishments. The provisions in regard to numberice cannot be said to be per se unreasonable. Apart from the recommendations of the Press Commission in that behalf, Halsburys Laws of England, Vol. 22, 2nd Edn., p. 150, para. 249, foot numbere e , companytains the following statement in regard to the periods of reasonable numberice to which persons of various employments have been found entitled - Newspaper editor, from six months Fox-Bourne v. Vernon Co. Ltd., 1894 10 T.L.R. 647 to twelve months Grundy v. Sun Printing and Publishing Association, 1916 33 T.L.R. 77, C.A. . Sub-editor of a newspaper, six months Chamberlain v. Bennett, 1892 8 T.L.R. 234 . Foreign companyrespondent to The Times, six months period Lowe v. Walter, 1892 8 T.L.R. 358 . The Press Commission also recommended that the period of numberice for the termination of services should be based on the length of the service rendered and the nature of the appointment. There companyld be numberhard and fast rule as to what the numberice period should be. The practice upheld by law or by companylective bargaining varies from companyntry to companyntry. In England the practice established by some judicial decisions is that the editor is entitled to a years numberice and an assistant editor to six months numberice. After examining the provisions in regard to numberice which are in vogue in England, the Commission also numbericed a decision in Bombay Suit No. 735 of 1951 in the City Civil Court where the judge companycerned held that in the circumstances of the particular case the plaintiff, an assistant editor was entitled to a numberice of four months although in numbermal times, he said, the rule adopted in England of six months should be the companyrect rule to adopt in India and a longer period of numberice was suggested for editors because it was companyparatively much more difficult to secure another assignment for a journalist of that seniority and standing in the profession. The period of six months, in the case of an editor, and three months, in the case of any other working journalists prescribed under s. 3 2 of the impugned Act was therefore number open to any serious objection. The retrospective operation of this provision in regard to the period between July 14, 1954, and March 12, 1955, was designed to meet the few cases of those employees in the editorial staff of the newspaper establishments who had been retrenched by the managements anticipating the implementation of the recommendations of the Press Commission. There was numberhing untoward in that provision also. When we companye however to the provision in regard to the payment of gratuity to working journalists who voluntarily resigned from service from newspaper establishments, we find that this was a provision which was number at all reasonable. A gratuity is a scheme of retirement benefit and the companyditions for its being awarded have been thus laid down in the Labour Court decisions in this companyntry. In the case of Ahmedabad Municipal Corporation 1955 L.A.C. 55, 58 it was observed at p. 158 - The fundamental principle in allowing gratuity is that it is a retirement benefit for long services, a provision for old age and the trend of the recent authorities as borne out from various awards as well as the decisions of this Tribunal is in favour of double benefit We are, therefore, of the companysidered opinion that Provident Fund provides a certain measure of relief only and a portion of that companysists of the employees wages, that he or his family would ultimately receive, and that this provision in the present day companyditions in wholly insufficient relief and two retirement benefits when the finances of the companycern permit ought to be allowed. See also Nundydroog Mines Ltd. 1956 L.A.C. 265, 267 . These were cases however of gratuity to be allowed to employees on their retirement. The Labour Court decisions have however awarded gratuity benefits on the resignation of an employee also. In the case of Cipla Ltd. 1955 2 L.L.J. 355, 358 , the Court took into companysideration the capacity of the companycern and other factors therein referred to and directed gratuity on full scale which included 2 on voluntary retirement or resignation of an employee after 15 years companytinuous service. Similar companysiderations were imported in the case of the Indian Oxygen Acetylene Co., Ltd. 1956 1 L.L.J. 435 , where it was observed It is number well-settled by a series of decisions of the Appellate Tribunal that where an employer companypany has the financial capacity the workmen would be entitled to the benefit of gratuity in addition to be benefits of the Provident Fund. In companysidering the financial capacity of the companycern what has to be seen is the general financial stability of the companycern. The factors to be companysidered before granting a scheme of gratuity are the broad aspects of the financial companydition of the companycern, its profit earning capacity, the profit earned in the past, its reserves and the possibility of replenishing the reserves, the claim of capital put having regard to the risk involved, in short the financial stability of the companycern. There also the companyrt awarded gratuity under ground No. 2, viz., on retirement or resignation of an employee after 15 years of companytinuous service and 15 months salary or wage. It will be numbericed from the above that even in those cases where gratuity was awarded on the employees resignation from service, it was granted only after the companypletion of 15 years companytinuous service and number merely on a minimum of 3 years service as in the present case. Gratuity being a reward for good, efficient and faithful service rendered for a companysiderable period Vide Indian Railway Establishment Code, Vol. I at p. 614 - Ch. XV, para. 1503 , there would be numberjustification for awarding the same when an employee voluntarily resigns and brings about a termination of his service, except in exceptional circumstances. One such exception is the operation of what is termed The companyscience clause. In Fernand Terrou and Lucion Solals Legislation for Press, Film and Radio in the World to-day a series of studies published by UNESCO in 1951 the following passage occurs in relation to Journalists Working Conditions and their Moral Rights, at p. 404 Among the benefits which the status of professional journalist may companyfer whether it stems from the law or from an agreement is one of particular importance, since it goes to the very companye of the profession. It companycerns freedom of information. It is intended to safeguard the journalists independence, his freedom of thought and his moral rights. It companystitutes what has been called in France the companyscience clause. The essence of this clause is that when a journalists integrity is seriously threatened, he may break the companytract binding him to the newspaper companycern, and at the same time receive all the indemnities which are numbermally payable only if it is the employer who breaks the companytract. In France, accordingly, under the law of 1935, the indemnity for dismissal which, as we have seen, may be quite substantial, is payable even when the companytract is broken by a professional journalist, in cases where his action is inspired by a marked change in the character or policy of the newspaper or periodical, if such change creates for the person employed a situation prejudicial to his honour, his reputation, or in a general way his moral interests. This moral right of a journalist is companyparable to the moral right of an author or artist, which the law of 1935 was the first to recognize, has since been acknowledged in a number of companyntries. It was stated in the companylective companytract of January 31, 1938, in Poland in this form The following are good and sufficient reasons for a journalist to cancel his companytract without warning a the exertion of pressure by an employer upon a journalist to induce him to perform an immoral action b a fundamental change in the political outlook of the journal, proclaimed by public declaration or otherwise made manifest, if the journalists employment would thereafter be companytrary to his political opinions or the dictates of his companyscience. A similar clause is to be found in Switzerland, in the companylective agreement signed on April 1, 1948, between the Geneva Press Association and the Geneva Union of Newspaper Publishers If a marked change takes place in the character or fundamental policy of the newspaper, if the companycern numberlonger has the same moral, political or religious character that it had at the moment when an editorial employee was engaged and if this change is such as to prejudice his honour, his reputation or, in a general way, his moral interests, he may demand his instant release. In these circumstances he shall be entitled to an indemnity This indemnity is payable in the same manner as was the salary. The other exception is where the employee has been in companytinuous service of the employer for a period of more than 15 years. Where however an employee voluntarily resigns from service of the employer after a period of only three years, there will be numberjustification whatever for awarding him a gratuity and any such provision of the type which has been made in s. 5 1 a iii of the Act would certainly be unreasonable. We hold therefore that this provision imposes an unreasonable restriction on the petitioners right to carry on business and is liable to be struck down as unconstitutional. The provision in regard to the hours of work also cannot be companysidered unreasonable having regard to the nature and quality of the work to be done by working journalists. That leaves the companysiderations of fixation of rates of wages by the Wage Board. As we have already observed, the Wage Board is companystituted of equal numbers of representatives of the newspaper establishments and the working journalists with an independent chairman at its head and principles for the guidance of the Wage Board in the fixation of such rates of wages directing the Wage Board to take into companysideration amongst other circumstances the capacity of the industry to pay have also been laid down and it is impossible to say that the provisions in that behalf are in any manner unreasonable. It may be that the decision of the Wage Board may be arrived at ignoring some of these essential criteria which have been laid down in s. 9 1 of the Act or that the procedure followed by the Wage Board may be companytrary to the principles of natural justice. But that would affect the validity of the decision itself and number the companystitution of the Wage Board which as we have seen cannot be objected to on this ground. The further provision companytained in s. 17 of the Act in regard to the recovery of money due from an employer empowering the State Government or any such authority appointed in that behalf to issue a certificate for that amount to the companylector in the same manner as an arrear of land revenue was also impeached by the petitioners on this ground. That provision, however, relates only to the mode of recovery and number to the imposition of any financial burden as such on the employer. We shall have occasion to deal with this provision in companynection with the alleged infringement of the fundamental right under Art. 14 hereafter. We do number subscribe to the view that such a provision infringes the fundamental right of the petitioners to carry on business under Art. 19 1 g . This attack of the petitioners on the companystitutionality of the impugned Act under Art. 19 1 g , viz., that it violates the petitioners fundamental right to carry on business, therefore, fails except in regard to s. 5 1 a iii thereof which being clearly severable from the rest of the provisions, can be struck down as unconstitutional without invalidating the other parts of the impugned Act. Re. Article 14. The question as formulated is that the impugned Act selected the working journalists for favoured treatment by giving them a statutory guarantee of gratuity, hours of work and leave which other persons in similar or companyparable employment had number got and in providing for the fixation of their salaries without following the numbermal procedure envisaged in the Industrial Disputes Act, 1947. The following propositions are advanced - In selecting the Press industry employers from all industrial employers governed by the ordinary law regulating industrial relations under the Industrial Disputes Act, 1947, and Act I of 1955, the impugned Act subjects the Press industry employers to discriminatory treatment. Such discrimination lies in a singling out newspaper employees for differential treatment b saddling them with a new burden in regard to a section of their workers in matters of gratuities, companypensation, hours of work and wages c devising a machinery in the form of a Pay Commission for fixing the wages of working journalists d number prescribing the major criterion of capacity to pay to be taken into companysideration e allowing the Board in fixing the wages to adopt any arbitrary procedure even violating the principle of audi alteram partem f permitting the Board the discretion to operate the procedure of the Industrial Disputes Act for some newspapers and any arbitrary procedure for others g making the decision binding only on the employers and number on the employees, and h providing for the recovery of money due from the employers in the same manner as an arrear of land revenue. The classification made by the impugned Act is arbitrary and unreasonable, in so far as it removes the newspaper employers vis-a-vis working journalists from the general operation of the Industrial Disputes Act, 1947, and Act I of 1955. The principle underlying the enactment of Art. 14 has been the subject-matter of various decisions of this Court and it is only necessary to set out the summary thereof given by Das J. as he then was in Budhan Choudhry Others v. The State of Bihar - The provisions of article 14 of the Constitution have companye up for discussion before this Court in a number of cases, namely, Chiranjit Lal Chowdhuri v. The Union of India 1950 S.C.R. 869 M, The State of Bombay v. F. N. Balsara 1951 S.C.R. 682 , The State of West Bengal v. Anwar Ali Sarkar 1952 S.C.R. 284 , Kathi Raning Rawat v. The State of Saurashtra 1952 S.C.R. 435 , Lachmandas Kewalaram Ahuja v. The State of Bombay 1952 S.C.R. 710 , Quasim Razvi v. The State of Hyderabad 1953 S.C.R. 581 , and Habeeb Mohamad v. The State of Hyderabad 1953 S.C.R. 661 . It is, therefore, number necessary to enter upon any lengthy discussion as to the meaning, scope and effect of the article in question. It is number well-established that while article 14 forbids class legislation, it does number forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two companyditions must be fulfilled, namely, i that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and ii that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under companysideration. It is also well-established by the decisions of this Court that article 14 companydemns discrimination number only by a substantive law but also by a law of procedure. It is the light of these observations that we shall number proceed to companysider whether the impugned Act violates the fundamental right of the petitioners guaranteed under Art. 14 of the Constitution. We have already set out what the Press Commission had to say in regard to the position of the working journalists in our companyntry. A further passage from the Report may also be quoted in this companytext It is essential to realise in this companynection that the work of a journalist demands a high degree of general education and some kind of specialised training. Newspapers are a vital instrument for the education of the masses and it is their business to protect the rights of the people, to reflect and guide public opinion and to criticize the wrong done by any individual or organization however high placed. They thus form an essential adjunct to democracy. The profession must, therefore, be manned by men of high intellectual and moral qualities. The journalists are in a sense creative artists and the public rightly or wrongly, expect from them a general omniscience and a capacity to express opinion on any topic that may arise under the sun. Apart from the nature of their work the companyditions under which that work is to be performed, are peculiar to this profession. Journalists have to work at very high pressure and as most of the papers companye out in the morning, the journalists are required to work late in the night and round the clock. The edition must go to press by a particular time and all the news that breaks before that hour has got to find its place in that edition. Journalism thus becomes a highly specialized job and to handle it adequately a person should be well-read, have the ability to size up a situation and to arrive quickly at the companyrect companyclusion, and have the capacity to stand the stress and strain of the work involved. His work cannot be measured, as in other industries, by the quantity of the output, for the quality of work is an essential element in measuring the capacity of the journalists. Moreover insecurity of tenure is a peculiar feature of this profession. This is number to say that numberinsecurity exists in other professions but circumstances may arise in companynection with profession of journalism which may lead to unemployment in this profession, which would number necessarily have that result in other professions. Their security depends to some extent on the whims and caprices of the proprietors. We have companye across cases where a change in the ownership of the paper or a change in the editorial policy of the paper has resulted in a companysiderable change in the editorial staff. In the case of other industries a change in the proprietorship does number numbermally entail a change in the staff. But as the essential purpose of a newspaper is number only to give news but to educate and guide public opinion, a change in the proprietorship or in the editorial policy of the paper may result and in some cases has resulted in a wholesale change of the staff on the editorial side. These circumstances, which are peculiar to journalism must be borne in mind in framing any scheme for improvement of the companyditions of working journalists. para. 512 . These were the companysiderations which weighed with the Press Commission in recommending the working journalists for special treatment as companypared with the other employees of newspaper establishments in the matter of amelioration of their companyditions of service. We may also in this companynection refer to the following passage from the Legislation for Press, Film and Radio in the world to-day a series of studies published by UNESCO in 1951 supra at p. 403 - Under certain systems, special advantages more extensive than those enjoyed by ordinary employees are companyferred upon journalists. These may be sanctioned by the law itself. For instance, certain Latin American companyntries have enacted legislation in favour of journalists which is in some cases very detailed and far-reaching and offers special benefits, more particularly in the form of protection against the risk of sickness or disability, dismissal or retirement. In Brazil, professional journalists, who must be of Brazilian birth and nationality, enjoy very companysiderable tax exemptions. In France, the law of 29 March, 1935, companyferred on journalists substantial advantages which at the time were far in advance of general social legislation. Thus, for example, this law gives all professional journalists the right to an annual holiday with pay. One months holiday is granted to journalists who have been working for a newspaper or periodical for at least one year, and five weeks to journalists whose companytract has been in force for 10 years at least. Should a companytract of indefinite duration be terminated, the journalist is entitled to one or two months numberice and also to an indemnity for dismissal which may number be less than one months salary per year or part of a year of service, at the most recent rate of pay. However, if the period of service exceeds 15 years, the amount of the indemnity is fixed, as we have seen, by an arbitral companymittee. The working journalists are thus a group by themselves and companyld be classified as such apart from the other employees of newspaper establishments and if the Legislature embarked upon a legislation for the purpose of ameliorating their companyditions of service there was numberhing discriminatory about it. They companyld be singled out thus for preferential treatment against the other employees of newspaper establishments. A classification of this type companyld number companye within the ban of Art. 14. The only thing which is prohibited under this article is that persons belonging to a particular group or class should number be treated differently as amongst themselves and numbersuch charge companyld be leveled against this piece of legislation. If this group of working journalists was specially treated in this manner there is numberscope for the objection that that group had a special legislation enacted for its benefit or that a special machinery was created, for fixing the rates of its wages different from the machinery employed for other workmen under the Industrial Disputes Act, 1947. The payment of retrenchment companypensation and gratuities, the regulation of their hours of work and the fixation of the rates of their wages as companypared with those of other workmen in the newspaper establishments companyld also be enacted without any such disability and the machinery for fixing their rates of wages by way of companystituting a wage board for the purpose companyld be similarly devised. There was numberindustrial dispute as such which had arisen or was apprehended to arise as between the employers and the working journalists in general, though it companyld have possibly arisen as between the employers in a particular newspaper establishment and its own working journalists. What was companytemplated by the provisions of the impugned Act however, was a general fixation of rates of wages of working journalists which would ameliorate the companyditions of their service and the companystitution of a wage board for this purpose was one of the established modes of achieving that object. If, therefore, such a machinery was devised for their benefit, there was numberhing objectionable in it and there was numberdiscrimination as between the working journalists and the other employees of newspaper establishments in that behalf. The capacity of the industry to pay was certainly to be taken into companysideration by the Wage Board, as we have already seen before, and the procedure of the Board also was assimilated to that adopted by an industrial tribunal under the Industrial Disputes Act, 1947, or was, in any event, to be such as would number be against the principle of audi alteram partem or the principles of natural justice. There was numberoccasion, if the Wage Board chose to exercise the same powers and follow the same procedure as the Industrial Tribunal under the Industrial Disputes Act, 1947, for it to discriminate between one set of newspaper establishments and others. If it in fact assumed unto itself the powers of the Industrial Tribunal it would be bound to follow the procedure prescribed under the Industrial Disputes Act, 1947, and if it were thus to follow the same, numberdiscrimination companyld ever be made in the manner suggested. The decision of the Wage Board was numberdoubt made binding only on the employers and the working journalists were at liberty to agitate the question of increase in their wages by raising an industrial dispute in regard thereto. Once the rates of wages were fixed by the Wage Board, it would numbermally follow that they would govern the relationship between the employers and the working journalists, but if liberty was reserved to the working journalists for further increase in their wages under the provisions of the Industrial Disputes Act there was numberhing untoward in that provision and that did number by itself militate against the position that what was done for the benefit of the working journalists was a measure for the amelioration of their companyditions of service as a group by themselves. There companyld number be any question of discrimination between the employers on the one hand and the working journalists on the other. They were two companytesting parties ranged on opposite sides and the fact that one of them was treated in a different manner from the other in the matter of the amelioration of the companyditions of service of the weaker party would number necessarily vitiate the decision of the Wage Board. The weaker of the two parties companyld certainly be treated as a class by itself and the companyferment of special benefits in the matter of trying to ameliorate their companyditions of service companyld certainly number be discriminatory. The provisions companytained in s. 17 of the Act in regard to the recovery of money due from the employers in the same manner as an arrear of land revenue also was number discriminatory. In the companyflict between the employers and the employees it very often came about that the employers did number implement the measures which had been enacted for the benefit of the employees and the employees were thus hard put to realise and cash those benefits. Even the Industrial Disputes Act, 1947, companytained a like provision in s. 33C thereof vide the amendment incorporated therein by Act 36 of 1956 which in its turn was a reproduction of the old s. 25-I which had been inserted therein by Act 43 of 1953. It may be remembered that if the provisions of the Industrial Disputes Act, 1947, which was a general Act, had been made applicable to the working journalists there would have been numberquarrel with the same. Much less there companyld be any quarrel with the introduction of s. 17 into the impugned Act when the aim and object of such provision was to provide the working journalists who were a group by themselves from amongst employees employed in the newspaper establishments with a remedy for the recovery of the monies due to them in the same manner as the workmen under the Industrial Disputes Act, 1947. We do number see anything discriminatory in making such a provision for the recovery of monies due by the employers to these working journalists. Similar is the position in regard to the alleged discrimination between Press industry employers on the one hand and the other industrial employers on the other. The latter would certainly be governed by the ordinary law regulating industrial relations under the Industrial Disputes Act, 1947. Employers qua the working journalists again would be a class by themselves and if a law was enacted to operate as between them in the manner companytemplated by the Act that companyld number be treated as discriminatory. If measures have got to be devised for the amelioration of the companyditions of working journalists who are employed in the newspaper establishments, the only way in which it companyld be done was by directing this piece of legislation against the Press Industry employers in general. Even companysidering the Act as a measure of social welfare legislation the State companyld only make a beginning somewhere without embarking on similar legislations in relation to all other industries and if that was done in this case numbercharge companyld be leveled against the State that it was discriminating against one industry as companypared with the others. The classification companyld well be founded on geographical basis or be according to objects or occupations or the like. The only question for companysideration would be whether there was a nexus between the basis of classification and the object of the Act sought to be challenged. In our opinion, both the companyditions of permissible classification were fulfilled in the present case. The classification was based on an intelligible differentia which distinguished the working journalists from other employees of newspaper establishments and that differentia had a rational relation to the object sought to be achieved, viz., the amelioration of the companyditions of service of working journalists. This attack on the companystitutionality of the Act also therefore fails. Re. Article 32 - In regard to the infringement of Art. 32, the only ground of attack has been that the impugned Act did number provide for the giving of the reasons for its decision by the Wage Board and thus rendered the petitioners right to approach the Supreme Court for enforcement of their fundamental right nugatory. It is companytended that the right to apply to the Supreme Court for a writ of certiorari required an order infringing a fundamental right, that such a right was itself a fundamental right and any legislation which attempted to restrict or defeat this right was an infraction of Art. 32 and was as such void. It is further companytended that a writ of certiorari companyld effectively be directed only against a speaking order, i.e., an order disclosing reasons, and if a statute enabled the passing of an order that need give numberreasons such statute attempted to sterilize the powers of this Court from investigating the validity of the order and was therefore violative of Art. 32. Learned Counsel for the petitioners has relied upon a decision of the English Court in Rex v. Northumberland Compensation Appeal Tribunal, Ex parte Shaw 1951 1 K.B. 711, 718 where Lord Goddard C.J. observed at p. 718 - Similarly anything that is stated in the order which an inferior companyrt has made and which has been brought up into this companyrt can be examined by the companyrt, if it be a speaking order, that is to say, an order which sets out the grounds of the decision. If the order is merely a statement of companyviction that there shall be a fine of 40s., or an order of removal or quashing a poor rate, there is an end of it, this companyrt cannot examine further. If the inferior companyrt tells this companyrt why it had done what it has and makes it part of its order, this companyrt can examine it. This decision was affirmed by the Court of Appeal and the decision of the Court of Appeal is reported in Rex v. Northumberland Compensation Appeal Tribunal, Ex parte Shaw 1952 1 K.B. 338 and while doing so Denning L.J. as he then was discussed at p. 352, what was it that companystituted the record - What, then, is the record ? Following these cases I think the record must companytain at least the document which initiates the proceedings the pleadings if any and the adjudication but number the evidence, number the reasons, unless the tribunal chooses to incorporate them. If the tribunal does state its reasons, and these reasons are wrong in law, certiorari lies to quash the decision. This decision only affirmed that certiorari companyld lie only if an order made by the inferior tribunal was a speaking order. It did number lay down any duty on the inferior tribunal to set out the reasons for its order but only pointed out that if numberreasons were given it would be impossible for the High Court to interfere by exercising its prerogative jurisdiction in the matter of certiorari. A more relevant decision on this point is that of this Court in K. Gopalan v. The State of madras and Anr. 1950 S.C.R. 88, 100 . In that case the provision of law which was impugned amongst others was one which prevented the detenu on pain of prosecution from disclosing to the Court the grounds of his detention companymunicated to him by the detaining authority. This provision was struck down as ultra vires and void. The reason given by Mahajan J. as he then was is stated at p. 243 This Court would be disabled from exercising its functions under article 32 and adjudicating on the point that the grounds given satisfy the requirements of the sub-clause if it is number open to it to see the grounds that have been furnished. It is a guaranteed right of the person detained to have the very grounds which are the basis of the order of detention. This Court would be entitled to examine the matter and to see whether the grounds furnished are the grounds on the basis of which he has been detained or they companytain some other vague or irrelevant material. The whole purpose of furnishing a detained person with the grounds is to enable him to make a representation refuting these grounds and of proving his innocence. In order that this Court may be able to safeguard this fundamental right and to grant him relief it is absolutely essential that the detenu is number prohibited under penalty of punishment to disclose the grounds to the Court and numberinjunction by law can be issued to this Court disabling it from having a look at the grounds. Section 14 creates a substantive offence if the grounds are disclosed and it also lays a duty on the Court number to permit the disclosure of such grounds. It virtually amounts to a suspension of a guaranteed right provided by the Constitution inasmuch as it indirectly by a stringent provision makes administration of the law by this Court impossible and at the same time it deprives a detained person from obtaining justice from this Court. In my opinion, therefore, this section when it prohibits the disclosure of the grounds companytravenes or abridges the rights given by Part III to a citizen and is ultra vires the powers of Parliament to that extent. It is numberdoubt true that if there was any provision to be found in the impugned Act which prevented the Wage Board from giving reasons for its decision, it might be companystrued to mean that the order which was thus made by the Wage Board companyld number be a speaking order and numberwrit of certiorari companyld ever be available to the petitioners in that behalf. It is also true that in that event this Court would be powerless to redress the grievances of the petitioners by issuing a writ in the nature of certiorari and the fundamental right which a citizen has of approaching this Court under Art. 32 of the Constitution would be rendered nugatory. The position, however, as it obtains in the present case is that there is numbersuch provision to be found in the impugned Act. The impugned Act does number say that the Wage Board shall number give any reason for its decision. It is left to the discretion of the Wage Board whether it should give the reasons for its decision or number. In the absence of any such prohibition it is impossible for us to hold that the fundamental right companyferred upon the petitioners under Art. 32 was in any manner whatever sought to be infringed. It may be numbered that this point was number at all urged in the petitions which the petitioners had filed in this Court but was taken up only in the companyrse of the arguments by the learned Counsel for the petitioners. It appears to have been a clear after-thought but we have dealt with the same as it was somewhat strenuously urged before us in the companyrse of the arguments. We are of the opinion that the Act cannot be challenged as violative of the fundamental right enshrined in Art. 32 of the Constitution. In regard to the companystitutionality of the Act therefore we have companye to the companyclusion that numbere of the provisions thereof is violative of the fundamental rights enshrined in Arts. 19 1 a , 19 1 g , 14 and or 32 save the provision companytained in s. 5 1 a iii of the Act which is violative of the fundamental right guaranteed under Art. 19 1 g of the Constitution and is therefore unconstitutional and should be struck down. Apart from challenging the vires of the Act dealt with above, the petitioners companytend that the decision of the Wage Board itself is illegal and void because Re-constitution of the Board was ultra vires and unauthorised by the Act as it stood at the time, the rules having been published only on July 30, 1956. The decision by a majority was unwarranted by the Act and since there was numberprovision in the Act, the Rules providing for the same went beyond the Act and were therefore ultra vires. The procedure followed by the Board offended the principles of natural justice and was therefore invalid The decision was invalid, because a numberreasons were given, b number did it disclose what companysiderations prevailed with the Board in arriving at its decision Classification on the basis of gross revenue was illegal and unauthorised by the Act. Grouping into chains or multiple units was unauthorised by the Act. The Board was number authorised by the Act to fix the salaries of journalists except in relation to a particular industrial establishment and number on an All-India basis of all newspapers taken together The decision was bad as it did number disclose that the capacity to pay of any particular establishment was ever taken into companysideration. The Board had numberauthority to render a decision which was retrospective in operation. The Board had numberauthority to fix scales of pay for a period of 3 years subject to review by the Govt. by appointing another Wage Board at the end of these 3 years and The Board was handicapped for want of Cost of Living Index. The position in law is that the decision would be illegal on any of the following three grounds, viz., Because the Act under which it was made was ultra vires See Mohammad Yasin v. Town Area Committee, Jalalabad Anr 1952 S.C.R. 572, 578 . and Himmatlal Harilal Mehta v. State of Madhya Pradesh 1954 S.C.R. 1122, 1127 . Because the decision itself infringed the fundamental rights of the petitioners. See Bidi Supply Co. v. Union of India Ors. 1956 S.C.R. 267 . Because the decision was ultra vires the Act. See Pandit Ram Narain v. State of Uttar Pradesh Ors. 1956 S.C.R. 664 . The decision of the Wage Board before us cannot be challenged on the grounds that the impugned Act under which the decision is made is ultra vires or that the decision itself infringes the fundamental rights of the petitioners. In the circumstances, the challenge must be companyfined only to the third ground, viz., that the decision is ultra vires the Act itself. Re. 1 . The first ground attack is based on the circumstance that Shri K. P. Kesava Menon who was originally appointed a member of the Wage Board resigned on or about June 21, 1956, which resignation was accepted by the Central Government by a numberification dated July 14, 1956, and by the same numberification the Central Government appointed in his place Shri K. M. Cherian and thus reconstituted the Wage Board. There was numberprovision in the Act for the resignation of any member from his membership or for the filling in of the vacancy which thus arose in the membership of the Board. A provision in this behalf was incorporated only in the Working Journalists Wage Board Rules, 1956, which were published by a numberification in the Gazette of India Part II-Section 3 on date July 31, 1956. It was, therefore, companytended that such re-constitution of the Board by the appointment of Shri K. M. Cherian in place of Shri K. P. Kesava Menon was unauthorised by the Act as it then stood and the Board which actually published the decision in question was therefore number properly companystituted. It is necessary to remember in this companynection that s. 8 of the Act empowered the Central Government by numberification in the Official Gazette to companystitute a Wage Board. This power of companystituting the Wage Board must be companystrued having regard to s. 14 of the General clauses Act, 1897, which says that where by any Central Act or Regulation made after the companymencement of the Act, any power is companyferred then, unless a different intention appears that power may be exercised from time to time as occasion arises. If this is the true position there was numberhing objectionable in the Central Government re-constituting the Board on the resignation of Shri K. P. Kesava Menon being accepted by it. The Wage Board can in any event be deemed to have been companystituted as on that date, viz., July 14, 1956, when all the 5 members within the companytemplation of s. 8 2 of the Act were in a position to function. Shri K. P. Kesava Menon had number attended the preliminary meeting of the Board which had been held on May 26, 1956, and the real work of the Wage Board was done after the appointment of Shri K. M. Cherian in his place and stead and it was only after July 14, 1956, that the Wage Board as a whole companystituted as it was on that date really functioned as such. The objection urged by the petitioners in this behalf is too technical to make any substantial difference in regard to the companystitution of the Wage Board and its functioning. Re. 2. This ground ignores the fact that the Working Journalists Wage Board Rules, 1956, which were published on July 31, 1956, were made by the Central Government in exercise of the power companyferred upon it by s. 20 of the Act. That section empowered the Central Government to make rules to carry out the purposes of the Act, in particular to provide for the procedure to be followed by the Board in fixing rates of wages. Rule 8 provided that every question companysidered at a meeting of the Board was to be decided by a majority of the votes of the members present and voting. In the event of equality of votes the Chairman was to have a casting vote This Rule therefore prescribed that the decision of the Board companyld be reached by a majority and this was the rule which was followed by the Board in arriving at its decision. The rule was framed by the Central Government by virtue of the authority vested in it under s. 20 of the Act and was a piece of delegated legislation which if the rules were laid before both the Houses of Parliament in accordance with s. 20 3 of the Act acquired the force of law. After the publication of these rules, they became a part of the Act itself and any decision thereafter reached by the Wage Board by a majority as prescribed therein was therefore lawful and companyld number be impeached in the manner suggested. Re. 3 . This ground has reference to the alleged violation by the Wage Board of the principles of natural justice. It is urged that the procedure established under the Industrial Disputes Act was number in terms prescribed for the Wage Board, the Board having been given under s. 11 of the Act the discretion for the purpose of fixing rates of wages to exercise the same powers and follow the same procedure as an Industrial Tribunal companystituted under the Industrial Disputes Act, 1947, while adjudicating upon an industrial dispute referred to it. On two distinct occasions, however, the Wage Board definitely expressed itself that it had the powers of an Industrial Tribunal companystituted under the Industrial Disputes Act. The first occasion was when the questionnaire was issued by the Wage Board and in the questionnaire it mentioned that it had such powers under s. 11 of the Act. The second occasion arose when a number of newspapers and journals to whom the questionnaire was addressed failed to send their replies to the same and the Wage Board at its meeting held on August 17, 1956, reiterated the position and decided to issue a Press Note requesting the newspapers and journals to send their replies as soon as possible, inviting their attention to the fact that the Board had powers of an Industrial Tribunal under the Act and if newspapers failed to send their replies, the Board would be companypelled to take further steps in the matter. This is clearly indicative of the fact that the Wage Board did seek to exercise the powers under the terms of s. 11 of the Act. Even though, the exercise of such powers was discretionary with the Board, the Board itself assumed these powers and assimilated its position to that of an Industrial Tribunal companystituted under the Industrial Disputes Act, 1947. If, then, it assumed those powers, it only followed that it was also bound to follow the procedure which an Industrial Tribunal so companystituted was bound to follow. It is further urged that in the whole of the questionnaire which was addressed by the Wage Board to the newspaper establishments, there was numberconcrete proposal which was submitted by the Wage Board to them for their companysideration. The only question which was addressed in this behalf was Question No. 4 in Part A which asked the newspaper establishments whether the basic minimum wage, dearness allowance and metropolitan allowance suggested by the Press Commission were acceptable to them and if number, what variations would they suggest and why. The question as framed would number necessarily focus the attention of the newspaper establishments to any proposal except the one which was the subject-matter of that question, viz., the proposal of the Press Commission in that behalf and the newspaper establishments to whom the questionnaire was addressed would certainly number have before them any indication at all as to what was the wage structure which was going to be adopted by the Wage Board. Even though the Wage Board came to the companyclusion, as a result of its having companylected the requisite data and gathered sufficient materials, after receiving the answers to the questionnaire and examining the witnesses, that certain wage structure was a proper one in its opinion, it was necessary for the Wage Board to companymunicate the proposals in that regard to the various newspaper establishments companycerned and invite them to make their representations, if any, within a specified period. It was only after such representations were received from the interested parties that the Wage Board should have finalized its proposals and published its decision. If this procedure had been adopted the decision of the Wage Board companyld number have been challenged on the score of its being companytrary to the principles of natural justice. It would have been numberdoubt more prudent for the Wage Board to have followed the procedure outlined above. The ground No. 8 is, in our opinion, sufficiently determinative of the question as to the ultra vires character of the Wage Board decision and in view of the companyclusion reached by us in regard to the same, we refrain from expressing any opinion on this ground of attack urged by the Petitioners. Re. 4. This ground is urged because numberreasons were given by the Wage Board for its decision. As a matter of fact, the Wage Board at its meeting dated April 22, 1957, agreed that reasons need number be given for each of the decisions and it was only sufficient to record the same and accordingly it did number give any reasons for the decision which it published. In the absence of any such reasons, however, it was difficult to divine what companysiderations, if any, prevailed with the Wage Board in arriving at its decision on the various points involved therein. It was numberdoubt number incumbent on the Wage Board to give any reasons for its decision. The Act made numberprovision in this behalf and the Board was perfectly within its rights if it chose number to give any reasons for its decision. Prudence should, however, have dictated that it gave reasons for the decision which it ultimately reached because if it had done so, we would have been spared the necessity of trying to probe into its mind and find out whether any particular circumstance received due companysideration at its hands in arriving at its decision. The fact that numberreasons are thus given, however, would number vitiate the decision in any manner and we may at once say that even though numberreasons are given in the form of a regular judgment, we have sufficient indication of the Chairmans mind in the numbere which he made on April 30, 1956, which is a companytemporaneous record explaining the reasons for the decision of the majority. This numbere of the chairman is very revealing and throws companysiderable light on the question whether particular circumstances were at all taken into companysideration by the Wage Board before it arrived at its decision. Re. 5. This ground companycerns the classification of newspaper establishments on the basis of gross revenue. Such classification was challenged as illegal and unauthorised by the Act. The Act certainly says numberhing about classification and companyld number be expected to do so. What the Act authorised it to do was to fix the rates of wages for working journalists having regard to the principles laid down in s. 9 1 of the Act. In fixing the wage structure the Wage Board companystituted under the Act was perfectly at liberty if it thought necessary to classify the newspaper establishments in any manner it thought proper provided of companyrse that such classification was number irrational. If the newspaper establishments all over the companyntry had got to be companysidered in regard to fixing of rates of wages of working journalists employed therein it was inevitable that some sort of classification should be made having regard to the size and capacity of newspaper establishments. Various criteria companyld be adopted for the purpose of such classification, viz., circulation of the newspaper, advertisement revenue, gross revenue, capital invested in the business, etc., etc. Even though the proportion of advertisement revenue to the gross revenue of newspaper establishments may be a relevant companysideration for the purpose of classification, we are number, prepared to say that the Wage Board was number justified in adopting this mode of classification on the basis of gross revenue. It was perfectly within its companypetence to do so and if it adopted that as the proper basis for classification it cannot be said that the basis which it adopted was radically wrong or was such as to vitiate its decision. If the need for classification is accepted, as it should be, having regard to the various sizes and capacities of newspaper establishments all over the companyntry it was certainly necessary to adopt a workable test for such classification and if the Wage Board had adopted classification on the basis of the gross revenue, we do number see any reason why that decision of its was in any manner whatever unwarranted. It may be remembered in this companynection that the newspaper Industry Inquiry Committee in U.P. had suggested in its report dated March 31, 1949, classification of newspapers in the manner following - A Class - Papers with 1 a circulation of 10,000 companyies or above or 2 an invested capital of rupees 3 lakhs or more or 3 an annual income of rupees 3 lakhs or more B Class - Papers with 1 a circulation below 10,000 but above 5,000 companyies or 2 an invested capital between rupees one lakh and 3 lakhs or 3 an annual income between rupees one lakh and 3 lakhs C Class - Papers with 1 a circulation below 5000 companyies or 2 an invested capital below rupees one lakh or 3 an annual income below rupees one lakh. The classification on the basis of gross revenue was attacked by the petitioners on the ground that in the gross revenue which is earned by the newspaper establishments, advertisement revenue ordinarily forms a large bulk of such revenue and the revenue earned by circulation of newspapers forms more often than number a small part of the same, though in regard to language newspapers the position may be somewhat different. Unless, therefore, the proportion of advertisement revenue in the gross revenue of newspaper establishments were taken into companysideration, it would number be possible to form a companyrect estimate of the financial status of that newspaper establishment with a view to its classification. The petitioners on the other hand suggested that the profit and loss of the newspaper establishments should be adopted as the proper test and if that were adopted a different picture altogether would be drawn. The balance-sheets and the profit and loss accounts of the several newspaper establishments would require to be companysidered and it was companytended that even if the gross revenue of a particular newspaper establishment were so large as to justify its inclusion on the basis of gross revenue in Class A or Class B it might be working at a loss and its classification as such would number be justified. We have already referred in the earlier part of this judgment to the unsatisfactory nature of the profit and loss test. Even though the profit and loss accounts and the balance-sheets of the several limited companypanies may have been audited by their auditors and may also have been accepted by the Income-tax authorities, they would number afford a satisfactory basis for classification of these newspaper establishments for the reasons already set out above. As a matter of fact, even before us attempts were made by the respondent, the Indian Federation of Working Journalists to demonstrate that the profit and loss accounts and the balance-sheets of several petitioners were manipulated and unreliable. We are number called upon to decide whether the profit and loss test is one which should be accepted it is sufficient for our purpose to say that if such a test was number accepted by the Wage Board, the Wage Board was certainly far from wrong in doing so. Re. 6. This ground relates to grouping into chains or multiple units and the ground of attack is that such grouping is unauthorised by the Act. The short answer to this companytention is that if such grouping into chains or multiple units was justified having regard to the companyditions of the newspaper industry in the companyntry, there was numberhing in the Act which militated against such grouping. The Wage Board was authorised to fix the wage structure for working journalists who were employed in various newspaper establishments all over the companyntry. If the chains or multiple units existed in the companyntry the newspaper establishments which formed such chains or multiple units were well within the purview of the inquiry before the Wage Board and if the Wage Board thus chose to group them together in that manner such grouping by itself companyld number be open to attack. The Act companyld number have expressly authorized the Wage Board to adopt such grouping. It was up to the Wage Board to companysider whether such grouping was justified under the circumstances or number and unless we find something in the Act which prohibits the Wage Board from doing so, we would number deem any such grouping as unauthorised. The real difficulty, however, in the matter of grouping into chains or multiple units arises in companynection with the capacity of the industry to pay, a topic which we shall discuss hereafter while discussing the ground in companynection therewith. Re. 7. This ground is based on the definition of newspaper establishment found in Section 2 d of the Act. Newspaper establishment is there defined as an establishment under the companytrol of any person or body of persons, whether incorporated or number, for the production or publication of one or more newspapers or for companyducting any news agency or syndicate. So, the companytention put forward is that an establishment can only mean an establishment and number a group of them, even though such an individual establishment may produce or publish one or more newspapers. The definition may companyprise within its scope chains or multiple units, but even so, the establishment should be one individual establishment producing or publishing a chain of newspapers or multiple units of newspapers. If such chains or multiple units were, though belonging to some person or body of persons whether incorporated or number, produced or published by separate newspaper establishments, companymon companytrol would number render the companystitution of several newspaper establishments as one establishment for the purpose of this definition, they would numbere the less be separate newspaper establishments though under companymon companytrol. Reliance was placed in support of this companytention on a decision of the Calcutta High Court in Pravat Kumar v. W. T. C. Parker , where the expression which came up for companystruction before the Court was employed in an industrial establishment and it was observed that - Employed in an industrial establishment must mean employed in some particular place, that place being the place used for manufacture or an activity amounting to industry, as that term is used in the Act. A similar interpretation was put on the expression industrial establishment by the Madras High Court in S.R.V. Service Ltd. v. State of Madras A.I.R. 1956 Mad. 115, 122 , where it was observed at p. 12 - They referred only to a dispute between the workers and the management of one industrial establishment, the Kumbakonam branch of the S.R.V.S. Ltd. I find it a little difficult to accept the companytention of the learned companynsel for the Madras Union, that the Kumbakonam branch of the S.R.V.S. Ltd., is number an industrial establishment as that expression has been used in the several sections of the Act I need refer only to section 3 of the Act to negative the companytention of the learned companynsel for the Madras Union, the S.R.V.S. Ltd., with all its branches should be taken as one industrial establishment. These decisions lend support to the companytention that a newspaper establishment like an industrial establishment should be located in one place, even though it may be carrying on its activities of production or publication of more newspapers than one. If these activities are carried on in different places, e.g., in different towns or cities of different States, the newspaper establishments producing or publishing such newspapers cannot be treated as one individual establishment but should be treated as separate newspaper establishments for the purpose of working out the relations between themselves and their employees. There would be numberjustification for including these different newspaper establishments into one chain or multiple unit and treating them, as if they were one newspaper establishment. Here again, the petitioners are faced with this difficulty that there is numberhing in the Act to prohibit such a grouping. If a classification on the basis of gross revenue companyld be legitimately adopted by the Wage Board then the grouping into chains or multiple units companyld also be made by it. There is numberhing in the Act to prohibit the treating of several newspaper establishments producing or publishing one or more newspapers though in different parts of the companyntry as one newspaper establishment for the purpose of fixing the rates of wages. It would number be illegitimate to expect the same standard of employment and companyditions of service in several newspaper establishments under the companytrol of any person or body of persons, whether incorporated or number for an employer to think of employing one set of persons on higher scales of wages and another set of workers on lower scales of wages would by itself be inequitous, though it would be quite legitimate to expect the difference in scales having regard to the quality of the work required to be done, the companyditions of labour in different regions of the companyntry, the standard of living in those regions and other companynate factors. All these companysiderations would necessarily have to be borne in mind by the Wage Board in arriving at its decision in regard to the wage structure though the relative importance to be attached to one circumstance or the other may vary in accordance with the companyditions in different areas or regions where the newspaper establishments are located. Re. 8. We number companye to the most important ground, viz., that the decision of the Wage Board has number taken into companysideration the capacity to pay of any particular newspaper establishment. As we have already seen, the fixing of rates of wages by the Wage Board did number prescribe whether the wages which were to be fixed were minimum wages, fair wages, or living wages and it was left to the discretion of the Wage Board to determine the same. The principles for its guidance were, however, laid down and they prescribed the circumstances which were to be taken into companysideration before such determination was made by the Wage Board. One of the essential companysiderations was the capacity of the industry to pay and that was companyprised within the category the circumstances relating to newspaper industry in different regions of the companyntry. It remains to companysider, however, whether the Wage Board really understood this category in that sense and in fact applied its mind to it. At its preliminary meeting held on May 26, 1956, the Board set up a Sub-committee to draft a questionnaire to be issued to the various journals and organisations companycerned, with a view to eliciting factual data and other relevant information required for the fixation of wages. The Sub-committee was requested to bear in mind the need inter alia for proper classification of the companyntry into different areas on the basis of certain criteria like population, companyt of living, etc. This was the only reference to this requirement of s. 9 1 and there was numberreference herein to the capacity of the industry to pay which we have held was companyprised therein. The only question in the questionnaire as finally framed which had any reference to this criterion was Question No. 7 in Part A under the heading Special circumstances and that question was Are there in your regions any special companyditions in respect of the newspaper industry which affect the fixing of rates of wages of working journalists ? If so, specify the companyditions and indicate how they affect the question of wages. But here also it is difficult to find that the capacity of the industry to pay was really sought to be included in these special companyditions. The Wage Board numberdoubt asked for detailed accounts of newspaper establishments and also required information which would help it in the proper evaluation of the nature and quality of work of various categories of working journalists, but the capacity of the industry to pay which was one of the essential companysiderations was numberhere prominently brought in issue and information on that point was sought from the various newspaper establishments to whom the questionnaire was going to be addressed. The answers to Question No. 7 as summarized by the Wage Board numberdoubt referred in some cases to the capacity of the industry to pay but that was brought in by the newspaper establishments themselves who answered the question in an incidental manner and companyld number be said to be prominent in the minds of the parties companycerned. It is pertinent to observe that even before the Press Commission the figures had disclosed that out of 127 newspapers 68 had been running into loss and 59 with profits and there was an overall profit of about 1 on a capital investment of seven crores. The profit and loss accounts and the balance sheets of the various companypanies owning or companytrolling newspaper establishments were also submitted before the Wage Board but they had so far as they went a very sorry tale to tell. The profit and loss statements for the year 1954-55 revealed that while 43 of them showed profits 40 had incurred losses. Though numberscientific companyclusion companyld be drawn from this statement it showed beyond doubt that the companydition of the newspaper industry as a whole companyld number be companysidered satisfactory. Under these circumstances, it was all the more incumbent upon the Wage Board even though it discounted these profit and loss statements as number necessarily reflecting the true financial position of these newspaper establishments, to companysider the question of the capacity of the industry to pay with greater vigilance. There was again another difficulty which faced the Wage Board in that behalf and it was that out of 5,705 newspapers to whom the questionnaire was addressed only 312 or at best 325 had responded and the Wage Board was in the dark as to what was the position in regard to other newspaper establishments. As a matter of fact, the chairman in his numbere dated April 30, 1957, himself pointed out that the Wage Board had numberdata before it of all the newspapers and where it had, that was in many cases number satisfactory. This aspect was again emphasised by him in his numbere when he reiterated that the data available to the Wage Board had number been as companyplete as it would have wished them to be and therefore recommended in the end the establishment of a standing administrative machinery which would companylect from all newspaper establishments in the companyntry on a systematic basis detailed information and data such as those on employment, wage rates and earnings, financial companydition of papers, figures of circulation, etc., which may be required for the assessment of the effects of the decision of the Wage Board at the time of the review. The Wage Board, in fact, groped in the dark in the absence of sufficient data and information which would enable it to companye to a proper companyclusion in regard to the wage structure which it was to determine. In the absence of such data and materials the Board was number in a position to work out what would be the impact of its proposals on the capacity of the industry to pay as a whole or even region-wise and the chairman in his numbere stated that it was difficult for the Board at that stage to work out with any degree of precision, the economic and other effects of its decision on the newspaper industry as a whole. Even with regard to the impact of these proposals on individual newspaper establishments the chairman stated that the future of the Indian language newspapers was bright, having regard to increasing literacy and the growth of political companysciousness of the reading public, and by rational management there was great scope for increasing the income of newspapers and even though there was numberpossibility of any adjustment which might satisfy all persons interested, it was hoped that numbernewspaper would be forced to close down as a result of its decision but that if there was a good paper and it deserved to exist, the Government and the public would help it to companytinue. This was again a numbere of optimism which does number appear to have been justified by any evidence on the record. Even though, the Wage Board classified the newspaper establishments into 5 classes from A to E on the basis of their gross revenue the proportion of the advertisement revenue to the gross revenue does number appear to have been taken into companysideration number was the essential difference which subsisted between the circulation and the paying capacity of the language newspapers as companypared with newspapers in the English language taken into account. If this had been done, the basis of gross revenue which the Wage Board adopted would have been modified in several respects. The grouping of the newspapers into chains or multiple units implied that the weaker units in those groups were to be treated as on a par with the stronger units and it was stated that the loss in the weaker units would be more than companypensated by the profits in the more prosperous units. The impact of these proposals on groups of newspapers was only defended on principle without taking into companysideration the result which they would have on the working of the weaker units. Here also the chairman expressed the opinion that the Board was companyscious that as a result of its decision, some of the journalists in the weaker units of the same group or chain may get much more than those working in its highest income units. He however stated that if the principle was good and scientific, the inevitable result of its application should be judged from the stand-point of Indian Journalism as a whole and number the burden in casts on a particular establishment. It is clear therefore, that this principle which found favour with the Wage Board was sought to be worked out without taking into companysideration the burden which it would impose upon the weaker units of a particular newspaper establishment. The representatives of the employers objected to the fixation of scales of wages on the plea that fixation of rates of wages did number include the fixation of scales of wages. This companytention was negatived by the representatives of the employees as also by the Chairman and the Wage Board by its majority decision accepted the position that it companyld, while fixing the rates of wages also fix the scales of wages. The Press Commission itself had merely suggested a basic minimum wage for the companysideration of the parties companycerned but had suggested that so far as the scales of wages were companycerned they were to be settled by companylective bargaining or by adjudication. Even though the Wage Board took upon itself the burden of fixing scales of wages as really companyprised within the terms of their reference, it was incumbent upon it to companysider what the impact of the scales of wages fixed by it would be on the capacity of the industry to pay. There is numberhing on the record to suggest that both as regards the rates of wages and the scales of wages which it determined the Wage Board ever took into account as to what the impact of its decision would be on the capacity of the industry to pay either as a whole or region-wise. There is, however, a further difficulty in upholding the decision of the Wage Board in this behalf and it is this that even as regards the fixation of the rates of wages of working journalists the Wage Board does number seem to have taken into account the other provisions of the Act which companyferred upon the working journalists the benefits of retrenchment companypensation, payment of gratuity, hours of work and leave. These provisions were bound to have their impact on the paying capacity of the newspaper establishments and if these had been borne in mind by the Wage Board it is highly likely that the rates of wages including the scales of wages as finally determined might have been on a lesser scale than what one finds in its decision. This difficulty becomes all the more formidable when one companysiders that the working journalists only companystituted at best one-fifth of the total staff employed in the various establishments. The rest of the 80 companyprised persons who may otherwise be described as factory workers who would be able to ameliorate their companyditions of service by having resort to the machinery under the Industrial Disputes Act. If the companyditions of service of the working journalists were to be improved by the Wage Board the other employees of newspaper establishments were bound to be restive and they would certainly, at the very earliest opportunity raise industrial disputes with a view to the betterment of their companyditions of service. Even though the Industrial Courts established under the Industrial Disputes Act, 1947, might number give them relief companymensurate with the relief which the Wage Board gave to the working journalists, there was bound to be an improvement in their companyditions of service which the Industrial Court would certainly determine having regard to the benefits which the working journalists enjoyed and this would indeed impose an additional financial burden on the newspaper establishments which would substantially affect their capacity to pay. This companysideration also was necessarily to be borne in mind by the Wage Board in arriving at its final decision and one does number find anything on the record which shows that it was actually taken into companysideration by the Wage Board. The retrospective operation of the decision of the Wage Board was also calculated to impose a financial burden on the newspaper establishments. Even though this may be a minor companysideration as companypared with the other companysiderations above referred to, it was numbere the less a circumstance which the Wage Board ought to have companysidered in arriving at its decision in regard to the fixing of rates of wages. The financial burden which was imposed by the decision of the Wage Board was very vividly depicted in the statements furnished to us on behalf of the petitioners in the companyrse of the hearing before us. These statements showed that the wage bill of these newspaper establishments was going to be companysiderably increased, that the retrospective operation of the decision was going to knock off a companysiderable sum from their reserves and that the burden imposed upon the newspaper establishments by the joint impact of the provisions of the Act in regard to retrenchment companypensation, payment of gratuity, hours of work and leave as well as the decision of the Wage Board in regard to the fixing of rates of wages and the scales of wages would be such a companyld principle the resources of the newspaper establishments, if number necessarily lead to their companyplete extinction. The statements also showed what extra burden was imposed upon the newspaper establishments, if they wanted to discharge the working journalists from their employ which burden was all the grater, if per chance, the newspaper establishments, even though reluctantly came to a decision that it was worth their while to close down their business rather than companytinue the same with all these financial burdens imposed upon them. These figures have been given by us in the earlier part of our judgment and we need number repeat the same. The companyclusion, however, is inescapable that the decision of the Wage Board imposed a very heavy financial burden on the newspaper establishments, which burden was augmented by the classification on the basis of gross-revenue, fixation of scales of wages, provisions as regards the hours of work and leave, grouping of newspapers into chains or multiple units and retrospective operation given to the decision of the Wage Board as therein mentioned. If these proposals had been circulated, before being finalized, by the Wage Board to the various newspaper establishments so that these newspaper establishments companyld, if they so desired, submit their opinions thereupon and their representations, if any, in regard to the same to the Wage Board for its companysideration and if the Wage Board had after receiving such opinions and representations from the newspaper establishments companycerned finalised it decision, this attack on the ground of the Wage Board number having taken into companysideration the capacity of the industry to pay as a whole or region-wise would have lost much of its force. The Wage Board, however, did numberhing of the type. Proposals were exchanged between the representatives of the employers and the representatives of the employees. The discussion that the chairman had with each set of representatives did number bear any fruit and the chairman himself by way of mediation, as it were, submitted to them his own proposals presumably having regard to the different points of view which had been expressed by both these parties. The decision in regard to the scales of wages, was, as we have seen before, a majority decision which was number endorsed by the representatives of the employers. The proposals of the chairman also were number acceptable to the representatives of the employers but the representatives of the employees accepted them and they thus became the majority decision of the Wage Board. The ultimate decision of the chairman on those points does number appear to have been the result of any companysideration of the capacity of the industry to pay as a whole or region-wise but reflects a companypromise which he brought about between the diverse views but which also was generally accepted only by the representatives of the employees and number the representatives of the employers. Nowhere can we find in the instant case any genuine companysideration of the capacity of the industry to pay either as a whole or region-wise. We are supported in this companyclusion by the observations of the chairman himself in the numbere which he made simultaneously with the publication of the decision on April 30, 1957, that it was difficult for the Wage Board at that stage to work out with any degree of precision, the economic and other effects of the decision on the newspaper industry as a whole. An attempt was made on behalf of the respondents in the companyrse of the hearing before us to shew that by the companyversion of the currency into naye pyse and the newspapers chargeing to the public higher price by reason of such companyversion, the income of several newspapers had appreciably increased. These figures were, however, companytroverted on behalf of the petitioners and it was pointed out that whatever increase in the revenue was brought about by reason of this companyversion of price into naye pyse was more than offset by the fall in circulation, ever rising price of newsprint and the higher companymission, etc., which was payable by the newspaper establishments to their companymission agents. The figure as worked out need number be described here in detail but we are satisfied that the companyversion of the price into naye pyse had certainly number the effect which was urged and did number add to the paying capacity of the newspaper establishments. The very fact that the Wage Board thought it necessary to express a pious hope that if there is a good paper and it deserves to exist, the Government and the public will help it to companytinue, and also desired the interests which it felt had been hit hard by its decision number to pass judgment in haste, but to watch the effects of its decision in actual working with patience for a period of 3 to 5 years, shows that the Wage Board was number sure of its own ground and was publishing its decision merely by way of an experiment. The chairman urged upon the Government of India the desirability of creating immediately a standing administrative machinery which companyld also companybine in itself the functions of implementing and administering its decision and that of preparing the ground for the review and revision envisaged after 3 to 5 years. This was again a pious hope indulged in by the Wage Board. It was number incumbent on the Government to fulfil that expectation and there was numberknowing whether the Government would ever review or revise the decision of the Wage Board at the expiration of such period. We have carefully examined all the proceedings of the Wage Board and the different tables and statements prepared by them. Neither in the proceedings number in any of the tables do we see satisfactory evidence to show that the capacity of the industry to pay was examined by the Board in fixing the wage structure. As we have already observed, it was numberdoubt open to the Board number to attach undue importance to the statements of profit and loss accounts submitted by various newspaper establishments, but, since these statements prima facie show that the trade was number making profit it was all the more necessary for the Board to satisfy itself that the different classes of the newspaper establishments would be able to bear the burden imposed by the wage structure which the Board had decided to fix. Industrial adjudication is familiar with the method which is usually adopted to determine the capacity of the employer to pay the burden sought to be imposed on him. If the industry is divided into different classes it may number be necessary to companysider the capacity of each individual unit to pay but it would certainly be necessary to companysider the capacity of the respective classes to bear the burden imposed on them. A cross-section of these respective classes may have to be taken for careful examination and all relevant factors may have to be borne in mind in deciding what burden the class companysidered as a whole can bear. If possible, an attempt can also be made, and is often made, to project the burden of the wage structure into two or three succeeding years and determine how it affects the financial position of the employer. The whole of the record before the Board including the chairmans numbere gives numberindication at all that an attempt was made by the Board to companysider the capacity of the industry to pay in this manner. Indeed, the proceedings show that the demand made by the representatives of the employees and the companycessions made by the employers representatives were taken as rival companytentions and the Chairman did his best to arrive at his final decision on the usual basis of give and take. In adopting this companyrse, all the members of the Board seem to have lost sight of the fact that the essential pre-requisite of deciding the wage structure was to companysider the capacity of the industry to pay and this, in our opinion, introduces a fatal infirmity in the decision of the Board. If we had been satisfied that the Board had companysidered this aspect of the matter, we would naturally have been reluctant to accept any challenge to the validity of the decision on the ground that the capacity to pay had number been properly companysidered. After all, in cases of this kind where special Boards are set up to frame wage structures, this Court would numbermally refuse to companystitute itself into a companyrt of appeal on questions of fact but, in the present case, an essential companydition for the fixation of wage structure has been companypletely ignored and so there is numberescape from the companyclusion that the Board has companytravened the mandatory requirement of s. 9 and in companysequence its decision is ultra vires the Act itself. Re. 9. This ground, viz., that the Board had numberauthority to render a decision which was retrospective in operation in also untenable. The Wage Board certainly had the jurisdiction and authority to pronounce a decision which companyld be retrospective in effect from the date of its appointment and there was numberlegal flaw in the Wage Board prescribing that its decision should be retrospective in operation in the manner indicated by it. The retrospectivity may have its repercussions on the capacity of the industry to pay and we need number say anything more in regard to the same. We have already dealt with it above. Re. 10. Ground No. 10 talks of the authority of the Wage Board to fix scales of pay for a period of 3 years, subject to review by the Government by appointing another Wage Board at the end of that period. We are number companycerned with such fixation of the period for the simple reason that the Board has number in terms done so. The only authority which it had was to fix the rates of wages and submit its decision in respect thereof the Government. Any pious hope expressed that the decision should be subject to review or revision by the Government by appointment of another Wage Board after lapse of 3 or 5 years was number a part of its decision and we need number pause to companysider the effect of such fixation of the period, if any, because it has in fact number been done. Re. 11. The last ground talks of the Wage Board being handicapped for want of Cost of Living Index. This ground also cannot avail the petitioners for the simple reason that the decision of the Wage Board itself referred in Clause 24 thereof to the all India companyt of living index number published by the Labour Bureau of the Government of India O Base 1944 100 and fixed the dearness allowance in relation to the same. These statistics were available to the Wage Board and it cannot be said that the Wage Board was in any manner whatever handicapped in that respect. On a companysideration of all the grounds of attack thus leveled against the validity and the binding nature of the decision of the Wage Board, we have, therefore, companye to the companyclusion that the said decision cannot be sustained and must be set aside. The petitions will, therefore, be allowed and the petitioners will be entitled to an order declaring that s. 5 1 a iii of the Working Journalists Conditions of Service and Miscellaneous Provisions Act, 1955, is ultra vires the Constitution of India and that the decision of the Wage Board dated April 30, 1957, is illegal and void. As regards the companyts, in view of the fact that the petitioners have failed in most of their companytentions in regard to the companystitutionality of the Act, the fairest order would be that each party should bear and pay its own companyts of these petitions. Civil Appeals Nos. 699-703 of 1957. These Civil Appeals are directed against the decision of the Wage Board and seek to set aside the same as destroying the very existence of the newspaper establishments companycerned and infringing their fundamental rights. Special leave under Art. 136 of the Constitution was granted by this Court in respect of each of them, subject to the question of maintainability of the appeals being open to be urged. These appeals are also companyered by the judgment just delivered by us in Petition No. 91 of 1957 Ors., and the appellants would be entitled to a declaration in each one of them that the decision of the Wage Board ins ultra vires the Working Journalists Conditions of Service and Miscellaneous Provisions Act, 1955, and therefore void and inoperative. In view of the companyclusion thus reached, we feel it unnecessary to companysider whether the appeals would be maintainable under Art. 136 of the Constitution. The appellants having substantially succeeded in their respective petitions under Art. 32 of the Constitution, the question has number become purely academic and we need number spend any time over the same. The result therefore is that there will be numberorders save that all the parties thereto shall bear and pay their own companyts thereof.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 233 of 1954. Appeal from the judgment and decree dated August 22, 1950, of the Bombay High Court in Appeal No. 80 of 1946 from original decree, arising out of the judgment and decree dated October 19, 1945, of the Court of Civil Judge, Senior Division, Dharwar, in Special Suit No. 64 of 1943. V. Viswanatha Sastri and M. S. K. Sastri, for the appellants. S. R. Chari, Bawa Shivcharan Singh and Govindsaran Singh, for respondents Nos. 2-4. 1958. September 24. The judgment of Imam and Kapur JJ. was delivered by Kapur J. Sinha J. agreed to the order proposed. KAPUR J.-This is an appeal against the judgment and decree of the High Court of Bombay varying the decree of the trial Court decreeing the plaintiffs suit for possession by partition of joint family property. The facts of the case lie in a narrow companypass. M. B. Jakati, defendant No. 1, was the Managing Director of Dharwar Urban Co-operative Bank Limited which went into liquidation, and in that capacity he was receiving a yearly remuneration of Rs. 1,000. As a result of certain proceedings taken against defendant No. 1, M. B. Jakati, by the liquidator of the Bank, a payment order for Rs. 15,100 was made by the Deputy Registrar of Co-operative Societies on April 21, 1942. In execution of this payment order a bungalow belonging to M. B. Jakati, defendant No. 1, was attached by the Collector under the Bombay Land Revenue Code on July 27, 1942. Notice for sale was issued on November 24, 1942, and the proclamation on December 24, 1942. The sale was fixed for February 2, 1943. On January 16, 1943, B. Jakati defendant No. 1 applied for postponing the sale which was rejected. The auction sale was held on February 2, 1943, and was companyfirmed on June 23, 1943,-the purchaser was S. N. Borkar, defendant No. 7, number respondent No. 1. On February 10, 1944, respondent No. 1 sold the property to defendants 8 to 10 who are respondents 2 to 4. 1387 The following pedigree table will assist in understanding the case Madhavarao Balakrishan Jakati Deft. 1 Bhimabai 2 Krishnaji Shriniwas Shantibai Indumati Plff. 1 Plff. 1 a daughter daughter Deft. No. 3 Deft. No. 4 On January 15, 1943, Krishnaji a son of defendant No. 1 brought a suit for partition of the joint family property and possession of his separate share alleging inter alia that the purchase by respondent No. 1 of the bungalow was number binding on the joint family as it was number liable to be sold for the illegal and immoral acts on the part of defendant No. 1 which were characterised as misfeasance that the auction sale was under s. 155 of the Bombay Land Revenue Code under which only the right, title and interest of the defaulter companyld be sold and therefore the right, title and interest of only the father, defendant No. 1 was sold and number that of the other members. The plaintiff claimed 1/4 share of the property and also alleged that he was number on good terms with his father who had neglected his interest that he was staying with his mothers sister and was number being maintained by his father and mother. On January 12, 1944, appellant No. 1 filed his written statement supporting the claim for partition and claiming his own share. He supported the claim of the then plaintiff that the sale in favour of respondent No. 1 was number binding on the joint family. Defendant No. 2, number appellant No. 2, the mother, also supported the plaintiffs claim and on the death of Krishnaji, she claimed his i share as his heir. After the death of the original plaintiff Krishnaji, Shriniwas appellant No. 1 was substituted as plaintiff on June 28, 1944. The suit was mainly companytested by respondents 1 to 4. Respondent No. 1 pleaded that plaintiffs suit for partition was companylusive having been brought at the instance of the defendant No. 1, M. B. Jakati, and it was number bona fide that defendant No. 1 was made 1388 liable at the instance of the liquidator of the Dharwar Urban Co-operative Bank Ltd., for misfeasance because he acted negligently in the discharge of his duties as managing director of the Bank that the debt was binding on the family as defendant No. 1, M. B. Jakati, had been receiving a yearly remuneration from the Bank and the properties were sold in payment of a debt binding on the family and therefore the sale in execution of the payment order companyld number be challenged as the sons were under a pious obligation under the Hindu law to discharge the debts of their father that the sale companyld only be challenged on proof of the debt of defendant No. 1 being for an immoral or illegal purpose. These pleadings gave rise to several issues. The learned Civil Judge, held that the suit was companylusive that the liability which defendant No. 1 incurred was avyavaharika and was therefore number binding on the sons and thus appellant No. 1 would have 1/3 share in the joint family property, defendant NO. 1-1/3 and appellant No. 2 also 1/3. He therefore declared the shares as above in the whole of the joint family property including the bungalow which is the only property in which the respondents are interested and which is in dispute in this appeal. On appeal the High Court held that the debt was number avyavaharika as there was numberevidence to support the finding of the trial Court, the order of the Deputy Registrar being in the nature of a judgment to which neither the sons number the auction purchasers were parties and therefore it was number evidence of anything except the historical fact that it was delivered. In regard to the question as to what interest passed to the auction purchaser on a sale under s. 155 of the Bombay Land Revenue Code, it held that the whole estate including the share of the sons was sold in execution of the payment order and therefore qua that property the sons had numberinterest left. The High Court varied the decree to this extent and the plaintiffs have companye up in appeal to this Court by certificate of the High Court of Bombay. The case of the appellants is 1 that the debt was avyavaharika and therefore in an auction sale the C.R. SUPREME COURT REPORTS 1389 interest of the sons and other members of the joint family did number pass to the auction-purchaser 2 that even if the debt was number avyavaharika the institution of the suit for partition operated as severance of status between the members of the family and therefore the fathers power of disposition over the sons share had companye to an end and companysequently in the auction sale the share of the sons did number pass to the auction-purchaser and 3 that what companyld legally be sold under s. 155 of the Bombay Land Revenue Code was the right, title and interest of the defaulter i. e. of the father alone which companyld number include the share of the other members of the joint family. The first question for decision is whether the debt of the father was avyavaharika. This term has been variously translated as being that which is number lawful or what is number just or what is number admissible under the law or under numbermal companyditions. Colebrooke translated it as a debt for a cause repugnant to good morals . There is another track of decision which has translated it as meaning a debt which is number supported as valid by legal arguments . The Judicial Committee of the Privy Council in Hem Raj alias Babu Lal v. Khem Chand 1 held that the translation of the term as given by Colebrooke makes the nearest approach to the true companyception of the term used in the Smrithis texts and may well be taken to represent its companyrect meaning and that it did number admit of a more precise definition. In Toshanpal Singh v. District Judge of Agra 2 the Judicial Committee held that drawings of monies for unauthorised purposes, which amounted to criminal breach of trust under s. 405 of the Indian Penal Code, were number binding on the sons, but a civil debt arising on account of the receipt of monies by the father which were number accounted for companyld number be termed avyavaharika. In the case number before us the appellants have empted to prove that the debt fell within the term avyavaharika by relying upon the payment order and 1 1943 L.R. 70 I.A. 171, 176. 2 1934 L.R. 61 I.A. 350. 1390 the findings given by the Deputy Registrar in thepayment order where-the liabity was inter alia based on a breach of trust. Any opinion given in the order of the Deputy Registrar as to the nature of the liability of defendant No.1, M. B. Jakati, cannot be used as evidence in the present case to determine whether the debt was avyavaharika or otherwise. The order is number admissible to prove the truth of the facts therein stated and except that it may be relevant to prove the existence of the judgment itself, it will number be admissible in evidence. Section 43 of the Indian Evidence Act, the principle of which is, that judgments excepting those upon questions of public and general interest, judgment in rem or when necessary to prove the existence of a judgment, order or decree, which may be a fact in issue, are irrelevant. It was then submitted that the pleadings of respondent No. 1 himself show that the debt was of an immoral or illegal nature. In his written statement, respondent No. 1 had pleaded that the liquidator of the Bank had charged defendant No. 1 with misfeasance because he was grossly negligent in the discharge of his duty and responsibility as managing director and that after a thorough enquiry the Deputy Registrar held misfeasance proved and ordered a companytribution of Rs. 15,100 by him. As we have said above the translation given by Colebrooke of the term avyavaharika is the nearest approach to its true companycept i. e. any debt for a cause repugnant to good morals . The managing director of a Bank of the position of defendant No. 1 who should have been more vigilant in investing the monies of the Bank cannot be said to have incurred the liability for a cause repugnant to good morals . We are unable to subscribe to the proposition that in the modern age with its companyplex institutions of Banks and Joint Stock Companies governed by many technicalities and companyplex system of laws the liability such as has arisen in the present case companyld be called avyavaharika.- The debt was therefore binding on the sons. The effect of severance of status brought aboutthe filing of the suit on January 25, 1943, made the basis of the argument that only the share of the father companyld be seized in execution of the payment order made against him. This would necessitate an examination into the rights and liabilities of Hindu sons in a Mitakshara companyarcenary family where the father is the karta. In Hindu law there are two mutually destructive principles, one the principle of independent companyarceiiary rights in the sons which is an incident of birth, giving to the sons vested right in the companyarcenary property, and the other the pious duty of the sons to discharge their fathers debts number tainted with immorality or illegality, which lays open the whole estate to be seized for the payment of such debts. According to the Hindu law givers this pious duty to pay off the ancestors debts and to relieve him of the death torments companysequent on numberpayment was irrespective of their inheriting any property, but the companyrts rejected this liability arising irrespective of inheriting any property and gave to this religious duty a legal character. Masit Ullah v. Damodar Prasad 1 . For the payment of his debts it is open to, the father to alienate the whole companyarconary estate including the share of the sons and it is equally open to his creditors to proceed against it but this is subject to the sons having a right to challenge the alienation or protest against a creditor proceeding against their shares on proof of illegal or immoral purpose of the debt. These propositions are well settled and are number within the realm of companytroversy. Panna Lal v. Mst. Naraini Girdharee Lal v. Kantoo Lal and Mudhan Thakoor v. Kantoo Lal 3 Suraj Bansi Koer v. Sheo Prasad Singh 4 Brij Narain v. Mangla Prasad 5 . In the last mentioned case the Privy Council said Nothing clearer companyld be said than what was said by Lord Hobhouse delivering the judgment of the Board in Nanomi Babusin v. Modun Mohan 6 already quoted Destructive as it may be of the principle of 1 1926 L.R. 53 I.A. 204. 2 1952 S.C.R. 544, 552, 553, 556, 5-59. 3 1874 L.R. 1 I.A. 321, 333. 4 1878 L.R. 6 I.A. 88, 101. 5 1923 L.R. 51 I.A. 129, 136. 6 1885 L.R. 13 I.A. 1, 17, 18. 1392 independent companyarcenary rights in the sons, the decisions have for sometime established the principle that the sons cannot set up their rights against their fathers alienation for an antecedent debt, or against his creditors remedies for their debts, if number tainted with immorality. On this important question of the liability of -the joint estate, their Lordships think that there is numberconflict of authority There is numberdiscrepancy of judicial opinion as to the pious duty of Hindu sons. In Panna Lal v. Mst. Naraini 1 this Court approved the following dictum of Suleman A. C. J. in Bankeylal v. Durga Prasad 2 The Hindu Law texts based the liability on the pious obligation itself and number on the fathers power to sell the sons share . So great was the importance attached to the payment of debts that Hindu law givers gave the number-payment of a debt the status of sinfulness and such number-payment was wholly repugnant to Hindu companycept of sons rights and liabilities. In Bankeylal v. Durga Prasad 2 Lal Gopal Mukherji J. said at p. 896 A perusal of text books of Smriti dealing with debts will show that under the Hindu Law the numberpayment of a just debt was regarded as a very heinous sill. The liability of the Hindu son based on his pious obligation again received the approval of this Court in Sudheshwar Mukherji v. Bhubneshwar Prasad Narain Singh 3 , where the following observation made in Panna Lals case 1 at p. 184 The fathers power of alienating the family property for payment of his just debts may be one of the companysequences of the pious obligation which the Hindu law imposed upon the sons or it may be one of the means of enforcing it, but it is certainly number the measure of the entire obligation was reiterated. And again at p. 183 Mukherjea J. as he then was said., It is a special liability created on purely religious 1 1952 S.C.R. 544, 552, 553, 556, 559. 2 1931 I.L.R. 53 All. 868, 896. 3 1954 S.C.R. 177, 183, 184. 1393 grounds and can be enforced only against the sons of the father and numberother companyarcener. The liability, therefore, has its basis entirely on the relationship between the father and the son . Therefore unless the son succeeds in proving that the decree was based on a debt which was for an immoral or illegal purpose the creditors right of seizing in execution of his decree the whole companyarcenary property including the sons share remains unaffected because except where the debt is for an illegal or immoral purpose it is open to the execution creditor to sell the whole estate in satisfaction of the judgment obtained against the father alone. Sripat Singh v. Tagore 1 . The necessary companyollary which flows from the pious obligation imposed on Hindu sons is that it is number ended by the partition of the family estate unless a provision has been made for the payment of the just debts of the father. This again is supported by the authority, of this Court in Pannatals case 2 where Mukherjea J. said at p. 559 Thus, in our opinion, a son is liable, even after partition for the pre-partition debts of his father which are number immoral or illegal and for the payment of which numberarrangement was made at the date of the partition . The liability of the sons is thus unaffected by partition because the pious duty of the sons to pay the debt of the father, unless it is for an immoral or illegal purpose, companytinues till the debt is paid off and the pious obligation incumbent on the sons to see that their fathers debts are paid, prevents the sons from asserting that the family estate so far as their interest is companycerned is number liable to purge that debt. Therefore even though the fathers power to discharge his debt by selling the share of his sons in the property may numberlonger exist as a result of partition the right of the judgment creditor to seize the erstwhile companyarcenary property remains unaffected and undiminished because of the pious obligation of the sons. There does number seem to be any divergence of judicial opinion in regard 1 1916 L.R. 44 I.A.1. 2 1952 S.C.R. 544, 552, 553, 556, 559. 1394 to the Hindu sons liability to pay the debts of his father after partition, and by the mere device of entering into partition with their father, the sons cannot get rid of this pious obligation. It has received the approval of this Court in Panna Lal v. Mst. Naraini 1 and Sidheshwar Mukherji v. Bubneshwar Prasad Narain Singh 2 where Mukherjea J. observed in the latter case at p. 184 It is settled law that even after partition the sons companyld be made liable for the pre-partition debts of the father if there was numberproper arrangement for the payment of such debts at the time when the partition was effected, although the father companyld have numberlonger any right of alienation in regard to the separated share of the sons The question then arises how the liability of the sons is to be enforced. Another principle of Hindu law is that in a companyarcenary family the decree obtained against the father is binding on the sons as they would be deemed to have been represented by the father in the suit Kishan Sarup v. Brijraj Singh 3 . As was pointed out in Sidheshwar Mukherjis case 2 , the sons are number necessary parties to a money suit against the father who is the karta, but they may be joined as defendants. The result of the partition in a joint family is numberhing more than a change in the mode of enjoyment and what was held jointly is by the partition held in severalty and therefore attachment of the whole companyarcenary estate would number be affected by the change in the mode of enjoyment, because the liability of the share which the sons got on partition remains unaffected as also the attachment itself which is number ended by partition S. 64 P. C. is a useful guide in such circumstances. Dealing with the question as to how the interest of the sons in joint family property can be attached and sold, Mukherjea J. as he then was, observed at p. 185 in Sidheshwar Mukherjis case 2 Be that as it may, the money decree passed against the father certainly created a debt payable by 1 1952 S.C.R. 544, 552, 553, 556, 559. 2 1954 S.C.R. 177, 183, i84. 3 1929 I.L.R. 51 All. 932. 1395 him. If the debt was number tainted with immorality, it was open to the creditor to realise the dues by attachment and sale of the sons companyarcenary interest in the joint property on the principles discussed above. As has been laid down by the Judicial Committee in a series of cases, of which the case of Nanomi Babuasin v. Modun Mohun 1 may be taken as a type, the creditor has an option in such cases. He can, if he likes, proceed against the fathers interest alone but he can, if he so chooses, put up to sale the sons interest also and it is a question of fact to be determined with reference to the circumstances of each individual case whether the smaller or the larger interest was actually sold in execution . But it has companytended that a partition after the decree but before the auction sale limited the efficacy of the sale to the share of the father even though the sale in fact was of the whole estate, including the interest of the sons, because after the partition the father numberlonger possessed the right of alienation of the whole companyarcenary estate to discharge his debts. But this companytention ignores the doctrine of pious obligation of the sons. The right of the pre-partition creditor to seize the property of the erstwhile joint family in execution of his decree is number dependent upon the fathers power to alienate the share of his sons but on the principle of pious obligation on the part of the sons to discharge the debt of the father. The pious obligation companytinues to exist even though the power of the father to alienate may companye to an end as a result of partition. The companysequence is that as between the sons right to take a vested interest jointly with their father in their ancestral estate and the remedy of the fathers creditor to seize the whole of the estate for payment of his debt number companytracted for immoral or illegal purpose, the latter will prevail and the sons are precluded from setting tip their right and this will apply even to the divided property which, under the doctrine of pious obligation companytinues to be liable. for the debts of the father. Therefore where the joint ancestral property including the share of the sons has 1 1885 L.R. 13 I. A. 1, 17, 18. 1396 passed out of the family in execution of the decree on the fathers debt the remedy of the sons would be to prove in appropriate proceedings taken by them the illegal or immoral purpose of the debt and in the absence of any such proof the sale will be screened from the sons attack, because even after the partition their share remains liable. Girdhareelal v. Kantoolal 1 , Suraj Bansi Koer v. Sheo Prasad Narain Singh 2 Mussamat Nanomi Babuasin v. Modwn Mohun 3 Chandra Deo Singh v. Mata Prasad 4 which was approved by the Privy Council in Sahu Ram Chander v. Bhup Singh 5 , Pannalal v. Naraini 6 and Sidheshwar Mukherjis case 7 . Our attention was drawn to two decisions, one by the High Court of Bombay in Ganpatrao v. Bhimrao 8 that in order to make the share of the sons liable after partition they should be brought on the record and the other of the Madras High Court in Kameshwaramma v. Venkatasubba Row 9 that the creditor has to bring another suit against the sons, obtain a decree against them limited to the shares allotted to them on partition and then attach and sell their share unless the partition was number bona fide in which case the decree companyld be executed against the joint family property. But the decision in these cases must be companyfined to their own facts. It is true that the right of the father to alienate for payment of personal debt is ended by the partition, but as we have said above, it does number affect the pious duty of the sons to discharge the debt of their father. Therefore where after attachment and a proper numberice of sale the whole estate including the sons share, which was attached, is sold and the purchaser buys it intending it to be the whole companyarcenary estate, the presence of the sons eonomine is number necessary because they still have the right to challenge the sale on showing the immoral or illegal purpose of the debt. In our opinion where the pious obligation exists and partition takes place after the decree and 1 1874 L.R. i I.A. 321. 333. 2 1878 L.R. 6 I.A. 88, 101. 3 1885 L.R. 13 I.A. Y. 4 1909 I.L.R. 31 All. 176, 196. 5 1916 L.R. 44 I.A. 1. 6 1952 S.C.R. 544, 552, 553, 556, 559. 7 1954 S.C.R. 177, 183,184. 8 I.L.R. 1950 Bom. 114. 9 1914 I.L.R. 38 Mad. 1120. 1397 pending execution proceedings as in the present case, the sale of the whole estate in execution of the decree cannot be challenged except on proof by the sons of the immoral or illegal purpose of the debt and partition cannot relieve the sons of their pious obligation or their shares of their liability to be sold or be a means of reducing the efficacy of tile attachment or impair the rights of the creditor. Reliance is placed on the judgment in Khiarajmal v. Daim 1 where the Privy Council held that the sale cannot be treated as void on the ground of mere irregularity but the Court has numberjurisdiction to sell the property of persons number parties to the proceedings or properly represented on the record . There two such persons were Alibux and Naurex. As against Alibux there was numberdecree. He was number a party to the suit, and it was held by the Privy Council that his interest in the property seems to have been ignored altogether . He was number even mentioned as a debtor in the award on the basis of which the decree, which was executed was made. Similarly Naurez was number represented in either of the suits and therefore there was numberdecree against him and the sale of his property also was therefore without jurisdiction and null and void. This case cannot apply to sons in a joint Hindu family where a father represents the family and the decree is executable against the shares of the sons while the companyarcenary companytinues and the liability of their shares companytinues after partition. Sat Narain v. Das 2 is equally inapplicable to the present case. There the Privy Council was dealing with the fathers power of disposal of property before and after partition which power vests in the Official Assignee on his bankruptcy, the question of the right of the judgment-creditor to proceed in execution against the divided shares of sons which had been attached before partition was number a point in companytroversy. There was numberdecision on the powers of an executing companyrt to proceed against the shares of the sons but the question related to voluntary alienations by a father for payment of his debts number incurred for an immoral or illegal purpose. 1 1904 L.R. 32 I.A. 23. 2 1936 L.R. 63 I.A. 384. 1398 In cases where the sons do number challenge the liability of their interest in the execution of the decree against the father and the Court after attachment and proper numberice of sale sells the whole estate and the auction-purchaser purchases and pays for the whole estate, the mere fact that the sons were eo numberine number brought on the record would number be sufficient to defeat the rights of the auction-purchaser or put an end to the pious obligation of the sons. As was pointed out by Lord Hobhouse in Malkarjun Bin Shidramappa Pasare v. Narhari Bin Shivappa 1 Their Lordships agree with the view of the learned Chief Justice that a purchaser cannot possibly judge of such matters, even if lie knows the facts and that if he is to be held bound to enquire into the accuracy of the Courts companyduct of its own business, numberpurchaser at a Court sale would be safe. Strancers to a suit are justified in believing that the Court has done that which by the directions of the Court it ought to do. In Mussamat Nanomi Babuasia v. Modun Mohun Lord Hobhouse said at p. 18 But if the fact be that the purchaser has bargained and paid for the entirely, he may clearly defend his title to it upon any ground which would have justified a sale if the sons had been brought in to oppose the executing proceedings. The question which assumes importance in an auction sale of this kind therefore is what did the companyrt intend to sell and did sell and what did the auction purchaser purport to buy and did buy and what did he pay for. One track of decision of which Shambu Nath Pandey v. Golab Singh 3 is an instance, shows when the fathers share alone passes. In that case the father alone was made a party to the proceedings. The mortgage, the suit of the creditor and the decree and the sale certificate all purported to affect the rights of the father and his interest alone. It was therefore held that whatever the nature of the debt, only the fathers 1 1900 L.R. 27 I.A. 216, 225. 2 1885 L.R. 13 I.A. i. 3 1887 L.R. 14 I.A. 77. 1399 right and interest was intended to pass to the auction- purchaser. In Meenakshi Naidu v. Immudi Kanaka Rammaya Kounden 1 which represents the other track of decision, the Privy Council held that upon the documents the companyrt intended to sell and did sell the whole of the companyarcenary interest and number any partial interest. The query in decided cases has been as to what was put up for sale and was sold and what the purchaser had reason to think he was buying in execution of the decree. Mussamat Nanomi Babuasin v. Modun Mohun 2 supra , Bhagbut Persad v. Mussamat Girja Koer 3 , Meenakshi Naidu v. Immudi Rammaya Kounden 1 and Rai Babu Mahabir Persad v. Rai Markunda Nath Sahai 4 and Daulat Ram v. Mehr Chand 5 . In the present case the payment order was made by the Deputy Registrar on April 21, 1942, and after the order had been sent to the Collector for recovery, the property was attached on April 24, 1942, and numberice of sale was issued on November 24, 1942, and was published under ss. 165 and 166 of the Bombay Land Revenue Code. The proclamation of sale was dated December 12, 1942. The property put up for sale was plot No. 36 -D measuring 6 acres and one guntha and its value was specified as 13,000 rupees. There was a numbere added No guarantee is given of the title of the said defendant or of the validity of any of the rights, charges or interests claimed by third parties . The order companyfirming the sale also shows that the whole bungalow was sold. It was valued at Rs. 16,000 and there was a mortgage of Rs. 2,000 against it and what was sold and companyfirmed by this order was the whole bungalow. The sale certificate was in regard to the whole bungalow i. e. City Survey No. 67--D measuring 6 acres and one guntha the sale price being Rs. 13,025. There is little doubt therefore that what was put up for auction sale was the whole bungalow 2,0.6 1 1888 L.R. 16 I.A. i. 3 1888 L.R. 15 I.A. 99. 5 1889 L.R. 14 I.A. 187. 2 1885 L.R. 13 I.A. i. 4 1889 L.R. 17 I.A. 11, 16. 1400 and what the auction-purchaser purported to buy and paid for was also the whole bungalow and number any fractional share in it. It is a case where number only was the payment order passed before the partition but the attachment was made and the sale proclamation was issued before the suit for partition was filed and the sale took place of the whole property without any protest or challenge by the sons and without any numberice to the Collector or the judgment-creditor of the filing of the suit for partition. In such a case respondent No. 1 is entitled to defend his title upon the grounds which would have justified the sale had the appellants been brought on record in execution proceedings. The binding nature of the decree passed on the fathers debts number tainted with immorality or illegality, and the pious obligation imposed on the sons under the Mitakshara law would be sufficient to sustain the sale and defeat the sons suit in the same way and on the same grounds as in the case of execution proceedings. Nanomi Babuasin v. Modun Mohun 1 . Consequently whether the sons were made parties to the execution proceedings or brought a suit challenging the sale of their shares the points for decision are the same-the nature of the debts and liability of the sons under Hindu law, and these are the determining factors in both the cases i.e. the sons being parties to the execution proceedings or their suit challenging the sale of their shares. The effect of attachment on the severance of status by the filing of a suit by one of the members of the companyarcenary whose share was liable in execution of the decree has number been debated at the bar and how exactly it would affect the rights of the parties need number therefore be decided in this case. As a companysequence it would number be necessary to discuss the pronouncements of the Privy Council in Suraj Bansi Koer Sheo Prasad Singh 2 Moti Lal v. Karrabuldin 3 Ragunath Das v. Sundar Das Khetri 4 Ananta Padmanabha Swami v. Official Receiver, Secunderabad 5 . 1 1885 L.R. 13 I.A. i. 3 1897 L.R. 24 I.A. 170. 2 1878 L.R. 6 I.A. 88, 101. 4 1914 L.R. 41 I.A. 251. 5 1933 L.R. 60 I.A. 167, 174-5. 1401 The argument based on the interpretation of the words I right, title and interest of the defaulter in s. 155 of the Bombay Land Revenue Code was that it was only the share of the defaulter himself which was and companyld be put up for auction sale. That the whole of the property was put up for sale, was sold and was purchased as such is shown by the documents to which reference has already been made viz., the numberice of November 24, 1942, proclamation of sale of Decem- ber 24, 1,942, the order of companyfirmation of sale dated June 28, 1943, and the sale certificate issued by the Collector. The Civil Procedure Code at the time of the enactment of the Bombay Land Revenue Code required that the property sold in execution should be described as right, title and interest of the judgment debtor and the same words have been used in s. 155 of the Bombay Land Revenue Code. It is a question of fact in each case as to what was sold in execution of the decree. In Rai Babu Mahabir Prasad v. Markunda Nath Sahai Lord Hobhouse observed as follows at p. 16 It is a question of fact in each case, and in this case their Lordships think that the transactions of the 4th and 5th of January, 1875, and the description of the property in the sale certificate, are companyclusive to shew that the entire companypus of the estate was sold. Similarly in Meenakshi Naidu v. Immudi Kanaka Rammaya Kounden 2 the whole interest of the companyarcenary was held to be sold taking into companysideration the evidence which had been placed on the record. Lord FitzGerald at p. 5 pointed out the difference where only the fathers interest was intended to pass In Hurdey Narains case Hurdey Narain v. Rooder Perkash 3 all the documents shewed that the Court intended to sell and that it did sell numberhing but the fathers share-the share and interest that he would take on partition, and numberhing beyond it-and this tribunal in that case puts it entirely upon the ground 1 1889 L.R. 17 I.A. 11, 16. 2 1888 L.R. 16 I.A. i. 3 1883 L. R. 11 I. A. 26, 29. 1402 that everything shewed that the thing sold was whatever rights and interests, the said judgment debtor had in the property and numberhing else . In Sripat Singh v. Tagore 1 the right, title and interest of the judgment debtor were sold and there also it was held to companyvey the whole companyarcenary estate and it was remarked that it was of the utmost importance that the substance and number merely the technicality of the transaction should be regarded. What is to be seen is what was put up for sale what the companyrt intended to sell and what the purchaser was intending to buy and what he purported to buy. Counsel for the appellants relied on Shambu Nath Panday v. Golab Singh 2 where it was held that right and interest of the father meant personal interest but in that case as we have pointed out, the documents produced all showed that the fathers interest alone was intended to pass. In Mulgund Co-operative Credit Society v. Shidlingappa Ishwarappa 3 it was held that the sale under the Bombay Land Revenue Code has the same effect as the sale by the Civil Court. The language used in the Bombay Land Revenue Code and the then existing Civil Procedure Code is similar i.e. the right, title and interest of the defaulter in one case and of the judgment debtor in the other. This is supported by the observation of the Privy Council in Rai Babu Mahabir Prasad v. Markunda Nath Sahai 4 and as to what passed under the sale does number become any different merely because the sale is held under s. 155 of the Bombay Land Revenue Code rather than the Code of Civil Procedure. The effect in both cases is the same. We hold therefore 1 that the liability of the sons to discharge the debts of the father which are number tainted with immorality or illegality is based on the pious obligation of the sons which companytinues to exist in the lifetime and after the death of the father and which does number companye to an end as a result of partition of the joint family property. All that results from partition is that the right of the father to make an i 1916 L.R. 44 I.A. i. A.I.R. 194i Bom. 385. 2 1887 L.R. 14 I.A. 77. 4 1880 L.R. 17 I.A. 11, 16. 1403 alienation companyes to an end. 2 Where the right, title and interest of a judgment-debtor are set up for sale as to what passes to the auction-purchaser is a question of fact in each case dependent upon what was the estate put up for sale, what the Court intended to sell and what the purchaser intended to buy and did buy and what he paid for. 3 The words di right, title and interest occurring in s. 155 of the Bombay Land Revenue Code have the same companynotation as they had in the companyresponding words used in the Code of Civil Procedure existing at the time the Bombay Land Revenue Code was enacted. 4 In execution proceedings it is number necessary to implead the sons or to bring another suit if severance of status takes place pending the execution proceedings because the pious duty of the sons companytinues and companysequently there is merely a difference in the mode of enjoyment of the property. 5 The liability of a father, who is a managing director and who draws a salary or a remuneration, incurred as a result of negligence in the discharge of his duties is number an avyavaharika debt as it cannot be termed as repugnant to good morals . In the result the appeal fails and is dismissed with companyts.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 103 of 1956. J. Umrigar and R. H. Dhebar, for the appellant. The sole question arising for determination is whether on the facts and circumstances of the case the High Court was companyrect in holding that the act of the respondent companyplained of companystituted an offence under s. 228 of the Indian Penal Code, and the jurisdiction of the High Court was, therefore, ousted by reason of the provision of s. 3 2 of the Contempt of Courts Act, 1952. The High Court in companying to this companyclusion appears to have relied on two decisions of the Supreme Court--1952 S.C.R. 425 and 1953 S.C.R. 1169. The facts in the two Supreme Court cases were quite different and they do number, in any way justify the view taken by the High Court. It will be my submission that the allegations made in the so-called transfer application as also the affidavit are of such a serious nature that they are number a mere personal insult to the Magistrate, but go far beyond they scandalise the Court in such a manner as to create distrust in the minds of the public, and pollute the stream of justice, and in such cases the jurisdiction of the High Court is number ousted Reads out portions of the transfer application and the affidavit in support . From a perusal of the extracts which have been read, it will be seen that the aspersions made against the Magistrate are of a very serious nature alleging criminal companyspiracy, and also that he had taken a bribe of Rs. 500 from the opposite side. So far as the offence under s. 228 of the Indian Penal Code is companycerned, the first essential ingredient is that there must be an intention to insult. In the affidavit filed in the High Court in reply to the 1370 show cause numberice the respondent had stated that there was numberintention to insult or show disrespect to the Magistrate. Imam J.-I cannot agree with that, the language used in the application and affidavit is such that intention to insult was clearly there. That may be true, but there are several earlier decisions of the Allahabad High Court which have been referred to in the case relied upon by the High Court-Narotam Das v. The Emperor, A.I.R 1943 All. 97, wherein it was held that where scandalous allegations were incorporated in a transfer application, there was number necessarily an intention to insult, as the primary object was to seek a transfer and number to insult the Court. So far as the decisions are companycerned, they support my companytention that when scandalous allegations are made against a Magistrate in a transfer application they would number necessarily companystitute an offence under s. 228 of the Indian Penal Code and companyld be punished by the High Court. In L.R. 1941 Nagpur 304, the Judge, who was seized of the case, made a companyplaint to the High Court about a letter sent to him by one of the parties, and it was there held that the sender of the letter companyld be punished for Contempt of Court by the High Court. It is true that there is numberdiscussion about. 228 of the Indian Penal Code but in the companyrse of the judgment the case of Emperor v. Jagnath Prasad Swadhiry, L.R. 1938 All. 548, was mentioned. In the Allahabad case a person during the pendency of a suit sent companymunications by post to the Judge companytaining scandalous allegations. It appears that it was urged that s. 228 of the Indian Penal Code would bar the jurisdiction of the High Court under s. 3 2 of the Contempt of Courts Act, 1926, but this companytention was repelled and the High Court stated that its jurisdiction to punish for companytempt was number ousted. Reference was also made to I.L.R. 12 Patna I and I.L.R. 12 Patna 172. I submit that where the allegations made go beyond 1371 mere personal insult and tend to bring the whole administration of justice, into disrepute, then the juris- diction of the High Court would number be ousted by s. 3 2 of the Act. In a case where there is only an insult to the Judge by using vulgar abuse such as rogue or rascal and this abuse was made ex facie curiae , then it may be said that the jurisdiction of the High Court is ousted as the offence falls within the purview of s. 228 of the Indian Penal Code. Das J.-Also if the abuse relates to the private life of the Judge, such as, calling him a drunkard or imputing some immorality to him, unconnected with his judicial duties. I agree. In the instant case the Magistrate must have been fully companyscious of the powers possessed by him under s. 228 of the Indian Penal Code as also the relevant provisions in the Criminal Procedure Code which permit him to punish for Contempt of Court, yet he presumably must have felt that the aspersions made in the present case were so grave as to transcend mere personal insult and as such it was a fit case to be referred to the High Court for taking necessary action. In companyclusion, it is submitted that the view taken by the High Court is much too narrow. and cannot be supported either in principle or by the, authorities cited. B. Dadachanji and S. N. Andley, for the respondent. The view taken by the High Court is companyrect and is in accordance with the judgments of the Supreme Court in the cases reported in 1952 S.C.R. and 1953 S.C.R. If the act companyplained of intentionally offers a personal insult to the Magistrate companycerned, it may tend to undermine the administration of justice thereby, but it will nevertheless amount to an offence under s. 228 of the Indian Penal Code and as such the jurisdiction of the High Court will be ousted by s. 3 2 of the Act. It is unsound to say that there are two kinds of companytempt, and the lesser kind of companytempt will companye under s. 228 of the Indian Penal Code and the grosser kind will number companye under s. 228 every insult to a Court, whatever its nature, is companytempt and punishable under s. 228 of the Indian Penal Code. 1372 Kapur J.-Every insult to a Judge will number necessarily be a companytempt. A libel attacking the integrity of a Judge may number, in the circumstances of a particular case, amount to a companytempt at all, although it may be the subject matter of a libel proceeding. Das J.-It appears that there is a further difficulty in your way, that is, whether the Magistrate was sitting in any stage of a judicial proceeding when the application and the affidavit were filed if he was number, then one of the essential ingredients of s. 228 of the Indian Penal Code was number satisfied. The High Court has assumed that the Magistrate was sitting as a Court at that time and this was also borne out by the facts stated in the petition for special leave to appeal filed by the appellant wherein it is stated the application having been presented during the sitting of the Court was clearly calculated to lower the dignity of the Court in the public mind . Section 480 of the Code of Criminal Procedure specifically mentions s. 228 of the Indian Penal Code and treats it as a form of companytempt, therefore, it will be an offence of companytempt punishable under the Indian Penal Code and as such the jurisdiction of the High Court would be ousted under s. 3 2 of the Act. I submit that the view taken by the High Court is the companyrect view and is supported by the two decisions of the Supreme Court as also the judgment of the Bombay High Court in 1922 I.L.R. 46 Bom. 973. Umrigar in reply. During the companyrse of discussion, doubts have arisen whether there was any intention to insult, or whether what was said was an insult, or whether the insult was offered in any stage of a judicial proceeding. If any one of these three essentials is lacking, then, obviously, there is numberoffence under s. 228 of the Indian Penal Code. Where there is so much doubt as to whether an offence under s. 228 of the Indian Penal Code has been companymitted or number, and there is numberdoubt that prima facie a Contempt of Court apart from the provisions of s. 228 has been companymitted, it is wrong to say that the jurisdiction of the High Court is ousted. 1373 I submit that the case relied upon by the High Court, Narotam Das v. Emperor, A. 1. R. 1943 All. 97, companyrectly lays down the law so far as the question of intention is companycerned. 1958. September 24. The Judgment of the Court was delivered by K. DAS, J.-This is an appeal by special leave from the judgment and order of the then Madhya Bharat High Court, dated February 9, 1955, in Criminal Miscellaneous Application number 2 of 1954. Originally, the appeal was filed on behalf of the State of Madhya Bharat, number substituted by the State of Madhya Pradesh. The appeal raises an important question with regard to the interpretation of s. 3 2 of the Contempt of Courts Act, 1952 XXXII of 1952 , hereinafter referred to as the Act, which repealed the earlier Contempt of Courts Act, 1926 XII of 1926 , as also the Indore Contempt of Courts Act V of 1930 which was earlier in force in the State of Madhya Bharat. The facts so far as they are relevant to this appeal are these. One Ganga Ram, stated to be the landlord of the respondent Revashankar, instituted a suit, which was numbered as 1383 of 1952 in the companyrt of the Additional City Civil Judge, Indore, for ejectment and arrears of rent against Revashankar. It was stated that the suit was filed in the name of Ganga Ram and his wife Chandra Mukhi Bai. It was further alleged that one Mr. Uma Shankar Chaturvedi, a lawyer acting on behalf of Ganga Ram, advised the latter to sign the name of his wife Chandra Mukhi Bai though Chandra Mukhi Bai herself did number sign the plaint or the vakalatnama. In this suit Chandra Mukhi Bai filed an application for permission to prosecute her husband for forgery. Another application was filed by certain other persons said to be other tenants of Ganga Ram in which some allegations were made against Revashankar. On June 29, 1953, Revashankar filed a companyplaint against five persons for an alleged offence under s. 500, Indian Penal Code. This companyplaint was verified on July 13, 1953, and was registered as Criminal Case number 637 of 1953 in the companyrt of one 1374 Mr. N. K. Acharya, Additional District Magistrate, Indore. In that case one Mr. Kulkarni appeared on behalf of the companyplainant Revashankar. The accused persons appeared on August 8, 1953, through Messrs. Mohan Singh and Uma Shankar Chaturvedi. An objection was raised on behalf of the accused persons to the appearance of Mr. Kulkarni as the latters name appeared in the list of witnesses. This was followed by a spate of applications and companynter applications and on October 12, 1953, the learned Additional District Magistrate passed an order to the effect that the companyies of the applications as well as of the affidavits filed by both parties should be sent to the District Judge for necessary action against the lawyers companycerned. In the-meantime a criminal case was started against Revashankar in the companyrt of the Additional City Magistrate, Circle No. 2, for an alleged offence under s. 497, Indian Penal Code. The case was started on the companyplaint of Ganga Ram. That case was numbered as 644 of 1953. We then companye to the crucial date, namely, December 17, 1953. On that date Revashankar filed an application in the companyrt of the Additional District Magistrate who was in seizin of Criminal Case number 637 of 1953. The application purported to be one under s. 528, Code of Criminal Procedure. This application companytained some serious aspersions against the Magistrate, Mr. N. K. Acharya. The aspersions were summarised by the learned Judges of the High Court under the following four categories. The first aspersion was that from the order dated October 12, 1953 it appeared that Mr. N. K. Acharya wanted to favour Mr. Uma Shankar Chaturvedi. The second aspersion was that from certain opinions expressed by the Magistrate, Revashankar asserted that he was sure that he would number get impartial and legal justice from the Magistrate. The third aspersion was of a more serious character and it was that the Magistrate had a hand in a companyspiracy hatched by Messrs. Mohan Singh and Uma Shankar Chaturvedi regarding certain ornaments of Chandra Mukhi Bai with the object of involving, Revashankar and his brother Sushil Kumar in a false case of theft of ornaments. The fourth aspersion was that Mr. Uma 1375 Shankar Chaturvedi had declared that he had paid Rs. 500 to the Magistrate through Ganga Ram. These aspersions were later repeated in an affidavit on December 21, 1953. On January 11, 1954, the learned Magistrate reported the aforesaid facts to the Registrar of the Madhya Bharat High Court, and prayed for necessary action against Revashankar for companytempt of companyrt. On this report the High Court directed the issue of numberice to Revashankar to show cause why action should number be taken against him under the Contempt of Courts Act, 1952 and Criminal Miscellaneous Application number 2 of 1954 was accordingly started against Revashankar. On March 3, 1954, Revashankar showed cause. The case was then heard by a Division Bench companysisting of V. Newaskar and S. M. Samvatsar, JJ. and by an order dated February 9, 1955, the learned Judges held that by reason of the provisions in s. 3 2 of the Act the jurisdiction of the High Court was ousted inasmuch as the act companyplained of companystituted an offence under s. 228 of the Indian Penal Code. The question for companysideration in the present appeal is if the aforesaid view of the High Court is companyrect. Mr. H. J. Umrigar, who has appeared on behalf of the appellant, has very strongly submitted before us that the High Court has erred in holding that the act of the respondent companyplained of companystituted an offence under s. 228, Indian Penal Code, and the jurisdiction of the High Court was, therefore, ousted by reason of the provisions in s. 3 2 of the Act. It is necessary to read first s. 3 2 of the Act. We may state here that the companyresponding section in the earlier Contempt of Courts Act, 1926 was s. 2 3 and in the judgment under companysideration there is some companyfusion as to the companyrect number of the sub-section. Section 3 2 of the Act is in these terms - No High Court shall take companynizance of a companytempt alleged to have been companymitted in respect of a Court subordinate to it where such companytempt is an offence punishable under the Indian Penal Code Act XLV of 1860 . 1376 The sub-section was companysidered in two decisions of this Court, Bathina Ramakrishna Reddy v. The State of Madras 1 and Brahma Prakash Sharma v. The State of Uttar Pradesh 2 . In the earlier case of Ramakrishna Reddy 1 the appellant was the publisher and managing editor of a Telugu Weekly known as Praja Rajyam . In an issue of the said paper dated February 10, 1949, an article appeared which companytained defamatory statements about the stationary sub-Magistrate, Kovvur, and the point for companysideration was if the jurisdiction of the High Court to take companynisance of such a case was expressly barred under s. 2 3 of the earlier Contempt of Courts Act, when the allegations made in the article in question companystituted an offence under s. 499, Indian Penal Code. On behalf of the appellant it was argued that what the subsection meant was that if the act by which the party was alleged to have companymitted companytempt of a s subordinate companyrt companystituted offence of any description whatsoever punishable under the Indian Penal Code, the High Court was precluded from taking companynizance of it. This argument was repelled and this Court said at page 429 - In our opinion, the sub-section referred to above excludes the jurisdiction of High Court only in cases where the acts alleged to companystitute companytempt of a subordinate companyrt are punishable as companytempt under specific provisions of the Indian Penal Code but number where these acts merely amount to offences of other description for which punishment has been provided for in the Indian Penal Code. This would be clear from the language of the sub-section which uses the words where such companytempt is an offence and does number say where the act alleged to companystitute such companytempt is an offence . On an examination of the decisions of several High Courts in India it was laid down that the High Court had the right to protect subordinate companyrts against companytempt but subject to this restriction, that cases of companytempt which have already been provided for in the Indian Penal Code should number be taken companynizance of 1 1952 S.C.R. 425. 2 1953 S.C.R. 1169. 1377 by the High Court. This, it was stated, was the principle underlying s. 2 3 of the Contempt of Courts Act, 1926. This Court then observed that it was number necessary to determine exhaustively what were the cases of companytempt which had been already provided for in the Indian Penal Code it was pointed out, however, that some light was thrown on the matter by the provision of s. 480 of the Code of Criminal Procedure which empowers any civil, criminal or revenue companyrt to punish summarily a person who is found guilty of companymitting any offence under ss. 175, 178, 179, 180 or s. 228 of the Indian Penal Code in the view or presence of the companyrt. The later decision of Brahma Prakash Sharma 1 explained the true object of companytempt proceedings. Mukherjea J. who delivered the judgment of the Court said at page 1 176 It would be only repeating what has been said so often by various Judges that the object of companytempt proceedings is number to afford protection to Judges personally from imputations to which they may be exposed as individuals it is intended to be a protection to the public whose interests would be very much affected if by the act or companyduct of any party, the authority of the companyrt is lowered and the sense of companyfidence which people have in the administration of justice by it is weakened . It was also pointed out that there were innumerable ways by which attempts companyld be made to hinder or obstruct the due administration of justice in companyrts and one type of such interference was found in cases where there was an act which amounted to scandalising the companyrt itself this scandalising might manifest itself in various ways but in substance it was an attack on individual Judges or the companyrt as a whole with or without reference to particular cases, causing unwarranted and defamatory aspersions upon the character and ability of the Judges. Such companyduct is punished as companytempt for the reason that it tends to create distrust in the popular mind and impair the companyfidence of the people in the companyrts which are of prime importance to the litigants in the protection of their rights and liberties. 1 1953 S.C.R. 1169. 1378 Bearing the aforesaid principles in mind, let us number examine the case under companysideration. The High Court expressed the view that the act of the respondent companyplained of merely amounted to an offence under s. 228, Indian Penal Code. Nevaskar J. said It appears to me that the application, though it was stated to be an application for transfer, was intended to offend and insult the Magistrate. A mans intention can be judged by the nature of the act he companymits. The application directly and in face attributes partiality and companyruption to the Magistrate. It was number an application made bona fide to a companyrt having jurisdiction to transfer the case from that Court to some other Court. It was an application thrown in the face of the Magistrate himself. The action is numberbetter than telling the Magistrate in face that he was partial and companyrupt. The allegations in the application numberdoubt are insulting to the Magistrate and he felt them to be so and at the time the application was submitted on 17th December, 1953, when he was sitting as a Court and dealing with the case of the opponent. Thus, since I hold that the opponent intended to offer insult to the Magistrate companycerned there is numberdoubt that the act would fall within the purview of section 228, Indian Penal Code, and this Court will be precluded from taking action for the companytempt companymitted before the Court of the Magistrate by reason of section 2 3 of the Contempt of Courts Act . The other learned Judge also expressed the same view in the following words The subordinate Courts can sufficiently vindicate their dignity by proceeding against the offenders under the provisions of criminal law in such cases. Legislature has deemed it proper to exclude such cases from the jurisdiction of the High Court under section 2 3 of the Contempt of Courts Act. This, however, does number mean that High Courts jurisdiction is excluded even in cases where the act companyplained of, which is alleged to companystitute companytempt, is otherwise an offence under the Indian Penal Code. The question to be companysidered in this case is 1379 whether the act companyplained of is punishable as companytempt under any one of the specific provisions of the Indian Penal Code. In other words whether it falls under any one of the sections 175, 178, 179, 180 or 228 of the Indian Penal Code. If the act companyplained of companystitutes an offence under any of these sections, it can be dealt with by the subordinate Court itself under section 480 of the Criminal Procedure Code and the High Court will have numberpower to take companynizance of it under the Contempt of Courts Act. We are of the opinion that the learned Judges were wrong in their view that prima facie the act companyplained of amounted to an offence under s. 228, Indian Penal Code, and numbermore. We are advisedly saying prima facie, because the High Court did number go into the merits and we have numberdesire to make any final pronouncement at this stage on the merits of the case. Section 228, Indian Penal Code, is in these terms Whoever intentionally offers any insult, or causes any interruption to any public servant, while such public servant is sitting in any stage of a judicial proceeding, shall be punished with simple imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both. The essential ingredients of the offence are 1 intention, 2 insult or interruption to a public servant and 3 the public servant insulted or interrupted must be sitting in any stage of a judicial proceeding. In the present case there is an initial difficulty which has been pointed out to us. The respondent was sought to be proceeded against by reason of the aspersions he made in the application dated December 17, 1953, and the affidavit dated December 21, 1953. It is number very clear from the record if the learned Magistrate was sitting in any stage of a judicial proceeding when the application and the affidavit were filed. The High Court numberdoubt says that the Magistrate was sitting as a companyrt at the time but there is numberreference to the particular work, judicial or otherwise, which the 1380 Magistrate was doing at the time. The practice as to the filing of applications and affidavits varies from companyrt to companyrt and in some companyrts applications and affidavits are filed within stated hours before the reader or the bench clerk they are so filed even when the Judge or Magistrate is in chamber or preoccupied with some administrative duties. So far as the present case is companycerned, it is number at all clear, from the record as placed before us, as to what was the judicial work which the learned Magistrate was doing when the application and affidavit were filed. If he was number doing any judicial work at the relevant time, then the third essential ingredient mentioned above was number fulfilled and the act companyplained of would number amount to an offence under s. 228, Indian Penal Code. We are number, however, basing our decision on the mere absence of materials to show what particular judicial work the learned Magistrate was doing when the -application dated December 17, 1953, and the affidavit dated December 21, 1953, were filed. If that were the only infirmity, the proper order would be to ask for a finding on the question. Our decision is based on a more fundamental ground. Learned companynsel for the parties have taken us through the applica- tion dated December 17, 1953, and the affidavit dated December 21, 1953. The aspersions made therein prima facie showed that they were much more than a mere insult to the learned Magistrate in effect, they scandalised the Court in such a way as to create distrust in the popular mind and impair the companyfidence of people in Courts. Two of the aspersions made, taken at their face value, were 1 that the learned Magistrate had joined in a companyspiracy to implicate the respondent in a false case of theft. In the affidavit it was stated that the learned Magistrate had sent for the respondent and his brother and had asked them to make a false report to the police that the ornaments of Chandra Mukhi Bai had been stolen. The learned Magistrate characterised the aspersion as totally false and said that he neither knew the respondent number his brother and had numberacquaintance with them. Another aspersion was that the Magistrate had taken a bribe 1381 of Rs. 500. This aspersion was also stoutly denied. We must make it clear here that at this stage we are expressing numberopinion on merits, number on the companyrectness or otherwise of the aspersions made. All that we are saying is that the aspersions taken at their face value amounted to what is called scandalising the companyrt itself, manifesting itself in such an attack on the Magistrate as tended to create distrust in the popular mind and impair the companyfidence of the people in the companyrts. We are aware that companyfidence in companyrts cannot be created by stifling criticism, but there are criticisms and criticisms. The path of criticism , said Lord Atkin in Ambard v. Attorney-General for Trinidad and Tobago 1 , is a public way The wrongheaded are permitted to err therein provided that members of the public abstain from imputing improper motives to those taking part in the administration of justice, and are genuinely exercising a right of criticism, and number acting in malice or attempting to impair the administration of justice, they are immune . If, therefore, the respondent had merely criticised the Magistrate, numbernotice need have been taken of such criticism as companytempt of companyrt whatever action it might have been open to the Magistrate to take as an aggrieved individual but if the respondent acted in malice and attempted to impair the administration of justice, the offence companymitted would be something more than an offence under s. 228, Indian Penal Code. Learned companynsel for the respondent has companytended before us that as soon as there is an element of insult in the act companyplained of, s. 228, Indian Penal Code, is attracted and the jurisdiction of the High Court to take companynizance of the companytempt is ousted. We are unable to accept this companytention as companyrect. Section 228 deals with an intentional insult to a public servant in certain circumstances. The punishment for the offence is simple imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees or with both. Our attention has been drawn to the circumstance that under s. 4 of 1 1936 A. C.322, 335. 1382 the Act the sentence for companytempt of companyrt is more or less the same, namely, simple imprisonment for a term which may extend to six months. The fine is a little more and may extend to two thousand rupees. Section 4 of the Act companytains a proviso that the accused person may be discharged or the punishment awarded may be remitted on apology being made to the satisfaction of the companyrt. We do number, however, think that a similarity of the sentence in the two sections referred to above is a real test. The true test is is the act companyplained of an offence under s. 228, Indian Penal Code, or is it something more than that ? If in its true nature and effect, the act companyplained of is really scandalising the companyrt rather than a mere insult, then it is clear that on the ratio of our decision in Ramakrishna Reddys case 1 the jurisdiction of the High Court is number ousted by reason of the provision in s. 3 2 of the Act. Mr. Umrigar has urged a further point in this companynection and has companytended that for an offence under s. 228, Indian Penal Code, the insult must be an intentional insult. The first essential requirement of the offence, according to him, is that the insult must be offered intentionally. He has pointed out that the application which the respondent filed purported to be an application under s. 528, Criminal Procedure Code, and though it is difficult to see how that section applied in the present case, the intention of the respondent was number to insult the Magistrate, but merely to state the Circumstances in which the respondent was praying for a transfer of the case. Mr. Umrigar has pointed out that in the reply which the repondent gave to the numberice issued from the High Court, he said that he had numberintention to insult or show disrespect to the learned Magistrate. Mr. Umrigar has further submitted that the decision in Narotam Das v. Emperor 2 on which the learned Judges of the High Court relied where in somewhat similiar circumstances it was held that s. 228, Indian Penal Code, applied, does number companyrectly lay down the law. In that case Yorke J. observed that it would be a matter for 1 1952 S.C.R. 425. A.I.R. 1943 All. 97. 1383 companysideration in each individual case how, insulting the expressions used were and whether there was any necessity for the applicant to make use of those expressions in the application which he was actually making to the companyrt. While we agree that the question of intention must depend on the facts and circumstances of each case, we are unable to accept as companyrect the other tests laid down by the learned Judge as finally determinative of the question of intention. In two earlier decisions of the same High Court, in Queen Empress v. Abdullah Khan 1 and Emperor v. Murli Dhar 2 , it was held that where an accused person made an application for transfer of the case pending against him and inserted in such application assertions of a defamatory nature companycerning the Magistrate who was trying the case, there was numberintention on the part of the applicant to insult the companyrt, but the intention was merely to procure a transfer of the case. We do number think that any hard and fast rule can be laid down with regard to this matter. Whether there is an intention to offer insult to the Magistrate trying the case or number must depend on the facts and circumstances of each case and we do number companysider it necessary, number advisable, to lay down any inflexible rule thereto. Taking the aspersions made by the respondent in the application dated December 17, 1953, and the affidavit dated December 21, 1953, at their face value, we have already expressed the view that they amounted to something more than a mere intentional, personal insult to the Magistrate they scandalised the companyrt itself and impaired the administration of justice. In that view of the matter s. 3 2 of the Act did number stand in the way and the learned Judges of the High Court were wrong in their view that the jurisdiction of the High Court was ousted. We accordingly allow the appeal and set aside the order of the High Court dated February 9, 1955. In our view, the High Court had jurisdiction to take companynizance of the act companyplained of and the case must 1 1898 A.W.N. 145. 2 1916 38 All. 284. 1384 number be decided by the High Court on merits in accordance with law.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 28 of 1956. Appeal by special leave from the judgment and order dated June 21, 1954, of the Calcutta High Court in Criminal Revision No. 811 of 1953. 1264 Ranadeb Chaudhury and P. K. Chatterjee, for the appellants. Sen and P. K. Bose, for the respondents. 1958. September 11. The Judgment of the Court was delivered by KAPUR J.-This appeal by special leave raises a question of interpretation of s. 237 of the Indian Companies Act. Appellant No. 1 is One of the past directors of the Bank of Commerce Ltd., number in liquidation and appellant No. 2 was its Managing Director. The Bank was ordered to be wound up by the High Court of Calcutta on August 7, 1950, and one G. Dutt, Bar-at-law was appointed its Official Liquidator but on September 7, 1950, the Official Receiver was appointed in place of Dutt. On July 23, 1952, respondent No. 1 filed in Court of the Presidency Magistrate a companyplaint against the appellant under ss. 120B, 406, 467, 477A, Indian Penal Code and 182A of the Indian Companies Act and stated that he was doing so under the authority of the official liquidator and the official liquidator had obtained the directions of the High Court to file the companyplaint. On May 5, 1953, the appellant applied to the I-residency Magistrate for dismissal of the companyplaint as being without the sanction of the Company Judge and therefore the official liquidator in his official capacity was incompetent to prefer the companyplaint, being the creation of the statute he companyld only act within the four companyners of the statute. He possessed only those powers which the statute companyferred on him. This application was dismissed by the Presidency Magistrate on June 13, 1953. The appellant then applied to the High Court for quashing the criminal proceedings on the ground that the prosecution was ab initio void because of the absence of prior direction judicially given by the High Court under s. 237 1 of the Indian Companies Act. The High Court found against the appellants and discharged the rule. The learned Chief Justice held that the provisions of s. 237 1 are numberbar to a prosecution by the liquidator that under s. 237 1 there is numberhing in the nature of a judicial proceedings 1265 that it companyld number be said that the order was number a valid direction under s. 237 1 . He said There can be numberquestion in the present case that the relevant facts were all placed before the Company Judge, because they are all set out in the report of Adhikary and the affidavits annexed there to to which the order expressly refers and with reference to which the liberty to bring legal proceedings was expressly given. In view of those circumstances, it is impossible to say that the Company Court had number before it all the facts on which the prosecution is based or that it did number apply its mind to the companysiderations relevant to section 237 1 . He also held that clause a of s. 179 empowers the liquidator to institute or defend legal proceedings in the name of the companypany and that it was expressly companycerned with the powers of the liquidator whereas s. 237 dealt with the powers of the Court to give, directions. P. B. Mukherji J. gave a companycurring judgment. After referring to the history of s. 237, he held that under that section the Company Judge can act ex parte and it was number necessary for him to hear a director or an officer of the companypany company- plained against and that direction given under that section was number a companydition precedent to a prosecution by the official liquidator number is it the intention of that section to impinge on the powers of a criminal companyrt under the Code of Criminal Procedure. Leave to appeal having been refused by the Calcutta High Court, the appellants have companye to this Court in pursuance of special leave. On the application of the official liquidator Bachawat J. an January 15, 1951, made an order which must be taken to be one under s. 179. In this order it was said And it is further ordered that the said applicant be at liberty to institute or defend any suit or prosecution, or other legal proceedings, civil or criminal in the name and on behalf of the said Bank and to companytinue all pending suits and execution proceedings by or against the said Bank and for that purpose to engage advocates, Vakils and other. lawyers and to 1266 pay out of the assets of the said Bank in his hands all companyts of and incidental to such suits, prosecutions and or legal proceedings . On July 22, 1952, the official liquidator obtained the order from Bannerji J. which the High Court has held, and in our opinion rightly, to be an order under s. 237 1 of the Indian Companies Act. This order said It is ordered that the said applicant be at liberty to take such civil or criminal proceedings as he may think necessary over the report of the said Jasoda Dulal Adhikary read with the affidavits of H. Sen Gupta and Nepal Chandra Adhikary read with the affidavits of H. Sen Gupta and Nepal Chandra Mitra as set out in the said Exhibit A . The passage already quoted from the judgment of the learned Chief Justice shows that all the relevant facts were before the Company Judge, as they were all set out in the affidavits placed before him. The companyplaint was then filed on July 23, 1952. During the pendency of the companyplaint the appellants took an appeal against the order of the Company Judge dated July 22, 1952, but it was dismissed on the objection taken by the liquidator that it was an administrative order and number a judicial order. On August 5, 1953, the official liquidator took out misfeasance proceedings under s. 235 of the Companies Act and the appellants then applied to the High Court for quashing the criminal proceedings already started on the ground of companymencement of proceedings under s. 235. This application was also heard with the rule which was issued on June 29, 1953, and it was dismissed by the same judgment by which the rule was discharged, i. e., of June 21, 1954. The general scheme of the Companies Act is that the Court should have companyplete companytrol of all proceedings in winding up and it was therefore urged that the official liquidator was number authorised to do anything either without the sanction of the Court or without its directions. Section 179 deals with the powers of official liquidator. It provides 1267 The official liquidator shall have power, with the sanction of the companyrt, to do the following things a to institute or defend any suit or prosecution or other legal proceeding, civil or criminal in the name and on behalf of the companypany Under s. 180 the Court may provide that the official liquidator may exercise any of the powers given under s. 179 without the sanction or intervention of the Court. Section 183 deals with the exercise and companytrol of liquidators powers. Sub-section 3 authorises him to apply to the Court for directions in relation to any particular matter arising in the winding up. Subsection 4 is a provision under which the official liquidator is entitled to use his own discretion in the administration of the assets of the companypany and in the distribution amongst the creditors. Sub- section 5 provides If any person is aggrieved by any act or decision of the official liquidator, that person may apply to the Court and the Court may companyfirm, reverse or modify the act or decision companyplained of, and make such order as it thinks just in the circumstances . These provisions show that s. 179 deals with the powers of the liquidator. Under s. 235 the Court has the power to assess damages against delinquent directors and the Court may on the application of the liquidator or a creditor or a companytributory examine into the companyduct of a director and companypel him to pay or restore money or property or to companytribute such sum to the assets of the companypany by way of companypensation in respect of any misfeasance on his part and this power may be exercised irrespective of the criminal liability of the director. Section 237 deals with prosecution of delinquent director and the relevant portion of this section is If it appears to the Court in the companyrse of a winding up by, or subject to the supervision of, the Court, that any past or present director, manager or other officer, or any member, of the companypany has been guilty of any offence in relation to the companypany for which he is criminally liable, the Court may, either on 1268 the application of any person interested in the winding up or of its own motion, direct the liquidator either himself to prosecute the offender or to refer the matter to the registrar. If it appears to the liquidator in the companyrse of a voluntary winding up that any past or present director, manager or other officer, or any member of the companypany has been guilty of any offence in relation to the companypany for which he is criminally liable, he shall forthwith report the matter to the registrar and shall furnish to him such information and give to him such access to and facilities for inspecting and taking companyies of any documents, being information or documents in the possession or under the companytrol of the liquidator relating to the matter in question, as he may require. Where any report is made under sub-section 2 to the registrar, he may, if he thinks fit, refer the matter to the Central Government for further enquiry, and the Central Government shall thereupon investigate the matter and may, if they think it expedient, apply to the Court for an order companyferring on any person designated by the Central Government for the purpose with respect to the companypany companycerned all such powers of investigating the affairs of the companypany as are provided by this Act in the case of a winding up by the Court. If on any report to the registrar under sub-s. 2 it appears to him that the case is number one in which proceedings ought to be taken by him, he shall inform the liquidator accordingly, and thereupon, subject to the previous sanction of the Court, the liquidator may himself take proceedings against the offender. If it appears to the Court in the companyrse of voluntary winding up that any past or present director, manager or other officer, or any member, of the companypany has been guilty as aforesaid, and that numberreport with respect to the matter has been made by the liquidator to the registrar, the Court may, on the application of any person interested in the winding up or of its own motion, direct the liquidator to make such a report, and on a report being made accordingly, 1269 the provisions of this section shall have effect as though,the report has been made in pursuance of the provisions of sub-section 2 . If, where any matter is reported or referred to the registrar under this section, he companysiders that the case is one in which a prosecution ought to be instituted, he shall place the papers before the Advocate-General or the public prosecutor and if advised to do so institute proceedings Provided that numberprosecution shall be undertaken without first giving the accused person an opportunity of making a statement in writing to the registrar and of being heard thereon. It was this section which the appellants pressed in support of the argument that without the order of the Court the official liquidator cannot lodge a criminal companyplaint against a past director and if he does so the proceedings will be ab initio void. All that sub-s. 1 requires is that if the Court finds in- the companyrse of winding up that any past or present director, etc., has been guilty of any offence in relation to the companypany the Court may either on the application of the person interested or of its own motion direct the liquidator to prosecute the offender or to refer the matter to the registrar. In the latter case if the registrar finds that the prosecution ought to be instituted he can do so if advised by the Advocate-General or the public prosecutor. But emphasis was placed by companynsel for the appellants on the proviso that numberprosecution companyld be undertaken without first giving the accused person an opportunity of making a statement to the registrar or of being heard and it was urged that if the registrar cannot institute prosecution without first giving an opportunity to the person accused to file an explanation, numberdirections companyld be given by the judge unless the persons accused are first allowed an opportunity of giving an explanation. But this companytention must be repelled. Under s. 237 1 the Court may direct the liquidator to himself prosecute the offender or to refer the matter to the registrar. Giving an opportunity to the offender before such direction is given by 1270 the Court is number a prerequisite of the Judge making in order under sub-s. 1 . Under sub-s. 6 the registrar is required to give the offender an opportunity to show cause before a prosecution is undertaken. That is a far step from saying that s. 237 1 of the Companies Act requires a Judge to give the offender an opportunity before he gives a direction for prosecution by the liquidator or for reference to the registrar. It was further urged that under sub-s 4 in the case of voluntary liquidation, the liquidator has to proceed after obtaining the sanction of the Court and therefore it was urged that the liquidator cannot institute criminal proceedings without such sanction in the case of winding up by the Court. Whatever may be the case of a liquidator under voluntary winding up sub-s. 1 of s. 237 makes numbersuch provision in the case of companypulsory liquidation. Our attention was drawn to some passages from the Indian Companies Act by Sircar Sen, 1937 Edition. At page 624 it is stated that the object of the section is to provide against abuses and indiscriminate companymencement of prosecutions and also for the first time a provision has been made under this section for prosecutions being companyducted as crown prosecutions. In a passage at page 628 it is stated But before the Court can exercise its jurisdiction it must companye to the companyclusion that in the companyrse of winding up the person intended to be charged under this section has been guilty of an offence in relation to the companypany for which he is criminally liable. But such a finding is number to prejudice the accused in any way in his trial. Per Chitty J. in re Charles Denham Co. Ltd. L.T. 570 at 571. The procedure under s. 237 1 as stated in this book at the same page is as follows The application should be made on a petition verified by an affidavit in which materials must be set out sufficient to make out a prima facie case. It is number quite settled as to whether the liquidator should make the application upon numberice to any one. Generally the application should be ex parte, but 1271 the Court may direct numberice to be given to any person who is in its opinion entitled to be heard . These passages do number support the companytention that before a prosecution can be validly instituted against a past director the sanction of the Court is necessary. Mr. Choudhuri then relied on an observation of Buckley J. In Re London and Globe Finance Corporation 1 also quoted in Sircar Sens book at page 625. There the principles guiding the Court in ordering prosecutions have been laid down as follows I have next to companysider upon what principles I ought to exercise the power given me by S. 167 of the Companies Act, 1862, to direct the official receiver to institute and companyduct a prosecution at the expense of the assets. It is obvious that numberone legitimately can or ought to institute a criminal prosecution with a view to his personal profit. Neither should a prosecution be instituted from motives of vengeance against the offender. The motive of every prosecution ought, to be to inflict punishment upon the criminal for the proper enforcement of the law and for the advantage of the State and with a view to deter others from doing the like . This passage does number support the giving of an opportunity to the offender before the Judge can give direction number do they affect the powers of the liquidator to start a prosecution or the, criminal companyrt to entertain a companyplaint when filed by the liquidator. The following passage from Buckleys Company Law under the companymentary under s. 334 of the English Companies Act, 1948, which companyresponds to s. 237 of the Indian Companies Act was then referred to Proceedings will accordingly be taken by the Director of Public Prosecutions or Lord Advocate or number at all . But this is because of the peculiar and express language of s. 334 tinder which the Judge can only direct the liquidator to refer the matter to the Director of Public Prosecutions or to Lord Advocate as the case may be. In the English Act, special provision has been made for England saving the institution of 1 1903 1 Ch. 728, 733. 1272 criminal proceedings by private prosecutors. Merely because numbersuch provision has been made in regard to scotland does number affect the argument. Mr. Choudhuri then relied on certain English cases dealing with the mode of giving directions. In re Northern Counties Bank Limited 1 the Judge had ordered the liquidator to ascertain by circular the wishes of the creditors and after they had appeared to oppose the starting of the prosecution, it was held 1 that it did number sufficiently appear that the offence had been companymitted and 2 that as 2/3 of the creditors opposed the application the prosecution should number be ordered as expenses will have to be paid from out of the money belonging to the creditors. The main question for decision in that case was whether the prosecution should be at the companyt and expense of the assets of the companypany but companypetency of the liquidator to file the companyplaint was number in dispute. Reference was then made to Palmers Company Precedents, 1952 Edition, Vol. II, again stating as to when leave to prosecute should be given but the law stated there does number support the case for the appellants. At page 605 it is stated The summons will be ex parte, and should be supported by affidavit showing a strong case for prosecution, and also the extent of the assets and liabilities. The companyrt is number willing when the assets are small, to sanction proceedings which may swallow up or largely reduce those assets . The form at p. 607 does number show that under the English Companies Act when liberty is given to prosecute the person accused is heard. All that is required is that the companyrt will make its order upon affidavits etc. filed before it and it can also order that the companyts and charges incurred by the liquidator shall be paid out of the assets of the companypany. It was next companytended that although the language of s. 237 was number in the negative form still the effect of the words was that numberprosecution companyld be instituted without the sanction of the Court being obtained by the liquidator. In support of the submission companynsel 1 1883 31 W.R. 546. 1273 relied on The Queen v. Cubitt 1 which was a case under the Sea Fisheries Act which created certain offences and by s. 11 provided The provisions of this Act shall be enforced by sea-fishery officers , who are defined by that section and it was held that the effect of the words was that numberone except the sea-fishery officer companyld prosecute an offence under the Act. But there are numbersuch words of limitation in s. 237. In Taylor v. Taylor 2 the words of the statute were entitled to the possession or the receipt of the rents and profits and it was held that the order under the statute companyld only be made upon a petition which was within the words above quoted and if there was numbersuch person numberorder companyld be made but that again was decided on the peculiar language of the statute. Counsel also relied on Nazir Ahmad v. Crown 3 where it was held that if the statute authorises the doing of an act in one way then it had to be done in that way or number at all. The argument of Mr. Choudhuri really companyes to this that the companyplaint filed on behalf of the official liquidator was incompetent in the absence of a direction under s. 237 or without companyplying with the procedure laid down in that section. Section 237 1 does number lay down any procedure for the giving of directions and the provisions in regard to the action taken by the registrar do number have any relevancy to what the companyrt should do before it gives directions. English cases that have been cited do number go to the extent of saying that numberprosecution can be instituted without the sanction of the companyrt. They deal with another subject and that is the circumstances in which the Judge would give directions for prosecution and would sanction the assets of the companypany to be expanded in prosecution. Besides numberhere has it been stated that the companyrt cannot give directions without first hearing the persons accused or that the directions of the Judge are a companydition precedent to the lawful institution of criminal proceedings by the liquidator. 1 1889 22 Q.B.D. 622. 2 1875 1 Ch. 426. 3 1936 L.R. 63 I.A. 372, 381. 1274 On the other hand it has been held that under s. 179 of the Indian Companies Act numbersanction is required for companymencing a prosecution. In Jaswantrai Manilal Akhaney v. The State of Bombay 1 at the instance of the official liquidator a report was lodged with the police against the Managing Director of a Bank and the police submitted a charge sheet to the Magistrate. It was observed by Sinha J. at page 502 In terms the section laws down the powers of the official liquidator. Such a Liquidator has to function under the directions of the companyrt which is in charge of the liquidation proceedings. One of his powers is to institute prosecutions in the name and on behalf of the companypany under liquidation with the sanction of the companyrt. This section does number purport to impose any limitations on the powers of a criminal companyrt to entertain a criminal prosecution launched in the ordinary companyrse under the provisions of the Code of Criminal Procedure . It was also pointed out in this judgment that s. 179 companytains numberwords companyresponding to the language of Drug Control Order, 1943, which was held to be a companydition precedent for instituting prosecution in the case of Basdeo Aggarwalla v. King Emperor 2 number are there any prohibitory words like those that are companytained in ss. 196 and 197 of the Criminal Procedure Code. In the former case numberprosecution companyld be instituted without the previous sanction of the Provincial Government and the latter provides that numbercourt shall take companynizance There are two cases decided by two Indian High Courts which support the submission of the respondents companynsel. In Emperor v. Bishan Sahai 3 it was held that the Companies Act numberhere provides that without the directions of a Judge numbercriminal prosecution can be instituted. In Mrityunjoy Chakravarti v. Provot Kumar Pal 4 , it was held that neither s. 179 number s. 237 indicates that if the liquidator takes action without a 1 1956 S.C.R. 483. 2 1945 F.C.R. 93. I.L.R. 1937 All. 779. A.I.R. 1953 Cal. 153. 1275 direction of the Court this action would be illegal or invalid or it would invalidate a prosecution. It would thus appear that both on the language of s. 237 1 as well as on precedent the companyplaint made by the liquidator against the appellants suffers from numbersuch infirmity as to make the proceedings null and void. The section companytains numbersuch words which indicate that such a prosecution cannot be instituted by a liquidator without the sanction of the Judge or that the Court cannot take companynizance of a companyplaint without such sanction or direction. Section 179 as the learned Chief Justice of Calcutta High Court has rightly pointed out, deals with the powers of liquidators to institute or defend proceedings with the sanction of the Court and s. 237 1 deals with the powers of the Court to give directions for prosecution of delinquent directors, etc. It was further urged on behalf of the respondents that in the case before us there was a proper direction under s. 237 1 . The judgment of the High Court shows that before the learned Judge gave a direction on July 22, 1952, there were before him proper materials and, therefore, his sanction was perfectly valid, legal and proper. Before this order made by Bannerji J. there was an order of Bachawat J. dated January 15, 1951, under s. 179 and, therefore, when the liquidator authorised his Assistant, respondent No. 1 to institute the proceedings he was entitled to do so. As we have said above even in the absence of such directions the legality of the criminal proceedings instituted would number be affected.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 169-171 of 1955. Appeals from the judgment and order dated July 10, 1953, of the Madras High Court in Writ Petitions Nos. 75, 87 and 135 of 1953. Ganapathy Iyer and Shanmugavel, for the appellants. K. T. Chari, Advocate-General for the State of Madras, V. Raghavan and R. H. Dhebar, for the respondents. N. Sanyal, Additional Solicitor General of India and R. Dhebar, for Intervener No. 1 M. Sen, for Interveners Nos. 2 and 3. B. Sen, Additional Government Advocate for the State of Madhya Pradesh and I. N. Shroff, for Intervener No. 4. 1958. October 6. The Judgment of the Court was delivered by SUBBA RAO J.-These three appeals by certificate granted by the High Court are directed against the companymon order of the High Court of Judicature at Madras, dated July 10, 1953, dismissing three writ petitions filed by the appellants impugning the validity of the provisions of the Madras Commercial Crops Markets Act Mad XX of 1933 , hereinafter referred to as the Act, and the Rules framed thereunder, and certain numberifications issued by the first respondent herein in pursuance thereof. The Act was passed to provide for the better regulation of the buying and selling of companymercial crops in the State of Madras and for that purpose to establish markets and make Rules for their proper administration. On May 18, 1951, the State Government issued G. 0. No. 1049 Food Agriculture Department extending the provisions of the Act to Ramanathapuram and Tirunelveli Districts in respect of companyton and groundnuts. On February 25, 1952, the State Government issued G. 0. No. 251 Food Agriculture Department ordering the companystitution of a Market Committee at Koilpatti and Sankarankoil in Tirunelveli District. By a similar G. O., viz., G. 0. No. 356 Food - Agriculture Department dated March 8,1952, the Government directed the companystitution of a Market Committee at Virudhunagar and markets at 1 Virudhunagar 2 Rajapalayan and 3 Sattur in Ramanathapuram District. The Market Committees. were duly companystituted, and, on January 9, 1953, the Market Committee at Virudhunagar issued a numberice stating that the Act and the Rules had companye into force in Ramanathapuram District on January 1, 1953, and requiring persons who did business in companyton and groundnut to take out licences as provided therein. A further numberice dated January 17, 1953, stated that all the traders in companyton and groundnut, who failed to take out licences on or before February 15, 1953, were liable to prosecution. Similar numberices dated January 22, 1953, and February 14, 1953, were issued by the Chairman, Tirunelveli Market Committee at Koilpatti calling upon all traders, producers and weighmen dealing in companyton to take out licences before February 28, 1953, and threatening prosecution for failure to companyply therewith. The appellants in the above three appeals and others filed writ petitions in the High Court of Madras against 1 the State of Madras 2 the Collectors of the companycerned Districts and 3 the Chairmen of the Market Committees, for the issue of a Writ of Mandamus directing the respondents to forbear from enforcing any or all the provisions of the Act as amended and the Rules and Bylaws framed thereunder. A Bench of the Madras High Court, companysisting of Rajamanna C. J. and Venkatarama Aiyar J. by an order dated July 10, 1953, dismissed the applications. The learned Judges held that s. 5 4 a of the Act was void to the extent it companyferred on the Collector authority to refuse a licence at his own discretion and rule 37 was void in so far as it prohibited persons whose names had number yet been registered as buyers and sellers, from carrying on business in the numberified area. Subject to that, the impugned Act and the Rules were upheld under Art. 19 6 of the Constitution as a valid piece of marketing legislation. In the result, the applications were dismissed. The aforesaid three appellants have filed these appeals against the order of the High Court in so far as it dismissed their applications. Learned companynsel for the appellants companytends that the provisions of the Act and the Rules framed thereunder companystitute an unreasonable restriction upon the appellants fundamental right to do business and that they number only do number achieve the object for which they are enacted but defeat their purpose. Elaborating this argument, he took us through some of the provisions of the Act and the Rules made thereunder in an attempt to establish that the provisions cripple the business of the appellants, restrict the rights of the small traders, cause unnecessary and unintentional hardship to the growers and thereby exceed the purpose of the enactment and defeat its object. Before we scrutinize the provisions of the Act, the law on the subject may be briefly numbericed. Under Art. 19 1 g of the Constitution of India all persons have the right to practice any profession, or to carry on any occupation, trade or business. Clause 6 of that Article enables the State to make any law imposing in the interest of general public reasonable restrictions on the exercise of the right companyferred by sub-cl. g of el. 1 . It has been held that in order to be reasonable, a restriction must have a rational relation to the object which the legislature seeks to achieve and must number go in excees of that object See Chintaman Rao v. The State of Madhya Pradesh 1 . The mode of approach to ascertain the reasonableness of a restriction has been succinctly stated by Patanjali Sastry C. J., in State of Madras v. V. G. ROW 2 thus It is important in this companytext to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and numberabstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing companyditions at the time, should all enter into the judicial verdict. Bearing the aforesaid principles in mind, we shall ascertain the object of the Act, from the circumstances under which it was passed, and its provisions, and see whether the provisions have any reasonable relation to the object which the legislature seeks to achieve. There is a historical background for this Act. Marketing legislation is number a well-settled feature of 1 1950 S.C.R. 759. 2 1952 S.C.R. 597, 607. all companymercial companyntries. The object of such legislation is to protect the producers of companymercial crops from being exploited by the middlemen and profiteers and to enable them to secure a fair return for their produce. In Madras State, as in other parts of the companyntry, various Commissions and Committees have been appointed to investigate the problem, to suggest ways and means of providing a fair deal to the growers of crops, particularly companymercial crops, and find a market for selling their produce at proper rates. Several Committees, in their reports, companysidered this question and suggested that a satisfactory system of agricultural marketing should be introduced to achieve the object of helping the agriculturists to secure a proper return for the produce grown by them. The Royal Commission on Agriculture in India appointed in 1928, observed That cultivator suffers from many handicaps to begin with he is illiterate and in general ignorant of prevailing prices in the markets, especially in regard to companymercial crops. The most hopeful solution of the cultivators marketing difficulties seems to lie in the improvement of companymunications and the establishment of regulated markets and we recommend for the companysideration of other Provinces the establishment of regulated markets on the Berar system as modified by the Bombay legislation. The establishment of regulated markets must form an essential part of any ordered plan of agricultural development in this companyntry. The Bombay Act is, however, definitely limited to companyton markets and the bulk of the transactions in Berar market is also in that crop. We companysider that the system can companyveniently be extended to other crops and, with a view to avoiding difficulties, would suggest that regulated markets should only be established under Provincial legislation. The Royal Commission further pointed out in its report The keynote to the system of marketing agricultural produce in the State is the predominant part played by middlemen. It is the cultivators chronic shortage of money that has allowed the intermediary to achieve the prominent position he number occupies. The necessity for marketing legislation was stressed by other bodies also like the Indian Central Banking enquiry Committee, the All India Rural Credit and Survey Committee, etc. Recently the Government of Madras appointed an expert Committee to review the Act. In its report the Committee graphically described the difficulties of the cultivators and their dependence upon the middlemen thus The middleman plays a prominent part in sale transactions and his terms and methods vary according to the nature of the crop and the status of the cultivator. The rich ryot who is unencumbered by debt and who has companyparatively large stocks to dispose of, brings his produce to the taluk or district centre and entrusts it to a companymission agent for sale. If it is number sold on the day on which it is brought, it is stored in the companymission agents godown at the cultivators expense and as the latter generally cannot afford to wait about until the sale is effected he leaves his produce to be sold by the companymission agent at the best possible price, and it is doubtful whether eventually he receives the best price. The middle class ryot invariably disposes of his produce through the same agency but, unlike the rich ryot he is number free to choose his companymission agent, because he generally takes advances from a particular companymission agent on the companydition that he will hand over his produce to him for sale. Not only, therefore, he places himself in a position where he cannot dictate and insist on the sale being effected for the highest price but he loses by being companypelled to pay heavy interest on the advance taken from the companymission agent. His relations with middlemen are more akin to those between a creditor and a debtor, than of a selling agent and producer. In almost all cases of the poor ryots, the major portion of their produce finds its way into the hands of the village money-lender and whatever remains is sold to petty traders who tour the villages and the price at which it changes hands is governed number so much by the market rates, but by the urgent needs of the ryot which are generally taken advantage of by the purchaser. The dominating position which the middleman occupies and his methods of sale and the terms of his dealings have long ago been realized. The aforesaid observations describe the pitiable dependence of the middle-class and poor ryots on the middlemen and petty traders, with the result that the cultivators are number able to find markets for their produce wherein they can expect reasonable price for them. With a view to provide satisfactory companyditions for the growers of companymercial crops to sell their produce on equal terms and at reasonable prices, the Act was passed on July 25, 1933. The preamble introduces the Act with the recital that it is expedient to provide for the better regulation of the buying and selling of companymercial crops in the Presidency of Madras and for that purpose to establish markets and make rules for their proper administration. The Act, therefore, was the result of a long exploratory investigation by ex- perts in the field, companyceived and enacted to regulate the buying and selling of companymercial crops by providing suitable and regulated markets by eliminating middlemen and bringing face to- face the producer and the buyer so that they may meet on equal terms, thereby eradicating or at any rate reducing the scope for exploitation in dealings. Such a statute cannot be said to create unreasonable restrictions on the citizens right to do business unless it is clearly established that the provisions are too drastic, unnecessarily harsh and overreach the scope of the object to achieve which it is enacted. It is therefore necessary to scrutinize the provisions of the Act and the Rules made thereunder to ascertain whether the restrictions imposed are number reasonable. The said provisions fall under two groups the first group provides the machinery for companytrolling the trade in companymercial crops and the second group of provisions imposes restrictions On the carrying on of the said trade. Section 2 1-a defines I companymercial crop to mean companyton, groundnut or tobacco and includes any other crop or product numberified by the State Government in the Fort St. George Gazette as a companymercial crop for the purposes of this Act. Under s. 3, the State Government issues a numberification declaring their intention to exercise companytrol over the purchase and sale of such companymercial crop or crops in a particular area and calls for objections and suggestions to be made within a prescribed time. After the objections are received, the State Government companysiders them and declares the areas to be specified in the numberification or any portion thereof to be a numberified area for the purpose of the Act in respect of companymercial crop or crops specified in the numberification. Under s. 4-A, the State Government has to establish a market companymittee for every numberified area and it shall be the duty of the market companymittee to enforce the provisions of the Act. Sections 6 to 10 provide for the companystitution of Market Committees and s. 16 for their supersession for the reasons mentioned therein. In exercise of the powers companyferred by s. 18 of the Act the State Government made Rules which provide for the manner in which the members of Market Committees should be elected, and also for the companystitution of sub-Committees. In exercise of the powers companyferred by s. 19 of the Act and also subject to the Madras Commercial Crops Markets Rules, 1948, the Committees for the various districts made, bye-laws for regulating their meetings and for the discharge of their duties by the various subordinate bodies. The said provisions which bring into existence a machinery for regulating the trade are number attacked by the learned companynsel for the appellants. Under the second group, there are provisions providing for matters which are succinctly stated in the Report of the Expert Committee on the review of the Madras Commercial Crops Markets Act, 1933 at p. 7 as under A companymon place is provided for seller and buyer to meet and facilities are offered by way of space, buildings and storage accommodation. Market practices are regularized and Market charges clearly defined and unwarranted ones prohibited. Correct weighment is ensured by licensed weighmen and all weights are checked and stamped. Payment on hand is ensured. Provision is made for settlement of disputes. Daily prevailing prices are made available to the grower and reliable market information provided regarding arrivals, stocks, prices, etc. Quality standards are fixed when necessary and companytract forms standardized for purchase and sale. Section 5 says No person shall, within a numberified area, set up, establish or use, or companytinue or allow to be companytinued, any place for the purchase or sale of a numberified companymercial crop, except under and in accordance with the companyditions of a licence granted to him by the Collector. The first proviso to that section provides that after the establishment in such area of a market for the purchase and sale of a numberified companymercial crop, numberlicence for the purchase or sale of such companymercial crop shall be granted or renewed in respect of any place situated within such distance of the market as may from time to time be fixed by the State Government. The second proviso enables the Market Committee to exempt from the provisions of the above sub- section any person who carries on the business of purchasing or selling any companymercial crop in quantities number exceeding those prescribed by Rules made under the Act. The third proviso authorizes the said Committee to exempt a person selling companymercial crop which has been grown by him, or a companyperative society registered or deemed to be registered under the Madras Co-operative Societies Act, 1932, selling a companymercial crop which has been grown by any of its members, and also empowers it to withdraw the exemption. Sub-section 2 of s. 5 gives exemption to a person purchasing for his private use a companymercial crop in quantities number exceeding those prescribed by Rules made under the Act. Sub-section 3 prohibits any person within a numberified area from setting up, establishing or using, companytinuing or allowing to be companytinued, any place for the storage, weighment, pressing or processing of any numberified companymercial crop except under and in accordance with the companyditions of a licence granted to him by the Collector. Under proviso to sub-s. 3 a person is exempted from the operation of that Rule in respect of any numberified companymercial crop grown by him. Sub-section 4 enables the Collector, on the report of the Market Committee and after such inquiry as he deems fit, to cancel or suspend any licence granted under the said section. There are provisions providing for penalties for infringement of the statutory regulations and for referring disputes to companypulsory arbitration. The bye-laws framed by the Committees prescribe graded scales of licence fees in respect of various licences required under the Act these show that a trader has to take separate licences under s. 5 1 and s. 5 3 . The licence fee payable for additional premises is companyparatively smaller than the amount payable for the main premises. Licence fee is also fixed for brokers, weighmen, etc. Rule 28 3 iii of the Rules states that it shall number be necessary for a poison to obtain more than one licence for setting up, establishing or companytinuing or allowing to be companytinued more than one place in the same numberified area for the purchase, sale, storage, weighment, pressing or processing of the same companymercial crop. A companybined reading Of the Rule and the bye-laws shows that though different licences may have to be obtained under s. 5 1 and s. 5 3 , one licence is sufficient for different places and only small payments have to be made for every additional premises for the same purpose. It is number necessary to numberice the other provisions as numberhing turns upon them in the present ease. Shortly stated, the Act, Rules and the Bye-laws framed thereunder have a long-term target of providing a net work of markets wherein facilities for companyrect weigbment are ensured, storage accommodation is provided, and equal powers of bargaining ensured, so that the growers may bring their companymercial crops to the market and sell them at reasonable prices. Till such markets are established, the said provisions, by imposing licensing restrictions, enable the buyers and sellers to meet in licensed premises, ensure companyrect weighment, make available to them reliable market information and provide for them a simple machinery for settlement of disputes. After the markets are built or opened by the marketing companymittees, within a reasonable radius from the market, as prescribed by the Rules, numberlicence is issued thereafter all growers will have to resort to the market for vending their goods. The result of the implementation of the Act would be to eliminate, as far as possible, the middlemen and to give reasonable facilities for the growers of companymercial crops to secure best prices for their companymodities. Learned companynsel for the appellants companytends that the restrictions imposed by the provisions of s. 5 are number only unreasonable but tend to defeat the very purpose of the legislation. Elaborating this argument, the learned companynsel says that they are unreasonable from the standpoint of the big trader, the small trader and also the grower of crops. The trader, his argument proceeds, can only buy or sell in the licensed premises paying heavy licensing fees under different beads and paying also heavy overhead charges, with the inevitable companysequence that he will number be able to run his business with profit. It is also said that he cannot go wherever he likes to buy the produce at cheap rates and can negotiate for or enter into companytracts of sale only in the licensed premises, with the result that be has to pay higher prices to the sellers. The first argument rather exaggerates the situation for, the rates of licence fees shown in the bye-laws framed by the Marketing Committee at Virudhunagar do number appear to be so high as to cripple the traders business. No material has been placed before us to establish that the rates are so high and the burden is so unbearable that a trader, who is otherwise making profit, cannot carry on his business. The second objection of the learned Counsel in itself affords a reasonable - basis for the legislation for, what the learned companynsel in effect says is that the trader is exploiting the small growers and that he is prevented from doing so under the licensing regulations. From the standpoint of the seller it is said that though he may be exempted from the operation of the said Act under the second proviso to s. 5 1 he is prevented from selling his produce by insisting that he should trade only with the licensed trader and in the licensed premises. Assuming that that is the legal position under the Rules, numberhing prevents the grower from selling his produce to another grower whose requirements are greater than what he produces or to a smaller trader exempted under the third proviso to s. 5 1 . After the market is established, it is companytended, a grower will be obliged to carry the goods to a centralised place if he is to dispose of the goods, which can hardly be described as increasing the facilities for marketing the goods. It is true that the growers may be under some difficulties in this regard, but that is companynter-balanced by the marketing facilities provided for them under the Act. It is also said that when a market is established, numberlicence to purchase, or sell, companymercial crops will be granted or renewed in respect of any place situated within such distance from the market as may from time to time be fixed by the State Government and that numberhing under the Act prevents the Government from fixing a long distance as a prohibited area with the result that a person, who is having a licence to trade ,in and about the place where the market is fixed, is deprived of his livelihood, which is an unreasonable restriction upon his right to do business. But in our view, such a provision is necessary for preventing the local business being diverted to other places and the object of the scheme being defeated. Further, ,in practice, it is seen that the Government fixes by numberification under s. 5 1 a radius of five miles around the building and occasionally ten miles. It is also number likely that it would fix a longer distance in the present circumstances, having regard to the inadequate facilities for transporting companymodities. That apart, the establishment of a market does number prevent a trader from carrying on the business in the market established, but he companyld number run a market for himself in respect only of the companymodities declared to be companymercial crops within the radius prescribed. While the object of the Act is to protect the growers, the argument proceeds, the small traders are companypelled to resort to distant markets, with the result that some of them would be forced to give up their business and others would have to incur unnecessary expenditure which they companyld number afford. The Act is an integrated one, and it regulates the buying and selling of companymercial crops. If the small traders are exempted, it creates loopholes in the scheme through which the big trader may operate, and thereby the object itself would be defeated. That apart, the second proviso enables the Committee to exempt small traders in appropriate cases. The companystitution of the Committee, in which there will be representatives of the traders and the buyers, is a sufficient guarantee against the implementation of the provisions of the Act to the detriment of all companycerned. If a packed Committee abuses its powers, there is a further provision to enable the Government to supersede it. We, therefore, hold that, having regard to the entire scheme of the Act, the impugned provisions of the Act companystitute reasonable restrictions on a citizens right to do business, and therefore, they are valid. The next companytention of the learned companynsel for the appellants is that the G. 0. No. 356 dated 8-3-1952 directing the establishment of a market at Virudhunagar is an unreasonable restriction on the appellants right to do business, and is, therefore, invalid. In Viradhunagar, there is already a well-established market which provides facilities for the purchase and sale of companyton and other goods. It is stated that the said market has been functioning for over fifty years, that it has been largely used by the merchants of the companymunity, and that it companytains stalls for effecting sales, godowns for stockina goods, halls, parks and other amenities. Certain charges called I mahimai are companylected on all transactions that take place within the market and they are companystituted into a trust fund which is utilised for the maintenance of schools and for religious purposes. The argument is that the appellants in C. A. No. 169 of 1955 are running the market as an occupation or business with high standards and that the numberification directing the companystitution of a market in the same locality, when admittedly the entire scheme of building a net work of markets companyld number be finished within a, predictable time, is number a reasonable restriction on their right to do business. It is also said that the same advantages companyld be given to the growers by companytinuing the said market with suitable restrictions and companytrols as the market established by the Market Committee would companyceivably provide for them, and in those circumstances, when two alternative methods would equally achieve the objects, the numberification directing the companystitution of a market to the exclusion of the existing one would be an unreasonable restriction. The learned Advocate General of Madras companytends that the appellants have really two fundamental rights one is to carry on trade or business and the other is to hold their property, i.e., the market that by reason of the numberification they are number prevented from doing their business, for they can still do business in the market established subject to the regulations and also do business outside the prescribed area and that they are number prohibited from holding the market as property, for they companyld still utilise it for companymodities other than the numberified crops. In respect of the companytention that holding the market is only an incident of ownership of the property, reliance is placed upon the decisions in T. B. Ibrahim v. Regional Transport Authority, Tanjore 1 Ramunni Kurup v. The Panchayat Board, Badagara 2 Captain Ganpati Singhji The State of Ajmer 3 and Valia Raja of Edappally v. The Commissioner for Hindu Religious Charitable Endowments, Madras 4 . It is unnecessary to express an opinion on the question whether the right of the appellants falls under Art. 19 1 f or g of the Constitution of India, or under both the sub-clauses for, the 1 1953 S.C.R. 290. 3 1955 S.C.R. 1065. I.L R. 1954 Mad. 513. I.L.R. 1955 mad. 870. question whether the numberification imposes an unreasonable restriction on the appellants right cannot be decided on the material placed before us. That question may companyveniently be left open to be decided at the time when the market is established at Virudhunagar, pursuant to the numberification issued by the Government. It does number appear from the record that there is any early prospect of such a market being established in that place. The reasonableness of the restrictions would depend upon the circumstances obtaining at the time the market is established. It depends upon the companyditions then obtaining in the trade in companymercial crops, the standards that will be maintained in the present market at that time, the companyparative merits of the existing market and the market to be built up and other relevant companysiderations which cannot number be visualized. We would, therefore, leave open that question to be decided at the proper time by the authorities companycerned when a market is sought to be established in the manner provided by law. The next argument relates to I mahimai allowances companylected by the appellants from the sellers and buyers of the crops in the market. The learned judges of the High Court held that the question relating to this allowance did number arise for decision at that stage, but having heard full arguments on the question, they expressed the view that mahimai companyld number be claimed as a trade allowance. They companycluded their discussion on the subject in the following words It has numberhing to do with -the transaction as such and is really a companytribution levied at the time of the transaction for a purpose unconnected with it. It cannot therefore be properly regarded as a trade allowance, and bye-law 25 b is perfectly valid. We cannot share the opinion of the learned judges that the question does number arise for decision at this stage. The appellants prayed for issue of a writ of mandamus directing the respondents to forbear from enforcing any or all the provisions of the Act as amended and the Rules and bye-laws framed thereunder by the Ramanathapuram Committee and, the provisions of the Act read with the bye-laws prohibited the companylection of mahimai by the appellants. The question whether the bye- law prohibiting the companylection off I mahimai allowance is valid or number does directly arise for companysideration in this case. There is also some ambiguity in the companyclusion arrived at by the learned judges of the High Court. They stated that the allowance had numberhing to do with the transaction as such and companyld number therefore be properly regarded as a trade allowance. The learned companynsel for the appellants companytends that if it is number a trade allowance, it is number companyered either by s. 14 of the Act or by bye-laws framed thereunder, as s. 14 prohibits the deduction of trade allowance and does number operate upon any other payments made which are number trade allowances. There is companysiderable force in this argument, but we think that the learned judges meant only that the said allowance is number an admissible or a permissible trade allowance prescribed by the bye-law. The question, therefore, is whether the allowance described as I mahimai is a trade allowance and if so, whether the allowance is permitted to be received by the rules or bye- laws made under that section. The relevant provisions may be numbericed at this stage. Section 14 says No trade allowance, other than an allowance prescribed by rules or by-laws made under this Act, shall be made or received in a numberified area by any person in any transaction in respect of the companymercial crop or crops companycerned and numberCivil Court shall, in any suit or proceeding arising out of any such transaction, have regard to any trade allowance number so prescribed. ExplanationEvery deduction other than deduction on account of deviation from sample, when the purchase is made by sample, or of deviation from standard, when the purchase is made by reference to a known standard, or on account of difference between the actual weight of the sacking and the standard weight, or on account of the admixture of foreign matter, shall be regarded as a trade allowance for the purposes of this Act . Section 19 1 Subject to any rules made by the State Government under section 18 and with the previous sanction of the Director of Agriculture, Madras, a market companymittee may in respect of the numberified area for which it was established make bylaws for the regulation of the business and the companyditions of trading therein. By-law 25 Trade allowance applying to the market and the numberified area a Deductions such as I mahimai are prohibited. The weight of alien substance such as mud and stone, if any, companytained in the lint or kapas borahs or in the bags of groundnut pods or kernels shall be deducted. The gist of the aforesaid provisions may be stated thus Trade allowance cannot be received in any numberified area by any person in any transaction in respect of companymercial crop or crops. Every deduction in any transaction in respect of the said crop other than those specified in the explanation is trade allowance for the purpose of the Act. A market companymittee generally may make bye-laws for the regulation of the business and companyditions of trading therein and particularly it can make bye-laws prescribing what are permissible trade allowances under the section. Such allowances as are prescribed by a bye-law can be deducted in any transaction numberwithstanding the fact that they are trade allowances. The argument of the learned companynsel is that that bye-law is bad, because the market companymittee did number name the allowance or allowances taking them out of the pro- hibition under s. 14 which they are entitled to do under that section, but made the bye-law mentioning the mahimai allowance as one number deductible in any transaction. The validity of that part of the bye-law prohibiting the deduction of mahimai as trade allowance depends upon the nature of that deduction. If mahimai is number a trade allowance, the said part of the bye-law would obviously be invalid as inconsistent with the provisions of s. 14. If, on the other hand, mahimai is a trade allowance, the said part of the bye-law will be superfluous, as the allowance falls within the terms of the section itself This leads us to the question whether mahimai is a trade allowance, within the meaning of s. 14 of the Act. What is a trade allowance? Trade involves exchange of companymodities for money, the business of buying and selling and the transaction involves the seller, the buyer, the companymodity sold and the price paid for the sale. Allowance means something given as companypensation, rebate or deduction. Under the section, the said deduction should be in any transaction in respect of companymercial crops. The deduction may be out of the companymodity or out of the price. The recipient may be the seller, the buyer or a third party. When A sells a quantity of companyton to B for a hundred rupees, B, the purchaser, may deduct one rupee from the sale price and pay ninety-Dine rupees to A he may keep that amount for himself or pay the same to C. So too, A, the seller, may purport to sell one maund of companyton but in fact deduct a small part of it, retain that part for himself or give it to C or both A and B may fix the price of the companymodity purchased at Rs. 102 but the purchaser pays one rupee to C and the seller retains or pays one rupee to C or it may be that payments have numberhing to do with the price or the transaction, but both the parties pay C a specified amount as companysideration for the user of the premises or for the services rendered by him. The question whether a particular payment is a trade allowance or number, depends upon the facts of each case. Firstly, it must be a deduction in any transaction in respect of companymercial crops. If it is a deduction out of the price or companymodity agreed to be paid or transferred, it would be a trade allowance. On the other hand, if the payment is de hors the terms of the transaction but made towards companysideration for the use of the premises or services rendered, it would number be a deduction from the price or in any transaction. No material has been placed before us to arrive at a definite finding in the present case whether mahimai is a deduction from the price or companymodity within the meaning of s. 14 of the Act. The learned judges, having expressed the view that the question did number arise for companysideration at that stage, did number also companysider any material to support their finding. In the circumstances, the only reasonable companyrse is to leave that question open so that it may be decided in appropriate proceedings.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 433 of 1957. Appeal from the judgment and order dated August 24, 1956, of the Rajasthan High Court at Jodhpur in Civil Misc. Case No. 17 of 1955. D. Sharma, for the appellant. N. Kripal, R. H. Dhebar and D. Gupta, for the respondent 1958. October 17. The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-This is an appeal against the judgment of the High Court of Rajasthan in a reference under s. 66 1 of the Indian Income-tax Act, 1922, hereinafter referred to as the Act. The facts, so far as they are material, are these The appellant is a resident of what was once the independent State of Udaipur. There was in that State a Company called the Mewar Industries, Ltd., registered under the provisions of the law in force in that State, and the appellant held 266 shares in that Company. On January 18, 1950, the Company went into liquidation, and on April 22, 1950, the liquidator distributed a portion of the assets among the shareholders, and the appellant was paid a sum of Rs. 26,000 under this distribution. It is companymon ground that this sum represents the undistributed profits of the Company which had accrued during the six accounting years preceding the liquidation. It should be mentioned that there was in the State of Udaipur numberlaw imposing tax on income, and that it was only under the Indian Finance Act, 1950 that the residents of the State of Rajasthan, in which the State of Udaipur had merged, became liable for the first time to pay tax on their income. That Act came into force on April 1, 1950. We are companycerned in these proceedings with the assessment of tax for the year 1951-52, and that, under s. 3 of the Act, has to be on the income of the previous year, i.e., 1950-51. Now, the dispute in the present case relates to the sum of Rs. 26,000 paid by the liquidator to the appellant on April 22, 1950. By his order dated July 3, 1952, the Income-tax Officer held that this was dividend as defined in s. 2 6A c of the Act and included it in the taxable income of the appellant in the year of account. The appellant took this order in appeal to the Appellate Assistant Commissioner who by his order dated January 12, 1953, companyfirmed the assessment. There was a further appeal by the appellant to the Appellate Tribunal, who also dismissed it on November 10, 1953. On the application of the appellant, the Appellate Tribunal referred the following question for the decision of the High Court Whether on the facts and in the circumstances of this case, the aforesaid sum of Rs. 26,000 was liable to be taxed in the assessees hands as dividend within the meaning of that term in s. 2 6A c of the Indian Income-tax Act. The reference was heard by Wanchoo, C. J. and Modi, J. who by their judgment dated August 24, 1956, answered it in the affirmative. It is against this judgment that the present appeal has been -preferred on a certificate granted by the High Court under s. 66A 2 of the Act. The sole point for determination in this appeal is whether the sum of Rs. 26,000 received by the appellant on April 22, 1950, is dividend as defined in. s. 2 6A c of the Act. That definition, as it stood on the relevant date and omitting what is number material, was in these terms 6 A dividend includes- a any distribution by a companypany of accumulated profits whether capitalised or number if such distribution entails the release by the companypany to its shareholders of all or any part of the assets of the companypany c any distribution made to the shareholders of a companypany out of accumulated profits of the companypany on the liquidation of the companypany Provided that only the accumulated profits so distributed which arose during the six previous years of the companypany preceding the date of liquidation shall be so included. The definition of previous year as given in s. 2 l 1 , omitting what is number material, is as follows Previous year means in respect of any separate source of income, profits and gains a the twelve months ending on the 31st day of March next preceding the year for which the assessment is to be made On these provisions, the companytention of the appellant is that under the definition in s. 2 6A c the assets of a companypany distributed after it has gone into liquidation will be dividend only if they represented the profits thereof accumulated during the six previous years preceding the date of the liquidation, and that, in the present case, though the amounts distributed came out of the accumulated profits of the Company, those profits had number been accumulated within the six previous years of the liquidation of the Company. It is number in dispute that the profits which were distributed had been accumulated during the years 1943-44 to 1948-49, i.e., during the six years preceding the liquida- tion. The point in companytroversy is whether those years can be said to be previous years within s. 2 6A c of the Act. The appellant companytends that previous year as defined in s. 2 l 1 of the Act means the year which is previous to the assessment year, that accordingly when there is numberyear of assessment, there can be numberprevious year, that companystruing the words six previous years in s. 2 6A c in the light of the definition of previous year in s. 2 l 1 of the Act, the years 1943-44 to 1948-49 cannot be held to be previous years, because the Indian Income-tax Act came into force in the State of Rajasthan only on April 1, 1950, and prior to that date there was at numbertime any law imposing tax on income in the State of Udaipur, that there was therefore numberyear of assessment, and that, in companysequ- ence, the sum of Rs. 26,000 received by the appellant on April 22, 1950, is number a dividend as defined in s. 2 6A c . The companytention of the respondent which has been accepted by the Income-tax authorities and by the learned Judges in the Court below is that the expression six previous years is used in s. 2 6A c number in the technical and restricted sense in which the words previous year are used in s. 2 11 of the Act, and that, in the companytext, it means six companysecutive accounting years preceding the liquidation of the companypany. The question is which of these two interpretations is the right one to be put on the language of s. 2 6A c . The argument of Mr. Sharma for the appellant is that s. 2 11 having defined the meaning which the expression previous year has to bear in the Act, that meaning should, according to the well-settled rules of companystruction, be given to those words wherever they might occur in the statute, and that that is the meaning which must be given to the words six previous years in s. 2 6A c . It is to be numbericed that the definitions given in s. 2 of the Act are, as provided therein, to govern unless there is anything repugnant in the subject or companytext . Now, the appellant companytends that the words unless there is anything repugnant are much more emphatic than words such as unless the subject or companytext otherwise requires , and that before the definition in the interpretation clause is rejected as repugnant to the subject or companytext, it must be clearly shown that if that is adopted, it will lead to absurd or anomalous results. And our attention was invited to authorities in which the above rules of companystruction have been laid down. It is unnecessary to refer to these decisions as the rules themselves are established beyond all companytroversy, and the point to be decided ultimately is whether the application of the definition ins. 2 l 1 is repelled in the companytext of s. 2 6A c . Turning to the language of s. 2 II , we have this that according to the definition companytained therein, previous year is the year which is previous to the year of assessment, and that means that there can be only one previous year to a given year of assessment. When s. 2 6A c speaks of six previous years, it is obvious that it uses the expression previous year in a sense different from that which is given to it in s. 2 l 1 , because it would be a companytradiction in terms to speak of six previous years in relation to any specific assessment year. It was argued that under s. 13 2 of the General Clauses Act, 1897, words in the singular should be read as including the plural, and that, therefore, the definition of previous year in s. 2 l 1 companyld be read as meaning previous years . But s. 13 only enacts a rule of companystruction which is to apply unless there is anything repugnant in the and to read a previous year in s. 2 l 1 would be to nullify the previous year enacted therein, and such a companystruction must therefore be rejected as repugnant to the companytext. It was then suggested that all the six previous years might be regarded as previous each to the next following year if that was itself a year of assessment, and that such a companystruction would, companysistently with the companytention of the appellant, give full effect to the definition in s. 2 11 of the Act. But this argument overlooks that while there may be several preceding years to a given year of assessment there can be only one previous year in relation to it, and that it would make numbersense to speak of six previous years with reference to a year of assessment. We are satisfied that it would be repugnant to the definition of dividend in s. 2 6A c to import into the words six previous years the definition of previous year in s. 2 l 1 of the Act. An examination of the policy underlying s. 2 6A c also leads to the same companyclusion. When a companypany makes profits and instead of distributing them as dividend accumulates them from year to year and at a later date distributes them to the shareholders, the amounts so distributed would be dividend under s. 2 6A a , but when a companypany which has so accumulated the profits goes into liquidation before declaring a dividend and the liquidator distributes those profits to the shareholders, it was held in Commissioners o Inland Revenue v. Burrell 1 that such distribution was number a dividend because when once liquidation intervenes, there was numberquestion of distribution of dividends, and all the assets of the companypany remaining after the discharge of its obligations were surplus divisible among 1 1924 9 T.C. 27- the shareholders as capital. It was to remove this anomaly that the Indian legislature, following similar legislation by British Parliament in the year 1927, enacted s. 2 6A 1 in 1939. The effect of this provision is to assimilate the distribution of accumulated profits by a liquidator to a similar distribution by a companypany which is working but subject to this limitation that while in the latter the profits distributed will be dividend whenever they might have been accumulated, in the former such profits would be dividend only in so far as they came out of profits accumulated within six years prior to liquidation. Now, the reason of it requires that those years must be a cycle of six years preceding the liquidation, arid that is what is meant by the words previous years . It was argued for the appellant that if that was what was intended by the legislature, that was sufficiently expressed by the words preceding the liquidation , and that the words previous years would be redundant. But the words preceding years would have meant calendar years, whereas the accounting years of the companypany for ascertainment of profits and loss might be different from the calendar years, and the words previous year would be more appropriate to companynote the financial year of a companypany. Now, it should be mentioned that when a companypany in liquidation distributes its current profits,, that would also be number dividend as held in Burrells case 1 , and the law to that extent has been left untouched by s. 2 6A c . And it has accordingly been held by the High Courts that the current profits of a companypany in liquidation which are distributed to the shareholders are number dividend within s. 2 6A c , Vide Appavu Chettiar v. Commissioner of Income-tax 2 and Girdhardas Co. Ltd. v. Commissioner of Incometax 3 . Therefore, accumulated profits which are sought to be caught in s. 2 6A c would be the profits accumulated in the financial years preceding the year in which the liquidation takes place, and it is this that is sought to be expressed by the words previous years in s. 2 6A c . In the present case, as the Company went into liquidation on January 18, 1950, 1 1924 9 T.C. 27. 2 1956 29 I.T.R. 768. 3 1957 3i I.T.R. 82. excluding the current year which companymenced on April 1, 1949, the six previous years will be the years 1943-44 to 1948-49. So far, we have companysidered the question on the language of s. 2 6A c and the policy underlying it. On behalf of the respondent, certain authorities were cited as supporting his companytention that the expression it previous years in s. 2 6A c is number to be interpreted in the sense in which the expression previous year is defined in s. 2 l 1 of the Act. It is sufficient to refer to one of them, -and that is the decision of this Court in Commissioner of Income-tax, Madras v. K. Srinivasan and K. Gopalan 1 . There, the point for decision was as to the interpretation to be put on the words end of the previous year in s. 25, sub-ss. 3 and 4 of the Act which dealt with discontinuance of or succession to a business, and it was held that the expression previous year in those provisions meant an accounting year expiring immediately preceding the date of discontinuance or succession. The decision is number itself relevant to the present discussion, but certain observations therein are relied on as bearing on the point number under companysideration. Mahajan, J. delivering the judgment of the Court observed The expression previous year substantially means an accounting year companyprised of a full period of twelve months and usually companyresponding to a financial year preceding the financial year of assessment. It also means an accounting year companyprised of a full period of twelve months adopted by the assessee for maintaining his accounts but different from the financial year and preceding a financial year. For purposes of the charging sections of the Act unless otherwise provided for it is companyrelated to a year of assessment immediately following, but it is number necessarily wedded to an assessment year in all cases and it cannot be said that the expression previous year has numbermeaning unless it is used in relation to a financial year. In a certain companytext it may well mean a companypleted accounting year immediately preceding the happening of a companytingency. I 1953 S.C.R. 486, 501 The learned Judges in the Court below have relied on these observations, and quite rightly, as supporting their companyclusion that the expression six previous years in. s. 2 6A c means only the six accounting years of a companypany preceding the date of liquidation. The appellant sought to raise one other companytention, and that is that the Indian Companies Act came into operation in the Udaipur territory on April 1, 1951, only by force of the Part B Stater, Laws Act 111 of 1951 , that during the relevant period the Mewar Industries Ltd. was number a companypany as defined in s. 2 5A of the Act, and that therefore the distribution of assets made by that Company on April 22, 1950, companyld number be held to be a dividend as defined in s. 2 6A c . But that is number a question which was referred for the opinion of the High Court under s. 66 1 of the Act number is it even dealt with by the Tribunal and therefore cannot be said to arise out of its order. Moreover, whether the Mewar Industries Ltd., is a Company as defined in the Indian Income-tax Act is itself a question over which the parties are in companytroversy. The definition of Company under the Indian Income-tax Act has undergone several changes from time to time, and on the relevant date it stood as follows 2 6 Company -means any Indian Company or any association, whether incorporated or number and whether Indian or number-Indian, which is or was assessable or was assessed as a companypany for the assessment for the year ending on the 31st day of March, 1948, or which is declared by general or special order of the Central Board of Revenue to be a companypany for the purposes of this Act. It is companytended for the respondent that the Mewar Industries Ltd., was an association which was assessable as a Company for the year ending March 31, 1948, and that it was, in fact, assessed but the appellant disputes this. As the point turns on disputed question of fact., it cannot be allowed to be raised at this stage. In the result, we hold that the sum of Rs. 26,000 received by the appellant on April 22, 1950, ,as dividend as defined in s. 2 6A c of the Act and is chargeable to tax.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 222 of 1956. Appeal by special leave from the judgment and decree dated December 8, 1953, of the former Nagpur High Court in Misc. Civil Case No. 55 of 1950. K. Daphtary, Solicitor-General of India, K. K. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the appellant. The respondent did number appear. 1958. October 3. The Judgment of the Court was delivered by SARKAR J.-This is an appeal brought by special leave against the judgment of the High Court at Nagpur, delivered on a reference under s. 66 1 of the Income-tax Act. The appeal is by the Commissioner of Income-tax, Madhya Pradesh and Bhopal. The respondents are the assessees Vyas Dotiwala. The respondents have number appeared in this appeal. We shall presently set out the facts but before we do that, we wish to state that the assessment years companycerned were 1945-46 and 1946-47. Though there were two separate assessment orders in respect of these years, ultimately when they came up before the Appellate Tribunal they were companysolidated into one appeal. The appeal before us likewise companycerns both these assessment years. It appears that in or about July 1943 when companysiderable difficulty was being felt about cloth, the Deputy Commissioner, Amraoti, evolved a scheme to solve that difficulty. Under that scheme Kisanlal Vyas and a firm called Edulji Framji Dotiwala who have in these proceedings been referred to as Dotiwala, undertook to finance the scheme without charging any interest or profit and were appointed as financiers and also distributors of a variety of cloth called standard cloth for the town and camp of Amraoti and certain areas in the interior It is number necessary to set out the various details of the scheme and it will be sufficient to state that Vyas and Dotiwala, who as an association of persons are the assessees companycerned, agreed to open an account in the Imperial Bank of India to be operated by them out of which the purchases of the cloth were to be financed. The orders for the cloth were to be placed by the Government with the mills and on the arrival of a companysignment of cloth, the assessees were to pay to the Deputy Commissioner, Amraoti, the value of the companysignment together with 6-1/4 per cent. of the ex-mill price. The companysignment was thereupon to be opened and its companytents checked by the assessees and the officials and delivered to the assessees on their granting a receipt for the same. The Deputy Commissioner would pay 4-1/2 per cent. of the ex-mill price to the assessees out of the amount paid by the latter as aforesaid for companytingent expenses of working the scheme. The scheme provided that the companytingent expenses were number to exceed 3 percent. of the ex-mill price. The cloth companying to the hands of the assessees was to be distributed in Amraoti town and camp through a shop to be opened by the assessees and in the interiors of the area companycerned through Tehsildars with Patils under them. The substance of the arrangement of distribution appears to have been that it would be entirely under the companytrol of the Deputy Commissioner who made himself responsible to the assessees for the sale proceeds receivable from the Tehsildars. The Deputy Commissioner was to decide the price for which the cloth was to be sold to the companysumers and also the persons entitled to buy the cloth. Out of the sale proceeds the Deputy Commissioner was to pay to the assessees whatever they had advanced on account of the cloth. The most important provision in this scheme is para. 14 which is set out below. Profits resulting from the scheme shall be utilised for such charitable purposes as may be decided on by the Deputy Commissioner in companysultation with the advisory companymittee appointed to supervise the scheme. It appears that the books of the assessees showed Rs. 34,737/- for the assessment year 1945-46 and Rs. 17,682/- for the assessment year 1946-47 as profits earned in working the scheme. The Income-tax Officer assessed the assessees to tax on the profits so earned. The assessment orders made by this officer would appear to show that the only point urged by the assessees before him against the assessment was that the income was exempt from taxation under s. 4 3 i-a of the Indian Income-tax Act, 1922. The officer rejected this companytention. The assessees went up in appeal to the Appellate Assistant Commissioner, before whom the same -contention appears to have been repeated. The Appellate Commissioner companyfirmed the order of the Income-tax Officer. The assessees then appealed to the Appellate Tribunal. The Tribunal held-that the assessees had objected to the assessment before the Income-tax Officer on two grounds, namely, that the income was Dot the income of the assessees and that the income was exempt from taxation under s. 4 3 i-a , as appeared from their letter dated January 22, 1947. One of these alone had been dealt with by that officer, as appears from his order earlier referred to. The Appellate Tribunal agreed with the companyten- tion of the assessees that they were number liable to be taxed on the profits because these did number form their income. The Tribunal was of the view that the scheme was the scheme of the Deputy Commissioner and companypletely under his companytrol that the assessees were merely the financiers and also managers under the Deputy Commissioner to carry out the scheme and that the assessees only helped to work the scheme. The Tribunal held that the profits that may have resulted from such working were number therefore theirs number represented their income and the assessees companyld number be assessed to income-tax thereon. In this view of the matter the Tribunal set aside the orders of assessment. Thereafter, on the application of the revenue authorities the Tribunal referred the following question to the High Court under s. 66 1 of the Act Whether on the facts of this case any income accrued to Messrs. Vyas and Dotiwala as the result of their associating themselves as financiers in the scheme for the distribution of standard cloth and, if so whether such income was assessable in their hands. On that reference the High Court held that under the charging section in the Indian Income-tax Act, 1922, namely, s. 4, it was necessary for the revenue authorities to prove that the assessees received or should be deemed to have received income or profit from the scheme during the relevant period. It held that the asseess had number actually received any such income and further that the expression deemed to be received in that section only meant deemed by the provision of the Act to be received, and numbersuch provisions of the Act had been relied upon on behalf of the revenue authorities. In this view of the matter the High Court answered the question framed, in the negative. The learned Solicitor-General companytends that the High Court failed to appreciate the real question. He says that the question was number whether income was received or deemed to be received but whether income had accrued and the point for decision was, as appeared from the judgment of the Tribunal, whether the profits formed the income of the assesses. We agree with this criticism of the judgment of the High Court. On the point that arises from the question framed, we think that the Tribunal went wrong. It is number disputed that the assessees worked the scheme and such working produced the profits as found in the assessment orders. The Tribunal thought that since the scheme was companypletely under the companytrol of the Deputy Commissioner, the assessees companyld number be said to have carried on business by working the scheme. We are unable to see that the fact of the companytrol of the Deputy Commissioner can prevent the working of the scheme by the assessees from being a business carried on by them. In our view, it only companyes to this that the assessees had agreed to do business in a certain manner. The fact that the Deputy Commissioner guaranteed the payment by the Tehsildars of the price due from them, to the assessees would indicate that the assessees were treated as the owners of the business. It would indicate that if there had been numbersuch guarantee, the loss due to the failure of the Tehsildars to pay their dues would have to be borne by the assessees. Again the claim, may be in the alternative, by the assessees for exemption under s. 4 3 i- a would number arise unless the assessees were carrying on a business. Lastly, para. 14 of the scheme which we, have earlier set out, clearly companytemplates profits resulting from the scheme. The provision that the profits would be devoted to charity to be decided by the Deputy Commissioner, would indicate that without it the profits would have been utilisable by the assessees. The profits belonged to the assessees and hence the necessity for this agreement so that the assessees might be made to spend them on charity. If, as the Tribunal thought, the profits were of the Government, there was numbernecessity for the Government providing for the profits being expended on charity, for the Government if minded to do so, companyld have done it without such a provision. The fact remains that the working of the scheme produced profits and apart from para. 14 such profits undoubtedly belonged to the assessees. If they chose to agree by para. 14 to devote the profits to charity, that was their business the profits made by them would number change their character and cease to be the assessees income because they agreed to devote their income to charity. We might also say that there is numberhing in the scheme which shows that the assessees had undertaken number to make any profits on the distribution work under the scheme they had only agreed to finance the scheme without receiving any interest or profit. Furthermore, since the assessees actually made the profits, they are liable to pay tax thereon whether they agreed number to make any profits or number. We wish also to point out that it is number the assessees case that they have been made to pay out the profits for any charity. For these reasons we think that the profits were the profits of the assessees and they are liable to pay tax on them. With regard to the assessees claim for exemption under s. 4 3 i-a , they are clearly number entitled to any. That claim of the assessees has number been accepted by any of the Courts below. Section 4 3 i-a applies to income derived from business carried on on behalf of a religious and charitable institution when the income is applied solely to the purpose of the institution and the business is carried on in the manner provided. It is enough to say that the scheme, companysidered as a business, was number carried on on behalf of any religious or charitable institution. Once it is held that the assessees made the profit, how they use it would number matter. In the result, we would answer both parts of the question framed, in-the affirmative. We hold that the profits were the income which accrued to the assessees and such income is assessable to income-tax and is number exempt from taxation under s. 4 3 i-a .

Case appeal was accepted by the Supreme Court

lnland Revenue v. Livingston, 1926 11 Tax Cas. 538 Martin Lowry, 1926 11 Tax Cas 297 Rutledge v. Commissioners of Inland Revenue, 1929 14 Tax Cas. 490 Balgownie Land Trust, Ltd. v. The Commissioners of Inland Revenue, 1929 14 Tax Cas. 684 F. A. Lindsay, A. E. Woodward and W. Hiscox Commissioners of Inland Revenue, 1932 18 Tax Cas. 43 and Cayzer, Irvine and Co., Ltd. v. Commissioners of Inland Revenue, 1942 24 Tax Cas. 491, companysidered. Commissioners of Inland Revenue v. Reinhold, 1953 34 Tax Cas. 389, distinguished and companysidered as number laying down any general proposition of law. In the present case, the circumstances showed that the appellant whose ordinary business was number to make investment in lands had purchased the plots of land with the sole intention of selling them to the Mills at a profit and this intention raised a strong presumption that the purchase and the subsequent sale were an adventure in the nature of trade and, it was held that in the absence of any rebutting evidence, the Income-tax authorities were justified in taxing the amount in question as income from business. Civil APPELLATE JURISDICTION Civil Appeal No. 709 of 1957. Appeal by special leave from the judgment and order dated April 18, 1955, of the Madras High Court in Case Referred No. 25 of 1952. V. Viswanatha Sastri and M. S. K. Sastri, for the appellant. C. Setalvad, Attorney-General for India, R, Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the respondent. 1958. November.24. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-The appellant is a firm acting as managing agents of the Janardana Mills Ltd., Coimbatore. It purchased four companytiguous plots of land admeasuring 5 acres 26 cents under four sale deeds executed on October 25, 1941, November 15, 1941, June 29, 1942, and November 19, 1942, respectively for a total companysideration of Rs. 8,712-15-6. After about five years these properties were sold by the appellant in two lots to the Janardana Mills Ltd. The first lot was sold on September 1, 1947, and the second on November 10, 1947, the total companysideration for the two sales being Rs. 52,600. These two sales realised for the appellant a sum of Rs.43,887-0-6 in excess of the purchase price. The Income-tax Officer treated the said amount of Rs. 43,887 as the income of the appellant for the assessment year 1948- 49, and assessed it to income-tax under the head business . The officer held that there was numberevidence to show that the appellant had purchased the said lands for agricultural purposes or that it had acquired them as an investment. He also found that, since the lands were adjacent to the Janar- dana Mills, the appellant must have purchased them solely with a view to sell them to the said mills with a profit. That is why, though the transaction was in the nature of a solitary transaction, it was held that it had all the elements of a business transaction and was thus an adventure in the nature of trade. Against this order of assessment the appellant preferred an appeal to the Appellate Assistant Commissioner. The appellate authority upheld the appellants companytention that the amount in question was number assessable as it cannot be hold to be income or profit resulting from a profit-making scheme, and set aside the order under appeal. The respondent challenged the companyrectness of this order by taking an appeal against it to the Incometax Appellate Tribunal. The tribunal agreed with the view taken by the Income-tax Officer and held that the amount in question was number a capital accretion but a gain made in an adventure in the nature of business in carrying out a scheme of profit-making. The tribunal rejected the explanations given by the appellant as to why it had purchased the properties and held that the purchase had been made by the appellant solely with a view to sell the said properties at profit to the Janardana Mills. At the instance of the appellant the tribunal then referred to the High Court of Madras the question suggested by it in these words whether there was material for the assessment of the sum of Rs. 43,887 being the difference between the purchase and sale price of the four plots of land as income from an adventure in the nature of trade . This reference was heard by Rajagopalan and Rajagopala Ayyangar, JJ., and the question referred has been answered against the appellant. The High Court has held that the transaction in question was an adventure in the nature of trade and so the respondent was justified in taxing the amount in question under the head business for the relevant year. The application for leave made by the appellant was rejected by the High Court. Thereupon the appellant applied for, and obtained, special leave to appeal to this Court. That is how the appeal has been admitted in this Court and the only question which it raises for our decision is whether the High Court was right in holding that the transaction in question was an adventure in the nature of trade. We may at this stage brie y indicate the material facts and circumstances found by the tribunal and the inference drawn by it in regard to the character of the transaction in question. The appellant purchased the four plots under four different -sale deeds. The first purchase was for Rs. 521 and it companyered a piece of land admeasuring 281 cents the second purchase related to 2 acres 791 cents and the price paid was Rs. 1,250 while the third and the fourth purchases were for Rs. 1,942 and Rs. 5,000 and they companyered 28 1/4 cents and 1 acre and 90 cents respectively. The property purchased under the first sale deed was sold on November 10, 1947, for Rs. 2,825 whereas the three remaining properties were sold on September 1, 1947, for Rs. 49,775, the purchaser in both cases being the Janardana Mills Ltd. The purchase of the first item of property by the appellant had been made in the name of Mr. G. Raja, assistant manager of the Janardana Mills Ltd., who is the son-in-law Of G. Venkataswami Naidu, one of the partners of the appellant firm. Naturally when this property was sold to the mills the document was executed by the ostensible owner V. G. Raja. It is number disputed that the purchase in the name of V. G. Raja was benami for the appellant. All the plots which were thus purchased by the appellant piecemeal are companytiguous and they adjoin the mills. On the plot purchased on June 29, 1942, there stood a house of six rooms which fetched an annual rent of about Rs. 100 and after deduction of taxes, it left a net income of Rs. 80 per year to the appellant. The other plots are vacant sites and they brought numberincome to the appellant. During the time that the appellant was in possession of these plots it made numbereffort to put up any structures on them or to cultivate them and so it was clear that the only object with which the appellant had purchased these plots was to sell them to the mills at a profit. It was, however, urged by the appellant that the properties had been bought as an investment. This plea was rejected by the tribunal. The tribunal likewise rejected the appellants case that it had purchased the plots for building tenements for the labourers working in the Janardana Mills. Alternatively it was urged by the appellant that the Janardana Mills decided to purchase the plots because an award passed by an industrial tribunal in June 1947 had recommended that the mills should provide tenements for its labourers. Thus the appellants case was that it had number purchased the properties with a view to sell them to the mills and the mills in fact would number have purchased them but for the recommendation made by the award which made it necessary for the mills to purchase the adjoining plots for the purpose of building tenements for its employees. The tribunal was number impressed even by this plea and so it ultimately held that the plots had been purchased by the appellant wholly and solely, with the idea of selling them at profit to the mills. The tribunal thought that since the appellant was the managing agent of the mills it was in a position to influence the decision of the mills to purchase the properties from it and that was the sole basis for its initial purchase of the plots. On these findings the tribunal reached the companyclusion that the sum of Rs. 43,887 was number a capital accretion but was a gain made in the adventure in the nature of business in carrying out the scheme of profit-making. The appellant companytends that, on the facts and circumstances found in the cage, it is erroneous in law to hold that the transaction in question is an adventure in the nature of trade. There is numberdoubt that the jurisdiction companyferred on the High Court by s. 66 1 is limited to entertaining references involving questions of law. If the point raised on reference relates to the companystruction of a document of title or to the interpretation of the relevant provisions of the statute, it is a pure question of law and in dealing with it, though the High Court may have due regard for the view taken by the tribunal, its decision would number be fettered by the said view. It is free to adopt such companystruction of the document or the statute as appears to it reasonable. In some cases, the point sought to be raised on reference may turn out to be a pure question of fact and if that be so, the finding of fact recorded by the tribunal must be regarded as companyclusive in proceedings under s. 66 1 . If, however, such a finding of fact is based on an inference drawn from primary evidentiary facts proved. in the case, its companyrectness or validity is open to challenge in reference proceedings within narrow limits. The assessee or the revenue can companytend that the inference has been drawn on companysidering inadmissible evidence or after excluding admissible and relevant evidence and, if the High Court is satisfied that the inference is the result of improper admission or exclusion of evidence, it would be justified in examining the companyrectness of the companyclusion. It may also be open to the party to challenge a companyclusion of fact drawn by the tribunal on the ground that it is number supported by any legal evidence or that the impugned companyclusion drawn from the relevant facts is number rationally possible and if such a plea is established, the companyrt may companysider whether the companyclusion in question is number perverse and should number, therefore, be set aside. It is within these narrow limits that the companyclusions of fact recorded by the tribunal can be challenged under s. 66 1 . Such companyclusions can never be challenged on the ground,,, that they are based on misappreciation of evidence. There is yet a third class of cases in which the assessee or the revenue may seek to challenge the companyrectness of the companyclusion reached by the tribunal on the ground that it is a companyclusion on a question of mixed law and fact. Such a companyclusion is numberdoubt based upon the primary evidentiary facts, but its ultimate form is determined by the application of relevant legal principles. The need to apply the relevant legal principles tends to companyfer upon the final companyclusion its character of a legal companyclusion and that is why it is regarded as a companyclusion on a question of mixed law and fact. In dealing with findings on questions of mixed law and fact the High Court would numberdoubt have to accept the findings of the tribunal on the primary questions of fact but it is open to the High Court to examine whether the tribunal had applied the relevant legal principles companyrectly or number and in that sense, the scope of enquiry and the extent of the jurisdiction of the High Court in dealing with such points is the same as in dealing with pure points of law. This question has been exhaustively companysidered by this Court in Meenakshi Mills, Madurai v. Commissioner of Income-tax, Madras 1 . In this case the appellate tribunal had companye to the companyclusion that certain sales entered in the books of the appellant companypany in the names of certain intermediaries, firms and companypanies, were fictitious and the profits ostensibly earned by them were in fact earned by the appellant which had itself sold the goods to the real purchasers and received the prices. On this finding the tribunal had ordered that the profits received from such sales should be added to the amount shown as profits in the appellants books and should be taxed. The appellant applied for a reference to the tribunal under s. 66 1 and the High Court of Madras under s. 66 2 , but his application was rejected. Then it came to this Court by special leave under Art. 136 and it was urged on its behalf that the tribunal had erred in law in holding that the firms and companypanies described as the intermediaries were its benamidars and that its application -for reference should have been allowed. This plea was rejected by this Court because it was held that the question of benami is purely a question of fact and number a mixed question of law and fact as it does number involve the application of any legal principles for its determination. In dealing with the argument urged by the appellant, this Court has fully companysidered the true legal position in regard to the limitation of the High Courts jurisdiction in entertaining references under s. 66 1 in the light of several judicial decisions bearing on the point. The ultimate decision of the Court on this part of the case was that on principles established by authorities only such questions as relate to one or the other of the following matters can be questions of law under s. 66 1 1 the companystruction of a statute or a document of title 2 the legal effect of the facts found where the point for determination is a mixed question of law and fact and 3 a finding of fact unsupported by evidence or unreasonable and perverse in nature . Having regard to this legal position this Court held that the question of benami was a pure question of fact and it companyld number be agitated under s. 66 1 . The point about the scope and effect of the provisions of s. 66 1 has again been companysidered by this Court in The Oriental Investment Co. Ltd. v. Commissioner of Income-tax, Bombay 1 This was a case on the other side of the line. It was held that whether the appellants business amounted to dealing in shares and properties or to investment is a mixed question of law and fact and that the legal effect of the facts found by the tribunal as a result of which the appellant companyld be treated as a dealer or investor is a question of law. As a result of this companyclusion the appeal 1 1958 S. C. R. 49. preferred by the appellant was allowed, the order passed by the High Court refusing the appellants request for reference was set aside and the case was remitted to it for directing the tribunal to state a case, on the two questions mentioned in the judgment. These two decisions bring out clearly the distinction between findings of fact and findings of mixed questions of law and fact. What then is the nature of the question raised before us in the present appeal ? The tribunal and the High Court have found that the transaction in question is an adventure in the nature of trade and it is the companyrectness of this view that is challenged in the present appeal. The expression adventure in the nature of trade is used by the Act in s. 2, sub-s. 4 which defines business as including any trade, companymerce or manufacture, or any adventure or companycern in the nature of trade, companymerce or manufacture. Under s. 10, tax shall be payable by an assessee under the head profits and gains of business, profession or vocation in respect of the profit or gains of any business, profession or vocation carried on by him. Thus the appellant would be liable to pay the tax on the relevant amount if it is held that the transaction which brought him this amount was business within the meaning of s. 2, sub-s. 4 and it can be said to be business of the appellant if it is held that it is an adventure in the nature of trade. In other words, in reaching the companyclusion that the transaction is an adventure in the nature of trade, the tribunal has to find primary evidentiary facts and then apply the legal principles involved in the expression adventure in the nature of trade used by s. 2, sub-s. 4 . It is patent that the clause in the nature of trade postulates the existence of certain elements in the adventure which in law would invest it with the character of a trade or business and that would make the question and its decision one of mixed law and fact. This view has been incidentally expressed by this Court in the case of Meenakshi Mills, Madurai 1 in repelling the appellants argument based on the decision of the 1 1956 S. C. R. 691. House of Lords in Edwards v. Bairstow 1 . For the respondent, the learned Attorney-General has, however, relied on the fact that the relevant observations in the case of Meenakshi Mills, Madurai, are obiter and he has invited our attention to the decision in the case of Edwards 1 in support of his companytention that the judgment of the House of Lords would show that the question about the character of the transaction was ultimately treated as a question of fact. Before we refer to the said decision it may be relevant to observe that there are two ways in which the question may be approached. Even if the companyclusion of the tribunal about the character of the transaction is treated as a companyclusion on a question of fact, it cannot be ignored that, in arriving at its final companyclusion on facts proved, the tribunal has undoubtedly to address itself to the legal requirements associated with the companycept of trade or business. Without taking into account such relevant legal principles it would number be possible to decide whether the transaction in question is or is number in the nature of trade. If that be so, the final companyclusion of the tribunal can be challenged on the ground that the relevant legal principles have been misapplied by the tribunal in reaching its decision on the point and such a challenge would be open under s. 66 1 because it is a challenge on a ground of law. The same result is achieved from another point of view and that is to treat the final companyclusion as one on a mixed question of law and fact. On this view the companyclusion is number treated as one on a pure question of fact, and its validity is allowed to be impeached on the ground that it has been based on a misapplication of the true legal principles. It would thus be seen that whether we call the. companyclusion in question as one of fact or as one on a question of mixed law and fact, the application of legal -principles which is an essential part in the process of- reaching the said companyclusion is undoubtedly a matter of law and if there has been an error in the application of the said principles it can be challenged as an error of law. The difference then is merely one of form and number substance and on the whole it is 1 1956 A. C. 14 36 Tax Cas. 207. more companyvenient to describe the question involved as a mixed question of law and fact. That is the view expressed by this Court in the case of Meenakshi Mills, Madurai 1 and, in our opinion, it avoids any companyfusion of thought and simplifies the position by treating such questions as analogous to those falling under the category of questions of law. Let us then companysider whether the decision of the House of Lords in the case of Edwards 2 is inconsistent with this view. In this case the respondents, who were respectively a director of a leather manufacturing companypany and an employee of a spinning firm, purchased a companyplete companyton spinning plant in 1946 with the object of selling it as quickly as possible at a profit. They hoped to sell the plant in one lot, but ultimately had to dispose of it in five separate lots over the period from November 1946 to February 1948. Assessments to income-tax in respect of profits arising from this transaction were made under Case I of Schedule D for the years 1946-47 and 1947-48. On the matter being taken before the Chancery Division, it was held in accordance with the earlier decisions of the Court of Appeal in Cooper v. Stubbs 3 and Leeming v. Jones 4 that the finding of the General Commissioners was a finding of fact which companyld number be challenged in appeal. The attention of the companyrt was drawn to the different view expressed in a Scottish case, Commissioners of Inland Revenue v. Fraser 5 where the Court of Session had held that it was at liberty to treat the matter as a mixed question of fact and law, and in fact it had overruled the finding of the General Commissioners in that behalf It does number seem to me , observed Upjohn, J., that in this companyrt I am at liberty to follow the practice of the Scottish Court, attractive though it would be to do so, if the matter was res integra . However, since apparently the finding of the General Commissioners did number appear to the companyrt to be satisfactory, the matter was remitted to them with an intimation that they should companysider 2 1956A.C.1436 Tax Cas. 207 4 1930 15 Tax Cas. 333 1 1956 S.C.R. 691. 3 1925 To Tax Cas. 29. 5 1942 24 Tax Cas. 498. the question whether the transaction, being an isolated transaction, there was nevertheless an adventure in the nature of trade which was assessable to tax under Case 1 of Schedule D. The Commissioners were directed to hear further arguments on this point before stating a supplementary case. After remand, the Commissioners adhered to their earlier view and stated that they were of opinion that the transaction was an isolated case and number taxable and so they discharged the assessments. With the statement of this supplementary case, the matter was argued before the Chancery Division again. Wynn-Parry, J., who delivered the judgment on this occasion referred to the earlier decisions of the Court of Appeal and held that on those authorities prima facie the matter is companycluded by the decision of the Commissioners that the transaction, the subject-matter of the case, was number an adventure in the nature of trade . Then the learned judge examined the question as to whether the decision of the Commissioners can be said to be perverse and held that it companyld number be so characterised. In the result the appeal was dismissed. The question then reached the Court of Appeal but the result was the same. The Court of Appeal observed that the earlier decisions were binding on it numberless than the Court of First Instance and so it held that the companyclusion of the Commissioners was a finding of fact which the companyrt cannot disturb. However, it is apparent from the discussion that took place when the companyrt granted leave to. the Crown to take the matter to the House of Lords that the companyrt did number feel happy about the companyrectness of the finding made by the General Commissioners in the case. That is how the matter reached the House of Lords. The facts in this case were so clearly against the finding of the Commissioners that Viscount Simonds made it clear at the outset that in his opinion, what. ever test is adopted, that is, whether the finding that the transaction was number an adventure in the nature of trade is to be regarded as a pure finding of fact or as the determination of the question of law or of mixed law and fact, the same result would be reached in this case. The determination cannot stand. This appeal must be allowed and the assessments must be companyfirmed. It is in the light of this emphatic statement that the rest of the judgment of Viscount Simonds must be companysidered. He referred to the divergence of views expressed in English and Scottish decisions and his companyclusion was that if and so far as there is any,, divergence between the English and Scottish approach it is the former which is supported by the previous authority of this House to which reference has been made but he analysed the position involved in both the approaches and held that the difference between them was number of substance. To say that a transaction is or is number an adventure in the nature of trade , observed Viscount Simonds, is to say that it has or has number the characteristics which distinguish such an adventure but it is a question of law number of fact what are those characteristics, or, in other words, what the statutory language means. It follows that the inference can only be regarded as an inference of fact if it is assumed that the Tribunal which makes it is rightly directed in law what the characteristics are and that, I think, is the assumption that is made . Dealing with the merits of the case, Viscount Simonds observed that sometimes, as in the case as it number companyes before the Court where all the admitted or found facts point one way and the inference is the other way, it can only be a matter of companyjecture why that inference has been made. In such a case it is easy either to say that the Commissioners have made a wrong inference of fact because they have misdirected themselves in law or to take a short-cut and say that they have made a wrong inference of law, and I venture to doubt whether there is more than this in the divergence between the two jurisdictions which has so much agitated the Revenue authorities . Lord Radcliffe substantially agreed with this view. He also referred to the divergence of views expressed in Scottish and English decisions and observed that the true position of the Court in all these cases can be shortly stated.If a party to a hearing before the Commissioners expresses dissatisfaction with their determination as being erroneous in point of law,it is for them to state a case and in the body of it to set out the facts that they have found as well as their determination. I do number think that inferences drawn from other facts are incapable of themselves being findings of fact, although there is value in the distinction between primary facts and inferences drawn from them. When -the case companyes before the Court, it is its duty to examine the determination having regard to its knowledge of the relevant law. If a case companytains anything ex facie which is bad in point of law and which bears upon the determination, it is obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that numberpersons acting judicially and properly instructed as to the relevant law companyld have companye to the determination under appeal.In those circumstances,too, the Court must intervene . Lord Radcliffe remarked that the English companyrts had been led to be rather overready to treat these questions as pure questions of fact and added if so I would say with very great respect that I think it a pity that such a tendency should persist . Therefore, it seems to us that in effect this decision is number inconsistent with the view we have taken about the character of the question raised before us in the present appeal. As we have already indicated, to avoid companyfusion or unnecessary companyplications it would be safer and more companyvenient to describe the question about the character of the transaction in the companytext as a question of mixed law and fact. The learned Attorney-General has invited our attentionto the fact that the form in which the question referred tothe High Court has been framed in the present case seems to assume that the impugned finding is a finding of fact. It is only in regard to a finding of fact that a question can be properly framed as to whether there was material to support the said finding. We would, therefore, like to add that it would be more appropriate to frame the question in this form whether, on the facts and circumstances proved in the case, the inference that the transaction in question is an adventure in the nature of trade is in law justified ? In substance, that is the basis on which the question has been framed by the respondent and companysidered by the High Court. This question has been the subject-matter of several judicial decisions and in dealing with it all the judges appear to be agreed that numberprinciple can be evolved which would govern the decision of all cases in which the character of the impugned transaction falls to be companysidered. When s. 2, sub-s. 4 , refers to an adventure in the nature of trade it clearly suggests that the transaction cannot properly be regarded as trade or business. It is allied to transactions that companystitute trade or business but may number be trade or business itself. It is characterised by some of the essential features that make up trade or business but number by all of them and so, even an isolated transaction can satisfy the description of an adventure in the nature of trade. Sometimes it is said that a single plunge in the waters of trade may partake of the character of an adventure in the nature of trade. This statement may be true but in its application due regard must be shown to the requirement that the single plunge must be in the waters of trade. In other words, at least some of the essential features of trade must be present in the isolated or single transaction. On the other hand, it is sometimes said that the appearance of one swallow does number make a summer. This may be true if, in the metaphor, summer represents trade but it may number be true if summer represents an adventure in the nature of trade because, when the section refers to an adventure in the nature of trade, it is obviously referring to transactions which individually cannot themselves be described as trade or business but are essentially of such a similar character that they are treated as in the nature of trade. It was faintly argued for the appellant that it would be difficult to regard a single or an isolated transaction as one in the nature of trade because income resulting from it would inevitably lack the characteristics attributed to it by Sir George Loundes in Commissioner of I. T. v. Shaw Wallace and Company 1 . Income their Lordships 1 1932 L. R. 59 I.A. 206. think , observed Sir George Loundes, in this Act companynotes a periodical monetary return companying in with some sort of regularity or expected regularity from definite sources Then the learned judge proceeded to observe that income has been likened pictorially to the fruit of a tree, or the crop of a field. It is essentially the produce of something which is often loosely spoken of as capital. In our opinion, it would be unreasonable to apply the test involved in the use of this pictorial language to the decision of the question as to whether a single or an isolated transaction can be regarded as an adventure in the nature of trade. In this companynection we may, with respect, refer to the companyment made by Lord Wright in Raja Bahadur Kamakshya Narain Singh of Ramgarh v. Commissioner of I. P., Bihar and Orissa 1 that it is clear that such picturesque similes cannot be used to limit the true character of income in general . We are inclined to think that, in dealing with the very prosaic and sometimes companyplex questions arising under the Income-tax Act, use of metaphors, however poetic and picturesque, may number help to clarify the position but may instead introduce an unnecessary element of companyfusion or doubt. As we have already observed it is impossible to evolve any formula which can be applied in determining the character of isolated transactions which companye before the companyrts in tax proceedings. It would besides be inexpedient to make any attempt to evolve such a rule or formula. Generally speak- ing, it would number be difficult to decide whether a given transaction is an adventure in the nature of trade or number. It is the cases on the border line that cause difficulty. If a person invests money in land intending to hold it, enjoys its income for some time, and then sells it at a profit, it would be a clear case of capital accretion and number profit derived from an adventure in the nature of trade. Cases of realisation of investments companysisting Of purchase and resale, though profitable, are clearly outside the doma- in of adventures in the nature of trade. In deciding 1 1943 L.R. 70 I.A, 180, 193. the character of such transactions several factors are treated as relevant. Was the purchaser a trader and were the purchase of the companymodity and its resale allied to his usual trade or business or incidential to it ? Affirmative answers to these questions may furnish relevant data for determining the character of the transaction. What is the nature of the companymodity purchased and resold and in what quantity was it purchased and resold ? If the companymodity purchased is generally the subject-matter of trade, and if it is purchased in very large quantities, it would tend to eliminate the possibility of investment for personal use, possession or Goverment. Did the purchaser by any act subsequent to the purchase improve the quality of the companymodity purchased and thereby made it more readily resaleable ? What were the incidents associated with the purchase and resale ? Were they similar to the operations usually associated with trade or business ? Are the transactions of purchase and sale repeated ? In regard to the purchase of the companymodity and its subsequent possession by the purchaser, does the element of pride of possession companye into the picture ? A person may purchase a piece of art, hold it for some time and if a profitable offer is received may sell it. During the time that the purchaser had its possession he may be able to claim pride of possession and aesthetic satisfaction and if such a claim is upheld that would be a factor against the companytention that the transaction is in the nature of trade. These and other companysiderations are set out and discussed in judicial decisions which deal with the character of transactions alleged to be in the nature of trade. In companysidering these decisions it would be necessary to remember that they do number purport to lay down any general or universal test. The presence of all the relevant circumstances mentioned in any of them may help the companyrt to draw a similar inference but it is number a matter of merely companynting the number of facts and circumstances pro and company what is important to companysider is their distinctive character. In each case, it is the total effect of all relevant factors and circumstances that determines the character of the transaction and so, though we may attempt to derive some assistance from decisions bearing on this point, we cannot seek to deduce any rule from them and mechanically apply it to the facts before us. In this companynection it would be relevant to refer to another test which is sometimes applied in determining the character of the transaction. Was the purchase made with the intention to resell it at a profit ? It is often said that a transaction of purchase followed by resale can either be an investment or an adventure in the nature of trade. There is numbermiddle companyrse and numberhalf-way house. This statement may be broadly true and so some judicial decisions apply the test of the initial intention to resell in distinguishing adventures in the nature of trade from transactions of investment. Even in the application of this test distinction will have to be made between initial intention to resell at a profit which is present but number dominant or sole in other words, cases do often arise Where the purchaser may be willing and may intend to sell the property purchased at profit, but he would also intend and be willing to hold and enjoy it if a really high price is number offered. The intention to resell may in such cases be companypled with the intention to hold the property. Cases may, however, arise where the purchase has been made solely and exclus- ively with the intention to resell at a profit and the purchaser has numberintention of holding the property for himselfor otherwise enjoying or using it. The presence of such an intention is numberdoubt a relevant factor and unless it is offset by the presence of other factors it would raise a strong presumption that the transaction is an adventure in the nature of trade. Even so, the presumption is number companyclusive and it is companyceivable that, on companysidering all the facts and circumstances in the case, the companyrt may, despite the said initial intention, be inclined to hold that the transaction was number an adventure in the nature of trade. We thus companye back to the same position and that is that the decision about the character of a transaction in the companytext cannot be based solely on the application of any abstract- rule, principle or test and m st in every case depend upon all the relevant facts and circumstances. Let us number companysider some of the decisions to which our attention was invited. Normally the purchase of land represents investment of money in land but where a companypany is formed for the purpose inter alia of acquiring and reselling mining property, and after acquiring and working various property, it resells the whole to a second companypany receiving payment in fully-paid shares of latter companypany, it was held in The Californian Copper Syndicate Limited and Reduced v. Harris Surveyor of Taxes 1 that the difference between the purchase price and the value of the shares for which the property was exchanged is a profit assessable to income-tax. In this case Lord Justice Clerk has observed that it is quite a well settled principle in dealing with the question of assessment of Income Tax, that where the owner of an ordinary in. vestment chooses to realise it, and obtains a greater price for it than he originally acquired it at, the enhanced price is number profit in the sense of Schedule D of the Income Tax Act and he added that it is equally well established that the enhanced value obtained from realisation or companyversion of security may be so assessable where what is done is number merely a realisation or a change of investment but an act done in what is truly the carrying on or carrying out of a business . This was a clear case where the companypany was held to be carrying on the business of purchase and sale of mining property. Where land purchased, and subsequently developed, with the object of making it more readily saleable, was sold at a profit, the intention of the assessee was treated to be number to hold the land as an investment, but as a trading asset in Cayzer, Irvine and Co. Ltd. v. Commissioners of Inland Revenue 2 . In his judgment, Lord President Normand referred to the large development expenditure incurred by the assessee to improve the property and observed that it appeared to be on the whole companysistent with the idea that it was carrying on a trade in land rather than with the idea that 1 1904 5 Tax Cas. 159. 2 1942 24 Tax Cas. 491. it was throughout holding it as an investment only to be realised if at all when it desired to meet some financial need. In repelling the plea that the transaction showed investment, the Lord President added that the Commissioners with their knowledge and experience of these matters, have companye to the companyclusion that the intention was to hold this estate number as an investment but as a trading asset and in, order to develop it and to market it . It would thus appear that the companyduct of the assessee in incurring a large amount of expenditure on the development of land companysisting mainly in the companystruction of roads and sewers was held to justify the inference that the transaction was an adventure in the nature of trade, though the property purchased and sold was land. In the Commissioners of Inland Revenue v. Livingston 1 the assessees respondents were a ship repairer, a blacksmith and a fish salesmens employee they purchased as a joint venture a cargo vessel with a view to companyverting it into a steam-drifter and selling it. They were number companynected in business and they had never previously bought a ship. After the ship was purchased, extensive repairs and alterations were carried out by the orders of the respondents and the ship was then sold at a profit. It was held that the profit arising from the transaction was assessable to income-tax under Case I of Schedule D. Lord President Clyde said that in deciding whether the profits in question were taxable, regard must be had to the character and circumstances of the particular venture. If the venture was one companysisting simply in an isolated purchase of some article against an expected rise in price and, a subsequent sale , observed the Lord President, it might be impossible to say that the venture was in the nature of trade . According to him the test to be applied would be whether the operations involved in the transaction are of the same kind and carried on in the same way as those which are characteristic of ordinary trading in the line of business in which the venture was made. If they are, there was numberreason why the venture should number be 1 , 1926 11 Tax Cas. 538. regarded as in the nature of trade merely because it was a single venture which took only three months to companyplete. Reference was then made to the steps taken ,by the assessees to buy a secondhand vessel and to ,convert into a marketable drifter and it was stated -that the profit made by the venture arose number from the mere appreciation of the capital value of an isolated purchase for resale but from the expenditure on the subject purchased of money laid out upon it for the purpose of making it marketable at a profit. That , said the Lord President, was the very essence of trade . It was in this companynection that the Lord President observed that the appearance of a single swallow does number make a summer. It would thus be numbericed that this decision was based substantially on the ground that after the ship was purchased the assessees bestowed labour and money on companyverting it into a marketable drifter and that imprinted upon the transaction the character of trade. It is true that some of the observations made by the Lord President would indicate that from the intention to resell at a profit it would be impossible to attribute to the transaction the character of an adventure in the nature of trade. However, as we will presently point out, these observations have been explained by the Lord President himself subsequently in Rutledge v. Commissioners of Inland Revenue 1 and it is to this case that we will number refer. In the case of Rutledge 2 the appellant was a moneylender who was also interested in a cinema companypany in 1920. Since that time he had been interested ill various businesses. He was in Berlin in 1920 on business companynected with the cinema companypany where he was offered an opportunity of purchasing very cheaply a large quantity of paper. He effected the purchase and within a short time after his return to England he sold the whole companysignment to one person at a companysiderable profit. This profit Was held liable to assessment to income-tax, Schedule D, and to excess profits duty as being profit of an adventure in the nature of trade. This assessment was the subject-matter 1 1929 14 Tax Cas. 490. of an appeal before the Court of Appeal, and on behalf of the appellant the observations made by the Lord President Clyde in the case of Livingston 1 were pressed into service but the Lord President did number accept the plea based on his earlier observations because he said that the said observations were intended to show that a single transaction fell far short of companystituting a dealers trade whereas, in the present case, the question was whether the transaction was an adventure in the nature of trade. The Lord President agreed that mere intention is number enough to invest a transaction with the character of trade but he added that, if the purchase is made for numberpurpose except that of resale at a profit, there seems little difficulty in arriving at the companyclusion that the deal was in the nature of trade though it may be wholly insufficient to companystitute by itself a trade. Then he referred to the illustration which he had cited in his earlier decision about the purchase of a picture and observed that if a picture was purchased to embellish the purchasers own house for a time, he might sell it if the anticipated appreciation in the value ultimately realised itself. In such a case , says the Lord President, I pointed out that it might be impossible to affirm that the purchase and sale companystituted an adventure in-the nature of trade although, again, the crisis of judgment might turn on the particular circumstances . It would thus be clear that the strong observations made by the Lord President in the case of Livingston 1 must be companysidered in the light of the clarification made by him in this case. Lord Sands, who agreed with the Lord President has thus observed Your Lordship in the Chair has indicated that there may be cases of purchase and resale at a profit where the transaction cannot be said to be in the nature of trade. In particular, this may be the case where there is numberdefinite intention of reselling when the purchase is made . This decision, therefore, shows that where the assessee purchased a very large quantity of paper with the intention to sell it at profit the transaction was treated as an adventure in the nature of trade. It was held 1 1926 11 Tax Cas. 538. to be a most successful adventure on the part of the assessee and having regard to the circumstances attending the purchase and sale it was treated as an adventure in the nature of trade. In T. Beynon Co. Ltd. v. Ogg 1 the companyrt was dealing with the case of a companypany which was carrying on business as companyl merchants, ship and insurance brokers and as sole selling agent for various companyliery companypanies in which latter capacity it was a part of its duty to purchase wagons on its own account as a speculation and -subsequently to dispose of them at a profit. The assessee companytended that the transaction of purchase and sale being an isolated one the profit was in the nature of a capital profit on the sale of an investment and should be excluded in companyputing its liability to income-tax. The companyrt held that the profit realised was made in the operation of the companypanys business and was properly included in the companyputation of companypanys profits for assessment under Schedule D. It appears that, in 1914, acting as agent on behalf of two companyliery , companypanies, the assessee had purchased two lots of wagons each of which companysisted of 250 wagons. During the companyrse of negotiations the assessee, foreseeing that the companyt of material and wages was likely to increase, determined to buy a, third lot of 250 wagons for itself and did eventually purchase it. In July 1915 the assessee sold this lot and made a profit of pound 2,500. The question which arose for decision was whether this sum was chargeable to incometax. In dealing with the argument that as an isolated transaction the profit arising out of it was number chargeable to tax, Sankey, J., observed that he thought in most cases an insolated transaction does number fall to be chargeable . But he added you have to companysider the transaction and you cannot lay it down as a matter of law without regard to the circumstances that in this case the pound, 2,500 is number chargeable . Then the learned judge companysidered that the number of wagons purchased was large and held that the other circumstances attending the purchase and sale of the said wagons showed that this transaction was a 1 1918 7 Tax Cas. 125. transaction, and this profit was a profit -with the result that it made the operation of the assessee in that behalf its business. The learned judge however, added a word of caution that he did number think it desirable to lay down any rule as to where the line ought to be drawn, and that it was number even possible to lay down such a rule. But , said the learned judge, it is perfectly easy to say whether Case A or Case B falls on the one side or the other . In the Balgownie Land Trust, Ltd. v. The Commissioners of Inland Revenue 1 the owner of a landed estate, at his death, had left his estate to trustees with a direction to realise. The trustees were number successful in their efforts to sell the estate in the market. So they formed a companypany with general powers to deal in real property and transferred the estate to this companypany in exchange for shares which were allotted to the beneficiaries under the trust and were, at the date of the appeal still mainly held by those beneficiaries or their representatives. Soon after its incorporation the purchaser companypany made a substantial purchase of some other property acquired by borrowing on the security of the original estate. The companypany received rents and paid a regular dividend on its capital. In 1921 and the following years parts of the original estate were sold and in 1925 the whole of the additional property was sold. When the profits realised by the sales were taxed under Schedule D for the year 1926-27, the assessee companytended that the transactions in question were number in the nature of trade and the profits arising therefrom cannot be taxed. This companytention was negatived by the General Commissioners whereupon the assessee appealed. Lord President Clyde described the problem raised by the assessee as one of. the most familiar problems under Case I of Schedule D and ob. served that a single plunge may be enough provided it is shown to the satisfaction of the Court that the plunge is made in the waters of trade but the sale of a piece of property-if that is all that is involved in the plunge-may easily fall short of anything in the nature of trade. Transactions of sale are characteristic 1 1929 14 Tax Cas. 684. of trade, but they are number necessarily distinctive of it much depends on the circumstances. Then the companyduct of the assessee after its incorporation was companysidered and it was held that the purchase of the property in substance amounted to a launching forth albeit, number in a very large scale. In the result the finding of the Commissioners was companyfirmed and the profit, Was held liable to tax. In Martin v. Lowry 1 the House of Lords was companysidering a case of a wholesale agricultural machinery merchant who had never had any companynection with the linen trade purchasing from the government the whole of its surplus stock of aeroplane linen some 44 million yards at a fixed price per yard. The companytract of purchase provided in detail as to delivery, and the payment of the price. The purchaser failed in his original attempt to sell the whole of the linen to Belfast linen manufacturers outright. Then he sought to bring pressure on them by placing the linen for sale to the public. It led to an extensive advertising campaign, renting of offices and engaging advertising manager, a linen expert as adviser and a staff of clerks. Sales then proceeded rapidly and soon the whole stocks were disposed of. In all 4,279 orders were received from 1,280 purchasers. Assessment to income-tax and excess profits duty were made upon the assessee in respect of profits of the transaction. It was held that the dealings of the assessee in linen companystituted the carrying on of a trade of which the profits were chargeable to income-tax and excess profits duty. One of the points raised before the House of Lords was that the assessee did number carry on trade or business but only engaged in a single adventure number involving trading operation. In rejecting this companytention, Viscount Cave, L. C., observed that the Commissioners have found as a fact that he did carry on trade, and they set out in the Case ample material upon which they companyld companye to that companyclusion . He added that, indeed, having regard to the methods adopted for the resale of the linen, to the number of operations into which the assessee entered and to the time occupied by 1 1926 11 Tax Cas. 297. the resale, he did number himself see how they companyld have companye to any other companyclusion. The other point raised in the appeal was that the profits in question did number companye within the description of annual profits or ,gains but we are number companycerned with that point. In F. A. Lindsay, A. E. Woodward and W. Hiscox v. Commissioners of Inland Revenue 1 the appellant L, a wine merchant, had on hand a large quantity of American rye whisky. He invited the appellants W H who were also engaged in the wine trade to join with him in a venture of shipping the whisky to the United States. It was agreed that W H should companytribute certain sums towards expenses and that the profits should be shared in certain proportions. The. agreement was number reduced to writing. The shipping of the whisky was arranged by L with companysultation with W H and was carried out gradually over a period of two years. From time to time W H met L who told them that the whisky had been successfully shipped to the United States and sold there profitably. Subsequently the appellants decided to discontinue the export of whisky and to employ the monies which they had accumulated in the purchase with a view to resale of a wine business in Portugal. In respect of the profits made by the appellants from the sale of wine an assessment was made on them jointly for 1922-23. The Special Commissioners found that a partnership or joint venture subsisted between the appellants and that the profits of the sales of whisky were assessable to income-tax. The Lord President Clyde rejected the appellants companytention and observed that the nature of the transaction-apart from the fraudulent breaches of law which were inherent in it-was neither more number less than the companymercial disposal of a quantity of rye whisky . In point of fact the disposal was number effected by a single transaction but extended over a year and more and so it companyld number fall outside the sphere of trade. This was a clear case where a large number of distinctive features of trade were associated with the transaction. 1 1932 18 Tax Cas. 43. The transaction of the purchase and sale of whisky was again brought before the companyrt for its decision in the Commissioners of Inland Revenue v. Fraser 1 . In this case the assessee, a woodcutter, bought through an agent for resale whisky in bond for pound 407. Nearly three years thereafter the whisky was sold at a profit for pound, 1,131. This was the assessees sole dealing in whisky. He had numberspecial knowledge of the trade and he did number take delivery of the whisky number did he have it blended and advertised. Even so, it was held that the transaction was an adventure in the nature of trade. It may be mentioned that when the matter was first taken before the Commissioners they took the view that an adventure in the nature of trade had number been carried on by the assessee, that merely an investment had been made and subsequently realised and so the profit was number assessable to income-tax. This view was, however, reversed by the First Division of the Court of Session and it was held that in companying to the companyclusion the Commissioners had misdirected themselves as to the meaning of being engaged in an adventure in the nature of trade . The Lord President Normand companyceded that it would be extremely difficult to hold that a single transaction amounted to a trade but he added that it may be much less difficult to hold that a single transaction was an adventure in the nature of trade. There was much discussion , observed the Lord President, as to the criterion which the companyrt should apply. I doubt if it would be possible to formulate a single criterion. The following observations made by the Lord President in this companynection may be usefully quoted It is in general more easy to hold that a single transaction entered into by an individual in the line of his own trade although number part and parcel of his ordinary business is an adventure in the nature of trade than to hold that a transaction entered into by an individual outside the line of his own trade or occupation is an adventure in the nature of trade. 1 1942 24 Tax Cas. 498. But what is a good deal more important is the nature of the transaction with reference to the companymodity dealt in. The individual who enters into a purchase of an article or companymodity may have in view the resale of it at a profit, and yet it may be that that is number the only purpose for which he purchased the article or the companymodity, number the only purpose to which he might turn it if favourable opportunity of sale does number occur. In some of the cases the purchase of a picture has been given as an illustration. An amateur may purchase a picture with a view to its resale at a profit, and yet he may recognise at the time or after- wards that the possession of the picture will give him aesthetic enjoyment if he is unable ultimately, or at his chosen time, to realise it at a profit. A man may purchase stocks and shares with a view to selling them at an early date at a profit, but, if he does so, he is purchasing something which is itself an investment, a potential source of revenue to him while he holds it. A man may purchase land with a view to realising it at a profit, but it also may yield him an income while he companytinues to hold it If he companytinues to hold it, there may be also a certain pride of possession. But the purchaser of a large quantity of a companymodity like whisky, greatly in excess of what companyld be used by himself, his family and friends, a companymodity which yields numberpride of possession, which cannot be turned to account except by a process of realisation, I can scarcely companysider to be other than an adventurer in a transaction in the nature of a trade and I can find numbersingle fact among those stated by the Commissioners which in any way traverses that view. In my opinion the fact that the transaction was number in the way of business whatever it was of the Respondent in numberway alters the character which almost necessarily belongs to a transaction like this. Most important of all, the actual dealings of the Respondent with the whisky were exactly of the kind that take place in ordinary trade. These observations indicate some of the important companysiderations which are to be borne in mind in determining the character of a single transaction. We may number refer to the decision of the House of Lords in Leeming v. Jones 1 . In this case the appellant was a member of a syndicate of four persons formed to acquire an option over a rubber estate with a view to resell it at a profit. The option was secured but the estate was companysidered too small for a resale to a companypany for public floatation. An option over another adjoining estate was accordingly secured and it was decided to resell the two estates to a public companypany to be formed for the purpose. Another member of the syndicate undertook to arrange for the promotion of this companypany. The syndicates total receipts resulting from the transactions in respect of the estates amounted to pound 3,000 and the balance remaining, after deduction of certain expenses, was divided between the members. The appellant was assessed to income-tax, Schedule D, in respect of his share. The General Commissioners held that the appellant acquired the property or interest in the property in question with the sole object of turning it over again at a profit and that he at numbertime had any intention of holding it as an investment. That is why they companyfirmed the assessment. After the case was heard before the Kings Bench Division it was remitted to the General Commissioners for a finding as to whether there was or was number a companycern in the nature of trade. The Commissioners then found that the transaction in question was number a companycern in the nature of trade and that there was numberliability to assessment. It may be pointed out that in remitting the case for the re- companysideration of the General Commissioners, Rowlatt, J., had observed that it was quite clear that what the Commissioners had got to find was whether there was a companycern in the nature of trade and all that they had found was that the property was acquired with the sole object of turning it over again at a profit and without any intention of holding it as an investment. That describes , said Rowlatt, J., what a man does if he buys a picture that he sees going cheap at Christies, because he knows that in a month he will sell it again at Christies That , according to 1 1930 15 Tax Cas. 333. the learned judge, is number carrying on trade and so what the Commissioners must do is to say, one way or the other, was this, I will number say carrying on a trade, but was it a speculation or an adventure in the nature of trade . The learned judge to doubt added that he did number indicate which way the finding ought to be, but he companymended the Commissioners to companysider what took place in the nature of organising the speculation, maturing the property and disposing of the property, and when they have companysidered all that, to say whether they think it was an adventure in the nature of trade or number. It is thus clear that Rowlatt, J., indicated clearly though in cautious words what he thought was the true nature of the transaction made. Even so, on reconsideration of the matter the Commissioners returned a finding in favour of the assessee. After the finding was returned Rowlatt, J., held that he must abide by his own decision in Pearm v. Miller 1 and so the appeal was allowed. The matter was then taken to the Court of Appeal where the revised finding of the Commissioners was treated as a finding on a question of fact number open to challenge and the point which was companysidered at length was whether even if the transaction was number an adventure in the nature of trade, companyld the profit resulting from it be taxed under Case VI? The Master of the Rolls Lord Hanworth traced the history of the dispute, mentioned how Mr. Justice Rowlatt had indicated to the Commissioners what they had to companysider in determin- ing the question remitted to them and observed that Mr Justice Rowlatt, and I think this Court, might perhaps have taken the companyrse of saying that having regard to what he had called attention to in this case, the particular facts, of organising the speculation, of maturing the property, and the diligence in discovering a second property to add to the first, and the disposing of the property, there ought to be and there must be a finding that it was an adventure in the nature of trade but Mr. Justice Rowlatt withheld his hand from so doing and I think he was right, for however strongly one may feel as to the facts, the facts 1 1927 11 Tax Cas. 610. are for the decision of the Commissioners . It would thus be clear that the decision of the Commissioners appeared both to Rowlatt, J., and the Court of Appeal to be erroneous. Even so, they refused to interfere with it on the ground that it was a decision on a question of fact. We may, with respect, recall that it was in regard to this approach that Lord Radcliffe observed in the case of Edwards 1 that it was a pity that such a tendency should persist to treat the findings of the Commissioners on the question as to the character of the transaction as companyclusive . In dealing wit the question as to whether if Case I did number apply Case VI companyld apply, Lord Justice Lawrence observed that in the case of an isolated transaction of purchase and resale of property there is really numbermiddle companyrse open. It is either an adventure in the nature of trade, or else it is simply a case of sale and resale of property . The Court of Appeal held that if the transaction did number fall in Case. It was difficult to see how it companyld fall under Case VI. The discussion on this part of the case is, however, number relevant for our purpose. This decision of the Court of Appeal was taken before the House of Lords and the question debated before the House of Lords was about the -application of Case VI to the transaction. The House of Lords affirmed the view taken by the Court of Appeal and held that Case VI was inapplicable because Case VI neces- sarily refers to the words of Schedule D, that is to say, it must be a case of annual profits and gains and those words again are ruled by the first section of the Act which says that when an Act indicates that income-tax shall be charged for any year at any rate the tax at that rate shall be charged in respect of the profits and gains according to the Schedules . Lord Buckmaster agreed with the observations of Lord Justice Lawrence that there can be numbermiddle companyrse open in such cases. Viscount Dunedin, in companycurring with the opinion of Lord Buckmaster, dealt with the several arguments urged by the Crown but the observations made by him with regard to the last argument are relevant for our purpose. The last argument of the 1 1956 A.C. 14 36 Tax Cas. 207. companynsel for the Crown , observed Viscount Dunedin, was that there was a finding that the respondent never meant to hold the land bought as an investment. The fact that a man does number mean to hold an investment may be an item of evidence tending to show whether he is carrying on a trade or companycern in the nature of trade in respect of his investment but per se it leads to numberconclusion whatever . According to Viscount Dunedin, recourse to Case VI ignores the fact that it had been settled again and again that Case VI does number suggest that anything that is a profit or gain falls to be taxed. The observations made by Viscount Dunedin were companysidered in the Commissioners of Inland Revenue v. Reinhold 1 . We ought to add that the appellant has placed strong reliance on this decision. In this case, the respondent was a director of a companypany carrying on a business of ware house men he bought four houses in January 1945 and sold them at a profit in December 1947. He admitted that he had bought the property with a view to resale and had instructed his agents to sell whenever a suitable opportunity arose. The profits made by him on resale were assessed to tax. On appeal before the General Commissioners he companytended that the profit on resale was number taxable. The Crown urged that the transaction was an adventure in the nature of trade and that profits arising therefrom were chargeable to Ax. The General Commissioners being equally divided allowed the appeal and discharged the assessment. It was on these facts that the matter was then taken before the First Division of the Court of Session and it was urged on behalf of the Crown that the initial intention of the assessee clearly was to sell the property at a profit and so the view taken by the General Commissioners about the character of the transaction was erroneous. This argument was, however, rejected and the order of discharge passed by the General Commissioners was companyfirmed. When the Crown referred to the observations of Lord Dunedin in the case of Leeming 2 which we have 1 1953 34 Tax Cas. 389. 2 1930 15 Tax Cas. 333. already cited, Lord Carmont observed that he did number wish to read the said passage out of its companytext and without regard to the facts of the case then under companysideration. Then Lord Carmont added that though the language used by Lord Dunedin may companyer the purchase of houses it would number companyer a situation in which a purchaser bought a companymodity which from G its nature can give numberannual return . This companyment of mine , said Lord Carmont, is just another way of saying that certain transactions show inherently that they are number investments but incursions into the realm of trade or adventures of that nature Then reference was made to the fact that the assessee was a warehouse companypany director and number a property agent or speculator and that the only purchases of property with which he was companycerned were two separated by ten years and that the first heritage was acquired without the intention to sell, which only arose fortuitously. His Lordship then put his companyclusion in this way I would therefore say that the Commissioners of Inland Revenue have failed to prove and the onus is on them the case they sought to make out. According to Lord Carmont, Lord Dunedins observations do number suggest that the initial declaration of intention per se leads to the companyclusion that the transaction was in the nature of trade. He thought that much more was required to show that the assessee was engaged in an adventure in the nature of trade than was proved in the case before the companyrt. Lord Russell, who companycurred with this opinion, began with the observation that prima facie the difference of opinion among the General Commissioners suggests that the case is a narrow one and that the onus on the appellants of showing that the transaction was an adventure in the nature of trade is number a light one. Lord Russell then mentioned the argument of the Lord Advocate that if a person buys anything with a view to sale that is a transaction in the nature of trade because the purpose of the acquisition in the mind of the purchaser is all- important and companyclusive and that the nature of the thing purchased and the other surrounding circumstances do number and cannot operate so as to render the transaction other than an adventure in the nature of trade, and observed that in his opinion the argument so formulated is too absolute and is number supported by the judicial pronouncements on which it was sought to be raised . He then referred to the variety of circumstances which are or may be relevant to the determination of such a question and he companycluded with the observation that the appellants had number discharged the burden of showing that the transaction was an adventure in the nature of trade. Lord Keith also took the same view and stated that the facts were, in his opinion, insufficient to establish that this was an adventure in the nature of trade . This case was numberdoubt a case on the border line and if we may say so with respect it was perhaps nearer an adventure in the nature of trade than otherwise. It would number be unreasonable to suggest that, in this case, if the Commissioners had found that the transaction was an adventure in the nature of trade, the companyrt would probably number have interfered with the said companyclusion but the Commissioners were equally divided and so the assessment had been discharged by them. It was under these circumstances that the point about the onus of proof became a matter of substance and, as we have already pointed out, all tile learned judges have emphasized that the onus had number been discharged and that numbercase had been made out for reversing the order of discharge -passed by the Commissioners. However that may be, it would, we think, be unsafe to treat this case as laying down any general proposition the application of which would assist the appellant before us. We would also like to add that there can be numberdoubt that Lord Russells criticism against the companytention raised by the Lord Advocate was fully justified because the companytention as raised clearly overstated the significance and effect of the initial intention. As we have already pointed out, if it is shown that, in purchasing the companymodity in question, the assessee was actuated by the sole intention to sell it at a profit, that numberdoubt is a relevant circumstance which would raise a strong presumption that the purchase and subsequent sale are an adventure in the nature of trade but the said presumption is number companyclusive and it may be rebutted or offset by other relevant circumstances. What then are the relevant facts in the present case ? The property purchased and resold is land and it must be companyceded in favour of the appellant that land is generally the subject-matter of investment. It is companytended by Mr. Viswanatha Sastri that the four purchases made by the appellant represent numberhing more than an investment and if by resale some profit was realised that cannot impress the transaction with the character of an adventure in the nature of trade. The appellant, however, is a firm and it was number a part of its ordinary business to make investment in lands. Besides, when the first purchase was made it is difficult to treat it as a matter of investment. The property was a small piece of 28-1/4 cents and it companyld yield numberreturn whatever to the purchaser. It is clear that this purchase was the first step taken by the appellant in execution of a well-considered plan to acquire open plots near the mills and the whole basis for the plan was to sell the said lands to the mills at a profit., Just as the companyduct of the purchaser subsequent to the purchase of a companymodity in improving or companyverting it so as to make it more readily resaleable is a relevant factor in determining the character of the transaction, so would his companyduct prior to the purchase be relevant if it shows a design and a purpose. As and when plots adjoining the mills were available for sale, the appellant carried out his plan and companysolidated his holding of the said plots. The appellant is the managing agent of the Janardana Mills and probably it was first thought that purchasing the plots in its own name and selling them to the mills may invite criticism and so the first purchase was made by the appellant in the name of its benamidar V. G. Raja. Apparently the appellant changed its mind and took the subsequent sale deeds in its own name. The companyduct of the appellant in regard to these plots subsequent to their purchase clearly shows that it was number interested in obtaining any return from them. No doubt the appellant sought to explain-its purpose on the ground that it wanted to build tenements for the employees of the mills but it had taken numbersteps in that behalf for the whole of the period during which the plots remained in its possession. Besides, it would number be easy to assume in the case of a firm like the appellant that the acquisition of the open plots companyld involve any pride of possession to the purchaser. It is really number one transaction of purchase and resale. It is a series of four transactions undertaken by the appellant in pursuance of a scheme and it was after the appellant had companysolidated its holdings that at a companyvenient time it sold the lands to the Janardana Mills in two lots. When the tribunal found that, as the managing agent of the mills, the appellant was in a position to influence the mills to purchase its properties its view cannot be challenged as unreasonable. If the property had been purchased by the appellant as a matter of investment it would have tried either to cultivate the land, or to build on it but the appellant did neither and just allowed the property to remain unutilised except for the net rent of Rs. 80 per annum which it received from the house on one of the plots. The reason given by the appellant for the purchase of the properties by the mills has been rejected by the tribunal and so when the mills purchased the properties it is number shown that the sale was occasioned by any special necessity at the time. In the circumstances of the case the tribunal was obviously right in inferring that the appellant knew that it would be able to sell the lands to the mills whenever it thought it profitable so to do. Thus the appellant purchased the four plots during two years with the sole intention to sell them to the mills at a profit and this intention raises a strong presumption in favour of the view taken by the tribunal. In regard to the other relevant facts and circumstances in the case, numbere of them offsets or rebuts the presumption arising from the initial intention on the other hand, most of them companyroborate the said presumption. We must, therefore, hold that the High Court was right in taking the view that, on the facts and circumstances proved in this case, the transaction in question is an adventure in the nature of trade.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 120 of 1955. Appeal from the judgment and decree dated March 25, 1949, of the Madras High Court in Appeal No. 55 of 1946, arising out of the judgment and decree dated November 26, 1945, of the Court of the District Judge of Bellary in Original Suit No. 39 of 1943. V. Viswanatha Sastri and K. R. Chaudhury for B. K. B. Naidu, for the appellant. N. Rajagopala Sastri and M. S. K. Sastri, for the respondents. 1958. December 19. The Judgment of the Court was delivered by IMAM, J.-This appeal is before us on a certificate granted by the High Court as according to that Court a substantial question of law arose in the case which was stated by it to be Is the adoption of the second defendant invalid, as the approval or companysent of the five trustees mentioned in paragraph 14 of the will of Kari Veerappa, Exbt. P-2 a was number obtained and is the authority to adopt at an end if any one of those five persons did number accept the trusteeship or died before the adoption or refused to give their approval . In view of certain matters about to be stated, the question of law as propounded by the High Court does number require to be companysidered. Kari Veerappa was the last male owner of the estate mentioned in his will, Exbt. P-2 a , which he executed on October 10, 1920. Under this will he authorised his wife Setra Veeravva, first defendant, to adopt a son for the purpose of companytinuation of his family as he had numberissue. The authority to adopt was in the following terms I have given her permission to adopt as many times as would be necessary, should the previous adoption be unsuccessful. But Veeravva must adopt only a boy approved by the respectable persons appointed by me in paragraph 14 should Veeravva die before -making any adoption, the persons becoming trustees should arrange for the adoption of a boy for the companytinuation of my family in accordance with my kulachara family usage At this stage it is unnecessary to refer to the other provisions of the will of Kari Veerappa. This gentle. man died on October 23, 1920. After his death, his widow made two attempts to adopt a son in accordance with his will. The first attempt was in 1939 which did number accomplish the purpose of the will as the person alleged to have been adopted died. The validity of this adoption was being questioned, but as the boy said to have been adopted had died, effects to dispute the adoption did number materialise. Veeravva thereafter, on October 11, 1942, adopted second defendant, Sesalvada Kotra Basayya. Two documents in this companynection are on the record. The first document is Exbt. D-25 dated the 18th of September, 1942, which was a registered agreement to adopt the second defendant. The second document is also a registered document, which is described as the deed of adoption and is dated June 23, 1943. This clearly states that on October 11, 1942, Veeravva had adopted the 2nd defendant. Reference was also made in this document to the agreement of September 18, 1942. The appellant claiming to be the nearest reversioner of Kari Veerappa filed the present suit asking for a declaration that the adoption of the second defendant by Veeravva was invalid and number binding on the appellant or the other reversioners to the estate of the late Kari Veerappa. The suit filed by the appellant was heard by the District Judge of Bellary who dismissed it. The appellant- appealed to the High Court of Madras. His appeal was dismissed and the decision of the District Judge was substantially affirmed. The High Court did number allow companypensatory companyts granted by the District Judge, number did it agree with his finding that the appellant had failed to prove the relationship he had propounded and that lie was -not a reversioner at all, far less the nearest reversioner. In the opinion of the High Court, the appellant was a relative and a reversioner, though he had number proved that he was the nearest reversioner alive at the time the appeal was heard and that he need number prove this until he actually sought to recover possession of the property after Veeravvas death. When this appeal came on for hearing the learned Advocate for the respondents took a preliminary objection that the suit filed by the plaintiff must in any event fail, having regard to the provisions of s. 14 of the Hindu Succession Act, 1956 30 of 1956 , hereinafter referred to as the Act. Hence the present appeal arising out of that suit must also fail. It was companytended on behalf of the respondents that either there was a valid adoption or there was number. If there was a valid adoption and the decisions of the High Court and the District Judge on this question were companyrect, then obviously the suit of the appellant must be dismissed. If, on the other hand, it was found that the adoption of the second defendant by Veeravva was either invalid or, in fact, had number taken place, then under the provisions of s. 14 of the Act, Veeravva became the full owner of her husbands estate and was number a limited owner thereof. Consequently, the appellants suit was number maintainable. In, view of this submission we are of the opinion that the point raised by way of preliminary objection must first be companysidered and decided. It is well settled that an appellate companyrt is entitled to take into companysideration any change in the law vide the case of Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri 1 . Section 14 of the Act states- 14 1 Any property possessed by a female Hindu, whether acquired before or after the companymencement of this Act, shall be held by her as full owner thereof and number as a limited owner. 1 1940 F.C.R. 84. Explanation.-In this sub-section, property includes both movable and immovable property acquired by a female Hindu by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or number, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever, and also any such property held by her as stridhana immediately before the companymencement of this Act. Nothing companytained in sub-section 1 shall apply to any property acquired by way of gift or under a will or any other instrument or under a decree or order of a civil companyrt or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property. On behalf of the appellant it was urged that s. 14 of the Act did number apply to the facts of the present case because the estate of Veerappa was number in possession of his widow Veeravva but was in possession of the second defendant at the time the Act came into force and, secondly, because under sub-s. 2 of s. 14 Veeravva got a restricted estate under the will Exbt. P-2 a and the agreement to adopt, Exbt. D-25. It was submitted that the widow , s power of adoption did number depend on her ownership of the estate of her husband. That power in the present case was derived under the Hindu law either from the authority companyferred by her husband or the companysent of his agnates. The Act did number enlarge her power of adoption and did number render an invalid adoption made by her immune from attack by the reversioners during her life time. The act of Veeravva in the present case was to bring in a stranger. The appellant as a rever- sioner was, therefore, entitled during the life time of Veeravva to bring the present suit to obtain a declaration that the adoption of the second defendant was invalid. The question raised by the preliminary objection taken by the respondents must be companysidered an the assumption that the adoption of the second defendant was invalid. The provisions of a. 14 of the Act would number arise for companysideration, if the second defendant had been validly adopted. It is necessary, therefore, to determine whether the provisions of s. 14 apply to the facts of the present case. It was strongly urged on behalf of the appellant that the words any property possessed by a female Hindu in s. 14 of the Act referred to actual possession of the property whether the property was acquired before or after the Act came into force. This was a companydition precedent to the applicability of the provisions of s. 14 to the present case. Since the Act came into force on June 17, 1956, and the decision of the High Court was given on March 25, 1955, the question as to who was in actual possession of the estate of Veerappa did number arise for companysideration on the case of the appellant set out in his plaint. The appellant should accordingly be given an opportunity to have a finding recorded on this question after the taking of evidence in that respect. On behalf of the respondents it was urged that the words any property possessed by a female Hindu did number refer merely to actual physical possession only but to ownership and possession in law as well. It was further urged on behalf of the respondents that even if it be assumed that the words possessed by a female Hindu mean actual possession then, in the present case, it had been proved that Veeravva was in actual possession of the estate of Veerappa when the Act came into force. It companyld number be disputed that on the death of Veerappa, Veeravva came into possession of his estate and that she remained in possession at least until 1942 when the adoption of the second defendant is said to have taken place. But even on the adoption of the second defendant, the agreement to adopt dated September 18, 1942, stated that Veeravva was to remain in possession of her husbands estate during her life time in spite of the adoption. In the written statement filed by Veeravva and the second defendant it was clearly stated in para. 6 thereof that Veeravva came into possession of her husbands property and that she recovered possession of the property companyered by the decree in 0. S. 20 of 1921 on the file of the Subordinate Judges Court, Bellary, and that she had been in sole possession of the said property up-to- date and that although she had adopted the second defendant on October 11, 1942, it was subject to retention of the enjoyment, possession and management by her of her husbands property during her life time. An affidavit had been filed in this Court by the second defendant in which he has clearly admitted that Veeravva is still in possession of his adoptive fathers estate in pursuance of the agreement of September 18, 1942. This was an admission against his own interest by the second defendant which he was number likely to make unless it was a fact that Veeravva was in possession of the estate since her husbands death up to the present. In answer to the affidavit of the second defendant and Veeravva that she was in actual possession, the appellant had failed to file an affidavit with any clear assertion that to his knowledge Veeravva was number in Possession. The affidavit filed by the appellant was in the nature of submissions made to the Court rather than an affidavit in which facts to his knowledge were asserted. In para. 2 he had made the significant statement I understand that the possession of the suit properties has been and is number, in truth and in fact, with the alleged adopted son, the second petitioner. He is in possession of these properties and is dealing with them. He did number disclose bow he came to under. stand this. He certainly did number assert that all that was stated in para. 2 was to his knowledge. As an alternative, the appellant in para. 4 of his affidavit had submitted ,If I succeed in proving that the adoption is number true and valid, the petitioners cannot turn round and say that the possession of the first petitioner is that of a widow of an intestate and invoke the provisions of s. 14 of the Succession Act. He had further submitted in this paragraph that, even on the case of the respondents set out in their petition for adding additional grounds, Veeravvas estate was divested by the adoption, and as- she came into possession by reason of the ante-adoption agreement Exbt. D-25, s. 14 of the Act was number applicable. It seems to us that if it were permissible to decide the question of Veeravvas possession on only the affidavits before us, we would find numberdifficulty in holding that she was in possession of her husbands estate when the Act came into force. It is to be remembered, however, that this question has arisen number and the appellant has had numberreal opportunity to establish his assertion that the second defendant is in actual possession and number Veeravva. It is necessary therefore to companysider the true scope and effect of the provisions of sub-s. 1 of a. 14 of the Act. If the words possessed by a female Hindu occurring therein refer only to actual physical possession, it may be necessary to call for a finding on the question of such possession if, on the companytrary, these words have a wide companynotation and include companystructive possession or possession in law, the preliminary objection can be determined on the footing that Veeravva was in such possession at the relevant time. The provisions of s. 14 of the Act have been the subject of scrutiny and interpretation by various High Courts. In the case of Rama Ayodhya Missir v. Raghunath Missir 1 and in the case of Mt. Janki Kuer v. Chhathu Prasad 2 the Patna High Court took the view that the effect of ss. 14 and 15 of the Act was that a reversioner recognised as such under the Hindu law was numbermore a reversioner, as a female Hindu possessing any property, whether acquired before or after the companymencement of the Act, held number a limited estate but an absolute estate therein, and after the companying into force of the Act, he had numberright of reversion or any kind Of Spes successionsis. The High Courts of Calcutta, Andhra Pradesh and Madhya Pradesh have taken a view which does number support the view expressed by the Patna High Court in the aforesaid cases, The High Court of Madhya Pradesh in the case of Mt. Lukai v. Niranjan 3 dissented from the decisions of the Patna High Court in the above-mentioned cases. Indeed, the Patna High Court in the case of A.I.R. 1957 Pat. 480. 2 A.I.R. 1957 Pat. 674. A.I.R. 1058 Madh. Pra. 160. Harak Singh v. KailaSh Singh 1 overruled its previous decisions referred to above, and rightly pointed out that the object of the Act was to improve the legal status of Hindu women, enlarging their limited interest in property inherited or held by them to an absolute interest, provided they were in possession of the property when the Act came into force and, therefore, in a position to take advantage of its beneficial provisions but the Act was number intended to benefit alienees who with their eyes open purchased the property from the limited owners without justifying necessity before the Act came into force and at a time when the vendors had only a limited interest of Hindu women. In the case before us, the essential question for company- sideration is as to how the words any property possessed by a female Hindu, whether aquired before or after the companymencement of this Act in a. 14 of the Act should be interpreted. Section 14 refers to property which was either acquired before or after the companymencement of the Act and that such property should be possessed by a female Hindu. Reference to property acquired before the companymencement of the Act certainly makes the provisions of the section re- trospective, but even in such a case the property must be possessed by a female Hindu at the time the Act came into force in order to make the provisions of the section applicable. There is numberquestion in the present case that Veeravva acquired the property of her deceased husband before the companymencement of the Act. In order that the provisions of s. 14 may apply to the present case it will have to be further established that the property was possessed by her at the time the Act came into force. It was the case of the appellant that the estate of Veerappa was in actual possession of the second defendant and number Veeravva at the relevant time. On behalf of the respondent it was urged that the words possessed by had a wider meaning than actual physical possession, although physical possession may be included in the expression. A.I.R. 1958 Pat. 581. In the case of Gaddam Venkayamma v. Gaddam Veerayya 1 Viswanatha Sastri, J., with whom Satyanarayana Raju, J., agreed, expressed the opinion that the word possessed in s. 14 refers to possession on the date when the Act came into force. companyrse, possession referred to in s. 14 need number be actual physical possession or personal occupation of the property by the Hindu female-but may be possession in law. The possession of a licensee, lessee or a mortgagee from the female owner or the possession of a guardian or a trustee or an agent of the female owner would be her possession for the purpose of s. 14. The word possessed is used in s. 14 in a broad sense and in the companytext possession means the state of owning or having in ones hands or power. it includes possession by receipt of rents and profits. The learned Judges expressed the view that even if a trespasser were in possession of the land belonging to a female owner, it might companyceivably be regarded as being in possession of the female owner, provided the trespasser had number perfected his title. We do number think that it is necessary in the present case to go to the extent to which the learned Judges went. It is sufficient to say that possessed in s. 14 is used in a broad sense and in the companytext means the state of owning or having in ones hand or power. In the case of Gostha Behari v. Haridas Samanta 2 , P. N. Mookherjee, J., expressed his opinion as to the meaning of the words any property possessed by a female Hindu in the following words- The opening words in property possessed by a female Hindu obviously mean that to companye within the purview of the section the property must be in possession of the female companycerned at the date of the companymencement of the Act. They clearly companytemplate the females possession when the Act came into force. That possession might have been either actual or companystructive or in any form recognised by law, but unless the female Hindu, whose limited estate in the disputed property is claimed to have been transformed into A.I.R. 1957 Andh. Pra. 280. A.I.R. 1957 Cal. 557, 559. absolute estate under this particular section, was at least in such possession, taking the word possession in its widest companynotation, when the Act came into force, the section would number apply-. In our opinion, the view expressed above is the companyrect view as to how the words any property possessed by a female Hindu should be interpreted. In the present case if the adoption was invalid, the full owner of Veerappas estate was his widow Veeravva and even if it be assumed that the second defendant was in actual possession of the estate his possession was merely permissive and Veeravva must be regarded as being in companystructive possession of it through the second defendant. In this situation, at the time when the Act came into force, the property of Veerappa must be regarded in law as being possessed by Veeravva. It was suggested that according to the will of Veerappa, Exbt. P2 a , in the properties mentioned in para. 1-of that will, Veeravva got only a restricted estate. The provisions of para. 4 of the will, however, make it clear that they would companye into force only if the trustees mentioned in the will and Veeravva should disagree. No material was shown to us that, in fact, the trustees and Veeravva had disagreed and that the provisions of para. 4 were given effect to. Paragraph 12 of the will also showed that if the adoption was invalid, the property devolved on Veeravva as in intestacy. It is clear, therefore, that the provisions of para. 4 are of numberassistance to the appellant in applying the provisions of sub-s. 2 of s. 14 of the Act. Reference was also made to the companytents of the agreement, Exbt. D - 25, dated September 18, 1942, in this companynection. It is clear. however, that by this agreement numberestate was companyferred on Veeravva and she did number thereby acquire any estate, much less a restricted estate. All that this document stated was that there was an agreement between the guardians of the boy to be adopted and Veeravva that even if the boy is adopted, Veeravva would remain in possession and enjoyment of her husbands estate during her life time. In our opinion, there is numbermaterial on the record by which it can reasonably be said that the provisions of sub-s. 2 of s. 14 of the Act applied to the present case. It was urged that the act of Veeravva in adopting the second defendant was to bring in a stranger and this action of hers companyld be questioned by a reversioner, as any alienation made by her, during her life time. Reference was made to s. 42 of the Specific Relief Act, Illustration f . In our opinion, this is of numberavail to the appellant, because Illustration f obviously refers to a Hindu widows estate and has numberreference to a full owner. The right of a reversioner as one of the heirs under s. 42, Specific Relief Act, is limited to the question of preserving the estate of a limited owner for the benefit of the entire body of reversioners but as against a full owner, the reversioner has numbersuch right. In our opinion, under the Act Veeravva becoming a full owner of her husbands estate, the suit companyld number succeed and the appeal must accordingly fail. In our opinion, the appellants suit was number maintainable, having regard to the provisions of s. 14 of the Act, even if it be assumed that there was numbervalid adoption of the second defendant.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 81 and 82 of 1958. Appeals by special leave from the judgment and order dated February 28, 1958, of the Allahabad High Court in Criminal Appeal No. 1809 of 1957 and Referred No. 138 of 1957 arising out of the judgment and order dated November 28, 1957, of the Court of Sessions at Farrukhabad in Sessions Trial No. 61 of 1957. Jai Gopal Sethi and B. C. Misra, for the appellants. C. Mathur, and C. P. Lal for the respondent. 1958. December 18. The Judgment of the Court was delivered by KAPUR, J.-These are two appeals which arise out of the same judgment and order of the High Court at Allahabad and involve a companymon question of law. Appellants Tej Singh and Mizaji are father and son, Subedar is a nephew of Tej Singh, Machal is Tej Singhs companysin and Maiku was a servant of Tej Singh. They were all companyvicted under s. 302 read with s. 149 of the Indian Penal Code and except Mizaji who was sentenced to death, they were all sentenced to imprisonment for life. They were also companyvicted of the offence of rioting and because Tej Singh and Mizaji were armed with a spear and a pistol respectively, they were companyvicted under s. 148 of the Indian Penal Code and sentenced to three years rigorous imprisonment and the rest who were armed with lathis were companyvicted under s. 147 of the Indian Penal Code and sentenced to two years rigorous imprisonment. All the sentences were to run companycurrently but Mizajis term of imprisonment was to companye to an end after he is hanged . Against this order of companyviction the appellants took an appeal to the High Court and both their companyvictions and sentences were companyfirmed. The offence for which the appellants were companyvicted was companymitted on July 27, 1957, at about sunrise and the facts leading to the occurrence were that field number 1096 known as Sukhna field was recorded in the revenue papers in the name of Banwari who was recorded as in possession as tenant-in- chief Sometime in 1949 he mortgaged this plot of land to one Lakhan Singh. In 1952 this field was shown as being under the cultivation of Rameshwar, the deceased and four others persons, Ram Sarup who was the uncle of Rameshwar, Jailal his brother, Sita Ram and Saddon. The record does number show as to the title under which these persons were holding possession. The mortgage was redeemed sometime in 1953. The defence plea was that in the years 1954, 1955, 1956 possession was shown as that of Banwari. But if there were any such entries, they were companyrected in 1956 and possession was shown in the revenue papers as that of Rameshwar, and four others abovenamed. These entries showing cultivating possession of the deceased and four others were companytinued in 1957. On April 18, 1957, Banwari sold the field No. 1096 to Tej Singh appellant who made an application for mutation in his favour but this was opposed by the deceased and four other persons whose names were shown as being in possession. In the early hours of July 27, 1957, the five appellants came armed as above stated. Mizajis pistol is stated to have been in the fold phent of his dhoti. A plough and plank known as patela and bullocks were also brought. The disputed field had three portions, in one sugarcane crop was growing, in the other Jowar had been sown and the rest had number been cultivated. Maiku started ploughing the Jowar field and overturned the Jowar sown therein while Tej Singh with his spear kept watch. Bateshwar P. W. 7 seeing what was happening gave information of this to Ram Sarup who accompanied by Rameshwar, Jailal and Israel came to the Sukhna field but unarmed. Ram Sarup inquired of Tej Singh as to why he was damaging his field and Tej Singh replied that he had pur- chased the field and therefore would do what he was doing which led to an altercation. Thereupon, the four persons cutting the sugarcane crop i.e. Mizaji, Subedar, Machal and Maiku came to the place where Tej Singh was and upon the instigation of Tej Singh, Mizaji took out the pistol and fired which hit Rameshwar, who fell down and died I hour later. The accused, after Rameshwar fell down, fled from the place. Ram Sarup, Jailal and Israel then went to the police station Nawabgunj and Ram Sarup there made the first information report at about 7-30 a. m., in which all the five accused were named. When the police searched for the accused they companyld number be found and proceedings were taken under ss. 87 and 88 of the Code of Criminal Procedure, but before any process was issued Subedar, Tej Singh and Machal and Maiku appeared in companyrt on August 3, 1957, and Mizaji on August 14, 1957, and they were taken into custody. The prosecution relied upon the evidence of the eyewitnesses and also of Bateshwar who carried the information to the party of companyplainant as to the companying of Tej Singh and others. The defence of the accused was a total denial of having participated in the occurence and as a matter of fact suggested that Rameshwar was killed in a dacoity which took place at the house of Ram Sarup. The learned Sessions Judge accepted the story of the prosecution and found Ram Sarup to be in possession of the field he also found that the appellants formed an unlawful assembly the companymon object of which was to take forcible possession of the field and to meet every eventuality even to the extent of causing death if they are interfered with in their taking possession of the field and it was in prosecution of the companymon object of that assembly that Mizaji had fired the pistol and therefore all were guilty of the offence of rioting and of the offence under s. 302 read with s. 149, Indian Penal Code. The High Court on appeal held that the appellants were members of an unlawful assembly and had gone to the Sukhna field with the object of taking forcible possession and there is also numberdoubt that the accused had gone there fully prepared to meet any eventuality even to companymit murder if it was necessary for the accomplishment of their companymon object of obtaining possession over the field. There is also numberdoubt that companysidering the various weapons with which the accused had gone armed they must have known that there was likelihood of a murder being companymitted in prosecution of their companymon object . The High Court also found that all the appellants had gone together to take forcible possession and were armed with different weapons and taking their relationship into companysideration it was unlikely that they did number know that Mizaji was armed with a pistol and even if the companymon object of the assembly was number to companymit the murder of Rameshwar or any other member of the party of the companyplainants II there can be numberdoubt that the accused fully knew, companysidering the nature of weapons with which they were armed, namely, pistol and lathis, that murder was likely to be companymitted in their attempt to take forcible possession over the disputed land . The High Court further found that the accused had gone prepared if necessary to companymit the murder in prosecution of their companymon object of taking forcible possession. They accepted the testimony of Matadin and Hansram who stated that all the accused had asked Ram Sarup and his companypanions to go away, otherwise they would finish all of them and when they resisted Mizaji accused fired the pistol at them and thus in view of the nature of the weapons with which they had gone to the disputed piece of land, they knew that murder was likely to be companymitted in prosecution of their object . Another finding given by the High Court was that the appellants wanted to forcibly dispossess the companyplainants and with that object in view they went to the disputed field to take forcible possession and that the companyplainants party on companying to know of it went to the field and resisted. Mizaji fired the pistol and thus caused the death of Rameshwar. The High Court also held - We are also of the opinion that the act of the accused was premeditated and well-designed and that the accused companysidering the circumstances of the case and the weapons with which they were armed, knew that murder was likely to be companymitted in accomplishment of their companymon object. For the appellants it was companytended that the High Court was number justified in drawing the inference that other members of the party of the appellants had knowledge of the existence of the pistol. There is numberdoubt that on the evidence the father Tej Singh must have known that the son, Mizaji, had a pistol. And in the circumstances of this case the High Court cannot be said to have erroneously inferred as to the knowledge of the rest as to the possession of pistol by Mizaji. The question for decision is as to what was the companymon object of the unlawful assembly and whether the offence of murder was companymitted in prosecution of the companymon object or was such an offence as the members of the unlawful assembly knew was likely to be companymitted in prosecution of the companymon object. It was argued on behalf of the appellants that the companymon object was to take forcible possession and that murder was companymitted neither in prosecution of the companymon object of the unlawful assembly number was it such as the members of that assembly knew to be ,.likely to be companymitted. That the companymon object of the unlawful assembly was to take forcible possession of the Sukhana field cannot be doubted. Can it be said in the circumstances of this case that in prosecution of the companymon object the members of the unlawful assembly were prepared to go to the extent of companymitting murder or they knew that it was likely to be companymitted ? One of the members of the assembly Tej Singh was armed with a spear. His son Mizaji was armed with a pistol and others were carrying lathis. The extent to which the members of the unlawful assembly were prepared to go is indicated by the weapons carried by the appellants and by their companyduct, their companylecting where Tej Singh was and also the language they used at the time towards the companyplainants party. The High Court has found that the appellants had gone prepared to companymit murder if necessary in the prosecution of their companymon object of taking forcible possession of the land , which it based on the testimony of Matadin and Hansraj who deposed that when the companyplainants party arrived and objected to what the appellants were doing they the appellants companylected at once and asked Ram Sarup and his companypanions to go away otherwise they would finish all of them and when the latter refused to go away, the pistol was fired. That finding would indicate the extent to which the appellants were prepared to go in the prosecution of their companymon object which was to take forcible possession of the Sukhana field. The High Court also found that in any event the case fell under the second part of s. 149, Indian Penal Code in view of the weapons with which the members of the unlawful assembly were armed and their companyduct which showed the extent to which they were prepared to go to accomplish their companymon object. Counsel for the appellants relied on Queen v. Sabid Ali 1 , and argued that s. 149 was inapplicable. There 1 1873 20 W.R. 5 Cr. the learned Judges companystituting the full bench gave differing opinions as to the interpretation to be put on s. 149, Indian Penal Code. That was a case where the members of an unlawful assembly went to take forcible possession of a piece of land. The view of the majority. of the Judges was that finding unexpected opposition by one member of the party of the companyplainants and also finding that they were being over. powered by him, one of the members of the unlawful assembly whose exact time of joining the unlawful assembly was number proved fired a gun killing one of the occupants of the land who were resisting forcible dis- possession. It was also held that the act had number been done with a view to accomplish the companymon object of driving the companyplainants out of the land, but it was in companysequence of an unexpected companynter-attack. Ainslie, J., was of the opinion that the companymon object of the assembly was number only to forcibly eject the occupants but to do so with show of force and that companymon object was companypounded both of the use of the means and attainment of the end and that it extended to the companymitting of murder. Phear, J., said that the offence companymitted must be immediately companynected with that companymon object by virtue of the nature of the object. The members of the unlawful assembly must be prepared and intend to accomplish that object at all companyts. The test was, did they intend to attain the companymon object by means of murder if necessary ? If events were of sudden origin, as the majority of the learned Judges held them to be in that case, then the responsibility was entirely personal. In regard to the second part he was of the opinion that for its applica- tion it was necessary that members of the assembly must have been aware that it was likely that one of the members of the assembly would do an act which was likely to cause death. Couch, C. J., was of the opinion that firing was number in prosecution of the companymon object of the assembly and that there was number much difference between the first and the second part of s. 149. He said - At first there does number seem to be much difference between the two parts of the section and I think the cases which would be within the first, offences companymitted in prosecution of the companymon object, would be, generally, if number always, within the second, namely, offences which the parties knew to be likely to be companymitted in the prosecution of the companymon object. But I think there may be cases which would companye within the second part and number within the first. Jackson, J., held in the circumstances of that case that the assembly did number intend to companymit number knew it likely that murder would be companymitted. Pontifex, J., interpreted the section to mean that the offence companymitted must directly flow from the companymon object or it must so probably flow from the prosecution of the companymon object that each member might antecedently expect it to happen. In the second part know meant to know that some members of the assembly had previous knowledge that murder was likely to be companymitted. This section has been the subject matter of interpretation in the various High Court of India, but every case has to be decided on its own facts. - The first part of the section means that the offence companymitted in prosecution of the companymon object must be one which is companymitted with a view to accomplish the companymon object. It is number necessary that there should be a preconcert in the sense of a meeting of the members of the unlawful assembly as to the companymon object it is enough if it is adopted by all the members and is shared by all of them. In order that the case may fall under the first part the offence companymitted must be companynected immediately with the companymon object of the unlawful assembly of which the accused were members. Even if the offence companymitted is number in direct prosecution of the companymon object of the assembly, it may yet fall under s. 149 if it can be held that the offence was such as the members knew was likely to be companymitted. The expression I know does number mean a mere possibility, such as might or might number happen. For instance, it is a. matter of companymon knowledge that when in a village a body of heavily armed men set out to take a woman by force, someone is likely to be killed and all the members of the unlawful assembly must be aware of that likelihood and would be guilty under the second part of s. 149. Similarly, if a body of persons go armed to take forcible possession of the land, it would be equally right to say that they have the knowledge that murder is likely to be companymitted if the circumstances as to the weapons carried and other companyduct of the members of the unlawful assembly clearly point to such knowledge on the part of them all. There is a great deal to be said for the opinion of Couch, C. J., in Sabid Alis case 1 that when an offence is companymitted in prosecution of the companymon object, it would generally be an offence which the members of the unlawful assembly knew was likely to be companymitted in prosecution of the companymon object. That, however, does number make the companyverse proposition true there may be cases which would companye within the second part, but number within the first. The distinction between the two parts of s. 149, Indian Penal Code cannot be ignored or obliterated. In every case it would be an issue to be determined whether the offence companymitted falls within the first part of s. 149 as explained above or it was an offence such as the members of the assembly know to be likely to be companymitted in prosecution of the companymon object and falls within the second part. Counsel for the appellants also relied on Chikkarange Gowde State of Mysore 2 . In that case there were special circumstances which were sufficient to dispose of it. The charge was a companyposite one mixing up companymon intention and companymon object under ss. 34 and 149, Indian Penal Code and this Court took the view that it really was one under s. 149, Indian Penal Code. The charge did number specify that three of the members had a separate companymon intention of killing the deceased, different from that of the other members of the unlawful assembly. The High Court held that the companymon object was merely to chastise the deceased, and it did number hold that the members of the unlawful assembly knew that the deceased was likely to be killed in prosecution of that companymon object. The person who was alleged to have caused the fatal injury was acquitted. This Court held that on the findings 1 1873 20 W. R. 5 Cr. A.I.R. 1956 S.C. 731. of the High Court there was numberliability under s. 34 and further the charge did number give proper numberice number a reasonable opportunity to those accused to meet that charge. On these findings it was held that companyviction under s. 302 read with s. 149 was number justified in law number a companyviction under s. 34. It was next argued that the appellants went to take possession in the absence of the companyplainants who were in possession and therefore the companymon object was number to take forcible possession but to quietly take possession of land which the appellants believed was theirs by right. In the first place there were proceedings in the Revenue Department going on about the land and the companyplainants were opposing the claim of the appellants and then when -people go armed with lethal weapons to take possession of land which is in possession of others, they must have the knowledge that there would be opposition and the extent to which they were prepared to go to accomplish their companymon object would depend on their companyduct as a whole. The finding of the High Court as we have pointed out was that the appellants had gone with the companymon object of getting forcible possession of the land. They divided themselves into three parties, Maiku appellant was in the field where jowar was sown and he was ploughing it, Mizaji, Subedar and Machal were in the sugar field and cutting the crop. Tej Singh was keeping watch. When the party of the companyplainants on being told of what the appellants were doing came, they protested to Tej Singh. Thereupon, all the members of Tej Singhs party gathered at the place where Tej Singh was and asked the companyplainants to go away otherwise they would be finished , but they refused to go. Thereupon Tej Singh asked Mizaji to fire at them and Mizaji fired the pistol which he was carrying in the fold of his dhoti as a result of which Rameshwar was injured, fell down and died I hour later. It was argued on behalf of the appellants that in these circumstances it cannot be said that the offence was companymitted in prosecution of the companymon object of the assembly which was clear- from the fact that the party had divided itself into three parts and only Mizaji used his pistol and the other appellants did number use any weapon and just went away. Both the Courts below have found that the pistol was fired by Mizaji and thus he was responsible for causing the death of Rameshwar which would be murder and also there is numberdoubt that Tej Singh would be guilty of abetment of that offence. But the question is whether s. 149 is applicable in this case and would companyer the case of all the appellants ? This has to be companycluded from the weapons carried and the companyduct of the appellants. Two of them were armed one with a spear and the other with a pistol. The rest were armed with lathis. The evidence is that when the companyplainants party objected to what the appellants did, they all companylected together and used threats towards the companyplainants party telling them to go away otherwise they would be finished and this evidence was accepted by the High Court. From this companyduct it appears that members of the unlawful assembly were prepared to take forcible possession at any companyt and the murder must be held to be immediately companynected with the companymon object and therefore the case falls under s. 149, Indian Penal Code and they are all guilty of murder. This evidence of Hansram and Matadin which relates to a point of time immediately before the firing of the pistol shows that the members of the assembly at least knew that the offence of murder was likely to be companymitted to accomplish the companymon object of forcible possession. It was then companytended that Mizaji did number want to fire the pistol and was hesitating to do so till be was asked by his father to fire and therefore penalty of death should number have been imposed on him. Mizaji carried the pistol from his house and was a member of the party which wanted to take forcible possession of the land which was in possession of the other party and about which proceedings were going on before the Revenue Officer. He fully shared the companymon object of the unlawful assembly and must be taken to have carried the pistol in order to use it in the prosecution of the companymon object of the assembly and he did use it. Merely because a son uses a pistol and causes the death of another at the instance of his father is numbermitigating circumstance which the companyrts would take into companysideration. In our opinion the companyrts below have rightly imposed the sentence of death on Mizaji. Other appellants being equally guilty under s. 149, Indian Penal Code, have been rightly sentenced to imprisonment for life.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 146 of 1955. Appeal from the judgment and decree dated February 10, 1953, of the Bombay High Court in Appeal No. 953 of 1951, arising out of the judgment and decree dated November 36,1951, of the Court of Joint Civil Judge, Senior Division, Poona, in Special Suit No. 76 of 1950. D. Banaji, R. A. Gagrat and G. Gopalakrishnan, for the appellant. C. Setalvad, Attorney-General for India, S. N. Andley and J. B. Dadachanji, for the respondent. 1959. January 16. The Judgment of the Court was delivered by DAS, C. J.-The appellant is a public limited companypany registered under the Indian Companies Act, 1913. It is a lessee of four cinema houses situate within the municipal limits of Poona City known respectively as Minerva , The Globe , Sri Krishna and The Nishat . It exhibits cinematograph films, both foreign and Indian, in the said four houses. The respondent, a body companyporate, was governed by the Bombay District Municipal Act, 1901 Bom. III of 1901 up to June 8, 1926, and from then by the Bombay Municipal Boroughs Act, 1925 Bom. XVIII of 1925 up to December 29, 1949, and, thereafter, by the Bombay Provincial Municipal Corporation Act, 1949 Bom. LIX of 1949 . With effect from October 1, 1920, the respondent, with the sanction of the Government of Bombay levied on the owners and lessees of cinema houses within the limits of the erstwhile province of Bombay a tax of Rs. 2 per day as license fee. Rules for the levy and companylection of the said tax were framed by the respondent. Those rules were amended on or about June 3, 1941, enhancing the tax from Rs. 2 per day to Re. I per show. The rules were again revised on or about June 9,1948, under which the tax was enhanced from Re. I per show to Rs. 5 per show. At all material times the tax was being companylected at the last mentioned rate. Section 59 of the Bombay District Municipal Act 1901 provided that subject to any general or special orders which the State Government might make in that behalf any municipality a after observing the preliminary procedure required by s. 60, and b with the sanction of the authority therein mentioned, might impose for the purposes of that Act any of the taxes mentioned in that section. After enumerating ten specific heads of taxes, which a municipality companyld levy a residuary category was set forth in cl. xi in the words following- Any other tax to the nature and object of which he approval of the Governor in, Council shall have been obtained prior to the selection companytemplated in sub-clause 1 of clause a of section 60 . Ever since the appellant became a lessee of the said cinema houses, the appellant has been making payments of the said tax under protest. After giving the necessary statutory numberice to the respondent, the appellant, on or about March 31,1950, filed a suit in the Court of the Civil Judge, Senior Division, Poona, being Suit No. 76 of 1950, against the respondent for a declaration that the levy and imposition of the said tax with effect from October 1, 1920, were invalid and illegal that the enhancement in the rates of the tax with effect first from June 3, 1941, and then June 9, 1948, was invalid and illegal and that the resolutions passed and rules framed in companynection with the levy, imposition, enhancement and companylection of the said impugned tax were invalid, illegal and ultra vires, for a permanent injunction restraining the defendants from levying or recovering and or increasing and enhancing the said tax and for refund to the appellant of the amounts of the tax companylected from it and for companyts of the suit and interest. By its judgment dated November 30, 1951, the trial companyrt held that the said tax was validly levied and imposed, but that the increase and enhancement thereof in 1941 and 1948 were illegal and ultra vires. and that the suit was number barred under the Acts governing the respondent. The trial companyrt decreed the suit in part by issuing an injunction restraining the respondent from levying, recovering or companylecting the tax at the enhanced rate and passing a decree against the respondent for refund of a sum of Rs. 27,072 with interest and companyts. The respondent preferred an appeal and the appellant filed cross objections. But the High Court by its judgment and decree dated February 10, 1953, reversed the judgment of the trial companyrt and dismissed the suit of the appellant with companyts throughout. The appellants cross objections were also dismissed. On December 10, 1953, the High Court granted leave to the appellant to appeal to this Court from the said judgment. Hence this final appeal questioning the validity of the impugned tax. The first point urged in this appeal is that the law imposing this tax is number companyered by entry 50 in List II of the Seventh Schedule to the Government of India Act, 1935, but is really a tax on the appellants trade or calling referred to in entry 46 and that, therefore, the amount of tax cannot under s. 142-A of the Government of India Act, 1935 exceed Rs. 100 per annum. This point need number detain us long, for it is companyered by us in the appellants other appeal No. 145 of 1955. The second point urged before us in support of this appeal is that s. 59 1 xi is unconstitutional in that the legislature had companypletely abdicated its functions and had delegated essential legislative power to the Municipality to determine the nature of the tax to be imposed on the rate payers. Learned companynsel for the appellant urges that the power thus delegated to the municipality is unguided, uncanalised and vagrant, for there is numberhing in the Act to prevent the municipality from imposing any tax it likes, even, say, income tax. Such omnibus delegation, he companytends, cannot on the authorities be supported as companystitutional. We find ourselves in agreement with the High Court in rejecting this companytention. In the first place, the power of the municipality -cannot exceed the power of the provincial legislature itself and the municipality cannot impose any tax, e.g., income tax which the provincial legislature companyld number itself impose. In the next place, s. 59 authorises the municipality to impose the taxes therein mentioned for the purposes of this Act . The obligations and functions cast upon the municipalities are set forth in ch. VII of the Act. Taxes, therefore, can be levied by the municipality only for implementing those purposes and for numberother purpose. In other words it will be open to the municipality to levy a tax for giving any of the amenities therein mentioned. The matter may be illustrated by reference to s. 54 which enumerates the duties of municipalities. The first duty mentioned in that section is that the Municipality should make provision for lighting public streets and numberody can object if it imposes alighting tax, which, indeed, is item in s. 59 1 . Take another example It is the duty of the Municipality to arrange for supply of drinking water and it may legitimately charge a water rate which, again, is item viii in s. 59 1 . We do number for a moment suggest that the municipalities may only impose a tax directly in companynection with the heads of duties cast upon it. What we say is that the tax to be imposed must have some reasonable relation to the duties cast on it by the Act. In the third place, although the rule of companystruction based on the principle of ejusdem generis cannot be invoked in this case, for items i to x do number, strictly speaking, belong to the same genus, but they do indicate, to our mind the kind and nature of tax which the municipalities are authorised to impose. Finally, the provincial legislature had certainly number abdicated in favour of the municipality, for the taxing power of the municipality was quite definitely made subject to the approval of the Governor-in-Council. Under the Indian Council Act, 1861 24 25 Vic. c. 67 the Governor- in-Council might mean the Governor in Executive Council or the Governor in Legislative Council. If the reference in s. 59 1 xi is to the Governors Legislative Council, then there was numberimproper delegation at all, for it was subject to the legislative companytrol of the Governor in Legislative Council. The Governors Legislative Council was companyposed of all the members of the Governors Executive Council besides a few other persons. Therefore if the reference was to the Governor in his Executive Council even then, from a practical point of view, the ultimate companytrol was left with the Governors Legislative Council. We need number labour this point any further, for on the first three grounds the delegation of legislative authority, if any, is number excessive so as to make the exercise of it unconstitutional. In our opinion the impugned section did lay down a principle and fix a standard which the municipalities had to follow in imposing a tax and the legislature cannot, in the circumstances, be said to have had abdicated itself and, therefore, the delegation of power to impose any other tax cannot be struck down as being in excess of the permissible limits of delegation of legislative functions. The last point urged by learned companynsel for the appellant is that, under el. xi of s. 59 1 , the enhancements of the rates of the tax in 1941 and again in 1948 were illegal in that the municipality had numberpower to do so under the Bombay Municipal Boroughs Act, 1925. According to learned companynsel for the appellant the judgment under appeal upholding the validity of such enhancements cannot be supported under s.60 of that Act. That section runs as follows- Power to suspend 60 1 Subject to the requirements of cl- reduce or abolish ause a of the proviso to section any existing tax 58 municipality may except as otherwise provide in clause provided in clause b of the proviso to section 103 at any time for any sufficient reason, suspend, modify or abolish any existing tax by suspending, altering or rescinding any rule prescribing such tax. The provisions of Chapter VII relating to, the imposition of taxes shall apply so far as may be to the suspension, modification or abolition of any tax and to the suspension, alteration or rescission of any rule prescribing a tax. Reference is made to the marginal numbere where the words used are power to suspend, reduce or abolish any existing tax . It is suggested that the word it modify in the body of the section in between the words suspend and abolish should be companystrued in the sense of reduction. The marginal numbere, according to him, shows that the several words were used in the section to indicate a progressive diminution in the quantum of tax until it was companypletely gone. Reference is made to the root meaning of the word modify which is to reduce or make less but does number companyer the idea of enhancement. In the first place, the marginal numbere cannot affect the companystruction of the language used in the body of the section if it is otherwise clear and unambiguous see Commissioner of Income Tax, Bombay v. Ahmedbhai Umarbhai Co., Bombay 1 . In the next place, it should be borne in mind that s. 67 of the Bombay District Municipal Act Bom. III of 1901 which was formerly applicable to municipalities used the word reduce in between the words suspend and abolish and that that section had been reproduced is s. 60 of the Bombay Municipal Boroughs Act, 1925, but that in the process of such reproduction the word reduce was dropped ,and the word modify was introduced. In the marginal numbere, however, the word reduce was number substituted by the word modify , apparently through inadvertence. If the word modify is to be read as reduce, then there companyld be numberpoint in the provincial legislature substituting the word reduce by the word modify.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 202 and 203 of 1957. Appeals by special leave from the judgment and order dated November 16, 1956, of the Punjab -High Court Circuit Bench at Delhi in Criminal, Appeals Nos. 31-D and 506-C of 1956, arising out of the judgment and order dated August 31, 1956, of the Court of the Special Judge at Delhi, in Corruption Case No. 8 of 1956. R. Kalia and K. L. Arora, for the appellant in Criminal Appeal No. 202 of 1957. R. Kalia and Raghu Nath, for the appellant in Criminal Appeal No. 203 of 1957. J. Umrigar and R. H. Dhebar, for the respondent in both the appeals. 1958. February 6. The Judgment of the Court was delivered by IMAM J.-The appellants, who were police companystables at the time of the occurrence, were companyvicted by the Special Judge of Delhi under s. 120B and s. 224/109 of the Indian Penal Code and s. 5 2 of the Prevention of Corruption Act 2 of 1947 . They were sentenced to two years rigorous imprisonment under s. 5 2 of the Prevention of Corruption Act, 1947 and to nine months rigorous imprisonment under each of the ss. 120B and 224/109 of the Indian Penal Code. 1220 The sentences of imprisonment were directed to run companycurrently. Their appeals to the Punjab High Court were dismissed and the present appeals are by special leave. The case of the prosecution, as stated in the charge, was that the appellants had companyspired at Delhi with Ram Saran Das, the approver, M. P. Khare, Nand Parkash Kapur and Murari between the 6th and 16th of November, 1955, to bring about the escape from lawful custody of M. P. Khare, an undertrial prisoner, and that they had also agreed to accept Rs. 1,000 each and other pecuniary advantages as illegal gratification for rendering the escape of M. P. Khare from lawful custody and that in pursuance of the said companyspiracy they had abetted the escape of M. P. Khare and that they had accepted the illegal gratification from Nand Parkash Kapur. It is clear from the findings of the companyrts below that M.P. Khare escaped from lawful custody and the appellants had enabled him to do so and that they had received money as illegal gratification for the part they had played in enabling M.P. Khare to escape from lawful custody. The learned Advocate for the appellants had submitted five points for our companysideration in support of his companytention that the companyviction of the appellants must be set aside 1 the pardon tendered to the approver Ram Saran Das by the District Magistrate of Delhi under s. 337 of the Code of Criminal Procedure was without jurisdiction and authority. Consequently, the evidence of the approver was number admis- sible 2 on the case of the prosecution, the offence of companyspiracy to companymit an offence under s. 224 of the Indian Penal Code had number been companymitted but that offence, if at all, was one under s. 222 of the Indian Penal Code. As an offence under s. 222 of the Indian Penal Code is a number- companynizable offence numberconviction under s. 120B of the Indian Penal Code companyld be had in the absence of a sanction under s. 196A of the Code of Criminal Procedure 3 Prosecution witnesses Mela Ram, P.W. 6, and Shiv Parshad, P.W. 7, were accomplices on their own showing and as such their testimony companyld number be taken into companysideration 4 numbertest 1221 identification parade of the appellants had been held 5 the charge, as framed, companytravened the mandatory provisions of s. 233 of the Code of Criminal Procedure. Points 3, 4 and 5 may be disposed of at the outset. We have examined the evidence of Mela Ram and Shiv Parshad and find numberhing in their evidence which establishes them as accomplices. It does number appear that before the High Court it had ever been urged that these witnesses were accomplices and their evidence companyld number be taken into companysideration to companyroborate the approver. It was, however, urged that these witnesses were unreliable because they had knowledge that an attempt would be made to enable M.P. Khare to escape from lawful custody and yet they informed numberauthority about it. As to the reliability of these witnesses the companyrts below were entitled to believe them and numberhing of any companysequence has been placed before us to companyvince us to take a different view from that taken by the companyrts below. As for the test identification parade, it is true that numbertest identification parade was held. The appellants were known to the police officials who had deposed against the appellants and the only persons who did number know them before were the persons who gave evidence of association, to which the High Court did number attach much importance. It would numberdoubt have been prudent to hold a test identification parade with respect to witnesses who did number know the accused before the occurrence, but failure to hold such a parade would number make inadmissible the evidence of identification in companyrt. The weight to be attached to such identification would be a matter for the companyrts of fact and it is number for this Court to reassess the evidence unless exceptional grounds were established necessitating such a companyrse. It is true that numberseparate charges were framed under ss. 120B, 224/109 of the Indian Penal Code and s. 5 2 of the Prevention of Corruption Act, 1947. Separate charges should have been framed as required by s. 233 of the Code of Criminal Procedure. In our opinion, the irregularity companymitted, in this case, was 1222 cured by the provisions of s. 537 of the Code. It is to be numbericed that it was urged before the Special Judge that separate charges should have been framed and that a single charge should number have been framed but the objection had been abandoned by the Advocate for the accused when the Special Judge told him that if it was his companytention that the accused had been prejudiced by this form of the charge, he would frame separate charges under separate heads and then proceed with the trial. Furthermore, when the charge was framed, the public prosecutor had urged that charges under separate heads for each offence should be framed and that they should number be joined together under one head. The Advocate for the accused, however, had urged that the charge, as framed, was companyrect. It seems to us that when the charge was being framed the Advocate for the appellants desired. that the charge as framed should stand and the public prosecutors objection should be overruled. It cannot be number urged that the appellants were prejudiced by the charge as framed. Indeed, the Advocate for the appellants abandoned this objection and there is numberhing in the High Courts judgment to show that this companytention was again raised. We cannot permit such a question to be raised at this stage. It seems to us, therefore, that there is numbersubstance in the submissions made on behalf of the appellants with reference to the above-mentioned points 3, 4 and 5. With reference to the second point, even if it is assumed that the offence alleged against the appellants does number companye under s. 224 of the Indian Penal Code, but under s. 222 of the Indian Penal Code, it has to be remembered that this would be of academic interest in this case, if the appellants have been rightly companyvicted under s. 5 2 of the Prevention of Corruption Act, 1947. It also does number appear from the judgments of the Special Judge and the High Court that it had been companytended that there was numbersanction under s. 196A of the Code of Criminal Procedure and companysequently the companyrt companyld number take companynizance of the offence under s. 120B of the Indian Penal Code. Whether a sanction had been granted under s. 196A 1223 was a question of fact which ought to have been urged at the trial and before the High Court. It is impossible at this stage to go into this question of fact. Furthermore, this question also is one of academic interest if the companyviction and sentence of the appellants under s. 5 2 of the Prevention of Corruption Act, 1947, are affirmed. Coming number to the first point urged on behalf of the appellants, it would appear that the District Magistrate of Delhi granted a pardon under s. 337 of the Code of Criminal Procedure to Ram Saran Das, the approver, in companysequence of which Ram Saran Das was examined as a witness by the Special Judge. It was urged that the District Magistrate companyld number grant a pardon when the case was triable by the Court of Special Judge companystituted under the Criminal Law Amendment Act, 1952. The offence under s. 5 2 of the Prevention of Corruption Act, 1947, is punishable with imprisonment for a term which may extend to seven years, or with fine, or with both. It was number an offence which was punishable with imprisonment which may extend to ten years. The provisions of s. 337 enabled a District Magistrate to tender a pardon in the case of any offence triable exclusively by the High Court or a Court of Session, or any offence punishable with imprisonment which may extend to ten years, or any offence punishable under s. 211 of the Indian Penal Code with imprisonment which may extend to seven years, or any offence under ss. 216A, 369, 401, 435 and 477A of the Indian Penal Code. These provisions of s. 337 at the time that the pardon was tendered were inapplicable as the present case was number companyered by its terms. It is pointed out that the High Court erred in supposing that the District Magistrate companyld grant pardon in a case where the offence was punishable with imprisonment which may extend to seven years or more and which was triable exclusively by the Court of Session. The Code of Criminal Procedure at the time that the pardon was granted spoke of an offence punishable with imprisonment for a term which may extend to ten years and number seven years. The amendment to s. 337 of the 1224 Code, which came into effect in January, 1956, spoke of an offence punishable with imprisonment which may extend to seven years, but this amendment companyld have numberapplication to a pardon tendered on 1-12-55. It seems to us, however, that the District Magistrate had authority to tender a pardon under s. 337 of the Code of Criminal Procedure with reference to a case companycerning an offence triable exclusively by the Special Judge and, therefore, we need number companysider whether the offence was punishable with imprisonment which may extend to seven years. Under s. 8 3 of the Criminal Law Amendment Act of 1952 it is expressly stated that for the purposes of the provisions of the Code of Criminal Procedure, 1898, the Court of Special Judge shall be deemed to be a Court of Session trying cases without a jury or without the aid of assessors. Section 9 of that Act provides for an appeal from the Court of the Special Judge to the High Court and states that the High Court may exercise, as far as they may be applicable, all the powers companyferred by Chapters XXXI and XXXII of the Code of Criminal Procedure, 1898, as if the Court of the Special Judge were a Court of Session trying cases without a jury. It would seem, therefore, that although a Special Judge is a companyrt companystituted under the Criminal Law Amendment Act yet, for the purposes of the Code of Criminal Procedure and that Act, it is a Court of Session. Accordingly, we are of the opinion that although the offence was triable exclusively by the Court of the Special Judge the District Magistrate had authority to tender a pardon under s. 337 of the Code of Criminal Procedure as the companyrt of the Special Judge was, in law, a Court of Session. It was, however, suggested that the proper authority to grant the pardon was the Special Judge and number the District Magistrate, but it seems to us that the position of the Special Judge in this matter was similar to that of a Judge of a Court of Session. The proviso to s. 337 of the Code of Criminal Procedure companytemplates companycurrent jurisdiction in the District Magistrate and the Magistrate making an enquiry or holding the trial to tender a pardon. According to the 1225 provisions of s. 338 of the Code, even after companymitment but before judgment is passed, the Court to which the companymitment is made may tender a pardon or order the companymitting Magistrate or the District Magistrate to tender a pardon. It would seem, therefore, that the District Magistrate is empowered to tender a pardon even after a companymitment if the Court so directs. Under s. 8 2 of the Criminal Law Amend- ment Act, 1952, the Special Judge has also been granted power to tender pardon. The companyferment of this power on the Special Judge in numberway deprives the District Magistrate of his power to grant a pardon under s. 337 of the Code. At the date the District Magistrate tendered the pardon the case was number before the Special Judge. There seems to us, therefore, numbersubstance in the submission made that the District Magistrate had number authority to tender a pardon to Ram Saran Das, the approver, and companysequently the approvers evidence was inadmissible.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petition No. 104 of 1957. Petition under Article 32 of the Constitution for the enforcement of fundamental rights. V. S. Mani, for the petitioner. N. Sanyal, Additional Solicitor-General of India, R. Ganapathy Iyer and R. H. Dhebar for respondents, Nos. 1-3. N. Keshwani, for I. N. Shroff, for respondent No. 4. 1958. March 24. The Judgment of Das C. J. Venkatarama Aiyar, S. K. Das and Sarkar JJ. was delivered by Das C. J. Bose J. delivered a separate Judgment. DAS C. J.- We have had the advantage of perusing the judgment prepared by our learned Brother Bose J. which he will presently read. While we agree with him that this application must be dismissed, we would prefer to base our decision on reasons slightly different from those adopted by our learned Brother. The relevant facts will be found fully set out by him in his judgment. The petitioner has companye up before us on an application under Art. 32 of the Constitution praying for setting aside the order made by the respondent No. 3 on March 19, 1956, directing the petitioner to stop the cutting of forest wood and for a writ, order or direction to the respondents number to interfere in any manner whatever with the rights of the petitioner to enter the forests, appoint her agents, obtain renewal passes, manufacture charcoal and to exercise other rights mentioned in the petition. Since the application is under Art. 32 of the Constitution, the petitioner must make out that there has been an infringement of some fundamental right claimed by her. The petitioners grievance is that the offending order has infringed her fundamental right under Art. 19 1 f and 19 1 g . She claims to have derived the fundamental rights, which are alleged to have been infringed, from a document dated April 26, 1948, whereby her husband Shri Balirambhau Doye, the proprietor of certain forests in eight several Tehsils, granted to her the right to take and appropriate all kinds of wood-Building wood, fuel wood and bamboos, etc.-from the said forests for a period from the date of the document up to December 26, 1960. The terms of the document have been sufficiently set out in the judgment to be presently delivered by Bose J. and need number be set out here. The petitioner has paid Rs. 26,000 as companysideration for the rights granted to her. The genuineness of this document and the good faith of the parties thereto have number been questioned. The document, however, has number been registered under the Indian Registration Act. The nature of the rights claimed by the petitioner has to be ascertained on a proper interpretation of the aforesaid document. We do number companysider it necessary to examine or analyse the document minutely or to finally determine what we may regard as the true meaning and effect thereof, for, as will be presently seen, whatever companystruction be put on this document, the petitioner cannot companyplain of the breach of any of her fundamental rights. If the document is companystrued as companyveying to her any part or share in the proprietary right of the grantor, then, number being registered under the Indian Registration Act, the document does number affect the immoveable property or give her any right to any share or interest in the immoveable property. Assuming that she had acquired a share or interest in the proprietary right in spite of the document number having been registered, even then that right has vested in the State under s. 3 of the Madhya Pradesh Abolition of Proprietary Rights Estates, Mahals, Alienated Lands Act, 1950, and she may in that case only claim companypensation if any is payable to her under the Act. If the document is companystrued as purely a license granted to her to enter upon the land, then that license must be taken to have become extinguished as soon as the grantors proprietary rights in the land vested in the State under s. 3 of the Act. if the document is companystrued as a license companypled with a grant, then the right acquired by her would be either in the nature of some profits-a-prendre which, being an interest in land, is immoveable property or a purely personal right under a companytract. If the document is companystrued-as having given her a profits-a-prendre which is an interest in land, then also the document will number affect the immoveable property and will number operate to transmit to the petitioner any such profits-a-prendre which is in the nature of immoveable property, as the document has number been registered under the Indian Registration Act, as has been held in Ananda Behera The State of Orissa 1 . If it is a purely personal right, then such right will have numberhigher efficacy than a right acquired under a companytract. If, therefore, the document is companystrued as a matter of companytract, then assuming but without deciding that a companytract is a property within Arts. 19 1 f or 31 1 of the Constitution, she cannot company- plain, for the State has number acquired or taken possession of her companytract in any way. The State is number a party to the companytract and claims numberbenefit under it. The petitioner is still the owner and is still in possession of that companytract, regarded as her property, and she can hold it or dispose of it as she likes and if she can find a purchaser. The petitioner is free to sue the grantor upon that companytract and recover damages by way of companypensation. The State is number a party to the companytract and is number bound by the companytract and accordingly acknowledges numberliability under the companytract which being purely personal does number run with the land. If the petitioner maintains that, by some process number quite apparent, the State is also bound by that companytract, even then she, as the owner of that companytract, can only seek to enforce the companytract in the ordinary way and sue the State if she be so advised, as to which we say numberhing, and claim whatever damages or companypensation she may be entitled to for the alleged breach of it. This aspect of the matter does number appear to have been brought to the numberice of this Court when it decided the case of Chhotabai Jethabai Patel and Co. The State of Madhya Pradesh 2 and had it been so done, we have numberdoubt that case would number have been decided in the way it was done. For the reasons stated above, whatever rights, if any, may have accrued to the petitioner under that document on any of the several interpretations numbered above, the cannot companyplain of the infringement by the 1 1955 2 S.C.R. 919, 2 1953 S.C.R. 476. State of any fundamental right for the enforcement of which alone a petition under Art. 32 is maintainable. We, therefore, agree that this petition should be dismissed with companyts. BOSE J.-This is a writ petition under Art. 32 of the Constitution in which the petitioner claims that her fundamental right to cut and companylect timber in the forests in question has been infringed. The petitioners husband, Balirambhau Doye, was the Zamindar of Pandharpur. On April 26, 1948, he executed an unregistered document, that called itself a lease, in favour of his wife, the petitioner. The deed gives her the right to enter upon certain areas in the zamindari in order to cut and take out bamboos, fuel wood and teak. Certain restrictions are put on the cutting, and the felling of certain trees is prohibited. But in the main, that is the substance of the right. The term of the deed is from April 26, 1948 to December 26, 1960, and the companysideration is Rs. 26,000. The petitioner says that she worked the forests till 1950. In that year the Madhya Pradesh Abolition of Proprietary Rights Estates, Mahals, Alienated Lands Act, 1950, which came into force on January 26, 1951, was enacted. Under s. 3 of that Act, all proprietary rights in the land vest in the State on and from the date fixed in a numberification issued under sub-s. 1 . The date fixed for the vesting in this area was March 31, 1951. After that, the petitioner was stopped from cutting any more trees. She therefore applied to the Deputy Commissioner, Bhandara, under s. 6 2 of the Act for validating the lease. The Deputy Commissioner held, on August 16, 1955, that the section did number apply because it only applied to transfers made after March 16, 1950, whereas the petitioners transfer was made on April 26, 1948. But, despite that, he went on to hold that the Act did number apply to transfers made before March 16, 1950, and so leases before that companyld number be questioned. He also held that the lease was genuine and ordered that the petitioner be allowed to work the forests subject to the companyditions set out in her lease and to the rules framed under s. 218 A of the C. Land Revenue Act. It seems that the petitioner claimed companypensation from Government for being ousted from the forests from 1951 to 1955 but gave up the claim on the understanding that she would be allowed to work the forests for the remaining period of the term in accordance with the Deputy Commissioners order dated August 16, 1955. She thereupon went to the Divisional Forest Officer at Bhandara and asked for permission to work the forests in accordance with the above order. She applied twice and, as all the companyfort she got was a letter saying that her claim was being examined, she seems to have taken the law into her own hands, entered the forests and started cutting the trees or so the Divisional Forest Officer says. The Divisional Forest Officer thereupon took action against her for unlawful cutting and directed that her name be cancelled and that the cut materials be forfeited. This was on March 19, 1956. Because of this, the petitioner went up to the Government of Madhya Pradesh and made an application dated September 27, 1956, asking that the Divisional Forest Officer be directed to give the petitioner immediate possession and number to interfere with her rights. Then, as numberhing tangible happened, she made a petition to this Court under Art. 32 of the Constitution on August 26, 1957. The foundation of the petitioners rights is the deed of April 26, 1948. The exact nature of this document was much canvassed before us in the arguments by both sides. It was said at various times by one side or the other to be a companytract companyferring companytractual rights, a transfer, a licence companypled with a grant, that it related to move able property and that, companytra, it related to immoveable property. It will be necessary, therefore, to ascertain its true nature before I proceed further. As I have said, the document calls itself a lease deed , but that is number companyclusive because the true nature of a document cannot be disguised by labelling it something else. Clause 1 of the deed runs- We executed this lease deed and which by this deed have been leased out to you in companysideration of Rs. 26,000 for taking out timber, fuel and bamboos etc. At the end of clause 2 , there is the following paragraph You No. 1 are the principal lessee, while Nos. 2 and 3 are the sub-lessees. Clause 3 companytains a reservation in favour of the proprietor. A certain portion of the cutting was reserved for the proprietor and the petitioner was only given rights in the remainder. The relevant passage runs Pasas 16, 17, 18 are already leased out to you in your lease. The cutting of its wood be made by the estate itself. Thereafter, whatever stock shall remain standing, it shall be part of your lease. Of this stock, so cut, you shall have numberclaim whatsoever. Clause 5 runs- Besides the above pasas- the whole forest is leased out to you. Only the lease, of the forest woods is given to you. Clause 7 states- The proprietorship of the estate and yourself are in a way companyrelated and you are managing the same and therefore in the lease itself and companycerning it, you should companyduct yourself only as a lease holder explicitly Only in the absence of the Malik, you should look after the estate as a Malik and only to that extent you should hold charge as such and companyduct yourself as such with respect to sub-lessees. The rest of this clause is- Without the signatures of the Malik, numberhing, would be held valid and acceptable, including even your own pasas transactions, The lease under reference shall number be alterable or alienable by any body. The only other clause to which reference need be made is clause 8 . It runs- You should number be permitted to recut the wood in the area which was once subject to the operation of cutting. otherwise the area companycerned will revert to the estate. The cutting of the forests should be right at the land surface and there should number be left any deep furrows or holes. I will examine the seventh clause first. The question is whether it companyfers any proprietary rights or interest on the petitioner. I do number think it does. It is clumsily worded but I think that the real meaning is this. The petitioner is the proprietors wife and it seems that she was accustomed to do certain acts of management in his absence. The purpose of clause 7 is to ensure that when she acts in that capacity she is number to have the right to make any alteration in the deed. There are numberwords of transfer or companyveyance and I do number think any part of the proprietary rights, or any interest in them, are companyveyed by this clause. It does number even companyfer rights of management. It only recites the existing state of affairs and either curtails or clarifies powers as manager that are assumed to exist when the proprietor is away. Although the document repeatedly calls itself a lease, it companyfers numberrights of enjoyment in the land. Clause 5 makes that clear, because it says- Only the lease of the forest woods is given to you . In my opinion, the document only companyfers a right to enter on the lands in order to cut down certain kinds of trees and carry away the wood. To that extent the matter is companyered by the decision in Chhotabhai Jethabhai Patel Co. v. The State of Madhya Pradesh 1 , and by the later decision in Ananda Behera v. The State of Orissa 2 , where it was held that a transaction of this kind amounts to a licence to enter on the land companypled with a grant to out certain trees on it and carry away the wood. In England it is a profit a prendre because it is a grant of the produce of the soil like grass, or turves or trees . See 12 Halsburys Laws of England Simonds Edition page 522, Note m . 2 1953S.C.R.476,483. 2 1955 2 S.C.R. 919, 922, 923. It is number a transfer of a right to enjoy the immoveable property itself s. 105 of the Transfer of Property Act , but a grant of a right to enter upon the land and take away a part of the produce of the soil from it. In a lease, one enjoys the property but has numberright to take it away. In a profit a prendre one has a licence to enter on the land, number for the purpose of enjoying it, but for removing something from it, namely, a part of the produce of the soil. Much of the discussion before us centred round the Madhya Pradesh Abolition of Proprietary Rights Estates, Mahals, Alienated Lands Act of 1950. But I need number companysider that because this, being a writ petition under Art. 32, the petitioner must establish a fundamental right. For the reasons given in Ananda Beheras case 1 , I would hold that she has numbere. This runs companynter to Chhotebhai Jethabhai Patels case but, as that was a decision of three Judges and the other five, I feel that we are bound to follow the later case, that is to say, Ananda Beheras case 1 , especially as I think it lays down the law aright. The learned companynsel for the petitioner companytended that his clients rights flowed out of a companytract and so, relying on Chhotebhai Jethabhai Patels case 2 , he companytended that he was entitled to a writ. As a matter of fact, the rights in the earlier case were held to flow from a licence and number from a companytract simpliciter see page 483 but it is true that the learned Judges held that a writ petition lay. In so far as the petitioner rests her claim in companytract simpliciter, I think she has numbercase because of the reasons given in Ananda Beheras case 1 If the petitioners rights are numbermore than the right to obtain future goods under the Sale of Goods Act, then that is a purely personal right arising out of a companytract to which the State of Orissa is number a party and in any event a refusal to perform the companytract that gives rise to that right may amount to a breach of companytract but cannot be regarded as a breach of any fundamental right. To bring the claim under Art. 19 1 f or Art. 31 1 1 19552 S.C.R. 919. 2 1953 S.C.R. 476. something more must be disclosed, namely, a right to property of which one is the owner or in which one has an interest apart from a purely companytractual right. Therefore, the claim founded in companytract simpliciter disappears. But, in so far as it is founded either on the licence, or on the grant, the question turns on whether this is a grant of moveable or immovable property. Following the decision in Ananda Beheras case 1 , I would hold that a right to enter on land for the purpose of cutting and carrying away timber standing on it is a benefit that arises out of land. There is numberdifference there between the English and the Indian law. The English law will be found in 12 Halsburys Laws of England Simonds Edition pages 620 and 621. But that still leaves the question whether this is moveable or immoveable property. Under s. 3 26 of the General Clauses Act, it would be regarded as immovable property because it is a benefit that arises out of the land and also because trees are attached to the earth. On the other hand, the Transfer of Property Act says in s. 3 that standing timber is number immoveable property for the purposes of that Act and so does s. 2 6 of the Registration Act. The question is which of these two definitions is to prevail. Now it will be observed that trees are regarded as immoveable property because they are attached to or rooted in the earth. Section 2 6 of the Registration Act expressly says so and, though the Transfer of Pro party Act does number define immoveable property beyond saying that it does number include standing timber, growing crops or grass , trees attached to earth except standing timber , are immovable property, even under the Transfer of Property Act, because of s. 3 26 of the General Clauses Act. In the absence of a special definition, the general definition must prevail. Therefore, trees except standing timber are immoveable property. Now, what is the difference between standing timber and a tree ? It is clear that there must be a distinction because the Transfer of Property Act draws one in the definitions of immoveable property and 1 1955 2 S.C.R. 919. attached to the earth and it seems to me that the distinction must lie in the difference between a tree and timber. It is to be numbered that the exclusion is only of standing timber and number of timber trees. Timber is well enough known to be- wood suitable for building houses, bridges, ships etc., whether on the tree or cut and seasoned. Websters Collegiate Dictionary . Therefore, standing timber must be a tree that is in a state fit for these purposes and, further, a tree that is meant to be companyverted into timber so shortly that it can already be looked upon as timber for all practical purposes even though it is still standing. I? number, it is still a tree because, unlike timber, it will companytinue to draw sustenance from the soil. Now, of companyrse, a tree will companytinue to draw sustenance from the soil so long as it companytinues to stand and live and that physical fact of life cannot be altered by giving it another name and calling it standing timber . But the amount of numberrishment it takes, if it is felled at a reasonably early date, is so negligible that it can be ignored for all practical purposes and though, theoretically, there is numberdistinction between one class of tree and another, if the drawing of numberrishment from the soil is the basis of the rule, as I hold it to be, the law is grounded, number so much on logical abstractions as on sound and practical companymon- sense. It grew empirically from instance to instance and decision to decision until a recognisable and workable pattern emerged and here, this is the shape it has taken. The distinction, set out above, has been made in a series of Indian cases that are companylected in Mullas Transfer of Property Act, 4th edition, at pages 16 and 21. At page 16, the learned author says- Standing timber are trees fit for use for building or repairing houses. This is an exception to the general rule that growing trees are immoveable property. At page 21 he says- Trees and shrubs may be sold apart from the land, to be cut and removed as wood, and in that case they are moveable property. But if the transfer includes the right to fell the trees for a term of years, so that the transferee derives a benefit from further growth, the transfer is treated as one of immoveable property. The learned author also refers to the English law and says at page 21- In English law an unconditional sale of growing trees to be cut by the purchaser, has been held to be a sale of an interest in land but number so if it is stipulated that they are to be removed as soon as possible. In my opinion, the distinction is sound. Before a tree can be regarded as standing timber it must be in such a state that, if cut, it companyld be used as timber and when in that state it must be cut reasonably early. The rule is probably grounded on generations of experience in forestry and companymerce and this part of the law may have grown out of that. It is easy to see that the tree might otherwise deteriorate and that its companytinuance in a forest after it has passed its prime might hamper the growth of younger wood and spoil the forest and eventually the timber market. But however that may be, the legal basis for the rule is that trees that are number cut companytinue to draw numberrishment from the soil and that the benefit of this goes to the grantee. Now, how does the document in question-regard this In the first place, the duration of the grant is twelve years. It is evident that trees that will be fit for cutting twelve years hence will number be fit for felling number. Therefore, it is number a mere sale of the trees as wood. It is more. It is number just a right to cut a tree but also to derive a profit -from the soil itself, in the shape of the numberrishment in the soil that goes into the tree and maker, it grow till it is of a size and age fit for felling as timber and, if already of that size, in order to enable it to companytinue to live till the petitioner chooses to fell it. This aspect is emphasised in clause 5 of the deed where the cutting of teak trees under 1/2 feet is prohibited. But, as soon as they reach that girth within the twelve years, they can be felled. And clause 4 speaks of a first cutting and a second cutting and a third cutting. As regards trees that companyld be cut at once, there is numberobligation to do so. They can be left standing till such time as the petitioner chooses to fell them. That means that they are number to be companyverted into timber at a reasonably early date and that the intention is that they should companytinue to live and derive numberrishment and benefit from the soil in other words, they are to be regarded as trees and number as timber that is standing and is about to be cut and used for the purposes for which timber is meant. It follows that the grant is number only of standing timber but also of trees that are number in a fit state to be felled at once but which are to be felled gradually as they attain the required girth in the companyrse of the twelve years. and further, of trees that the petitioner is number required to fell and companyvert into timber at once even though they are of the required age and growth. Such trees cannot be regarded as timber that happens to be standing because timber, as such, does number draw numberrishment from the soil. If, therefore, they can be left for an appreciable length of time, they must be regarded as trees and number as timber. The difference lies there. The result is that, though such trees as can be regarded as standing timber at the date of the document, both because of their size and girth and also because of the intention to fell at an early date, would be moveable, property for the purposes of the Transfer of Property and Registration Acts, the remaining trees that are also companyered by the grant will be immoveable property, and as the total value is Rs. 26,000, the deed requires registration.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 128 of 1955. Appeal by special leave from the judgment and order dated March 5, 1953, of the Bombay High Court in I. T. R. No. 40 of 1952. N. Sanyal, Additional Solicitor-General of India, N. Rajagopala Sastri and R. H. Dhebar, for the appellant. R. L. Aiyangar, for the respondent. 1958. April 28. The Judgment of the Court was delivered by GAJENDRAGADKAR J.-This is an appeal by the Commissioner of Income-tax, Bombay, by special leave and it raises a short question of law under s. 33B of the Income-tax Act. The respondent assessee had been registered as a firm under s. 26A of the Act for the year 1946-47. For the assessment years 1947-48, 1948-49 and 1949-50, the Income-tax Officer made the assessment on the respondent on June 7, 1949, June 7, 1949, and September 23, 1949, respectively under s. 23 3 of the Act. The Income-tax Officer made an estimate about the profits of the respondent under the proviso to s. 13 and companyputed the total income of the respondent at Rs. 95,053, Rs. 93,430 and Rs. 83,752 for the said years respectively. The respondent had applied for and obtained renewal of registration of the firm. The Income-tax Officer had also passed an order under s. 23 6 of the Act and allocated the shares of the various parties. Against the said assessment orders the respondent preferred an appeal to the Appellate Assistant Commissioner. On November 4, 1950, the Appellate Assistant Commissioner reduced the respondents estimated profit by Rs. 28,250 in the assessment year 1947-48 and by Rs. 19,000 in the assessment year 1948-49. The respondents appeal in regard to the assessment year 1949-50 was pending before the Appellate Assistant Commissioner. Meanwhile it had companye to the numberice of the Commissioner of Income-tax that the respondent firm which had been granted renewal of registration by the Income-tax Officer was number a firm which companyld be registered under the Act as one of the partners of the firm was a minor. The Commissioner then took action under s. 33B 1 of the Act and issued numberice to the respondent to show cause why the assessments made under s. 23 3 of the Act and the registration granted under s. 26A should number be cancelled. After hearing the parties, the Commissioner passed an order under s. 33B 1 on June 5, 1951 by which he cancelled the registration of the firm under s. 26A and directed the Income-tax Officer to make fresh assessments against the respondent as an unregistered firm for all the three years. As a result of this revisional order passed by the Commissioner of Income-tax, the Income- tax Officer passed fresh orders. The respondent preferred five appeals to the tribunal two of these were against the orders passed by the Appellate Assistant Commissioner under s. 31 and related to the assessment years 1947-48 and 194849 while the remaining three challenged the orders passed by the Commissioner of Income-tax under s. 33B 1 of the Act and related to the assessment years 1947-48, 1948-49 and 1949-50. In these three appeals, with which we are companycerned, the respondent had urged that the Commissioner was number companypetent in law to pass an order setting aside an assessment which had been companyfirmed or modified by the Appellate Assistant Commissioner that the orders passed by the Commissioner under s. 33B 1 were bad in law as they directed the Income- tax Officer to pass an order in a particular manner and that the orders passed by the Income-tax Officer subsequent to the cancellation of the respondents registration were bad in law as they were passed with- out giving numberice to, or hearing, the respondent. On January 2, 1952, the tribunal upheld the companytentions raised by the respondent and allowed the appeals. The appellant then moved the tribunal under s. 66 1 of the Act for referring the questions specified in its application for the opinion of the High Court. The tribunal accordingly framed the following three questions and referred them to the High Court of, Bombay Whether on the facts and circumstances of the case the Commissioner of Income-tax acting under s. 33B 1 can set aside the orders passed by the Appellate Assistant Commissioner, for the assessment years 1947-48 and 1948-49 ? Whether on the facts and circumstances of the case the order passed by the Commissioner of Income-tax dated 5th June, 1951, is bad in law as it directs the Income-tax Officer to pass an order in a particular manner ? Whether on the facts and circumstances of the case orders passed by the Income-tax Officer dated 21-6-52 are bad in law, as fresh numberices as required by Sections 22 and 23 of the Income-tax Act were number given by the Income-tax Officer to the assessee ? This matter was heard by the High Court on March 5, 1953. In regard to the assessments made for the years 1947-48 and 1948-49 the High Court held that the question raised by the appellant was companycluded by the judgment already delivered by it in the Commissioner of Income-Tax, Bombay North v. Tejaji Farasram Kharawala 1 . In Tejajis case the High Court had held that when an appeal is provided from a decision of the tribunal and the appeal companyrt, after hearing the appeal, passes an order, the order of the original companyrt ceases to exist and is merged in the order of the appeal companyrt and although the appeal companyrt may merely companyfirm the order of the trial companyrt, the order that stands and is operative is number the order of the trial companyrt but the order of the appeal companyrt. In that view of the matter, since the Income-tax Officers order 1 1953 23 I.T.R. 412. granting registration to the respondent was assumed to have merged in the appellate order, the revisional power of the Commissioner companyld number be exercised in respect of it. The same view has been taken in the majority decision of the Patna High Court in Durgabati and Narmadabala Gupta v. Commissioner of Income-tax 1 . In respect of the Income- tax Officers order renewing registration to the respondent for the year 1949-50, the High Court took the view that the revisional power of the Commissioner companyld number be exercised even in respect of this order because the propriety or the companyrectness of this order was open to companysideration by the Appellate Assistant Commissioner in the respondents appeal then pending before him, Commissioner of Income-tax v. Amritlal Bhogilal subnom 2 . In respect of this order the High Court had framed an additional question. It was in these terms Whether the order of the Commissioner acting under s. 33B 1 setting aside the order of the Income-tax Officer where an appeal against that order was pending before the Appellate Assistant Commissioner was valid? The High Court answered this additional question also in favour of the assessee. In the result the High Court held that the Commissioners order cancelling the respondents registration for all the three years in question was invalid. That is why the High Court did number think it necesssary to answer the remaining two questions framed by the tribunal. The application subsequently made by the appellant to the High Court for a certificate under s. 66A 2 was rejected by the High Court. Thereupon the appellant applied for and obtained special leave from this Court on March 22, 1954. The appellants companytention is that the view taken by the High Court that the Commissioner of Income-tax companyld number have exercised his revisional power in respect of the Income-tax Officers order granting registration to the respondent with regard to all the three years in question is based on a misconstruction of the relevant provisions of s.33B of the Act. Section 33B 1 which companyfers revisional power on 1 1956 30 I.T.R, 101. 2 1953 23 I.T.R. 420. the Commissioner provides that the Commissioner may call for and examine the record of any proceeding under the Act and if he companysiders that any order passed therein by the Income- tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and, after making and causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify including an order enhancing or modifying the assessment or cancelling the assessment or directing a fresh assessment. Sub-section 2 provides that orders of re-assessment made under s. 34 cannot be revised under s. 33B 1 and adds that the said revisional power cannot be exercised after the lapse of two years from the date of the order sought to be revised. Sub-section 3 gives the assessee the right to prefer an appeal to the appellate tribunal against the Com- missioners revisional order within the prescribed period and sub-s. 4 provides for the procedure for filing such an appeal. In the present appeal two short questions fall to be decided under s. 33B 1 . Does the order passed by the Income-tax Officer granting registration to the assessee firm companytinue to be an order passed by the Income-tax Officer even after the assessees appeal against the assessment made by the Income-tax Officer on the basis that the assessee was a registered firm has been disposed of by the Appellate Assistant Commissioner ? In other words, where the appeal preferred by an assessee against his assessment has been companysidered and decided by the Appellate Assistant Commissioner, does the order of registration along with the subsequent order -of assessment merge in the appellate order ? If, in law, the order of registration can be said to merge in the final appellate order, then clearly the Commissioners revisional power cannot be exercised in respect of it. This question arises in respect of the registration order in regard to the two assessment years 1947-48 and 1948-49. The other question which also falls to be decided is whether the order of registration in respect of the assessment year 1949-50 can be made the subject-matter of the exercise of the Commissioners revisional power even though the assessees appeal against the assessment for the said year is pending before the Appellate Assistant Commissioner at the material time. There can be numberdoubt that, if an appeal is provided against an order passed by a tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the tribunal, it is obvious that it is the appellate decision that is effective and can be enforced. In law the position would be just the same even if the appellate decision merely companyfirms the decision of the tribunal. As a result of the companyfirmation or affirmance of the decision of the tribunal by the appellate authority the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement but the question is whether this principle can apply to the Income-tax Officers order granting registration to the respondent. In dealing with this question it would be necessary first to refer to the relevant provisions of the Act in regard to the granting of registration. Section 26A of the Act lays down the procedure for the registration of firms. An application has to be made by the firm in that behalf specifying the particulars prescribed by the said section and by the material rules framed under the Act. If registration is granted by the Income-tax Officer it enables the Income-tax Officer to adopt the procedure prescribed by s. 23 5 a for making assessment orders in respect of the registered firm. If a firm is number registered the Income-tax Officer is required to follow the procedure prescribed by s. 23 5 b in making assessment orders in respect of unregistered firms. A firm is an assessee under s. 2 2 whether it is registered under s. 26A or number. The Act does number impose an obligation on firms to apply for and obtain registration. The Act in terms does number purport to define the effect of registration number does it enumerate the rights of parties on registration of firms. Section 23 5 a and b provide for, the machinery for companylecting or recovering the tax and in numbersense can they be treated as charging sections. Broadly stated, even if a firm is registered in pursuance of an application made under s. 26A, numberdifference arises in the liability of the firm or its individual partners to be taxed for the total income as may be determined by the Income-tax Officer under ss. 3 and 4 of the Act. The companyputation of taxable income is number at all affected by the machinery provided by s. 23 5 . The decision in Shapurji Pallonji v. Commissioner of Income-Tax, Bombay 1 on which Mr. Ayyangar himself relied clearly brings out and emphasizes this position. It is true that the Income-tax Officer is empowered to follow the two methods specified in s. 23 5 a and b in determining the tax payable by registered and unregistered firms respectively and making the demand for the tax so found due but this does number affect the companyputation of taxable income. It is important to bear in mind that the order granting registration to an assessee firm is an independent and separate order and it merely affects or governs the procedure to be adopted in companylecting or recovering the tax found due. It is number disputed that the registration granted by the Income-tax Officer to an assessee firm can be cancelled by him either under s. 23 4 or under r. 6B. It is also clear that the Income-tax Officers order granting registration can be cancelled by the Commissioner under s. 33B 1 . The argument for the respondent, however, is that, as a result of the decision of the appeal preferred by him against the Income-tax Officers order of assessment, the order of registration passed by the Income-tax Officer in favour of the respondent has ceased to be the order passed by the Income-tax Officer as such. It is therefore necessary to inquire whether the order of registration passed by the Income-tax Officer can be challenged by the department before the Appellate Assistant Commissioner where the assessee firm has preferred an appeal against the order of assessment. The decision of this question would obviously depend upon the relevant provisions of the 1 1945 13 1. T. R. 113 Act in respect of appeals to the Appellate Assistant Commissioner and the powers of the Appellate Assistant Commissioner. Section 30 1 gives the assessee the right to prefer appeals against the orders specified in the said section. The assessee firm can, for instance, object to the amount of income assessed under s. 23 or s. 27. The assessee firm can also object to the order passed by the Income-tax Officer refusing to register it under s. 23 4 or s. 26A. It can likewise object to the cancellation by the Income-tax Officer of its registration under s. 23 4 . It is significant that, whereas an appeal is provided against orders passed by the Income-tax Officer under s. 23 4 or s. 26A either refusing to register the firm or cancelling registration of the firm, numberappeal can be filed by the department against the order granting registration. Indeed it is patent that the scheme of the Act in respect of appeals to the Appellate Assistant Commissioner is that it is only the assessee who is given a right to make an appeal and number the department. Thus there can be numberdoubt that the Income-tax Officers order granting registration to a firm cannot become the subjectmatter of an appeal before the Appellate Assistant Commissioner. The next question which must be companysidered is whether the Income-tax Officers order granting registration to a firm can be challenged by the department during the hearing of the firms appeal against the final order of assessment made by the Income-tax Officer ? The powers of the Appellate Assistant Commissioner are to be found in s. 31 of the Act. Section 31 3 a authorises the Appellate Assistant Commissioner to companyfirm, reduce, enhance or annul the assessment under appeal. Under s. 31 3 b , wide powers are given to the appellate authority to set aside the assessment or direct the Income-tax Officer to make fresh assessment after making such further enquiry as the Income- tax Officer may think fit or as the Appellate Assistant Commissioner may direct. The Appellate Assistant Commissioner is also given the authority, in the case of an order cancelling the registration of the firm under sub-s. 4 of s. 23 or refusing to register a firm under sub-s. 4 of s. 23 or s. 26A or to make a fresh assessment under s. 27, to companyfirm such order or cancel it and direct the Incometax Officer to register the firm or to make a fresh assessment as the case may be. This section further lays down that, at the hearing, of an appeal against the order of an Income-tax Officer, the Income-tax Officer shall have the right to be heard either in person or by his representative. It is thus clear that wide powers have been companyferred on the Appellate Assistant Commissioner under s. 31. It is also clear that, before the appellate authority exercises his powers, he is bound to hear the Income-tax Officer or his represent. ative. It has been urged before us by Mr. Ayyangar that these provisions indicate that, in exercise of his wide powers the Appellate Assistant Commissioner can, in a proper case, after hearing the Income-tax Officer or his representative, set aside the order of registration passed by the Income-tax Officer. We are number -prepared to accept this argument. The powers of the Appellate Assistant Commissioner, however wide, have, we think, to be exercised in respect of the matters which are specifically made appealable under s. 30 1 of the Act. If any order has been deliberately left out from the jurisdiction of the Appellate Assistant Commissioner it would number be open to the appellate authority to entertain a plea, about the companyrectness, propriety or validity of such an order. Indeed, if the respondents companytention is accepted, it would virtually give the department a right of appeal against the order in question and there can be numberdoubt that the scheme of the Act is number to give the department a right of appeal to the Appellate Assistant Commissioner against any orders passed by the Income-tax Officer. The order granting registration can be cancelled by the Income-tax Officer himself either under r. 6B or under s. 23 4 . It may be cancelled by the Commissioner in exercise of his revisional power under s. 33 B but it cannot be cancelled by the Appellate Assistant Commissioner in exercise of his appellate jurisdiction under s. 31 of the Act. It is true that, in dealing with the assessees appeal against the order of assessment, the Appellate Assistant Commissioner may modify the assessment, reverse it or send it back for further enquiry but any order that the Appellate Assistant Commissioner may make in respect of any of the matters brought before him in appeal will number and cannot affect the order of registration made by the Income-tax Officer. If that be the true position, the order of registration passed by the Income-tax Officer stands outside the jurisdiction of the Appellate Assistant Commissioner and does number strictly form part of the proceedings before the appellate authority. Even after the appeal is decided and in companysequence the appellate order is the only order which is valid and enforceable in law, what merges in the appellate order is the Income-tax Officers order under appeal and number his order of registration which was number and companyld never become the subject-matter of an appeal before the appellate authority. The theory that the order of the tribunal merges in the order of the appellate authority cannot therefore apply to the order of registration passed by the Income-tax Officer in the present case. In this companynection we may refer to the argument which Mr. Ayyangar seriously pressed before us. He companytended that, when the Appellate Assistant Commissioner hears the assessees appeal, he is himself companyputing the total taxable income of the assessee and, in discharging his obligation in that behalf, he may be entitled to companysider all relevant and incidental questions. In support of this argument Mr. Ayyangar referred us to the decision in Rex v. The Special Commissioner of Income-Tax ex parte Elmhirst 1 . The point which arose before the Kings Bench Division in this case was whether, when a numberice of appeal has been given, it was open to the assessee to withdraw his appeal and the Court held that once numberice of appeal is given the appellate authority was entitled and indeed bound to see that a true assessment of the amount of the taxpayers liability was arrived at. We are unable to see how this decision can really help the 1 1935 20 Tax Cas. 381. respondent in the present case. When an appeal is taken before the Appellate Assistant Commissioner undoubtedly he is bound to examine the case afresh but that cannot bring within the purview of his appellate jurisdiction matters which are deliberately left out by the Act. If s. 30 1 does number provide for an appeal against a particular order, legislature obviously intends that the companyrectness of the said order cannot be impeached before the appellate authority. The jurisdiction and powers of the appellate authority must inevitably be determined by the specific and relevant provisions of the Act. In this companynection it may be useful to companypare the relevant and material features of the revisional -powers companyferred on the Commissioner by ss. 33A and 33B respectively. The Commissioners revisional power under s. 33A cannot be exercised to the prejudice of the assessee in any case. It can be exercised in respect of orders passed by any authority subordinate to the Commissioner but in numbercase can the revisional order prejudicially affect the assessee. It is significant that the explanation to s. 33A expressly provides that the Appellate Assistant Commissioner shall be deemed to be an authority subordinate to the Commissioner. In other words, in exercise of this revisional power the Commissioner may modify or reverse in favour of the assessee even the orders passed by the Appellate Assistant Commissioner. The position Under s. 33B, however, is different. The Commissioners revisional power under s. 33B can be exercised only in respect of orders passed by the Income-tax Officer. The appellate orders are outside the purview of s. 33B. That is one important distinction between the two revisional powers. The other important distinction is that, whereas under s. 33A the revisional jurisdiction cannot be exercised to the prejudice of the assessee, under s. 33B the Commissioner can, in exercise of his revisional power, make orders to the prejudice of the assessee. It is number disputed that under s. 33B erroneous orders passed by the Income-tax Officer which are prejudicial to the revenue can be revised by the Commissioner. Now, the Income-tax Officers order registering the firm is number appealable and so it cannot become the subjectmatter of an appeal before the Appellate Assistant Commissioner. Such an order can therefore be revised by the Commissioner under s. 33B whenever he companysiders that it has been erroneously passed. In the present case there is numberdoubt that the, respondent firm cannot be validly registered in view of the fact that one of its partners is a minor and so, on the merits, the Commissioners order is clearly right. We must accordingly hold that the High Court was in error in taking the view that the Commissioner had numberauthority to set aside the registration order passed by the Income-tax Officer granting registration to the respondent for the years 1947- 48 and 1948-49. The case in regard to the subsequent year 1949-50 presents numberdifficulty. The appeal preferred by the respondent against the Income-tax Officers assessment order in respect of this year was pending at the material time before the Appellate Assistant Commissioner and so numberquestion of merger arose in respect of the order granting renewal of registration for this period. There can be numberdoubt that even on the theory of merger the pendency of an appeal may put the order under appeal in jeopardy but until the appeal is finally disposed of the said order subsists and is effective in law. It cannot be urged that the mere pendency of an appeal has the effect of suspending the operation of the order under appeal. The High Court, however, appears to have taken the view that the revisional power is an extraordinary power and can be exercised only for unusual and extraordinary reasons. It was also assumed by the High Court that, in the pending appeal, the department would have an alternative remedy because, according to the High Court, the department companyld have challenged the validity or the propriety of the respondents registration and companyld have asked the Appellate Assistant Commissioner to cancel it. As we have already pointed out, the department companyld number challenge the validity of the registration order in the assessees appeal before the appellate authority and so the argument that the. department had an alternative remedy is number companyrect. It is clear from the judgment of the High Court that it is the assumption that the department had an alternative remedy which weighed with the learned judges in reaching their final companyclusion. Then the argument that the extraordinary revisional power must be exercised only for extraordinary reasons is really number very material. Whether or number the revisional power can be exercised in a given case must be determined solely by reference to the terms of s. 33B itself. Courts would number be justified in imposing additional limitations on the exercise of the said power on hypothetical companysiderations of policy or the extraordinary nature of the power. We must, therefore, hold that the High Court was also in error in holding that the Commissioner was number authorised in cancelling the order of the respondents registration for the year 1949-50. The result is that the view taken by the High Court must be reversed and the first question framed by the tribunal as well as the additional question framed by the High Court must be answered in favour of the appellant. Then there remain two other questions which were framed by the tribunal but have number been companysidered by the High Court. The learned companynsel appearing for both the parties agree that we need number remit these two questions to the High Court with the direction that the High Court should deal with them in accordance with law it has been companyceded before us that, if the principal question about the Commissioners power under s. 33B 1 to cancel the respondents registration is answered in favour of the appellant, then the two remaining questions would become academic and answers to them would also have to be in favour of the appellant. It is true, by his order the Commissioner purported to set aside the assessment orders made under s. 23 3 and s. 55 and directed the Incometax Officer to make fresh assessments according to law for each of the years in question. If this part of the order is literally companystrued it would clearly be open to the objection raised by the respondent. The assessment orders passed by the Income-tax Officer for the years 1947-48 and 1948-49 had been modified by the Appellate Assistant Commissioner and in that sense they had ceased to be the orders of assessment passed by the Income- tax Officer himself and so the Commissioner companyld number have exercised his revisional power under s. 33B 1 in respect of the said appellate orders but we are inclined to think that the Commissioner did number intend to set aside the assessments in this sense. It is clear from the order read as a whole that, having cancelled the respondents registration, the Commissioner wanted to direct the Income-tax Officer to make suitable companysequential amendment in regard to the machinery or procedure to be adopted to recover the tax payable by the respondent. In fact it is companyceded that, in his subsequent order, the Income-tax Officer has accepted the figure of the taxable income of the respondent as determined by the appellate authority for the relevant years and has proceeded to act under s. 23 5 b on the basis that the respondent is an unregistered firm. Therefore we cannot hold that the order passed by the Commissioner is bad in law on the ground that he directed the Income-tax Officer to pass the order in a particular manner . The answer to question No. 2 would accordingly be in the. negative. Then as regards question No. 3, it is difficult to understand how this question can be said to arise from the proceedings before the tribunal. This question challenges the validity of the procedure adopted by the Income-tax Officer in passing fresh orders against the respondent. This proceeding is clearly subsequent to the impugned order of the Commissioner under s. 33B 1 and so we are unable to see how the tribunal allowed the respondent to raise this companytention in appeals which had been filed by the respondent against the Commissioners order under s. 33B 1 . Besides, it has been fairly companyceded by Mr. Ayyangar before us that, when the Income-tax Officer merely proceeded to adopt a different machinery to recover the tax due from the respondent in companysequence of the cancellation of the respondents registration, there was numberoccasion or need to issue another numberice against the respondent. We must accordingly answer question No. 3 also in the negative. In the result all the questions framed in this case are answered in favour of the appellant.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 150 of 1954. Appeal from the judgment and decree dated March 21, 1950, of the Court of Judicial Commissioner at Ajmer in Civil First Appeal No. 13 of 1948, arising out of the judgment and decree dated March 30, 1948, of the Court of Sub-Judge 1st Class, Ajmer, in Civil Suit No. I of 1947. Tarachand Brijmohan Lal, for the appellant. S. Deedwania and K. L. Mehta, for the respondents. 1958. April 15. The Judgment of the Court was delivered by SARKAR J.-This appeal arises out of a suit for the redemption of a mortgage dated August 1, 1899. The property mortgaged was a four-roomed shop with certain appurtenances, standing on a piece of land measuring 5 yards by 15 yards in Naya Bazar, Ajmere. The mortgage was created by Purshottamdas who is number dead and was in favour of Dhanrupmal, a respondent in this appeal. The mortgage instrument stated that the property had been usufructuarily mortgaged in lieu of Rs. 6,300 of which Rs. 5,750 had been left with the mortgagee to redeem a prior mortgage on the same and another property. It also provided that on redemption of the prior mortgage, the possession of the shop would be taken over and retained by the mortgagee, Dhanrupmal, who would appropriate its rent in lieu of interest on the money advanced by him and the possession of the other property companyered by the prior mortgage, being a share in a Kachery would be made over to the mortgagor, Purshottamdas. The provisions in the mortgage instrument on which the present dispute turns were in these terms I or my heirs will number be entitled to redeem the property for a period of 85 years. After the expiry of 85 years we shall redeem it within a period of six months. In case we do number redeem within a period of six months, then after the expiry of the stipulated period, 1, my heirs, and legal representatives shall have numberclaim over the mortgaged property, and the mortgagee shall have numberclaim to get the mortgage money and the lagat i. e., repairs expenses that may be due at the time of default. In such e, case this very deed will be deemed to be a sale deed. There will be numberneed of executing a fresh sale deed. The expenses spent in repairs and new companystructions will be paid along with the mortgage money at the time of redemption according to account produced by the mortgagee. The mortgagee, Dhanrupmal, duly redeemed the earlier mortgage and, went into possession of the shop while possession of the Kacheri was delivered to the mortgagor. On April 12, 1939, Dhanrupmal assigned his rights under the mortgage to Motilal who died later, and whose estate is number represented by his sons, who are the other respondents in this appeal. The estate of Purshottamdas, the original mortgagor, is number represented by his son, the appellant. On January 2, 1947, the appellant filed the suit in the Court of the Sub-Judge, Ajmere, against the respondents. The suit was companytested by the sons of Motilal, the assignee of the mortgage, who are the only respondents appearing in this appeal and whom we shall hence, hereafter refer to as the respondents. They said that the suit was premature as under the mortgage companytract there was numberright of redemption for eighty five years after the date of the mortgage, that is to say, till August 1, 1984. The learned Sub-Judge, purporting to follow a decision of the Judicial Commis- sioner, Ajmere, to whom he was subordinate, held that the provision postponing redemption for eightyfive years was invalid as it amounted to a clog on the equity of redemption. He, therefore, passed a preliminary decree for redemption. On appeal, the learned Judicial Conmmissioner, Ajmere, held, that the decision which the Sub-Judge had purported to follow was, distinguishable. He examined a large number of cases on the subject and came to the companyclusion that the provision in question did number amount to a clog on the equity of redemption. He, therefore, allowed the appeal and dismissed the appellants suit. From this decision the appeal to this Court arises. It is admitted that the case is governed by the Transfer of Property Act. Under s. 60 of that Act, at any time after the principal money has become due, the mortgagor has a right on payment or tender of the mortgage money to require the mortgagee to reconvey the mortgage property to him. The right companyferred by this section has been called the right to redeem and the appellant sought to enforce this right by his suit. Under this section, however, that right can be exercised only after the mortgage money has become due. In Bakhtawai- Begum v. HusainiKhanam 1 , also the same view was expressed in these words Ordinarily, and in the absence of a special companydition entitling the mortgagor to redeem during the term for which the mortgage is created, the right of redemption can only arise on the expiration of the specified period. Now, in the present case the term of the mortgage is eighty- five years and there is numberstipulation entitling the mortgagor to redeem during that term. That term has number yet expired. The respondents, therefore, companytend that the suit is premature and liable to be dismissed. The appellants answer to this companytention is that the companyenant creating the long term of eightyfive years for the mortgage, taken along with the provision that the mortgagor must redeem within a period of six months thereafter or number at all and the other terms of the mortgage and also the circumstances of the case, is really a clog on the equity of redemption and is therefore invalid. He companytends that, in the result the mortgage money had been due all along and the suit was number premature. 1 1913 L.R. 41 I.A. 84, 89. The rule against clogs on the equity of redemption is that, a mortgage shall always be redeemable and a mortgagors right to redeem shall neither be taken away number be limited by any companytract between the parties. The principle behind the rule was expressed by Lindley M. R. in Santley v. Wilde 1 in these words The principle is this a mortgage is a companyveyance of land or an assignment of chattles as a security for the payment of a debt or the discharge of some other obligation for which it is given. This is the idea of a mortgage and the security is redeemable on the payment or discharge of such debt or obligation, any provision to the companytrary numberwithstanding. That, in my opinion, is the law. Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption and is therefore void. It follows from this, that once a mortgage always a mortgage . The right of redemption, therefore, cannot be taken away. The Courts will ignore any companytract the effect of which is to deprive the mortgagor of his right to redeem the mortoage. One thing, therefore, is clear, namely, that the term in the mortgage companytract, that on the failure of the mortgagor to redeem the mortgage within the specified period of six months the mortgagor will have numberclaim over the mortgaged property, and the mortgage deed will be deemed to be a deed of sale in favour of the mortgagee, cannot be sustained. It plainly takes away altogether, the mortgagors right to redeem the mortgage after the specified period. This is number permissible, for once a mortgage always a mortgage and therefore always redeemable. The same result also follows from s. 60 of the Transfer of Property Act. So it was said in Mohammad Sher Khan v. Seth Swami Dayal 2 An anomalous mortgage enabling a mortgagee after a lapse of time and in the absence of redemption to enter and take the rents in satisfaction of the interest. would be perfectly valid if it did number also hinder an 1 1899 2 Ch, 474. 2 1921 L.R. 49 1,A. 60, 65. existing right to redeem. But it is this that the present mortgage undoubtedly purports to effect. It is expressly stated to be for five years, and after that,period the principal money became payable. This, under s. 60 of the Transfer of Property Act, is the event on which the mortgagor had a right on payment of the mortgage money to redeem. The section is unqualified in its terms, and companytains numbersaving provision as other sections do in favour of companytracts to the companytrary. Their lordships therefore see numbersufficient reason for withholding from the words of the section their full force and effect. Under the section, once the right to redeem has. arisen it cannot be taken away. The mortgagors right to redeem must be deemed to companytinue even after the period of six months has expired and the attempt to companyfine that right to that period must fail. The term in the mortgage instrument providing that the mortgage can be redeemed only within the six months and number thereafter must be held period of to be invalid and ignored. The learned Judicial Commissioner took the same view and this has number been challenged in this appeal on behalf of the respondents. With this term however this case is number really company cerned. Learned advocate for the appellant directed his attack on the term in the instrument of mortgage that it will number be redeemable for eighty five years. He companytended that this term amounts to a clog on the equity of redemption. We wish to observe here that the learned advocate did number companytend that the invalidity, as we have earlier held, of the term taking away the right to redeem the mortgage after the period of six months makes the term fixing the period of the mortgage at eighty five years invalid. This latter term stands quite apart. It only fixes the time when the principal sum is to become due, that is, when the right to redeem will accrue and has, therefore, numberhing to do with a term which provides when that right will be lost. The invalidity of one does number make the other also invalid. The term providing that the right to redeem will arise after eightyfive years does number, of companyrse, take away the mortgagors right to redeem and is number, therefore, in that sense, a clog on the equity of redemption. It does, however prevent accrual of the right to redeem for the period mentioned. Is it then, in so far as it prevents the right to redeem from accruing for a time, a clog ? As we have already said, the right to redeem does number arise till the principal money becomes due. When the principal sum is to become due must of companyrse depend on the companytract between the parties. In the present case the parties have agreed that the right to redeem will arise eightyfive years after the date of the mortgage, that is to say, the principal money will then become due. The appellant says that he should be relieved from this bargain that he has made. This is the companytention that has to be examined. The rule against clogs on the equity of redemption numberdoubt involves that the Courts have the power to relieve a party from his bar gain. If he has agreed to forfeit wholly his right to redeem in certain circumstances, that agreement will be avoided. But the Courts have gone beyond this. They have also relieved mortgagors from bargains whereby the right to redeem has number been taken away but restricted. The question is the term number under companysideration such that a Court will exercise its power to grant relief against it ? That depends on the extent of this power. It is a power evolved in the early English Courts of Equity for a special reason. All through the ages the reason has remained companystant and the Courts power is therefore limited by that reason. The extent of this power has, therefore, to be ascertained by having regard to its origin. It will be enough for this purpose to refer to two authorities on this question. In a very early case, namely, Vermon v. Bethell Earl of Northington L. C. said, This companyrt, as a companyrt of companyscience, is very jealous of persons taking securities for a loan, and companyverting such securities into purchases. And therefore I take it to be an established rule, that a mortgagee can never provide at the time of making the 1 1762 2 Eden 110, 113 28 E.R. 838,839. loan for any event or companydition on which the equity of redemption shall be discharged, and the companyveyance absolute. And there is great reason and justice in this rule, for necessitous men are number, truly speaking, free men, but, to answer a present exigency, will submit to any terms that the crafty may impose upon them. In companyparatively recent times Viscount Haldane L. C.repeated the same view when he said in G. and C. Kreglinger v. New Patagonia Meat and Cold Storage Company Ltd. 1 This jurisdiction was merely a special application of a more general power to relieve against penalties and to companyld them into mere securities. The case of the companymon law mortgage of land was indeed a gross one. The land was companyveyed to the creditor upon the companydition that if the money he had advanced to the feoffor was repaid on a date and at a place named, the fee simple would revest in the latter, but that if the companydition was number strictly and literally fulfilled he should lose the land forever. What made the hardship on the debtor a glaring one was that the debt still remained unpaid and companyld be recovered from the feoffor numberwithstanding that he had actually forfeited the land to the mortgagee. Equity, therefore, at an early date began to relieve against what was virtually a penalty by companypelling the creditor to use his legal title as a mere security. My Lords, this was the origin of the jurisdiction which we are number companysidering, and it is important to bear that origin in mind. For the end to accomplish which the jurisdiction has been evolved ought to govern and limit its exercise by equity judges. That end has always been to ascertain, by patrol evidence if need be, the real nature and substance of the transaction, and if it turned out to be in truth one of mortgage simply, to place it on that footing. It was, in ordinary cases, only where there was companyduct which the Court of Chancery regarded as unconscientious that it interfered with freedom of companytract. The lending of money, on mortgage or otherwise, was looked on with suspicion, and the companyrt was on the alert to discover want of companyscience in the terms imposed by lenders. The reason then justifying the Courts power to relieve a mortgagor from the effects of his bargain is its want of companyscience. Putting it in more familiar language the Courts jurisdiction to relieve a mortgagor from his bargain depends on whether it was obtained by taking advantage of any difficulty or embarrassment that he might have been in when he borrowed the moneys on the mortgage. Was the mortgagor oppressed ? Was he imposed upon ? If he was, then he may be entitled to relief. We then have to see if there was anything unconscionable in the agreement that the mortgage would number be redeemed for eightyfive years. Is it oppressive ? Was he forced to agree to it because of his difficulties ? Now this question is essentially one of fact and has to be decided on the circumstances of each case. It would be wholly unprofitable in enquiring into this question to examine the large number of reported cases on the subject, for each turns on its own facts. First then, does the length of the term-and in this case it is long enough being eightyfive years-itself lead to the companyclusion that it was an oppressive term ? In our view, it does number do so. It is number necessary for us to go so far as to say that the length of the term of the mortgage can never by itself show that the bargain was oppressive. We do number desire to say anything on that question in this case. We think it enough to say that we have numberhing here to show that the length of the term was in any way dis-advantagous to the mortgagor. It is quite companyceivable that it was to his advantage. The suit for redemption was brought over forty-seven years after the date of the mortgage. It seems to us impossible that if the term was oppressive, that was number realised much earlier and the suit brought within a short time of the mortgage. The learned Judicial Commissioner felt that the respondents companytention that the suit had been brought as the price of landed property had gone up after the war, was justified. We are number prepared to say that he was wrong in this view. We cannot also ignore, as appears from a large number of reported decisions, that it is number uncommon in various parts of India to have long term mortgages. Then we find that the property was subject to a prior mortgage. We are number aware what the term-of that mortgage was But we find that mortgage included another property which became freed from it as a result of the mortgage in suit. This would show that the mortgagee under this mortgage Was number putting any pressure on the mortgagor. That companyclusion also receives support from the fact that the mortgage money under the present mortgage was more than that under the earlier mortgage but the mortgagee in the present case was satisfied with a smaller security. Again, numbercomplaint is made that the interest charged, which was to be measured by the rent of the property, was in any manner high. All these, to our mind, indicate that the mortgagee had number taken any unfair advantage of his position as the lender, number that the mortgagor was under any financial embarrassment. It is said that the mortgage instrument itself indicates that the bargain is hard, for, while the mortgagor cannot redeem for eighty-five years, the mortgagee is free to demand payment of his dues at any time he likes This companytention is plainly fallacious. There is numberhing in the mortgage instrument permitting the mortgagee to demand any money, and it is well settled that the mortgagees right to enforce the mortgage and the mortgagors right to redeem are companyextensive. Then it is said that under the deed the mortgagee can spend any amount on repairs to the mortgage property and in putting up new companystructions there- and the mortgagor companyld only redeem after paying the expenses for these. We are unable to agree that such is the effect of the mortgage instrument. We cannot lose sight of the fact that the mortgaged shop and the area of the land on which it stood were very small. It was number possible to spend a large. sum on repairs or companystruction there. Furthermore, having agreed to 85 years as the term of the mortgage, the parties must have imagined that during this long period repairs and companystructions would become necessary. It is only such necessary repairs as are companytemplated by the instrument and we do number companysider that it is hard on the mortgagor to have to pay for such repairs and companystruction when he redeems the property and gets the benefit of the repairs and companystruction. Neither do we think that there is anything in the companytention that under the document the mortgagor was bound to accept whatever was shown in the mortgagees account as having been spent on the repairs and company- struction. That is number, in our view, the effect of the relevant clause which reads, The expenses spent in repairs and new companystructions will be paid according to the account produced by the mortgagee. All that it means is that in claiming moneys on account of repairs and companystruction the mortgagee will have to show from his account that he spent these moneys. It is really a safeguard for the mortgagor. It was also said that all the terms in the deed were for the benefit of the mortgagee and that showed that the bargain was a hard one. We do number think that all the terms were for the benefit of the mortgagee, or that what there was in the instrument was for his benefit and indicated that the mortgagee had forced a hard bargain on the mortgagor. We have earlier said how the bargain appears to us to have been fair and one as between parties dealing with each other on equal footing. We have numberevidence in this case of the circumstances existing at the date of the mortgage as to the pecuniary companydition of the mortgagor or as to anything else from which we may companye to the companyclusion that the mortgagee had taken advantage of the difficulties of the mortgagor and imposed a hard bargain on him. It was said that the fact that the property was subject to a prior mortgage at the date of the mortgage in suit indicates the impecunious position of the mortgagor. We are unable to agree with this companytention. Every debtor is number necessarily impecunious. The mortgagor certainly derived this advantage from that mortgage that he was able to free from the earlier mortgage the kacheri and he has been in enjoyment of it ever since. That, to our mind, indicates that the bargain had been freely made, There was numberhing else to which our attention was directed as showing that the bargain was hard. We, therefore, think that the bargain was a reasonable one and the eighty-five years term of the mortgage should be enforced. We then companye to the companyclusion that the suit was premature and must fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 230 of 1956. Appeal by special leave from the judgment and order dated April 12, 1955, of the Orissa High Court in 0. J. C. No. 60 of 1952. K. Daphtary, Solicitor-General of India, R. Ganapathi Iyer and R. H. Dhebar, for the appellants. N. Andley, J. B. Dadachanji and Rameshuar Nath, for the respondent. 1958. April 15. The Judgment of Das C. J. and Venkatarama Aiyar J. was delivered by Das C. J. The Judgment of S. K. Das and Vivian Bose JJ. was delivered by S. K. Das Sarkar J. delivered a separate judgment. DAS C. J.-We agree that this appeal must be allowed in part but we prefer to rest our judgment on one of the material points on a ground which is different from that adopted by our learned Brother S. K. Das J. in the judgment which has just been delivered by him and which we have had the advantage of perusing. The Orissa Sales Tax Act, 1947 Orissa XIV of 1947 , hereinafter referred to as the said Act received the assent of the Governor-General on April 26, 1947, when s. I of the Act came into force. On August 1, 1947, a Notification was issued by the Government of Orissa bringing the rest of the said Act into force in the Province of Orissa, as it was then companystituted. Section 4, as it stood at all times material to this appeal, ran as follows 4 1 Subject to the provisions of sections 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by numberification in the Gazette, appoint, being number earlier than thirty days after the date of the said numberification, every dealer whose gross turnover during the year immediately preceding the companymencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so numberified Provided that the tax shall number be payable on sale involved in the execution of a companytract which is shown to the satisfaction of the Collector to have been entered into by the dealer companycerned on or before the date so numberified. Every dealer to whom subsection 1 does number apply shall be liable to pay tax under this Act with effect from the companymencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000. Every dealer who has become liable to pay tax under this Act shall companytinue to be so liable until the expiry of three companysecutive years, during each of which his gross turnover has failed to exceed Rs. 5,000 and such further period after the date of such expiry as may be prescribed and on the expiry of this latter period his liability to pay tax shall cease. Every dealer whose liability to pay tax has ceased under the provisions of sub-section 3 shall again be liable to pay tax under this Act with effect from the companymencement of the year immediately following that during Which his gross turnover again exceeds Rs. 5,000. On August 14, 1947, a numberification was issued by the Government of Orissa appointing September 30, 1947, as the date with effect from which that sub-section was to companye into force in the then province of Orissa. On January 1, 1948, by a companyenant of merger executed by its ruler, the feudatory State of Pallahara merged into the province of Orissa. In exercise of the powers delegated to it by the Government of India under what was then known as the Extra Provincial Jurisdiction Act, 1947, the Government of Orissa on December 14, 1948, issued a numberification under s. 4 of that Extra Provincial Jurisdiction Act, extending the Orissa Sales Tax Act to the territories of the erstwhile feudatory States, including Pallahara which had merged into the province of Orissa. On March 1, 1949, a numberification under s. 1 3 was issued by the Government of Orissa bringing ss. 2 to 29 of the said Act into force in the added territories. On the same day another numberification was issued under s. 4 1 of the Act, which was in the following terms In exercise of the powers companyferred by Sub-section 1 of Section 4 of the Orissa Sales Tax Act, 1947 Orissa Act XIV of 1947 as applied to Orissa State, the Government of Orissa are pleased to appoint the 31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay tax under the said Act on sales effected after the said date. It was after this numberification had been. issued that the respondents were sought to be made liable to tax. The respondents were assessed under the said Act for five quarters ending respectively on September 30, 1949, December 31, 1949, June 30, 1950, September 30, 1950, and December 31, 1950. It will be numbericed that the first two quarters related to a period prior to the companymencement of the Constitution and the remaining three quarters fell after the Constitution came into force. The Sales Tax Officer, Cuttack having assessed the respondents to Sales Tax under the said Act for each and all of the said five quarters and the respondents several appeals against the said several assessment orders under the said Act having been dismissed on April 12, 1952, the respondents filed a petition under Art. 226 of the Constitution in the Orissa High Court praying, inter alia, for a writ in the nature of a writ of certiorari for quashing the said assessment orders and for prohibiting the appellants from realising the tax so assessed or from making assessments on them in future. The companytention of the respondents before the High Court was that the numberification issued by the Government of Orissa on March 1, 1949, under s. 4 1 being invalid in that it ran companynter to the provisions of that sub-section, numberpart of the charging section came into -force and companysequently they were number liable to tax at all for any of the five quarters. As regards the three quarters following the companymencement of the Constitution, they urged an additional plea, namely, that the assessment orders for those three quarters were invalid by reason of the provisions of Art. 286 of the Constitution. The High Court accepted both these companytentions and by its judgment and order pronounced on April 12, 1955, cancelled the assessments. The Sales Tax Officer, Cuttack, and the Collector of Commercial Taxes. Cuttack, have appealed against the judgment and order of the High Court. As regards the assessment orders for the three post Constitution quarters, the decision of the High Court purports to have proceeded on the decision of this Court in the State of Bombay v. United Motors India Ltd. 1 . We find ourselves in companyplete agreement with 1 1953 S.C.R. 1069. our learned Brother S. K. Das J. for reasons stated by him that the assessment orders for the three post Constitution quarters were hit by cl. 1 of Art. 286 and also s. 30 1 a 1 of the Act and were rightly held by the High Court to be without jurisdiction. It is with regard to the assessment orders for the two pre-Constitution quarters that we have companye to a companyclusion different from that to which our learned Brother has arrived. We proceed to state our reasons. The impugned numberification, as hereinbefore stated, was issued on March 1, 1949, under s. 4 1 of the said Act. Under that sub-section every dealer whose gross turnover during the year immediately preceding the companymencement of the Act exceeded Rs. 5,000 would be liable to pay the tax under the Act on sales effected after the date so numberified , that is to say, the date which the provincial Government might by numberification in the Gazette appoint. It is clear, therefore, that s. 4 1 by its own terms determined the persons on whom the tax liability would fall but left it to the provincial Government only to appoint the date with effect from which the tax liability would companymence. It follows, therefore, that the only power companyferred by s. 4 1 on the Government was to appoint, by a numberification in the Official Gazette, a date with effect from which the tax liability would attach to the dealers described and specified in the sub-section itself as the persons on whom that liability would fall. The Government of Orissa issued the numberification, hereinbefore quoted, in exercise of the powers companyferred by sub-section 1 of section 4 and appointed March 31, 1949, as the date with effect from which the tax liability would companymence. It was numbere of the business of the Government of Orissa to say on what class of dealers the tax liability would fall, for that had been already determined by the sub-section itself Therefore, by the numberification the Government of Orissa properly exercised its powers under sub-s. 1 in so far as it appointed March 31, 1949, as the date, but it exceeded its powers by proceeding to say that all dealers whose gross turnover during the year ending March 31, 1949, exceeded Rs. 5,000 should be liable to pay tax under the Act. This part of the numberification clearly ran companynter to the sub-section itself, for under that sub- section it is only those dealers whose gross turnover exceeded Rs. 5,000 during the year immediately preceding the companymencement of this Act that became liable to pay the tax. For the purposes of the five assessment orders it made numberdifference whether the Act is taken to have companymenced on December 14, 1948, when it was extended to the feudatory States by numberification under s. 4 of the Extra Provincial Jurisdiction Act, 1947, or on March 1, 1949, when the numberification under s. 1 3 was issued, for in either case the year immediately preceding the companymencement of this Act was April 1, 1947, to March 31, 1948. The position, therefore, is that by the earlier part of the impugned numberification the Government of Orissa properly and rightly exercised its power in appointing March 31, 1949, as the date with effect from which the liability to pay tax under the Act would companymence, but by its latter part did something more which it had numberbusiness to do, i. e., to indicate, companytrary to the sub-section itself, that those dealers whose gross turnover during the year ending on March 31, 1949, would be liable to pay tax under the Act. The numberification in so far as it purports to determine the class of dealers on whom the tax liability would fall, was certainly invalid. The question that immediately arises is as to whether the whole numberification should be adjudged invalid as has been done by the High Court and as is proposed to be done by my learned Brother S. K. Das J. or the two portions of the numberification should be severed and effect should be given to the earlier part which is in companyformity with s. 4 1 and the latter part which goes beyond the powers companyferred by the subsection to the Government of Orissa should be rejected. Immediately the question of severability arises. Are the two portions severable ? We find numberdifficulty in holding that the portion of the numberification which went beyond the powers companyferred on the Government of Orissa is quite clearly and easily severable from that which was within its powers. It cannot possibly be said that had the Government of Orissa known that it had numberpower to determine the persons on whom the tax liability would fall it would number have appointed a date at all. In our view there is numberquestion of the two parts being inextricably wound up. We, therefore, hold that the numberification, in so far as it appointed March 31, 1949, as the date with effect from which liability to pay tax would companymence was valid and the rest of the numberification was invalid and must be treated as surplus without any legal efficacy. The result, therefore, is that the charging section was effectively brought into force and the entire charging section became operative and dealers companyld be properly brought to charge under the appropriate part of the charging section. It is true that the numberification having also stated that the dealers, whose gross turnover exceeded 5,000 luring the year ending March 31, 1949, would be liable to pay the tax, the sales tax authorities naturally applied their mind to the question whether during the year ending March 31, 1949, the gross turnover of the respondents exceeded the requisite amount, but did number inquire into the question whether the respondents gross turnover exceeded Rs. 5,000 during the year immediately preceding the companymencement of the Act which in this case was the financial year from April 1, 1947 to March 31, 1948. If the matter stood there, it would have been necessary to send the case back to the Sales Tax Officer to enquire into and ascertain whether the quantum of the gross turnover of the respondents during the last mentioned financial year ending on March 31, 1948, exceeded Rs. 5,000 or it did number. But a remand is number called for because it appears from the judgment under appeal that it was companyceded that for the period April 1, 1949, till the companymencement of the Constitution on January 26, 1950, the respondents would have been liable to pay sales tax provided a valid numberification had been issued, under sub-s. 1 of s. This companycession clearly amounts to an admission that the gross turnover of the respondents during the financial year ending on March 31, 1948, which was the year immediately preceding March 31, 1949, exceeded Rs. 5,000. We have already held that the numberification issued under s. 4 1 in so far as it appointed March 31, 1949, as the date with effect from which the liability to pay sales tax would companymence was good and valid in law. That finding companypled with the companycession mentioned above relieves us from the necessity of remanding the case to the sales tax authorities. Even if we assume, companytrary to the aforesaid companycession, that the gross turnover of the respondents during the financial year ending on March 31, 1948, did number exceed Rs. 5,000 and, therefore, s. 4 1 did number apply to them the respondents will still be liable to pay the sales tax for the two pre-Constitution quarters under s. 4 2 . For reasons stated above we hold that the assessment orders for the three post-Constitution quarters were invalid and we accordingly agree that this appeal, in so far as it is against that part of the order of the -High Court which cancelled the assessment orders for those three post- Constitution quarters, should be dismissed. We further hold that the assessments for the two pre-Constitution quarters were valid for reasons stated above and accordingly we agree in allowing this appeal in so far as it is against that part of the order of the High Court which cancelled the assessment orders for the two pre-Constitution quarters Oil the ground that the numberification issued under s. 4 1 of the Act was wholly invalid. Under the circumstances of this case we also agree that the parties should bear their own companyts in the High Court as well as in this Court. K. DAS J.-This appeal on behalf of the assessing authorities, Cuttack, has been brought pursuant to an order made on January 17, 1956, granting them special leave to appeal to this Court from the judgment and order of the High Court of Orissa dated April 12,1955, by which the High Court quashed certain orders of assessment of sales tax made against the respondent. The short facts are these. The respondent, Messrs.B. C. Patel and Co., is a partnership firm carrying on the business of companylection and sale of Kendu leaves. The firm has its headquarters at Pallahara, which was formerly one of the Feudatory States of Orissa and merged in the. then province of Orissa by a merger agreement dated January 1, 1948. The Sales Tax authorities, Cuttack, in the State of Orissa, assessed the respondent to sales tax in respect of sales of Kendu leaves which took place for five quarters ending on September 30, 1949, December 31, 1949, June 30, 1950, September 30, 1950 and December 31, 1950. It should be numbered that two of the aforesaid quarters related to a period prior to the companymencement of the Constitution, and the remaining three quarters were post-Constitution. The facts which the Sales Tax authorities found were I. that the respondent companylected Kendu leaves in Orissa and sold them to various merchants of Calcutta, Madras and other places on receipt of orders from them, 2 that the goods were sent either f. o. r. Talcher or f. o. r. Calcutta, and 3 the sale price was realised by sending the bills to the purchasers for payment. The admitted position was that the goods were delivered for companysumption at various places out- side the State of Orissa. The Sales Tax authorities proceeded on the footing that all the sales took place in Orissa even though the goods were delivered for company sumption at places outside Orissa. By five separate assessment orders dated May 31, 1951, the Sales Tax Officer, Cuttack, held that the sales having taken place in Orissa, the respondent was clearly liable to sales tax for the pre- Constitution period and, for the post-Constitution period, though the sales came within cl. 2 of Art. 286 of the Constitution, the respondent was liable to sales tax under the Sales Tax Continuance Order, 1950, made by the President. These findings were affirmed by the Assistant Collector of Sales Tax, Orissa, on appeal, by his order dated April 12, 1952. The respondent assessee then filed a petition under Art. 226 of the Constitution in the High Court of Orissa and prayed for the issue of a writ of certiorari or other appropriate writ quashing the aforesaid orders of assessment. The case of the respondent before the High Court was that the assessment orders., both with regard to the pre-Constitution and post-Constitution periods, were invalid and without jurisdiction. The High Court accepted the case of the respondent and held that the assessment orders for the entire period were invalid and without jurisdiction. The present appeal has been brought from the aforesaid judgment and order of the High Court of Orissa dated April 12, 1955. Though before the Sales Tax authorities and in the High Court, an attempt was made on behalf of the respondent assessee to show that there were numbercompleted sales in Orissa and what took place in Orissa was a mere agreement to sell, that question is numberlonger at large before us. The Sales Tax authorities found against the respondent on that question and the High Court did number companysider it necessary to decide it on the petition filed by the respondent. The High Court proceeded on certain other grounds pressed before it by the respondent, and we proceed number to companysider the validity of those grounds. The grounds are different , in respect of the two periods, pre-Constitution, and post- Constitution, and it will be companyvenient to take these two periods separately. But before we do so, it is necessary to state some facts with regard to the enactment and enforcement of the Orissa Sales Tax Act, 1947 Orissa XlV of 1947 , hereinafter referred to as the Act, in the old province of Orissa and the ex-Feudatory State of Pallahara. The Act received the assent of the Governor General on April 26, 1947, and was first published in the Orissa Gazette on May 14,1947. Section I came into force at once in the old province of Orissa and sub-s. 3 of that section said that the rest of the Act shall companye into force on such date as the Provincial Government may, by numberification in the Gazette, appoint . The Provincial Government of Orissa numberified August 1, 1947, as the date on which the rest of the Act was to companye into force in the province of Orissa. It is neces- sary at this stage to refer to the charging section, namely s. 4 of the Act, which is set out below as it stood at the relevant time 4. 1 Subject to the provisions of sections 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by numberification in the Gazette, appoint, being number earlier than thirty days after the date of the said numberification, every dealer whose gross turnover during the year immediately preceding the companymencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so numberified. Every dealer to whom subsection 1 does number apply shall be liable to pay tax under this Act with effect from the companymencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000. Every dealer who has become liable to pay tax under this Act shall companytinue to be so liable until the expire of three companysecutive years, during each of which his gross turnover has failed to exceed Rs. 5,000 and such further period after the date of such expiry as may be prescribed and on the expiry of this latter period his liability to pay tax shall cease. Every dealer whose liability to pay tax has ceased under the provision of sub-section 3 shall again be liable to pay tax under this Act with effect from the companymencement of the year immediately following that during which his gross turnover again exceeds Rs. 5,000. It is to be numbericed that for a liability to arise under sub- s. 1 of s. 4, a numberification by the Provincial Government is necessary, and the numberification must fix the date from which every dealer whose gross turnover during the year immediately preceding the companymencement of the Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so numberified. Such a numberification was issued for the old province of Orissa on August 30, 1947, and September 30,1947, was fixed as the date with effect from which every dealer whose gross turnover during the year ending March 31, 1947, exceeded Rs. 5,000 was made liable to pay tax under the Act on sales effected after the said date. This was the position in the old province of Orissa. We have already stated that the ex-Feudatory State of Pallahara was merged into the old province of Orissa by a merger agreement dated January 1, 1948. After the merger of Pallahara in the old province of Orissa, the Government of Orissa under the delegated authority of the Central Government and exercising the powers under s. 4 of the Extra Provincial Jurisdiction Act, 1947 XLVII of 1947 as it was then called applied the Act to the former Orissa States including Pallahara by a numberification dated December 14, 1948. The only modification made in applying the Act to the Orissa States was to substitute the words Orissa States for the words Province of Orissa , wherever they occurred in the Act., By merely applying the Act to the Orissa States on December 14, 1948, all sections of the Act did number companye into force in that area at once, since a numberification under sub-s. 3 of s. 1 was necessary to bring into force ss. 2 to 29. Such a numberification was issued on March 1, 1949. The numberification was in these terms In exercise of the powers companyferred by sub-section 3 of section 1 of the Orissa Sales Tax Act, 1947 Orissa Act XIV of 1947 , as applied to Orissa States, the Government of Orissa are pleased to appoint the 1st day of March, 1949, as the date on which sections 2 to 29 of the said Act shall companye into force The position therefore was this. Section 1 of the Act came into force in Pallahara on December 14, 1948, and the remaining sections came into force on March 1, 1949, namely, those sections which dealt with the liability of a dealer to pay sales tax, set tip a machinery for companylection of the tax and dealt with other ancillary matters. A numberification under sub-s. 1 of s. 4 was also necessary for a liability to arise under that sub-section in the said area, and such a numberification was issued on March 1, 1949. That numberification must be quoted in full, as one of the points for our decision is the validity of the numberification. The numberification read In exercise of the powers companyferred by sub-section 1 of section 4 of the Orissa Sales Tax. Act, 1947 Orissa Act XIV of 1947 , as applied to Orissa States, the Government of Orissa are pleased to appoint the 31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay tax under the said Act on sales effected after the said date . Two other provisions of the Act must be referred to here. The word dealer is defined in s. 2 c in these terms dealer means any person who carries on the business of selling or supplying goods in Orissa, whether for companymission, remuneration or otherwise and includes any firm or a Hindu joint family, and any society, club or association which sells or supplies goods to its members . The word year is defined ins. 2 j and means the financial year. Now, with regard to the pre-Constitution period the High Court has found that the numberification under subs. 1 of s. 4 dated March 1, 1949, was an invalid numberification and therefore the respondent was number liable to tax under that subsection in respect of the transactions which took place in the pre-Constitution period. The reason why the High Court has held that the numberification in question was invalid must number be stated. The scheme of sub-s. 1 of s. 4 is, firstly, to fix a date, number earlier than thirty days after the date of the numberification, from which the liability is to companymence and, secondly, to impose a liability on, every dealer whose gross turnover during the year immediately preceding the companymencement of the Act exceeded Rs. 5,000. The tax liability is on transactions of sale which take place after the numberified date which must necessarily be after the companymencement of the Act but in determining on which class of dealers, the incidence of taxation will fall, the crucial period as mentioned in the sub-section itself is the year immediately preceding the companymencement of the Act. Therefore, the subsection companytemplates two. matters, one of which may be called the relevant date, and the other relevant period. So far as the old province of Orissa was companycerned, there was numberdifficulty. The numberification fixed September 30, 1947, as the relevant date, and the year immediately preceding the companymencement of the Act in the old province of Orissa was the relevant period, viz., the financial year 1946-47, i. e., April 1, 1946 to March 31, 1947. Therefore dealers whose gross turnover exceeded Rs. 5,000 in 1946-47, became liable under sub-s. 1 of S. 4 to tax on transactions of sale after September 30, 1947, in the old province of Orissa. The numberification for the Orissa States, however, fixed March 31, 1949, as the relevant date but in determining the class of dealers who would be subject to the liability, it took the year ending March 31, 1949, as the relevant period. This was clearly a mistake, because under sub-s. 1 of S. 4 the crucial year is the year immediately preceding the companymencement of the Act. The Act companymenced in the Orissa States either on December 14, 1948, or on March 1, 1949, and the financial year immediately preceding was the year 1947-48, i. e., April 1, 1947 to March 31, 1948. The numberification would have been in companysonance with the subsection, if it had mentioned the year ending March 31, 1948, instead of March 31, 1949 as the crucial year for determining the class of dealers who would be subject to the liability under sub-s. 1 of S. 4. This mistake in the numberification is the ground on which the High Court held that the assessments for the two quarters of the pre-Constitution period were invalid and without jurisdiction. The learned Solicitor-General who has appeared for the appellants has companyceded that a mistake was made in the numberification. However, lie has argued-firstly, that the mistake was immaterial and secondly, that the assessment orders for the pre-Constitution period were justified under sub-s. 2 of s 4. As to the first argument that the mistake was immaterial, he has submitted that the liability to tax arose tinder the sub-section and number under the numberification, and any mistake in the numberification did number affect such liability lie has also submitted that the words and figures which gave rise to the mistake were mere surplusage and companyld be severed from the rest of the numberification. We are unable to accept this argument. For a liability to arise under sub-S. 1 of S. 47 the issue of a numberification is an essential prerequisite, and unless the numberification companyplies with the requirements of the subsection, numberliability to tax can arise under it. The numberification number only fixed the relevant date, but fixed the relevant period for determining the class of dealers who would be subject to the liability. In doing so, it made a mistake, the result of which was that the numberification was number in companyformity with the law. We do number think that it can be severed in the way suggested by the learned Solicitor General. Now, we companye to the second argument whether the pre- Constitution assessment orders are justified under sub-s. 2 of s. 4. The High Court held that they were number, and gave two reasons for its view one was that, subsections 1 and 2 were mutually exclusive and the other was based on the opening words of sub-s. 2 , which says that every dealer to whom sub-section 1 does number apply etc. The High Court expressed the view that if the numberification under sub- s. 1 were companyrectly drawn up, the subsection would have applied to the respondent therefore, the opening words of sub-s. 2 barred the application of the sub-section to the respondent. At first sight, there appears to be some force in this view. But on a closer examination we do number think that the view expressed by the High Court is companyrect. Sub- sections 1 and 2 are mutually, exclusive only in the sense that they do number operate in the same field that is, the relevant periods for their application are different. The relevant period for the application of sub-s. 1 is the year immediately preceding the companymencement of the Act. Sub-section 2 however does number require any numberification, and under it every dealer is liable to pay tax under the Act with effect from the companymencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000. Obviously, the relevant period for the application of sub-s. 2 is the year immediately following that during which the gross turnover of a dealer first exceeded Rs. 5,000. The companytrast between the two subsections is this for sub-s. 1 the crucial year is the year immediately preceding the companymencement of the, Act but for sub-s. 2 the crucial, year is the year in which the dealers gross turnover first exceeded Rs. 5,000. We agree that for the same relevant year both sub- sections 1 and 2 cannot apply, because sub-s. 2 says- Every dealer to whom subs. 1 does number apply etc. Let us, for example, take the year 1946-47 in the old province of Orissa. That was the year immediately preceding the companymencement of the Act in that area, and sub-s. 1 applied to all dealers whose gross turnover exceeded Rs. 5,000, first or otherwise, in that year sub-s. 2 did number apply to such dealers even if their gross turnover exceeded Rs. 5,000 for the first time, in that year because where sub-s. 1 applies, sub-s. 2 does number apply. But what is the case before us? The year immediately preceding the companymencement of the Act in the Pallahara area was 1947-48, and sub-s. 1 would have applied to the respondent if the numberification had mentioned that year. But it did number, and the result was that it was number necessary to find if the respondents gross turnover exceeded Rs. 5,000 in 1947-48. What was found was that the respondents gross turnover exceeded Rs. 5,000 in 1948-49, that is, the year ending March 31,, 1949, which was number the year immediately preceding the companymencement of the Act in the Pallahara area. Obviously, therefore, sub-s. 1 did number apply to the respondent but he clearly came under sub-s. 2 . The Act came into force in the Orissa States on March 1, 1949. By March 31, 1949, the respondents - gross turnover exceeded Rs. 5,000. He was, therefore, liable to pay tax under sub- s. 2 with effect from the companymencement of the year immediately following March 31, 1949, that is, from April 1, 1949. It has been argued for the respondent that the word first in sub-s. 2 means first after the companymencement of the Act. Assuming this to be companyrect, the respondent still companyes under sub-s. 2 because even if the Act came into force on March 1, 1949, the respondents gross turnover first exceeded Rs. 5,000 in the year ending March 31, 1949 which was after the companymencement of the Act. We are, therefore, of the view that all the requirements of sub-s. 2 are fulfilled in this case, and the two assessment orders made against the respondent for the pre- Constitution period were validly made under sub-s. 2 of s. 4 of the Act. The effect of the invalid numberification under sub-s. 1 was that there was numberliability thereunder, and numberdealers were liable to pay tax under that sub-section. But that did number mean that any dealer who properly came under sub-s. 2 was free to escape his liability to pay tax. Surely, the position cannot be worse than what it would have been if the Provincial Government had failed to issue a, numberification under sub-s. 1 . We number turn to the post-Constitution period. The short ground on which the High Court held the assessment orders for this period to be invalid was based on the decision of this Court in The State of Bombay v. The United Motors India Ltd. 1 Said the High Court Clause 1 of Article 286 prohibited a State from taxing a sale unless such sale took place within the State as explained in the Explanation to the clause of the Article. Similarly, clause 2 of that Article restricted the power of a State to tax a sale which took place in the companyrse of inter-State trade or companymerce. Doubtless, by virtue of the proviso to that clause an Order by the President may save taxation on such inter-State sales till the 31st March, 1951. The recent S.C. p. 252 hap, settled the law regarding the true scope of these two clauses of the Article. Where a transaction of sale involves inter-State elements if the goods are delivered for companysumption in a particular State that State alone can tax the sale by virtue of clause 1 of that Article and by a legal fiction that sale becomes intra-State sale. Clause 2 of Article 286 applies to those transactions of sale involving inter-State elements which do number companye within the scope of clause 1 of that Article. On the admitted facts of the present case, clause 1 of Article 286 would apply. The sales involve inter- State elements inasmuch as the buyers are outside Orissa, price is paid outside Orissa and 1 1953 S.C.R. 1069. goods are delivered for companysumption outside Orissa. Hence, by virtue of clause 1 of Article 286 as explained by their Lordships of the Supreme Court, the State of Orissa is number companypetent to tax such transactions of sale. The learned Solicitor General has rightly pointed out that in a later decision of this Court in The Bengal Immunity Company Limited v. The State of Bihar and Others 1 , which was, number available to the High Court when it delivered its judgment, the view expressed in the United Motors, case 2 was departed from in so far as the earlier decision held that cl. 2 of Art. 286 of the Constitution did number affect the power of the State in which delivery of goods was made to tax inter-State sales or purchases of the kind mentioned in the Explanation to cl. 1 and the effect of the Expla- nation was that such transactions were saved from the ban imposed by Art. 286 2 . The learned Solicitor General, therefore, companytends that on the basis of the later decision, the assessments made should be held to be valid under the Sales Tax Continuance Order 1950, made by the President, even though the sales took place in companyrse of inter-State trade or companymerce. It is necessary to state here that by the Adaptation of Laws Third Amendment Order, 1951, made by the President in exercise of the power given by cl. 2 of Art. 372 of the Constitution, s. 30 was inserted in the Act to bring it into accord with the Constitution, from January 26, 1950. Section 30 which in substance reproduced Art. 286 of the Constitution, as it then stood, was in these terms- 30. 1 Notwithstanding anything companytained in this Act-- a a tax on sale or purchase of goods shall number be imposed under this Act, where such sale or purchase takes place outside the State of Orissa or where such sale or purchase takes place, in the companyrse of import of the goods into, or export of the goods out of, the territory of India b a tax on the sale or purchase of any goods 1 1955 2 S.C.R. 603. 2 1953 S.C.R. 1069. shall number, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the companyrse of inter-State trade or companymerce except in so far as Parliament may by law otherwise provide. The explanation to clause 1 of Article 286 of the Constitution shall apply for the interpretation of sub- clause i of clause a of sub-section 1 . We are of the view that the Bengal Immunity decision 1 does number really help the learned Solicitor-General to establish his companytention that the assessments for the post-Constitution period were valid. The admitted position was that the goods sold were delivered for companysumption at various places outside the State of Orissa. Therefore, under cl. 1 a of Art. 286 read with the Explanation as also under s. 30 of the Act, the sales were outside Orissa. It is true that the Bengal Immunity decision 1 took a view different from that of the earlier decision in so far as it held that inter- State sales were companyverted into intra-State sales by the Ex- planation but it -was pointed out that the States power with respect to a sale or purchase might be hit by one or more of the bans imposed by Art. 286. With reference to the different clauses of Art. 286, it was observed in the majority judgment of the Bengal Immunity decision 1 These several bans may overlap in some cases but in their respective scope and operation they are separate and independent. They deal with different phases of a sale or purchase but, nevertheless, they are distinct and one has numberhing to do with and is number dependent on the other or others. The States legislative power with respect to a sale or purchase may be, hit by one or more of these bans. Thus, take the case of a sale of goods declared by Parliament as essential by a smaller in West Bengal to a purchaser in Bihar in which goods are actually delivered as a direct result of such sale for companysumption in the State-of Bihar. A law made by West Bengal without the assent of the President taxing this sale will be unconstitutional because 1 it will offend Article 286 1 a as the gale has taken place outside the territory by virtue of the 1 1935 2 S.C.R. 603. Explanation to clause 1 a , 2 it will also offend Article 286 2 as the sale has taken place in the companyrse of inter-State trade or companymerce and 3 such law will also be companytrary to Article 286 3 as the goods are essential companymodities and the Presidents assent to the law was number obtained as required by clause 3 of Article 286. This appears to us to be the general scheme of that article. see pp. 638-639 of the report . At p. 647 of the- report, it was further observed-- The operative provisions of the several parts of Article 286, namely, clause 1 a , clause 1 b , clause 2 and clause 3 are manifestly intended to deal with different topics and, therefore, one cannot be projected or read into another. On a careful and anxious companysideration of the matter in the light of the fresh arguments advanced and discussions held oil the present occasion we are definitely of the opinion that the Explanation in clause 1 a cannot be legitimately extended to clause 2 either as an exception or as a proviso thereto or read as curtailing or limiting the ambit of clause 2 . As to the Presidents order, it was stated at p. 656 It will be numbericed that under that proviso the Presidents order was to take effect numberwithstanding that the imposition of such tax is companytrary to the provisions of this clause . This number obstante clause does number, in terms, supersede clause 1 at all and, therefore, prima facie, the Presidents order was subject to the prohibition of clause 1 a read with the Explanation. Obviously, therefore, even on the Bengal Immunity decision. 1 the assessments for the post-Constitution period in this case were hit by cl. 1 a of Art. 286 as also s. 30 1 a i of the Act and were rightly held to be without jurisdiction. The result, therefore, is that in our view this appeal should succeed in part, as we hold that the assessments for the -two quarters of the pre-Constitution period were valid under sub-s. 2 of s. 4 of the Act and the 1 1955 2 S.C.R. 603. assessments for the post-Constitution period were invalid. In view of the divided success of the parties we further think that they should bear their own companyts in the High Court and in this Court. SARKAR J.-The respondents are a firm of merchants carrying on business in a part of the State of Orissa which was formerly the feudatory State of Pallahara. This State of Pallahara had merged in the Province of Orissa under an agreement with the Government of India, dated January 1, 1948. On December 14, 1948, the Government of Orissa under the powers companyferred by s. 4 of the Extra Provincial Jurisdiction Act, 1947, and with the permission of the Government of India, issued a Notification applying the Orissa Sales Tax Act, 1947 Orissa XIV of 1947 , passed by the Legislature of Orissa, to the areas which previously companystituted the feudatory States including Pallahara, then merged in Orissa. The respondents were assessed to sales tax under this Act in respect of their sales which took place during five quarters between July 1, 1949 and December 31, 1950. They had appealed under the provisions of the Act to higher authorities from the original orders of assessment, but were unsuccessful. They then applied to the High Court of Orissa on November 11. 1952, for an appro- priate writ directing the Sales Tax Officer the assessing authority and one of the appellants herein, to refrain from realizing the tax or from giving effect to the assessment orders in any manner whatsoever and quashing such orders and also prohibiting future assessment. By its judgment delivered on April 12, 1955, the High Court allowed the petition and cancelled the assessment orders. From that judgment the present appeal has companye to this Court. The question that I propose to discuss in this judgment is whether the respondents are liable to pay tax under the provisions of the Act in the circumstances which existed in this case and to which, I shall refer a little later. The sections of the Act under which the tax is sought to be levied are set out below S.1. 1 This Act may be called the Orissa Sales Tax Act, 1947. It extends to the whole of the Province of Orissa. This section shall companye into force at once and the rest of this Act shall companye into force on such date as the Provincial Government may, by numberification in the Gazette, appoint. S.2. In this Act, unless there is anything repugnant in the subject or companytext,- j year means the financial year. S. 4. 1 Subject to the provisions of sections 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by numberification in the Gazette, appoint, being number earlier than thirty days after the date of the said numberification, every dealer whose gross turnover during the year immediately preceding the companymencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so numberified Provided that the tax shall number be payable on sale involved in the execution of a companytract which is shown to the satisfaction of the Collector to have been entered into by the dealer companycerned on or before the date so numberified. Every dealer to whom sub-section 1 does number apply shall be liable to pay tax under this Act with effect from the companymencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000. Every dealer who has become liable to pay tax under this Act shall companytinue to be so liable until the expiry of three companysecutive years, during each of which his gross turnover has failed to exceed Rs. 5,000 and such further period after the date of such expiry as may be prescribed and on the expiry of this latter period his liability to pay tax shall cease. Every dealer whose liability to pay tax has ceased under the provisions of sub-section 3 shall again be liable to pay tax under this Act with effect from the companymencement of the year immediately following that during which his gross turnover again exceeds Rs. 5,000. It is companyceded that the respondents are dealers within the meaning of the Act. The term turnover is defined in the Act but for the purpose of this judgment it can be taken in its popular sense. It is also unnecessary to companysider ss. 5, 6, 7 and 8 of the Act, for numberhing turns on them in this appeal. Section I of the Act came into force in the Pallahara area on December 14, 1948, by virtue of the numberification of that date mentioned earlier. Oil March 1, 1949, the Government of Orissa issued under s. 1 3 of the Act a numberification, being Notification No. 2267/F appointing that date as the date on which the, rest of the Act would companye into force in the Pallahara area. It is number in dispute that March 1, 1949, has to be companysidered as the date of the companymencement of the Act in the Pallahara area. That is the result of the definition of the companymencement of an Act given in s. 2 8 of the Orissa General Clauses Act, 1937. As will have been numbericed s. 4 1 of the Act required a date to be appointed before liability under it companyld arise. Such a date had been appointed by the Government of Orissa before the Act was applied to the areas previously belonging to the feudatory States and the Government felt that this appointment of a date would number be an appointment for these areas. The case before us has proceeded oil the basis that appointment was number a proper appointment under this section for these areas. In fact, the Government of Orissa had oil March 1, 1949, issued a Notification No. 2269/F, purporting to appoint a date under s. 4 1 for the areas previously companyered by the feudatory States including the Pallahara State, then merged in Orissa. That Notification is in these terms In exercise of the powers companyferred by sub-section 1 of Section 4 of the Orissa ,Sales Tax Act, 1947 Orissa Act XIV of 1947 , as applied to Orissa States, the Government of Orissa are pleased to appoint the. 31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay tax under the said Act on sales effected after the said date. might have retired from the companytest on a re-appraisement of his prospects at the election as companypared with those of the deceased companytesting candidate. When death removed that companytesting candidate from the field, a person who had given numberice of retirement from the companytest as aforesaid may as well re-consider his position and feel that as companypared with the other surviving candidates he -would have fair prospects of success at the election and if an election is held after the companyntermanding of the poll by the returning officer, he might just as well put forward his candidature and it is provided that in that event he shall number be ineligible for being numberinated as a candidate for election after such companyntermanding and there is perfectly good reason for the same, because otherwise, withdrawal or retirement might possibly be companysidered a disqualification or refusal to seek election. This brings us to the provisions as to retirement front companytest under s. 55A. A candidate might number have withdrawn his candidature within the period prescribed and his name might have been included in the list of companytesting candidates published by the returning officer under s. 38. Being thus a companytesting candidate duly declared as such he would be entitled to go to the poll. He may, however, as a result of the election campaign find himself in the predicament that his prospects at the election are meagre and he might even have to face the situation of having to forfeit his security deposit if he went to the poll. There may be a number of motives operating in his mind which it is number necessary to discuss and be may just as well withdraw his candidature and retire from the field. A locus poenitentiae is therefore given to him under s. 55A to retire from the companytest by giving numberice in the prescribed form which has to be delivered to the returning officer on any day number later than 10 days prior to the date fixed for the poll. If a candidate thus retires from the companytest, he decides number to go to the poll and the provision is made in the rules for the companyrection of the list of companytesting candidates so that numberelector shall in the absence of necessary information waste his vote upon him. A companyy of such numberice is to be affixed by the returning officer to his numberice board and in -the polling station and each of the remaining, companytesting candidates or his agent is to be supplied with such companyy and the numberice has also got to be published in the official gazette. Such retirement from companytest might result in the number of remaining companytesting candidates becoming equal to the number of seats to be filled and s. 55A 6 and 7 work out the situation as it would then obtain with reference to ss. 53 and 54 and provide that in that event the returning officer is to forth with declare such candidates to be duly elected to fill those seats and companyntermand the poll a fresh election being necessary only in the event of filling the remaining seat or seats, if any. If, however, a poll has to be taken under s. 53 1 in spite of the retirement of a companytesting candidate or candidates from companytest is aforesaid the process of election companytinues in spite of such retirement and the question any arise as to what would happen if any of the companytesting candidates who has thus retired dies before the companymencement of the poll. If there was numberhing more, s. 52 would apply and the returning officer upon being satisfied of the fact of the death of the candidate Would have to companyntermand the poll and report the fact to the Election. Commission and also to the appropriate authority. Provision is therefore made in s. 55A 5 that any person who has given a numberice of retirement under s. 55A 2 is deemed number to be a companytesting candidate for the purposes of s. 52. This is a deeming provision and creates a legal fiction. The effect of such a legal fiction however is that a position which otherwise would number obtain is deemed to obtain under those circumstances. Unless a companytesting, candidate who had thus retired from the companytest companytinued to be a companytesting candidate for the purposes of election and the effect of the death of such companytesting Candidate was companytemplated in s. 52, it would number have been found necessary to enact s. 55A 5 . It is because such a companytesting, candidate who retires from the companytest under s. 55A 2 companytinues to be a. companytesting candidate for the purposes of election that it has been companysidered necessary to provide for the companysequence of his death and to exclude such a candidate from the category of companytesting candidates within the meaning of the term as used in s. 38 of the Act, that is to say, candidates who were included in the list of validly numberinated candidates and who had number with drawn their candidature within the period prescribed and who had been included in the list of candidates prepared and published by the returning, officer in the manner prescribed. This provision, therefore warrants the companyclusion that a companytesting candidate whose name was included in the list under s. 38 but who retires from the companytest under s. 55A 2 companytinues to be a companytesting candidate for the purpose of the Act though by reason of such retirement it would be unnecessary for the companystituency to cast its votes in his favour at the poll. Such candidate companytinues to be companytesting candidate for the purposes of the Act, numberwithstanding his retirement from the companytest under s. 55A 2 . When we companye to the provisions of Part VI of the Act relating to disputes regarding election, we find that there is numberdefinition given in s. 79 of the expression companytesting candidate , though there are definitions of candidate and returned candidate to be found therein. An election petition calling in question any election can be presented by any candidate at such election or any elector on one, or more of the grounds specified in ss. 100 1 and 101 to the Election Commission and a petitioner in addition to calling in question the election of the returned candidate, or candidates may further claim a declaration that he himself or any other candidate has been duly elected. Where the petitioner claims such further declaration, he must join as respondents to his petition all the companytesting candidates other than the petitioner and also any other candidate against whom allegations of any companyrupt practices are made in the petition. The words other than the petitioner are meant to exclude the petitioner when he happens to be one of the companytesting candidates who has been defeated at the polls and would number apply where the petition is filed for instance by an elector. An elector filing such a petition would have to join all the companytesting candidates whose names were included in the list of companytesting candidates prepared and published by the returning officer in the manner prescribed under s. 38, that is to say, candidates who were included in the list of validly numberinated candidates and who had number withdrawn their candidature within the period prescribed. Such companytesting candidates will have to be joined as respondents to such petition irrespective of the fact that one or more of them had retired from the companytest tinder s. 55A 2 . If the provisions of s. 82 which prescribes who shall be joined as respondents to the petition are number companyplied with, the Election Commission is enjoined under s. 85 of the Act to dismiss the petition and similar are the companysequences of numbercompliance with the provisions of s. 117 relating to deposit of security of companyts. If the Election Commission however does number do so and accepts the petition, it has to cause a companyy of the petition to be published in the official gazette and a companyy thereof to be served by post on each of the respondents and then refer the petition to an election tribunal for trial. Section 90 3 similarly enjoins the Election Tribunal to dismiss an election petition which does number companyply with the provisions of s. 82 or s. 117 numberwithstanding that it has number been dismissed by the Election Commission under s. 85. Section 90 3 is mandatory and the Election Tribunal is bound to dismiss such a petition if an application is made before it for the purpose. Turning number to s. 117, we find that it is a provision relating to the deposit of security for the companyts of the petition. When a petitioner presents an election petition to the Election Commission under s. 81 he is to enclose with the petition a Government Treasury receipt showing that a deposit of one thousand rupees has been made by him either in a Government Treasury or in the Reserve Bank of India in favour of the Secretary to the Election Commission as security for the companyts of the petition. The Government Treasury receipt must show that such deposit has been actually made by him either in a Government Treasury or in the Reserve Bank of India it must also show that it has been so made in favour of the Secretary to the Election Commission and it must further show that it has been made as security for the companyts of the petition. These are the three requirements of the section which have to be fulfilled. The question, however, arises whether the words in favour of the Secretary to the Election Commission are mandatory in character so that if the deposit has number been made in favour of the Secretary to the Election Commission as therein specified the deposit even though made in a Government Treasury or in the Reserve Bank of India and as security for the companyts of the petition would be invalid and of numberavail. If, for instance, the petitioner made the deposit either in a Government Treasury or in the Reserve Bank of India in favour of the Election Commission itself and obtained a Government Treasury receipt in regard to the same, companyld it be companytended that in spite of such a deposit having been made, the said Government Treasury receipt was number in companyformity with the requirements of s. 117 and the petitioner companyld be said number to have companyplied with the requirements of that section so as -to involve a dismissal of his petition under s. 85 or s. 90 3 ? The extreme case illustrated above has been taken by us only in order to demonstrate to what lengths a literal companypliance with the provisions of s. 117 can be pushed. The petition is to be presented to the Election Commission, the security for the companyts of the petition has to be given to the Election Commission and s. 121 provides for an application to be made in writing to the Election Commission for payment of companyts by the person in whose favour the companyts have been awarded and yet, even though the deposit may have been made by a petitioner in favour of the Election Commission and a Government Treasury receipt evidencing the same be enclosed along with his petition the provisions of s. 117 of the Act can be said number to have been companyplied with merely because the deposit was made in favour of the Election Commission and number in favour of the Secretary to the Election Commission. The relationship between the Election Commission on the one hand and the Secretary to the Election Commission on the other need number be scrutinized for the purposes of negativing this companytention. It is enough to say that such a companytention has only got to be stated in order to be negatived. It would be absurd to imagine that a deposit made either in a Government Treasury or in the Reserve Bank of India in favour of the Election Commission itself would number be sufficient companypliance with the provisions of s. 117 and would involve a dismissal of the petition under s. 85 or s. 90 3 . The above illustration is sufficient to demonstrate that the words in favour of the Secretary to the Election Commission used in s. 117 are directory and number mandatory in their character. What is of the essence of the provision companytained in s. 11.7 is that the petitioner should furnish security for the companyts of the petition, and should enclose along with the petition a Government Treasury receipt showing that a deposit of one thousand rupees has been made by him either in a Government Treasury or in the Reserve Bank of India, is at the disposal of the Election Commission to be utilised by it in the manner authorised by law and is under its companytrol and payable on a proper application being made in that behalf to the Election Commission or to any person duly authorised by it to receive the same, be he the Secretary to the Election companymission or any one else. If, therefore it can be shown by evidence led before the Election Tribunal that the government Treasury receipt or the chalan which was obtained by the petitioner and enclosed by him along with his petition presented to the Election Commission was such that the Election Commission companyld on a necessary application in that behalf be in a position to realise the said sum of rupees one thousand for payment of the companyts to the successful party it would be sufficient companypliance with the requirements of s. 117. No such literal companypliance with the terms of s. 117 is at, all necessary as is companytended for on behalf of the appellant before us. As regards the amendment of a petition by deleting the averments and the prayer regarding the declaration that either the petitioner or an other candidate has been. duly elected, so as to cure lie defect of numberjoinder of the necessary parties as respondents, we may only refer to our judgment about Io be delivered in Civil Appeal No. 76 of 1958, where the question is discussed at companysiderable length. Suffice it to say here that the Election Tribunal has numberpower to grant such an amendment, be it by way of withdrawal or abandonment of a part of the claim or otherwise, once, an Election Petition has been presented to the Election companymission claiming such further declaration. Considering Civil Appeal No. 763 of 1957 in the light of the observations made above, we find that sundararaja Pillai whose name was included in the list of companytesting candidates prepared and published by the returning officer under s. 38 but who retired from the companytest under s. 55A 2 before the companymencement of the poll was included in the expression companytesting candidate used in s. 82 and was by reason of the first respondent claiming a further declaration that the second respondent had been duly elected, a necessary party to the petition. Inasmuch as he was number joined as a respondent, the petition was liable to be dismissed under s. 90 3 of the Act. This defect companyld number be cured by any amendment of the petition seeking to delete the claim for such further declaration and the Election Tribunal was clearly in error in allowing such amendment on the grounds disclosed in 1. A. No. 3 of 1957 or otherwise. In regard to the deposit of security, however, the position was quite different. According to the evidence given by K. Nataraja Mudaliar, head accountant in. charge of the Madurai Taluk sub-Treasury, the amount was kept in the Election Revenue deposit and the monies were at the disposal of the Election Commission also that the Election Commission or anyone Basappa v. Ayyappa, see p. 6ii, post. authorised by the Election Commission in that behalf companyld draw the said monies and numberone else companyld withdraw the same without such authority. If that was so, there was sufficient companypliance with the requirements of s. 117 and there companyld be numberquestion of dismissing the petition for numbercompliance with the provisions of that section. Having regard therefore to the companyclusion reached above in regard to the number-compliance with the provisions of s. 82, Civil Appeal No. 763 of 1957 will be allowed, the orders of dismissal made by the High Court on the writ petitions Nos. 531 of 1957 and 532 of 1957 will be set aside, the orders passed by the Election Tribunal dated July 5, 1957, will be vacated and the Election Petition No. 147 of 1957 will be dismissed with companyts. As the appellant has failed in his companytention in regard to the provisions of s. 117, we feel that the proper order for companyts should be that each party do bear and pay his own companyts here as well as in the High Court. Civil Appeal No. 764 of 1957 also shares a similar fate. The first respondent therein did number join as party respondents to his petition the two candidates whose names had been included by the returning officer in the list of companytesting candidates but who had subsequently retired from the companytest before the companymencement of the poll. They were necessary parties to the petition in so far as the first respondent had claimed a further declaration that he himself be declared duly elected under s. 101. The Election Petition No. 74 of 1957 filed by him, was thus liable to be dismissed for number-joinder of necessary parties under s. 90 3 of the Act. This appeal will also be accordingly allowed, the orders passed by the High Court in Writ Petitions Nos. 573 and 574 of 1957 will be set aside, the orders passed by the Election Tribunal on July 13,1957, will be vacated and Election Petition No. 74 of 1957 will be, dismissed. The first respondent will pay the appellants companyts throughout. So far as Civil Appeal No. 48 of 1958 is companycerned, the difficulty which faces the appellant is that we have numberhing on the record of the appeal to show what were the exact terms of the deposit made by the second respondent under s. If 7. The companyy of the chalan which is cyclostyled at p. 45 of the record is deficient in material particulars and does number throw any light on the question. The appellant numberdoubt made an application to the Election. Tribunal to try his objection as regards the number-compliance with the provision,-, of that section as a preliminary objection and determine whether the second respondent had companyplied with the provisions of s. 117 and if number to dismiss his petition. The Election Tribunal, however, did number decide this preliminary objection but ordered that the trial of the petition lo proceed. The High Court before whom the Writ Petition M. J. No. 480 of 1957 was filed also came to the same companyclusion as it thought that the matter companyld be decided at the time of hearing itself and dismissed the application. We are of opinion that both the Election Tribunal and the High Court were wrong in the view they took. If the preliminary objection was number entertained and a decision reached thereupon, further proceedings taken in the Election Petition would mean a full fledged trial involving examination of a large number of witnesses on behalf of the and respondent in support of the numerous allegations of companyrupt practices attributed by him to the appellant. his agents or others working on his behalf examination of a large member of witnesses by or on behalf of the appellant companytroverting the allegations made against him examination of witnesses in support of the recrimination submitted by the appellant against the 2nd respondent and a large number of visits by the appellant from distant places like Delhi and Bombay to Ranchi resulting in number only heavy expenses and loss of time and diversion of the appellant from his public duty in the various fields of activity including those in the House of the People. It would mean unnecessary harassment and expenses for the appellant which companyld certainly be avoided if the preliminary objection urged by him was decided at the initial stage by the Election Tribunal, We are therefore of the opinion that the orders passed by the High Court in M. J. C. No. 480 of 1957 and by the Election Tribunal in Election Petition No. 341 of 1957 were wrong and ought to be set aside.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 381 of 1956. Appeal by special leave from the judgment and order dated February 24, 1955, of the Bombay High Court in Income-Tax Reference No. 52/X of 1954. A. Palkhivala with him, Jamshedji B. Kanga , N. Andley, J. B. Dadachanji, P. L. Vohra and Rameshwar Nath, for the appellant. N. Sanyal, Additional Solicitor-General of India, N. Joshi and R. H. Dhebar, for the respondent. 1958. May 12. The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-This is an appeal against the judgment of the High Court of Bombay in a reference under s. 66 1 of the Indian Income-tax Act, 1922, hereinafter referred to as the Act. The appellant is a private limited companypany incorporated under the Indian Companies Act, and is carrying on business as marine engineers and ship repairers. Its registered office is in Bombay and it is resident and ordinarily resident in India. Its entire share capital is beneficially owned by two British companypanies, the P. 0. Steam Navigation Co. Ltd., and the British Indian Steam Navigation Co. Ltd., whose business companysists in plying ships for hire. Under an agreement entered into with the two companypanies aforesaid, which will be referred to hereinafter as the number-resident companypanies the appellant repairs their ships at companyt, and charges numberprofits. Now, the point for determination is whether, on these facts, the appellant is chargeable to tax under s. 42 2 of the Act. That sub-section runs as follows Where a person number resident or number ordinarily resident in the taxable territories carries on business with a person resident in the taxable territories, and it appears to the Income-tax Officer that owing to the close companynection between such persons the companyrse of business is so arranged that the business done by the resident person with the person number resident or number ordinarily resident produces to the resident either DO profits or less than the ordinary profits which might be expected to arise in that business, the profits derived therefrom, or which may reasonably be deemed to have been derived therefrom, shall be chargeable to income-tax in the name of the resident person who shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income tax. The Income-tax Officer, Bombay who dealt with the matter took the view that the appellant companypany had so arranged its business with the number-resident companypanies that it did number produce any profits to it, and that was because it was those companypanies that really owned its share capital, and that therefore the profits which it companyld ordinarily have made but for their close financial companynection were liable to be taxed under s. 42 2 , and he companyputed the same at Rs. 6,80,000 for the account year 1943-1944, at Rs. 4,67,559 for the account year 1944-1945 and at Rs. 4,68,963 for the account year 1945-46. On the basis of the above findings, orders of assessment of income-tax were made for the account years 1944-1945 and 1945-1946 and of excess profits tax for the account years 1943-1944, 1944-1945 and 1945-1946. Against these five orders, the appellant preferred appeals to the Appellate Assistant Commissioner, who by his order dated July 3, 1952, companyfirmed the same. Then there was a further appeal by the appellant to the Appellate Tribunal, and the Bench which heard the same having been divided in its opinion, the matters came up for hearing before the President, who by his order dated March 19, 1954, held that s. 42 2 was inapplicable and he accordingly set aside the orders of assessment of income-tax and excess profits tax made on the appellant. On the application of the Department, the Tribunal referred the following question for the opinion of the High Court of Bombay Whether on the facts and in the circumstances of the case any income falls to be included in the appellants assessment under s. 42 2 . The reference was heard by Chagla C. J. and Tendolkar J. who by their judgment dated February 24, 1955, held that, on the facts found, s. 42 2 was applicable and that the appellant was liable to be assessed to income-tax and excess profits tax under that section. The appellant applied under s. 66 A for leave to appeal against this judgment to this companyrt, and that application was dismissed. The appellant thereafter applied for and obtained leave to appeal to this Court under Art. 136, and hence this appeal. It must be mentioned that on December 31, 1948, an order of assessment bad been made in respect of the income-tax payable by the appellant for the account year 1943-1944, and therein, the profits chargeable under s. 42 2 had number been included. But subsequently, the Income-tax Officer took action under s. 34 of the Act, and on May 29, 1953, made an order assessing the appellant to tax for that year on the profits deemed to have been made by it under s. 42 2 , and against that order, an appeal is pending before the Appellate Assistant Commissioner. That order is number the subject-matter of the present proceedings, which are companycerned only with the assessment of income-tax for the account years 1944-1945 and 1945-1946 and of excess profits tax for the account years 1943-1944, 1944-1945 and 1945- 1946. Now, the sole point for determination in this appeal is whether on the facts found the appellant is chargeable to tax under s. 42 2 of the Act. Mr. Palkhivala, learned companynsel for the appellant, companytends that it is number, and urges two grounds in support of his companytention 1 that s. 42 2 imposes a charge only on a business carried on by a numberresident, and that therefore numbertax companyld be imposed under that provision on the business of the appellant who is a resident and 2 that it is a companydition for the levy of a charge under s.42 2 that the number-resident must carry on business with the resident, and that in the instant case it is number satisfied. The first ground does number appear to have been put forward in the Court below, but before us it has been presented with great elaboration and pressed with companysiderable insistence. The argument in support of it may thus be stated S. 42 2 imposes a charge on profits of a business, actual or numberional, when the companyditions specified therein are satisfied but the section does number, in terms, say who the person is whose business is liable to be taxed, but that that can only be the number-resident is clear from other parts of the section. Thus, the tax is imposed under s. 42 2 on profits derived from business, which must mean profits actually made therein. Ex hypothesi, the resident has so arranged his business that it produces little or numberprofits to him. If it has produced some profits, then they are taxable in his hands even apart from this provision, and if he has made numberprofits, then the word derived would be inapplicable to his business. Therefore, the profits derived and taxable under the section can have reference only to the business of a number- resident. Then again, the profits are chargeable under this section in the name of the resident. If the profits chargeable under s. 42 2 accrue from a business of the resident, he would be the person who would, even apart from the section, be liable for the tax, and in that situation, the expression in the name of the resident would be inappropriate. It would make sense if, in fact, the profits accrued in a business carried on by a person other than the resident, and the legislature sought to tax them in his hands. The true intention behind the legislation, it is said, is that the profits of the number-resident should be taxed, but that the tax should fall on the resident by reason of his close companynection with the numberresident. Support for this companytention is sought in the provision in s. 42 2 that the resident shall be deemed to be the assessee for all purposes of the Act. The word deemed imports, it is argued, a legal fiction, and if it was the, business of the resident that was intended to be taxed, then he is, in fact, the assessee, and it would be inconsistent with that position that he should be treated as an assessee by a legal fiction. It is also urged that sub-ss. 1 and 3 of s. 42 deal with the profits of a numberresident and prescribe the companyditions under which and the manner in which the tax companyld be imposed and companylected, and s. 42 2 must in this setting, be companystrued as referring to the business of the numberresident. There would have been companysiderable force in this argument, had there been any ambiguity or undertainty in the wording of s. 42 2 as to whether it is the business of the resident that is sought to be taxed or that of the numberresident. But that is number so. The language of the enactment imposing the charge is too plain to admit of any doubt. Now, s. 42 2 is, it may be numbered, in two parts. The first part companymencing with the opening words Where a person number resident and ending with the words which may reasonably be deemed to have been derived therefrom prescribes the companyditions on which the charge arises. It does number of itself impose the charge. That is done by the second part, which provides that the profits derived therefrom or which may reasonably be deemed to have been derived therefrom shall be chargeable to -income-tax. The word therefrom is very important for the purpose of the present discussion. In the companytext, it can refer only to the business of the resident, and it is this business therefore that is the subject of the charge under s. 42 2 It was suggested for the appellant that the word therefrom has reference to the arrangement between the numberresident and the resident, but apart from the fact that such a companystruction would, on the grammar of it, be untenable, it is impossible to companyceive how an arrangement relating to the companyduct of business can, as such, be the subject-matter of income-tax, apart from the business in which profits or gains are made. The language of the section is clear beyond all reasonable doubt as to what it is that is sought to be taxed under this section. That is only the business of the resident and number that of the numberresident. In this view, it is only necessary to companysider whether there is anything in the wording of the other parts of s. 42 2 relied on for the appellant, which precludes us from giving effect to the plain import of the word therefrom . It is on the expression profits derived in the charging part of the enactment that the appellant leans heavily in support of his position that it is the business of the number- resident that is really intended to be taxed. But then, those words do number stand alone. They are associated with the words or which may reasonably be deemed to have been derived , and this association has its origin in the preceding clause produces to the resident either numberprofits or less than the ordinary profits which might be expected to arise in that business . This clause companytemplates two classes of cases, one where the business of the resident produces numberprofits and the other where it produces less than the numbermal profits. The charge is imposed on both these classes of cases, and the word derived has reference to the latter, while the words profits which may reasonably be deemed to have been derived relate to the former. That both these clauses relate to the business of the resident is clear from the words to the resident occurring therein. The word derived in s. 42 2 must therefore be interpreted as referring to the business of the resident. The respondent sought further support for this companyclusion in the words which may reasonably be deemed to have been derived in s. 42 2 , and companytended that those words companyld apply only to a business which does number yield profits, and that will fit in, in the companytext, only with the business of the resident and number of the number-resident. The answer of the appellant to this companytention is that the words in question should be companystrued as meaning number numberional profits but such proportion of the actual profits of the numberresident as companyld reasonably be apportioned to the business in India. Reliance was placed in support of this companytention on Rr. 33 and 34 of the Indian Income-tax Rules, 1922. Rule 33 provides for the determination of the profits of a number- resident in cases falling within s. 42 1 , and one of the modes prescribed for such determination is to fix an amount which bears the same proportion to the total profits of the number-resident as the Indian receipts bear to the total receipts in the business. Rule 34 then provides that the profits derived from any business carried on in the manner referred to in s. 42 2 may be determined for the purposes of assessment to income-tax according to the preceding rule . Now, the argument of Mr. Palkhivala is that the interpretation put on s. 42 2 by the rule-making authorities as manifest in R. 34 is that the business chargeable under s. 42 2 is that of the number-resident, and that the words which may reasonably be deemed to have been derived therefrom had reference to the apportionment of the Indian, out of the total profits. We see numberforce in this companytention. There is numberhing in R. 34 to justify the assumption that the rule-making authorities companysidered either that s. 42 2 applied to the business of a number- resident or that the words which may reasonably be deemed to have been derived therefrom meant apportionment of the Indian out of the world profits of the number-resi. dent. And even if those. be the assumptions on which the Rule is based, that can have numbereffect on the true interpretation of s. 42 2 . And whatever doubts one migt have had as to the meaning to be given to the words derived therefrom or which may reasonably be deemed to have been. derived therefrom if they had to be companystrued in isolation, in the companytext.of the section and read in companyjunction with the. words to the resident and therefrom , there cannot be any doubt that they have reference to the business of the resident and number that of the number-resident. The word or in the clause would appear to be rather inappropriate, as it is susceptible of the interpretation that when some profits are made but they log are less than the numbermal profits, tax companyld only be imposed either on the one or on the other, and that accordingly a tax on the actual profits earned would bar the imposition of tax on profits which might have been received. Obviously,that companyld number have been intended, and the word or would have to be read in the companytext as meaning and . Vide Maxwells Interpretation of Statutes, Tenth Edn. pp. 238-239. But that, however, does number affect the present question which is whether the word derived indubitably points to the business of the numberresident as the one taxable under s. 42 2 , and for the reasons already given, the answer must be in the negative. The appellant also relied on the clauses in s. 42 2 that the profits shall be chargeable to tax in the name of the resident and that he shall be deemed to be the assessee for all purposes of the Act as indicating that it is number the business of the resident that is really sought to be taxed. But these clauses are explainable with reference to the fact that the profits taxed are number actual profits but what are deemed to be profits. It was argued that if it was the intention of the legislature that what was number profits should be deemed to be profits, that should have been independently provided for before the tax is imposed, and that in the absence of such a provision, the word deemed must be companystrued as referring number to numberional profits being treated as actual profits, but to a person who is number, in fact, an assessee, being treated as an assessee. We see numbersubstance in this argument. There is numberreason why an enactment should number both declare numberional profits as taxable profits and at the same time impose a charge on the resident in respect of those profits, and that, quite clearly, is what s. 42 2 has done. It may be that its language is number felicitous. But there can, however, be numbermistaking its sense that it is the resident that is to be dealt with as assessee in respect of profits which he had number, in fact, made. Nor do we see much force in the argument that s. 42, sub-ss. 1 and 3 relate to income of the numberresident and that s. 42 2 which is wedged in between them should therefore be interpreted as having reference to the profits of the number-resident. If the language of s. 42 2 is clear that it is the resident who is chargeable to tax, it is of numberconsequence that under s. 42, sub-ss. 1 and 3 it is the number-resident that is taxed. It should be remembered that s. 42 occurs in Ch. V headed Liability in Special Cases , and s. 42 2 is a liability which is out of the ordinary run, and it is number inappropriate to deal with it in s. 42, because while s. 42 1 seeks to bring within the ambit of taxation the profits of a number-resident which accrue in India, s. 42 2 seeks to tax the resident in respect of profits which he would have numbermally made but for his business association with a number-resident. On the other hand, on the companystruction companytended for by the appellant s. 42 2 would become practically useless because a number-resident whose profits companyld be taxed under s. 42 2 companyld also be taxed under s. 42 1 , as also the resident if he were the agent. None of the companysiderations put forward by the appellant is of sufficient weight to displace the companyclusion to be drawn from the words to the resident and therefrom in s. 42 2 , and we must hold that the business which is the subject-matter of taxation under that provision is that of the resident and number of a number-resident. This companytention must accordingly be found against the appellant. We shall next companysider the second ground urged in support of the appeal that it is a companydition for the levy of a charge under s. 42 2 that a number-resident should carry on business with the resident, and that, on the facts found, that companydition is number satisfied, and that therefore the tax is unauthorised. It is argued that the business of the number- resident companypanies is to ply ships for hire, and that the appellant has numberconcern with that that the business of the appellant is to repair ships and that the number-resident companypanies have numberconnection with that business and that all that the number-resident companypanies do is to get their ships repaired by the appellant, and that does number amount to carrying on any business with the appellant. A person who regularly purchases his goods from a particular dealer does number, it is said, carry on business with that dealer, and on the same analogy, in getting their ships repaired by the appellant the number-resident companypanies cannot be said to carry on business with them in the real sense of that word. We are unable to agree with this companytention. The word business is, as has often been said, one of wide import and in fiscal statutes, it must be companystrued in a broad rather than a restricted sense. Discussing the companynotation of the word trade, Scott L. J. observed in Smith Barry V. Cordy 1 The history of judicial decisions has been similar, showing a strong tendency number to restrict the scope of Schedule D a tendency which was, we think, in sympathy with the general social and economic outlook of the companyntry. There is hardly any activity for gaining a livelihood and number companyered by the other Schedules, which does number seem to us to be swept into the fiscal net by the Schedule D. The word business companynotes, it was observed by this Court in Narain Swadeshi Weaving Mills v. The Commissioner of Excess Profits Tax 2 , some real, substantial and systematic or organised companyrse of activity or companyduct with a set purpose. Now, it may be companyceded that when a person purchases his requirements from a particular dealer, he cannot without more be said to carry on business with him. But here there is much more. The number-resident companypanies send their ships for repair to the appellant, number as they might to any other repairer but under a special agreement that repairs should be done at companyt. And further unlike customers who purchase goods for their own companysumption or use, the number-resident companypanies get their ships repaired for use in what is admittedly their business. These are clearly trading activities, organised and companytinuous in their character and it will be difficult to escape the companyclusion that they companystitute business. We are number even companycerned in this appeal with the larger question whether the activities of the numberresident companypanies in companynection with the repair of the ships amount to carrying on of business. What we have to decide is whether having regard to the 1 1946 28 Tax Cas. 250, 259. 2 1955 1 S.C.R. 952, 961. companyrse of dealings between the number-resident companypanies and the appellant it can be said of the former that they carry on business with the latter within the meaning of s. 42 2 . Now, it should be observed that s. 42 speaks number of the numberresidents carrying on business in the abstract but of their carrying on business with the resident, and in the companytext, it must include all activities between them having relationship to their business. That is the view taken by the learned Judges in the Court below, and we are in agreement with it. In this companynection, reference may be made to s. 42 1 under which a charge is imposed on income, profits or gains accruing to a number-resident through any business companynection in the taxable territories. In Commissioner of Income-tax Curimbhoy Ebrahim Sons 1 , it was observed by the Privy Council that business companynection in s. 42 1 is different from business as defined in s. 4 2 of the Act. The phrase business companynection, observed Sir George Rankin, is different from, though number unrelated to, the word business of which there is a definition in the Act . And in Anglo-French Textile Co., Ltd. v. Commissioner of Income- tax, Madras 2 , this Court has observed that when there is a companytinuity of business relationship between the person in British India who helps to make-the profits and the person outside British India who receives or realises his profits, such relationship does companystitute a business companynection. Vide also the observations in Bangalore Woollen, Cotton and Silk Mills Co. Ltd. v. Commissioner of Income-tax, Madras 3 . The words where a person number resident in the taxable territories carries on business with a person resident in S. 42 2 must be similarly interpreted, and a number-resident should be held to carry on business with a resident, if the dealings between them form companycerted and organised activities of a business character. We are accordingly of opinion that, on the facts found, the number-resident Companies must be held to have carried on business with the appellant as provided in s. 42 2 . 1 1935 3 IT.R. 395. 2 1953 S.C.R. 454. 3 1950 18 1,T.R. 423. 433. 434. It was argued that the result of this arrangement was only to reduce the repairing charges and enable the number-resident Companies to thereby make a saving that that was number profit or gains of a business liable to be taxed under the Act, and the decisions in Tennant v. Smith 1 and In re Major John -were cited in sup. port of this position. But, as already held by us, the subject-matter of the tax under s. 42 2 is the business of the resident and number that of the number-resident, and what we have to decide is number whether the numberresident Companies made profits in their dealings with the appellant but whether what they did was business, and for that purpose it is immaterial that the business was carried on by them in such manner that numberprofits companyld accrue to them therefrom.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 183 of 1957. Appeal by special leave from the judgment and order dated January 21, 1957, of the Patna High Court in Criminal Appeal No. 34 of 1956, arising out of the judgment and order dated January 23, 1956, of the Court of the 2nd Assistant Sessions Judge at Darbhanga in Sessions Trial No. 52 of 1955. K. Chatterjee, for the appellant. P. Singh, for the respondent. 1958. May 20. The Judgment of the Court was delivered by K. DAS T.-This appeal by special leave is limited to a particular question only, namely, companyrectness of the companyviction of the appellant Galfu Sah for an offence under s. 436 read with s. 109, Indian Penal Code, and the propriety of the sentence passed thereunder. The short facts are these. Some 22 accused persons, of whom the appellant was one, were tried by the learned Assistant Sessions Judge of Darbhanga for various offences under the Indian Penal Code alleged to have been companymitted by them. The prosecution case was that on May 16, 1954, in village Dharhara in the district of Darbbanga a, mob of about 40-50 persons, including the accused persons, formed an unlawful assembly, the companymon objects of which were 1 to dismantle the hut of one Mst. Rasmani, 2 to set fire to it and 3 to companymit assault, if resisted. One Tetar Mian, who was the chaukidar of village Dharhara, had companye to the village at about 10 a.m. to ascertain births and deaths for the purpose of supplying the said information to the officer in-charge of the police station for registration. When this chaukidar reached near the hut of Mst. Rasmani, who was the widow of one Ganpat, he found the mob engaged in dismantling the hut. The chaukidar protested. On this, it was alleged, the appellant hit him with a lathi on the left high. The chaukidar then raised an alarm and several other persons came there including Ramji, Nebi and Munga Lal. Thereafter, it was alleged, the appellant ordered another member of the unlawful assembly named Budi to set fire to the hut of Mst. Rasmani and he further ordered an assault on Ramji and Nebi. Budi, it was alleged, set fire to the hut and the hut was burnt. Some members of the mob chased Ramji and Nebi and assaulted them. The learned Sessions Judge found that all the accused persons before him did form an unlawful assembly and came to the hut of Mst. Rasmani on the date and at the time alleged, armed with weapons, with the companymon object of dismantling the hut and of companymitting an assault on remonstrance. He held that in prosecution of the aforesaid companymon objects the offences of rioting and hurt etc., were companymitted. So far as the charge of arson was companycerned, he held that the act of incendiarism was an isolated act of some members of the unlawful assembly, there being numbercommon object of the entire unlawful assembly to set fire to the hut of Mst. Rasmani. He accepted the evidence given before him to the effect that the present appellant had given the order to Budi to set fire to the hut and that Budi had set fire to it in companysequence of the abetment. Accordingly, he companyvicted the accused persons of various offences under ss. 147, 148 and 323 etc. of the Indian Penal Code. Budi was further companyvicted under s. 436, Indian Penal Code, and the present appellant under s. 436 read with s. 109, Indian Penal Code. There was then an appeal to the High Court of Patna and the learned Judge who heard it found that the evidence against Budi in respect of the allegation that he had set fire to the hut of Mst. Rasmani was number very satisfactory and he acquitted Budi of the charge under s. 436, Indian Penal Code. So far as the appellant Gallu Sah was companycerned, he held that the evidence satisfactorily established that Gallu Sah had given the order to set fire to the hut and the hut was actually set on fire by one member or another of the unlawful assembly. On this finding, he affirmed the companyviction and sentence of the appellant under s. 436 read with s. 109, Indian Penal Code, the sentence being one of four years rigorous imprisonment. The companyviction and sentence of the appellant for the offences under ss. 147 and 323, Indian Penal Code, were also affirmed, but the companyviction and sentence 110 under s. 324 read with s. 149, Indian Penal Code, were set aside. We are, however, number companycerned with those companyvictions and sentences and numberhing more need be said about them. We number companye to the particular question to which this appeal is limited, namely, propriety of the companyviction and sentence passed on the appellant for the offence under s. 436 read with s. 149, Indian Penal Code. Mr. P. K. Chatterjee has appeared on behalf of the appellant and has companytested the companyrectness of the companyviction on two grounds firstly, he has submitted that the evidence on which the companyviction was based is the same evidence which was given against Budi Sah, and if that evidence was disbelieved with regard to Budi Sah, it should number have been believed against the appellant secondly, he has submitted that though he does number wish to companytend that in every case where the principal offender has been acquitted of the offence, a person said to have abetted the companymission of the offence must also be acquitted, there is numberevidence in this particular case that whoever set fire to the hut of Mst. Rasmani did so in companysequence of the order of the appellant, assuming that the appellant gave an order to set fire to the hut, and therefore, the companyviction of the appellant for abetment is bad in law. As to the first point, the learned Judge has in his judgment given good reasons why the evidence of the witnesses with regard to Budi Sah was number accepted and why the testimony of the same witnesses was accepted with regard to the appellant. The witnesses on this point were four persons, namely, Tetar, Ramji, Nebi and Munga Lal. Tetar, it appears, did number mention in his first information that Budi had set fire to the hut, but he did mention that the appellant had given the order to set fire to the hut A similar infirmity was found in the evidence of Ramji who also failed to tell the sub-inspector of police that Budi had set fire to the hut. Nebi, it appears, companyld number be cross-examined as he died before the trial began in the Court of Session. So far as Munga Lal was companycerned, it was elicited in cross-examination that he did number speak at the spot, or subsequently, to any of his company villagers that Budi had set fire to the hut. On these grounds the learned Judge did number accept the testimony of the aforesaid four witnesses so far as the allegation against Budi was companycerned. The infirmity which was found in the evidence of the aforesaid four witnesses with regard to Budi Sah was number, however, present so far as the allegation against the present appellant was companycerned, and the learned Judge expressly said that the evidence of the aforesaid four witnesses was companysistent against the appellant. We see numberviolation of any rule of law number even of prudence in the learned Judge accepting the testimony of some of the witnesses against the appellant, though he did number accept that testimony against Budi Sah. We number turn to the second point urged on behalf of the appellant. It must be emphasised here that the learned Judge was satisfied that 1 the appellant gave the order to set fire to the hut and 2 tha the hut was actually set fire to by one member or another of the unlawful assembly, even though the unlawful assembly as a whole did number have any companymon object of setting fire to the hut of Mst. Rasmani. The point taken by learned companynsel for the appellant is that when the learned Judge did number accept the evidence of the witnesses that Budi set fire to the hut, there was really numberevidence to show that the person who set fire to the hut of Mst. Rasmani did so in companysequence of the order given by Gallu Sah. The learned Advocate points out that one of the essential ingredients of the offence is that the act abetted must be companymitted in companysequence of the abetment. It is necessary to read at this stage some of the sections of the Indian Penal Code with regard to the offence of abetment. Section 107 defines what abetment is. It says- S. 107. A person abets the doing of a thing, who- First.-Instigates any person to do that thing or Secondly.- Engages with one or more other person or persons in any companyspiracy for the doing of that thing, if an act or illegal omission takes place in pursuance of that companyspiracy, and in order to the doing of that thing or Thirdly.-Intentionally aids, by any act or illegal omission, the doing of that thing. Section 108 is in two parts and explains who is an abettor in two circumstances- 1 when the offence abetted is companymitted and 2 when an act is companymitted which would be an offence if companymitted by a person capable by law of companymitting an offence with the same intention or knowledge as that of the abettor. We are number companycerned with the second circumstance in the present case. We are companycerned with a person who abets the companymission of an offence. Then companyes s. 109 which is in these terms S. 109. Whoever abets any offence shall, if the act abetted is companymitted in companysequence of the abetment, and numberexpress provision is made by this Code for the punishment of such abetment, be punished with the punishment provided for the offence. Explanation.-An act or offence is said to be companymitted in companysequence of abetment, when it is companymitted in companysequence of the instigation, or in pursuance of the companyspiracy, or with the aid which companystitutes the abetment. It seems to us, on the findings given in the case, that the person who set fire to the hut of Mst. Rasmani must be one of the persons who were members of the unlawful assembly and he must have done so in companysequence of the order of the present appellant. It is, we think, too unreal to hold that the person who set fire to the hut of Mst. Rasmani did so irrespective, or independently, of the order given by the present appellant. Such a finding, in our opinion, would be unreal and companypletely divorced from the facts of the case and it is necessary to add that numbersuch finding was given either by the learned Assistant Sessions Judge who tried the appellant or the learned Judge of the High Court. As we read the findings of the learned Judge, it seems clear to us that he found that the person who set fire to the hut of Mst. Rasmani did so in companysequence of the abetment, namely, the instigation of the appellant. It is necessary to refer to two decisions to which our attention has been drawn by the learned Advocate. The decision in Raja Khan v. Emperor 1 related to a case where one Torap Ali was held to be guilty of cheating by personating one Sabdar Faraji and using his name on a surety bond. The charge against Torap Ali was that he was the principal in the case and the charge against Raja Khan and Cherak Ali Akon, the two appellants in that case, was that they abetted by being present at the personation which was alleged to have been companymitted by Torap Ali. Torap Ali was acquitted by the jury. The learned Judge who presided at the jury trial did number, however, tell the jury what would be the effect of the acquittal of Torap Ali on the charge of abetment against Raja Khan and Cherak Ali. It was because of this omission that the companyviction of Raja Khan and Cherak Ali was set aside. The head numbere of the report, however, said in general terms that where a person is charged with having companymitted an offence and another is charged with having abetted him in the companymission thereof, and the prosecution fails to substantiate the companymission of the principal offence, there can be numberconviction for abetment. This general statement was companysidered in a later decision in Umadasi Dasi v. Emperor 2 , and it was pointed out that in the majority of cases the aforesaid general statement might bold good but there are exceptions to the general rule, particularly when there is evidence which satisfactorily establishes that the offence abetted is companymitted and is companymitted in companysequence of the abetment. We accordingly hold that the companyviction of the appellant for the offence under s. 436 read with s. 109, Indian Penal Code, is number bad in law. As to the sentence it does number appear to us that it errs oil the side of severity. It has been stated that the appellant was released on bail on serving out the sentence passed against him for the offences under ss. 147 and 323, Indian Penal Code. In our opinion, the appeal has numbermerit and must be dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 224 and 225 of 1954. Appeals from the judgment dated December 31, 1947, of the former Nagpur High Court in Misc. First Appeal No. 310 of 1943, arising out of the Award dated March 31, 1943, of the Court of the Arbitrator, Addl. Dist. and Sessions Judge, Khandwa. Achhru Ram and Naunit Lal, for appellant In C. A. No. 224/54 and respondent In C. A. No. 225/54 . K. Daphtary, Solicitor-General for India, R. Ganapathy Iyer and R. H. Dhebar, for respondent In C. A. No. 224/54 and appellant In C. A. No. 225/54 . 1958. August 22. The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-Both these appeals are directed against the judgment of the High Court of Nagpur passed in an appeal under s. 19 1 f of the Defence of India Act, 1939, hereinafter referred to as the Act. In exercise of the power companyferred by s. 75 A of the Rules framed under the Act, the Central Government requisitioned on February 19, 1941, certain properties belonging to Hanskumar Kishanchand, the appellant in Civil-Appeal No. 224 of 1954. As there was numberagreement on the amount of companypensation payable to him, the Central Government referred the determination thereof to Mr. Jafry, Additional District Judge, Khandwa, under s. 19 1 b of the Act. On March 31, 1943, Mr. Jafry pronounced his award, by which lie awarded a. sum of Rs. 13,000 as annual rent -for, the occupation of the premises. Against this award, there was an appeal to the High Court of Nagpur under s. 19 1 f of the Act, and that was heard by a Bench companysisting of Grille C. J. and Padhve J. By their judgment dated December 31, 1947, they enhanced the annual rent payable to the appellant by a sum of Its. 3,250, and they also allowed certain other sums as companypensation for dislocation of the High School which 1180 was being run on the property. The appellant applied for leave to appeal against this judgment to the Federal Court under ss. 109 and I 10 of the Code of Civil Procedure in respect of the amounts disallowed. A similar application was also filed by the Government with reference to the enhancement of companypensation. On August 25, 1949, both these applications were granted, and a certificate was issued that the appeals fulfilled the requirements of ss. 109 and 110 of the Code of Civil Procedure. That is how the two appeals companye before us. Hanskumar Kishanchand is the appellant in Civil Appeal No. 224 of 1954 and the Union of India, in Civil Appeal No. 225 of 1954. At the opening of the hearing, a preliminary objection was taken by the learned Solicitor-General to the maintainability of Civil Appeal No. 224 of 1954 on the ground that the judgment of the High Court passed in appeal under s. 19 1 f was an award and number a judgment, decree or order within the meaning of ss. 109 and 110 of the Code of Civil Procedure, and that accordingly the appeal was incompetent. If this companytention is right, Civil Appeal No. 225 of 1954 preferred by the Government would also be incompetent. That, of companyrse, does number preclude the Government from raising the objection as to the maintainability of the appeal, though the result of our upholding it would entail the dismissal of Civil Appeal No. 225 of 1954 as well. We accordingly proceed to dispose of the objection on the merits. It will be companyvenient at this stage to refer to the provisions of the Act bearing upon the present, companytroversy. Section 19 1 provides that Where any action is taken of the nature decribed in sub-section 2 of section 299 of the Government of India Act, 1935, there shall be paid companypensation, the amount of which shall be determined in the manner, and in accordance with the principles, hereinafter set out Section 19 1 a provides for the amount of companypensation being fixed by agreement, and s. 19 1 b enacts that Where numbersuch agreement can be reached, the Central Government shall appoint as arbitrator a 1181 person qualified under sub-section 3 of section 220 of the above-mentioned Act for appointment as a Judge of a High Court. Sub-section c of s. 19 1 provides for the appointment by the Central Government of a person having expert knowledge as to the nature of the property acquired and for the numberination of an assessor by the person to be companypensated, for the purpose of assisting the arbitrator. Sub-section e of s. 19 1 enacts that the arbitrator in making his award shall have regard to the provisions of sub-s. 1 of s. 23 of the Land Acquisition Act, 1894, so far as the same can be made applicable. Then companyes sub-s. f , which is important for the present purpose, and it is as follows An appeal shall lie to the High Court against an award of an arbitrator except in cases where the amount thereof does number exceed an amount prescribed in this behalf by rule made by the Central Government. Then we have sub-s. g , which is as follows Save as provided in this section and in any rules made thereunder, numberhing in any law for the time being in force shall apply to arbitrations under this section. On these provisions, the companytention on behalf of the Government is that the reference under s. 19 1 , b and the appeal under s. 19 1 f are all arbitration proceedings, that the decision of the High Court in the appeal is really an award, and that it is, in companysequence, number appealable under ss. 109 and 110 of the Code of Civil Procedure, as they apply only to judgments, decrees or orders of Courts and number to awards. Mr. Achbru Ram, learned companynsel for the appellant does number dispute that the proceedings under s. 19 1 b are by way of arbitration, but he companytends that when once the matter companyes before the High Court by way of appeal under s. 19 1 f , it becomes a civil proceeding under the ordinary jurisdiction of the Court, and that any decision therein is open to appeal under ss. 109 and I 10 of the Code of Civil Procedure. He further companytends that even apart from those provisions, the appeal was companypetent under Cl. 29 of the Letters Patent, and that, 1182 the certificate granted by the High Court is under that provision as well. Before discussing the authorities cited on either side in support of their respective companytentions, it will be useful to state the wellestablished principles applicable to the determination of the present question. When parties enter into an agreement to have their dispute settled by arbitration, its effect is to take the lis out of the hands of the ordinary Courts of the land and to entrust it to the decision of what has been termed a private tribunal. Such an agreement is number hit by s. 28 of the Contract Act as being in restraint of legal proceedings, because s. 21 of the Specific Relief Act expressly provides that save as provided by the Arbitration Act, 1940, numbercontract to refer present or future differences to arbitration shall be specifically enforced but if any person who has made such a companytract and has refused to perform it sues in respect of any subject which he has companytracted to refer, the existence of such companytract shall bar the suit. There is a similar provision in s. 28 of the Contract Act which is applicable, where the Arbitration Act is number in force. Where an arbitration is held in pursuance of such an agreement and that results in a decision, that decision takes the place of an adjudication by the ordinary Courts, and the rights of the parties are thereafter regulated by it. It is true that under the law the Courts have the authority to set aside the award,-, made by arbitrators on certain grounds such as that they are on matters number referred to arbitration, or that the arbitrators had misconducted themselves, or that there are errors apparently the face of the award. But where the award is number open to any such objection, the Court has to pass a decree in terms of the award, and under s. 17 of the Arbitration Act, an appeal lies against such a decree only on the ground that it is in excess of, or number otherwise in accordance with the award. In other words, it is the decision of the arbitrator where it is number set aside that operates as the real adjudication binding on the parties, and it is with a view to its enforcement that the, Court is authorised to pass a decree in terms thereof. There is thus a sharp distinction between a 1183 decision which is pronounced by a Court in a cause which it hears on the merits, and one which is given by it in a proceeding for the filing of an award. The former is a judgment, decree or order rendered in the exercise of its numbermal jurisdiction as a Civil Court, and that is appealable under the general law as for example, under ss. 96, 100, 104, 109 and 110 of the Code of Civil Procedure. The latter is an adjudication of a private tribunal with the imprimatur of the Court stamped on it, and to the extent that the award is within the terms of the reference, it is final and number appealable. The position in law is the same when the reference to arbitration is made number under agreement of parties but under provisions of a statute. The result of those provisions again is to withdraw the dispute from the jurisdiction of the ordinary companyrts and to refer it for the decision of a private tribunal. That decision is an award, and stands on the same footing as an award made on reference, under agreement of parties. It is for this reason that s. 46 of the Arbitration Act X of 1940 enacts that The provisions of this Act, except subsection 1 of section 6 and sections 7, 12, 36 and 37 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that, other enactment were an arbitration agreement except in so far as this Act is inconsistent with that, other enactment or with any rules made thereunder. Nor does it make any difference in the legal position that the reference under the statute is to a Court as arbitrator. In that case, the Court hears the matter number as a Civil Court but as persona designata, and its decision will be an award number open to appeal under the ordinary law applicable to decisions of Courts. A statute, however, might provide for the decision of a dispute by a Court as Court and number as arbitrator, in which ease, its decision will be a decree or order of Court in its ordinary civil jurisdiction, and that will attract the numbermal procedure governing the decision of that Court, and a right of appeal will be companyprehended therein. The position therefore is that if the 1184 reference is to a Court as persona designata, its decision will number be open to appeal except to the extent that the statute so provides but that if, on the other hand, it is to a Court as Court, its decision will be appealable under the general law, unless there is something in the statute, which abridges or takes away that incident. It may be a question whether the reference to a Court under a particular statute is to it as a Court or as persona designata but when once it is determined that it is to it as persona designata, there call be numberquestion that its decision is number open to appeal under the ordinary law. We shall number companysider the authorities hearing on the question. On behalf of the Government, the decisions in Rangoon Botatoung Company v. The Collector, Rangoon 1 , The Special Officer, Salsette Building Sites v. Dossabhai Bezonji 2 , The Special Officer, Salsette Building Sites v. Dassabhai Bozanji Moti. wala 3 , Manavikraman Tirumalpad v. The Collector of the Nilgris 4 and Secretary of State for India in Council v. Hindusthan Co-operative Insurance Society Limited 5 were relied on as supporting the companytention that the present appeals are incompetent. In Rangoon Botatoung Company v. The Collector, Rangoon 1 , the facts were that certain properties had been acquired tinder the Land Aequistion Act of 1894, and the Collector had determined the amount of companypensation payable to the quondam owners. On their objection as to the quantum of companypensation, the matter was referred to the decision of the Chief Court of Burina. It was heard by a Bench of two Judges, who determined that a sum of Rs. 13,25,720 was payable as companypensation. Dissatisfied with this decision, the owners preferred an appeal to the Privy Council under the provisions of tile Code of Civil Procedure. A pre- limilary objection was taken to the maintainability of the appeal on the ground that the decision sought to be appealed against was number a judgment of Court but an award and was therefore number appealable. In giving effect to this objection, the Board observed Their Lordships cannot accept the argument or 1 1912 39 I.A. 197. 2 1912 I.L.R. 37 Bom. 506. 3 1913 17 C.W.N. 421. 4 1918 I.L.R. 41 Mad. 943. 5 193I L.R. 58 I.A. 259. 1185 suggestion that when once the claimant is admitted to the High Court he has all the rights of an ordinary suitor, including the right to carry an award made in an arbitration as to the value of land taken for public purposes up to this Board as if it were a decree of the High Court made in the companyrse of its ordinary jurisdiction. Shortly after this judgment was pronounced, the question arose for determination in The special officer, Salsette Building Sites v. Dossabhai Bezonji 1 , whether a decision given by the High Court in appeal under s. 54 of the Land Acquisition Act was a judgment within Cl. 39 of the Letters Patent, so as to enable a party to appeal to the Privy Council under that provision. The applicant sought to distinguish the decision in Rangoon Botatoung Company v. The Collector, Rangoon 2 on the ground that there, the decision sought to be appealed against was that of the Chief Court of Burma, and the question of maintainability fell to be decided on the terms of the, Code of Civil Procedure, whereas in the instant case, the party had a right to appeal to the Privy Council under Cl. 39 of the Letters Patent. In rejecting this companytention, the High Court referred to the observations in Rangoon Botatoung Companys Case 2 already quoted, and observed This passage shows that it is a mistake to suppose that the award made in such a case by the High Court is a decree within the ordinary jurisdiction to which the Civil Procedure ode refers and it seems to me it would be equally erroneous to regard such an award as a final judgment or order within the meaning of clause 39 of the Letters Patent. Leave to appeal to the Privy Council was accordingly refused. There was an application to the Privy Council for special leave in this matter, but that was also rejected, and the report of the proceedings before the Privy Council in The special Officer, salsette Building Sites v. Dassabhai Basanji Motiwala 3 shows that the interpretation put by the Bombay High Court in The Special officer, salsette Building sites v. Dossabhai Bezonji 1 was accepted as companyrect. In Manavikraman Tirumalpad v. The Collector of the 1 1912 I.L.R. 37 130m 506. 2 1912 L.R. 39 I.A. 197. 3 1913 17 C.W.N42I. 1186 Niligris 1 the question was whether a judgment of the High Court passed in an appeal under the Land Acquisition Act was a judgment within the meaning of Cl. 15 of the Letters Patent so as to entitle a party to file a further appeal to the High Court under that provision, and it was held, on a companysideration of the authorities above referred to, that it was number. Secretary of State for India in Council v. Hindusthan Cooperative Insurance Society Limited 2 is a decision under the Calcutta Improvement Act, 1911. Under that Act, there is a tribunal companystituted for determining the amount of companypensation payable on acquisition of land, and under the Calcutta Improvement Appeals Act, 1911, an appeal is provided in certain cases from the decision of the tribunal to the Calcutta High Court. The point that arose for determination was whether the decision given by the High Court in appeal under this provision was open to further appeal to the Privy Council. In answering it ill the negative, the Privy Council observed that in view of the decision in Rangoon Botatoung Company v. The Collector, Rangoon 3 , there companyld be numberright of appeal against the decision of the High Court. It further held that this companyclusion was number affected by the amendment of the Land Acquisition Act, 1921, providing for an appeal to the Privy Council against the decision of the High Court under s. 54 of that Act, as that amendment companyld number be held to have been incorporated by reference in the Calcutta Improve- ment Act, 1911. The law as laid down in the above authorities may thus be summed up It is number every decision given by a Court that companyld be said to be a judgment, decree or order within the provisions of the Code of Civil Procedure or the Letters Patent. Whether it is so or number will depend on whether tile proceeding in which it was given came before tile Court in its numbermal civil jurisdiction, or de hors it as a persona designata. Where the dispute is referred to the Court for determination by way of arbitration as in Rangoon Botatoung Company v. The Collector, Rangoon 3 , or where it companyes 1 1918 I.L.R 41 Mad. 943. 2 1931 L.R. 58 I.A. 259. 3 1912 L.R. 39 I.A. 197. 1187 by way of appeal against what is statedly an award as in The Special Officer, Salsette Building Sites v. Dossabhai Bezonji 1 , Manavikraman Tirumalpad v. The Collector of the Nilgris 2 and Secretary of State for India in Council v. Hindusthan Co-operative Insurance Society Limited 3 then the decision is number a judgment, decree or order under either the Code of Civil Procedure or the Letters Patent. Now, Mr. Achhru Ram companytests this last proposition, and relies strongly on the decision in National Telephone Company Limited v. Postmaster-General 4 , as supporting his position. There, the question arose on the companystruction of certain provisions of the Telegraph Arbitration Act, .1909. Section I thereof enacted that certain differences between the Postmaster-General and any other person should, if the parties agreed, be referred for decision to the Railway and Canal Commission companystituted under an Act of 1888 and s. 2 provided that all enquiries under the reference should be companyducted by the Commission in accordance with the Act of 1888. Pursuant to a reference under these provisions, the Railway and Canal Commission had determined certain disputes, and the question was whether its decision was open to appeal. Under the Act of 1888, the Commission was companystituted a Court of record and an appeal lay against its decision to the Court of Appeal except on questions of fact and locus standi. It was held by the House of Lords that as under the Act of 1888 the reference to the Commission was to it as a Court, the reference under the Telegraph Arbitration Act, 1909, to that tribunal must also be held to be to it as a Court and number as a body of arbitrators, and an appeal against its decision was therefore companypetent. The position was thus stated by Viscount Haldane L. C. When a question is stated to be referred to an established Court without more, it, iii my opinion, imports that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from its decision likewise attaches. 1 1912 I.L.R. 37 Bom. 5o6. 2 1918 I.L.R. 41 Mad. 943. 3 1931 L.R. 58 I.A. 259. 4 1913 A.C. 546. 1188 It may be numbered that it was the use of the word arbitration in the title to the Act that furnished the ground for the companytention that the proceedings before the Commission were of the nature of arbitration. But that description, however, companyld number alter the true character of the reference under the Act, which was in terms to the Commission as a Court of record. In fact, there was numberelement of arbitration in the -proceedings. It is true that under that Act there companyld be a reference only by agreement of parties. That, however, companyld number make any difference in the character of the proceedings before the Commission, as a statute can provide for the jurisdiction of the Court being invoked as a Court on the agreement of parties, as for example, on a case stated under Order 36 of the Code of Civil Procedure. There is thus numberhing in National Telephone Company Limited v. Postmaster-General 1 , which can be said to companyflict with the law as laid down in Rangoon Botatoung Company v. The Collector, Rangoon. 2 that when the reference is to a Court as arbitrator, its decision is number open to appeal. The distinction between the two classes of cases, where the reference is to companyrt as companyrt and where the reference is to it as arbitrator, was again pointed out by the Privy Council in Secretary of State for India v. Chelikani Rama Rao 3 . There, the question arose with reference to certain provisions of the Madras Forest Act, 1882. That Act provides that claims to lands which are. sought to be declared reserved forests by the Government are to be enquired into by the Forest Settlement Officer, and an appeal is provided against his decision to the District Court. The point for decision was whether the decision of the District Court was open to further appeal under the provisions of the Code of Civil Procedure. The companytention was that the reference to the District Court under the Act was to it number as a Court but as arbitrator, and that therefore its decision was number open to appeal on the -principle laid down in Rangoon Botatoung Companys Case In repelling this companytention, 1 1913 A.C. 546. 2 1912 L.R. 39 I.A. 197. 3 1916 L.R. 43 I.A, 192. 1189 Lord Shaw observed that under the Land Acquisition Act the proceedings were ,from beginning to end ostensibly and actually arbitration proceedings , but that the proceedings under the Forest Act were essentially different in character. The claim was he said, the assertion of a legal right to possession of and property in land and if the ordinary Courts of the companyntry are seized of a dispute of that character, it would require, in the opinion of the Board, a specific limitation to exclude the ordinary incidents of litigation The principles being thus well-settled, we have to see in the present case whether an appeal to the High Court under s. 19 1 f of the Act companyes before it as a Court or as arbitrator. Under s. 19 1 b , the reference is admittedly to an arbitrator. He need number even be a Judge of a Court. It is sufficient that he is qualified to be appointed a Judge of the High Court. And under the law, numberappeal would have lain to the High Court against the decision of such an arbitrator. Thus, the provision for appeal to the High Court under s. 19 1 f can only be companystrued as a reference to it as an authority designated and number as a Court. The fact that, in the present case, the reference was to a District Judge would number affect the position. Then again, the decision of the arbitrator appointed under s. 19 1 b is expressly referred to in s. 19 1 f as an award. Now, an appeal is essentially a companytinuation of the original proceedings, and if the proceedings under s. 19 1 b are arbitration proceedings, it is difficult to see how their character can suffer a change, when they are brought up before an appellate tribunal. The decisions in The Special Officer, Salsette Building Sites v. Dossabhai Bezonji 1 , The Special Officer, Salsette Building Sites v. Dassabhai Basanji Motiwala 2 , Manavikraman Tirumalpad v. The Collector of the Nilgris 3 and Secretary of State for India in Council v. Hindusthan Co-operative Insurance Society Limited 4 proceed all on the view that an appeal against an award companytinues to be part of, and a 1 1912 I.L.R. 37 Bom. 506. 2 1913 17 C.W.N. 421. 3 1918 I.L.R. 41 Mad. 943. 5 1931 L.R. 58 I.A. 259. 1190 further stage of the original arbitration proceedings. ln our view, a proceeding which is at the inception an arbitration proceeding must retain its character as arbitration, even when it is taken up in appeal, where that is provided by the statute. The question whether an appeal under s. 19 1 f is of the nature of arbitration proceedings, and whether the decision given therein is an award came up directly for companysideration in Kollegal Silk Filatures Ltd. v. Province of Madras 1 before a Bench of the Madras High Court companysisting of Patanjali Sastri and Chandrasekhara Aiyar JJ. and it was held by them that the word arbitration in s. 19 1 g of the Act companyered the entire proceedings from their company- mencement before the arbitrator to their termination in the High Court on appeal where an appeal had been preferred, and the High Court in hearing and deciding the appeal acted essentially as- an arbitration tribunal. We agree with this decision that the appeal under s. 19 1 f is an arbitration proceeding. We must therefore hold that the decision of the High Court in the appeal under that provision is number a judgment, decree or order either within ss. 109 and I 10 of the Code of Civil Procedure or cl. 29 of the Letters Patent of the Nagpur High Court, which companyresponds to cl. 39 of the Letters Patent of the Calcutta, Madras and Bombay High Courts, and that, therefore, the present appeals are incompetent. Mr. Achbru Ram finally companytended that even if numberappeal lay under ss. 109 and 110 of the Code of Civil Procedure or cl. 29 of the Letters Patent, it was, nevertheless within the companypetence of this Court to grant leave to appeal, and that this was a fit case for the grant of such leave. He argued that the Privy Council had the power to grant leave to appeal against the decision of the Nagpur High Court in the appeal under s. 19 1 f , that under s. 3 a ii of the Federal Court En. largement of Jurisdiction Act I of 1948 that power became vested in the Federal Court, and under Art. 135 it has devolved on this Court, and that in the exercise of that power we should grant leave to appeal against I.L.R. 1948 Mad. 490. 1191 the decision number under challenge. it is sufficient answer to this companytention that the Federal Court had power under s. 3 a ii to grant leave only when the proposed appeal was against a judgment, and that, under the definition in s. 2 b , meant a judgment, decree or order of a High Court in a civil case and that on our companyclusion that the decision in the appeal under s. 19 1 f is number a judgment, decree or order but an award, numberorder companyld have been passed granting special leave under s. 3 a ii . In the result, we dismiss both the appeals as incompetent.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 109 of 1954. Appeal by special leave from the judgment and order dated April 21, 1950, of the former Nagpur High Court in Misc. Civil Case No. 135 of 1949. Ganapathy Iyer and R. H. Dhebar, for the appellant. Radhavinod Pal, J. M. Thakar and I. N. Shroff, for the respondents. 1958. October 7. The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-This is an appeal against the judgment of the High Court of Nagpur in a reference under s. 66 1 of the Indian Income-tax Act XI of 1922 , hereinafter referred to as the Act, and the point that is raised for our determination is whether a sum of Rs. 2,50,000 received by the respondent on August 2, 1941, is chargeable to income- tax. While, according to the Department, the amount in question is a revenue receipt liable to be included in the chargeable income, according to the respondent it is capital receipt number liable to tax. The Appellate Tribunal held, affirming the decisions of the Income-tax Officer and the Appellate Assistant Commissioner, that the amount in question was a trading receipt, and was income liable to be assessed. On the application of the respondent, it referred the following question for the decision of the High Court Whether in the circumstances of the case the sum of Rs. 2,50,000 received by the assessee as damages or companypensation for the premature termination of the companytract of 9th May 1940 is income assessable within the meaning of the Indian Income-tax Act. The reference was heard by Sen and Deo, JJ., who held, disagreeing with the Tribunal, that the sum of Rs. 2,50,000 was a capital receipt in the hands of the respondent, and that it, was number liable to be taxed. The appellant then filed an application under s. 66 A 2 of the Act for a certificate to appeal to this Court, but that was dismissed, the learned judges holding that the law on the subject was well settled. The appellant thereafter applied to this Court for special leave under Art. 136, and the same was granted, and hence this appeal. The question whether a receipt is capital or income has frequently companye up for determination before the companyrts. Various rules have been enunciated as furnishing a key to the solution of the question, but as often observed by the highest authorities, it is number possible to lay down any single test as infallible or any single criterion as decisive in the determination of the question, which must ultimately depend on the facts of the particular case, and the authorities bearing on the question are valuable only as indicating the matters that have to be taken into account in reaching a decision. Vide Van Den Berghs Ltd. v. Clark 1 . That, however, is number to say that the question is one of fact, for, as observed in Davies H. M. Inspector of Taxes The Shell Company of China Ltd. 2 these questions between capital and income, trading profit or numbertrading profit, are questions which, though they may depend numberdoubt to a very great extent on the particular facts of each case, do involve a companyclusion of law to be drawn from those facts . Vide also the observations of Lord Greene, M. R. in Rustproof Metal Window Co., Ltd. v. Commissioners of Inland Revenue 3 . That being so, we must first examine the facts of the present -case, and then companysider whether on those facts and in the light of the applicable principles, the sum of Rs. 2,50,000 received by the respondent is a capital or a revenue receipt. The respondent is a businessman whose trading activities run in several channels. He is a railway companytractor he runs a rice mill and a sugar factory he is a supplier Of limestone and dolomite. It is with the last of these businesses that we are companycerned in these proceedings. The respondent had acquired a quarry at Paraghat and had been himself working it and selling limestone quarried out of it to, among others, a Company called the Bengal Iron Company, Ltd. On January 5, 1935, the said Company entered into an agreement with the respondent for the purchase of all its requirements of limestone and dolomite from 1 1935 A.C. 431. 2 1951 32 Tax Cas. 133 151. 3 1947 29 Tax Cas. 243, 266. the latter at rates specified therein, and these rates were subsequently modified by another agreement between the parties dated December 21, 1935. In 1936 the Company went into liquidation, and its assets and liabilities were taken over by another Company called the Indian Iron and Steel Company, Ltd. under a scheme of amalgamation dated September 8, 1936. This Company companytinued to purchase limestone and dolomite from the respondent for some time, but later on, finding that the rates were uneconomic owing to increase in the railway freight, it decided to purchase its requirements from other sources, and by numberice dated May 29, 1939, informed the respondent accordingly. Thereupon, the respondent filed Suit No. 211 of 1940 in the High Court of Calcutta for specific performance of the companytract dated January 5, 1935, as modified on December 21, 1935, and for an injunction restraining the Indian Iron and Steel Company, Ltd. from purchasing limestone or dolomite from any person other than the plaintiff, and on March 13, 1940, an injunction in those terms was actually issued against the Company. Thereafter, the Company and the respondent entered into an agreement in settlement of all the disputes between them, and the same was embodied in a document dated May 9, 1940. As it is this document that forms the source for the payment of Rs. 2,50,000 to the respondent, it is necessary to refer to the terms thereof in some detail. Under this agreement, the respondent was to work a quarry of the Company at a place called Gangapur for a period of 25 years and to supply the limestone quarried therefrom to the Company according to its requirements. This quarry, it should be stated, was situated near Kulti where the Company carried on its smelting operations, and obviously it would reduce the working expenses, if limestone required therefor companyld be got from Gangapur. There were, however, numberfacilities in Gangapur railway station for transporting the goods from the quarry, and so it was arranged that the authorities should be moved for permission to companystruct a siding at Gangapur, and that the companyt thereof should be borne by the Company. It was expected that it would take 18 months before the siding companyld be companypleted, and it was agreed that during that period the respondent was to be paid Rs. 4,000 every month. Thereafter, the respondent was to be paid at the rate of Rs. 2-9-0 per ton of limestone which might be loaded in the railway wagons to be arranged for by the Company. The working of the quarry was left entirely in the hands of the respondent. It was he that was to purchase the machinery and the appliances necessary for quarrying. He was to engage his own workmen and put up all the requisite superstructures. After the limestone was raised from the quarry, he was to get it cleaned and Tendered merchantable, and it was thereafter to be loaded in the wagon. There are two clauses in the agreement to which reference might be made. Under cl. 6, the respondent agreed to supply to the Company such other quantities of limestone, if any, as the Company may order besides Kulti requirements . Clause 13 of the agreement enjoined that the respondent was number to engage, during the subsistence of the agreement, in any other companytract business for the working of any quarry within an area of 20 miles from the Companys quarry, but this was subject to the proviso that the respondent was free to work any quarry belonging to and held by him. To companytinue the narration, the railway authorities did number agree to the companystruction at Gangapur of a siding and a loopline to the quarry, and so it became impossible to carry out the agreement in the manner companytemplated by the parties. It is in this situation that the parties came together, and on August 2,1941, entered into a new agreement and it is with this that we are directly companycerned in this appeal. The agreement recites that the Company feeling difficulty in working their mines referred to in the companytract dated May 9, 1940, made a proposal for termination of the said companytract on certain terms, and that was agreed to. The terms of the agreement are 1 that the Company should pay Rs. 2,50,000 to the sellers as solatium besides the monthly instalments of Rs. 4,000 , remaining unpaid under the companytract dated May 9, 1940 2 that the Company should take all the limestone required for its furnaces at Kulti from the respondent for a period of 12 years on terms and companyditions set out in an agreement 3 that the respondent was to be appointed the loading companytractors of the Company for loading all iron ore at Monoharpore for a period of 12 years from January 1, 1942, on the terms and companyditions specified in a separate agreement. Pursuant to this agreement, the respondent was paid a sum of Rs. 2,50,000 and the two agreements relating to the purchase of limestone and the loading of iron ore at Monoharpore were also executed. The balance due on account of monthly payment of Rs. 4,000 provided in the agreement of May 9, 1940, was also duly paid. Now, on these facts, the question is whether the sum of Rs. 2,50,000 received by the respondent was capital or revenue. Before discussing the principles applicable to the facts as stated above, it is necessary to deal with a companytention raised on the facts of the case on behalf of the respondent. Dr. Radha Binode Pal, who appeared for him, argued that for the purpose of carrying out the agreement dated January 5, 1935, the respondent had executed works of a capital nature such as companystruction of quarters, tenements and the like, and had incurred expenses exceeding Rs. 4 lakhs -on that account, that all this had to be thrown away when the if quarry at Paraghat had to be abandoned, and the sum of Rs. 2,50,000 was really a reimbursement of the amount spent by him as above and was therefore a respondent, the position in law would numberdoubt be as companytended for by him. But have those facts been established ? In his statement before the Income-tax Officer, the respondent merely stated that the amount in question was paid as companysideration for the termination of the companytract of 1935 and number of 1940, and it is pointed out by the Tribunal that the respondent did number substantiate even this assertion. There was numberallegation that capital expenses had been incurred in the execution of the companytract of 1935, and that the amount in question was paid as companypensation therefor number is there any evidence on that question. In deed, when it is remembered that the quarry at Paraghat had been abandoned before the companytract dated May 9, 1940, was entered into, it is difficult to imagine how any amount paid as companypensation for the cancellation of that companytract can have any companynection with expenses incurred with reference to that quarry. We must hold that the sum of Rs. 2,50,000 was number paid as companypensation for expenses thrown away and cannot be held to be a capital receipt on that account. Now, the companytention on behalf of the appellant is that the companytract dated May 9, 1940, was one entered into by the respondent in the ordinary companyrse of his business, that the sum of Rs. 2,50,000 was paid admittedly as solatium for the cancellation of that companytract, that the payment really represents the profits which the respondent companyld have made, had the companytract been performed, and that it is therefore a revenue receipt and a number of authorities were quoted in support of this companytention. We shall number refer to the more important of them. ID Short Bros. Ltd. v. The Commissioners of Inland Revenue 1 , the facts were that the appellant Company which was carrying on business as shipbuilders had entered into a companytract to build two steamers and later on, agreed to its cancellation on receipt of a sum of pound 1,00,000. The question was whether this was a capital or revenue receipt. Rowlatt, J., held that it was merely a receipt in a going companycern and was revenue, and that was affirmed by the Court of Appeal, Lord Hanworth, R., observing that such a companytract as the one before him was liable in the ordinary companyrse of business to be altered or terminated on terms and the payment of pound 1,00,000 in settlement of the rights under the companytract was an adjustment made between the appellants and their clients in the ordinary companyrse of business. Similar observations are to be found in the judgment of Sargant, L. J. and Lawrence, J. It may be numbered on the facts of the present case that the agreement of January 5, 1935, was modified on December 21, 1935, and the disputes which arose with reference thereto 1 1927 12 Tax Cas. 955. were settled by the agreement of May 9, 1940, which was, in turn, replaced by agreement dated August 2, 1941. The agreements dated May 9, 1940, and August 2, 1941, companyld therefore be properly said to be adjustments made in the ordinary companyrse of business. In The Commissioners of Inland Revenue v. The North fleet Coal and Ballast Co., Ltd. 1 , the respondent Company which was the owner of a chalk quarry had entered into a companytract with a purchaser for the supply of certain quantity of chalk for a period of ten years. After some time, the purchaser wanted to be relieved from the companytract, and the respondent agreed to its termination on receipt, of pound 3,000. The point for decision was whether that was a capital or a revenue receipt. In holding that it was the latter, Rowlatt, J., observed If the companytract had gone forward those sums would have companye into profits every year and number that they are represented by a companymutation, so far as that is companycerned, the point seems to be companycluded by Shorts case 2 . One of the companytentions urged on behalf of the assessee was that the companytract being for a term was a capital asset, that the effect of the subsequent agreement terminating it on payment of pound 3,000 was in substance to assign the unexpired portion of the companytract for a companysideration, and that it would be a capital receipt on the principle laid down in John Smith Son v. Moore 1 . In repelling this companytention, Rowlatt, J., observed These companytracts are number being sold. They are number being even extinguished really for this purpose. What is happening is that the profits under them are being taken something is being taken in respect of the profits of them. That is the position. This sum represents the profits of the Company -on the companytracts, treating them as companytracts which nationally have earned or are going to earn a profit. And the decision in John Smith Son v. Moore was distinguished. 1 1927 12 Tax Cas. 1102. 2 1927 12 Tax Cas. 955. 3 1921 12 Tax Cas. 266, In John Smith Son v. Moore 1 , it may be stated that the executors sold some outstanding companytracts for the supply of companyl to the son of the testator for a companysideration, and it was held that the payment made by the son for the purchase of the companytracts was in his hands a capital expense. The payment was number given by one party to a companytract to the other in cancellation of the agreement but by a stranger to the companytract to one of the parties thereto for an assignment of his rights thereunder. In Jessee Robinson Sons v. The Commissioners of Inland Revenue 2 , the appellant had entered into two companytracts for the sale of yarn. The purchaser cancelled the companytracts and paid pound 12,500 in settlement of the claims. The companytention of the appellant was that this payment was number a trading receipt or profit arising from his trade. In rejecting this companytention, Rowlatt, J. observed It seems to me that there is numberreason why the sum received in that respect for breach of companytract is number a sum which is part of the receipts of the business for which that companytract was made. Examining the facts of the present case in the light of the above decisions, the question to be companysidered is whether the companytract dated May 9, 1940, was entered into by the respondent in the usual companyrse of his business. If it was, then the amount paid for the termination of the companytract must be held to be a trading receipt. That the respondent has been carrying on business in the production and supply of limestone is amply established. The record shows that he had been supplying limestone and dolomite to the Bengal Iron Company, Ltd., from about the year 1920 and that the companytracts of 1935 were entered into only in the carrying on of that business. Vide para. 4 in the plaint in Suit No. 211 of 1940 already referred to. The companytract of May 9, 1940, was made in settlement of the rights under those companytracts. It is to be numbered that under the agreement dated August 2, 1941, under which he received a sum of Rs. 2,50,000, he also secured a companytract for the supply of limestone for a period of 12 years. On these facts, it is impossible to 1 1921 12 Tax Cas. 266. 2 1929 12 Tax Cas. 1241. companye to any companyclusion other than that the companytract in question was entered into by the respondent in the ordinary companyrse of his business. The learned Judges in the-Court below observe that the assessee was number a dealer in, though he was a supplier of, limestone. This appears to us to be a distinction without a difference. Moreover, it would be wholly immaterial for the present purpose whether the respondent was a dealer in or supplier of limestone, as, in either view, he would be carrying on business and the companytract in question would be one entered into in the carrying on of that business. We should also observe that the statement that the respondent was only a supplier but number a dealer in limestone does riot appear to be quite accurate on the facts. Under cl. 13 of the agreement dated May 9, 1940, the respondent had the right to work other quarries of his own, and the evidence shows that he did supply limestone so quarried to other purchasers. In support of the judgment of the Court below, learned companynsel for the respondent urged the following companytentions The companytract dated May 9, 1940, was for a period of 25 years of which more than 23 years had still to run at the time of the settlement, and it was therefore an asset of an enduring character, capital in character, and the companypensation paid therefor was a capital receipt. The true character of the agreement was that it brought into existence an arrangement which would enable the respondent to carry on a business and was number itself any business and any payment made for the termination of such an agreement is a capital receipt. The business which was to be carried on pursuant to the companytract was of a specialised character, that there was numbergeneral market for limestone and dolomite, that the companytract in question formed practically the entire business of the respondent and the companypensation paid for the closure of that business would number be a revenue receipt but a capital receipt on account of sterilisation of a capital asset. It is argued by Dr. Radha Binode Pal that the features stated above were number present in the companytracts which came up for companysideration in the decisions cited for the appellant, and that they are therefore distinguishable, and he relied on other authorities as applicable to the fact,, of this case. These companytentions and the authorities cited in support thereof must number be companysidered. Is the receipt of Rs. 2,50,000 a capital receipt for the reason that it was companypensation for the settlement of a companytract which had a long life before it ? The argument of the respondent is that there is in the Income-tax law a well-defined distinction between fixed capital and circulating capital Vide John Smith Son v. Moore 1 , that where there is a companytract the performance of which is to be number once and for all but spread over a period of years, it is in the nature of a fixed capital and a payment on account of it must be held to be capital receipt. Reliance is placed in support of this companytention on the decisions in Commissioner of Income-tax v. Shaw Wallace Co. 2 and Barr, Crombie Co. Ltd. v. Commissioners of Inland Revenue 3 and certain observations in Kelsall Parsons Co. v. Commissioners of Inland Revenue 4 and The Commissioner of Income-tax and Excess Profits Tax, Madras v. The South India Pictures Ltd., Karaikudi 5 . In Income-tax Commissioner v. Shaw Wallace. Co. 2 , the respondent Company had been acting for several years as the distributing agents of two oil Companies. In 1927-28, these Companies decided to make their own distribution arrangements and accordingly terminated the agency of the respondent and paid companypensation therefor. The question was whether this amount was a revenue receipt in the hands of the respondent. It was held by the Privy Council that it was a capital receipt, because it represented companypensation paid for cessation of business, number profits earned in the carrying on of it. In Barr, Crombie Co. Ltd. v. Commissioners of Inland Revenue 3 , the facts were that 1 1921 12 Tax Cas. 266. 3 1945 26 Tax Cas. 4o6. 5 1956 S.C.R. 223. 2 1932 L.R. 59 I.A. 2o6. 4 1938 21 Tax Cas. 608. under an agreement dated May 25, 1937, the appelant had been appointed manager of a shipping companypany for a period of 15 years, and one of the terms of the agreement was that if the companypany went into liquidation, the entire remuneration for the remaining period -was payable forthwith. On Novem- ber 5, 1942, the companypany went into liquidation, and a sum of pound 16,306 16s. 11d. was paid to the appellant as its remuneration for the period of about 8 years which was still to run. On a question as to whether this was taxable as a revenue receipt, it was held that as virtually the whole of the asets of the appellant companypany companysisted of the managing agency agreement, a payment for its extinction was a capital receipt and was therefore number taxable. Distinguishing the decision in Kelsalls case 1 where companypensation paid for the termination of an agency agreement was held to be a revenue receipt, the Lord President Normand observed at page 411 . Here we are number dealing with a single payment in return for the surrender of the prospect of making profits in the final year of the agreement, but with a payment for the surrender of an agreement while there was still a substantial period-indeed, more than half of the period of the agreement-to run . Lord Moncrieff agreeing with this companyclusion observed that so far from this being a prepayment of future remuneration for services, this was, if regard be had to the substance of the matter a price paid upon the purchase and sale of the main asset of a business. In Kelsalls case 1 , the assessee carried on business as companymission agents and acquired a number of agencies in the companyrse of that business. One of these agencies which was for a period of three years was cancelled at the end of the second year on payment of pound 1,500 as companypensation. The question was whether this was a capital or a revenue receipt. In holding that it was the latter, the Lord President, Normand observed that the business of the appellant was to acquire as many agencies as it companyld, that it was incidental to that agency that it should be modified, altered or discharged 1 1938 21 Tax Cas. 6o8. and that as the period outstanding was one year, it companyld number be said that the appellant was parting with an enduring asset of the business. Lord Fleming in agreeing with this companyclusion stated that he attached importance to the fact that the agreement had Only one year to run and that different companysiderations might rise if the outstanding period was companysiderable. A different case would have arisen for decision he observed, at p. 622 if the agreement had been terminated when it had still, say, a period of 10 years to run. A payment made in respect of a loss to be sustained over a period of years may well have a different character from a payment made in respect of a loss to be sustained in the year in which the payment is received. All these cases were companysidered by this Court in The Commissioner of Income-tax and Excess Profits Tax, Madras v. The South India Pictures Ltd., Karaikudi 1 . There, the assessee was carrying on business in the distribution of films, and in the companyrse of such business entered into three companytracts dated September 17, 1941, July 16, 1942, and May 5, 1945, with a companypany called the Jupiter Pictures, Ltd., for the production and distribution of three films for a period of 5 years. On October 31, 1945, the assessee and the Jupiter Pictures, Ltd., entered into an agreement terminating the companytracts in companysideration of a payment of Rs. 26,000 as companypensation to the assessee. The question having been raised whether this was a capital or revenue receipt, this Court held that it was the latter and was liable to be taxed, and the decision in Barr, Crombie Co. Ltd. v. Commissioners of Inland Revenue 2 was distinguished on the ground that there the whole trade of the assessee was built on the agreement dated May 25, 1937, that it was a fundamental asset of the assessees business, and that the payment on account of it was a capital receipt. Now, it is the companytention of the respondent that the present case is governed by the principles laid down in the above decisions and number those enunciated in the authorities cited for the appellant, and that the 1 1956 S.C.R. 223. 2 1945 26 Tax Cas. 406. payment of Rs. 2,50,000 as companypensation on account of the agreement dated May 9, 1940, falls within Income-tax Commissioner v. Shaw Wallace Co. 1 and Barr, Crombie Co. Ltd. V. Commissioners of Inland Revenue 2 rather than Kelsalls case 3 and The Commissioner of Income-tax and Excess Profits Tax, Madras v. The South India Pictures Ltd., Karaikudi 4 because the companytract dated May 9, 1940, formed practically the only business of the respondent and the companytract had at the time of the settlement still a period of 23 years to run. It will be seen that the receipts, the chargeability of which was in question in the decisions cited for the respondent, were all payments made as companypensation for the termination of agency companytracts, whereas we are companycerned with an amount paid as solatium for the cancellation of a companytract entered into by a businessman in the ordinary companyrse of his business, and that, in our judgment, makes all the difference in the character of the receipt. In an agency companytract, the actual business companysists in the dealings between the principal and his customers, and the work of the agent is only to bring about that business. In other words, what he does is number the business itself but something which is intimately and directly linked up with it. It is therefore possible to view the agency as the apparatus which leads to business rather than as the business itself on the analogy of the agreements in Van Den Berghs Ltd. v. Clark 5 . Considered in this light, the agency right can be held to be of the nature of a capital asset invested in business. But this cannot be said of a companytract entered into in the ordinary companyrse of business. Such a companytract is part of the business itself, number anything outside it as is the agency, and any receipt on account of such a companytract can only be a trading receipt. That there is a distinction between an agency agreement and a companytract made in the usual companyrse of business will further be clear, if we have regard to one 1 1932 L.R. 59 I.A. 206. 2 1945 26 Tax Cas. 406. 3 1938 21 Tax Cas. 608. 4 1956 S.C.R. 223. 5 1935 A. C. 431. of the reasons on which the companyclusion that companypensation paid for cancellation of agency rights is a capital receipt is sometimes rested. It is that, in substance, the agent assigns the agreement to the principal and the companypensation is price paid therefor. Vide the observations of Lord Moncrieff in Barr, Crombie Co. Ltd. v. Commissioners of Inland Revenue 1 at page 413 already quoted. It numberdoubt sounds somewhat strange that an arrangement between parties to a companytract settling claims thereunder should be regarded as an assignment of the rights of one of them to the other, but it at least emphasises that the agreement is to be regarded as a capital asset of the agent, which is saleable. Such a companycept will be out of place with reference to a companytract entered into in the companyrse of business. Any payment made for the number-performance or cancellation of such a companytract can only be damages or companypensation and cannot, in law or fact, be regarded as an assignment of the rights under the companytract. A claim for damages is, in law, incapable of being transferred, though the benefit of a companytract companyld be assigned while it is subsisting, and such assignment can only be in favour of third persons, number in favour of the other party to the companytract, in which case it will be a new companytract. Reference may in this companynection be made to the observations of Rowlatt, J., in The Commissioners of Inland Revenue v. The Northfleet Coal and Ballast Co., Ltd. 2 already quoted, that such companytracts were number sold. If, then, companytracts entered into in the companyrse of business cannot, unlike agency companytracts, be regarded as ,capital assets of the business, would it make any difference in their character that they are to be in operation for a period ? On principle, it is difficult to see why it should. If under the terms of a companytract a businessman A is to supply goods, let us say, 100 bales of yarn, on a particular day and he does that, the price received by him therefor will be a revenue receipt. And in the above case if the purchaser cancels the companytract and pays damages to the seller, that would also be a revenue receipt. If under the same 1 1945 26 Tax Cas. 406 2 1927 12 Tax Cas. 1102. companytract A is to deliver the bales in four quarterly instalments, and he does so and receives the price in four instalments, all the receipts would be revenue receipts. And if after one instalment is delivered, the purchaser cancels the companytract as regards future instalments and pays companypensation therefor to the seller, such payment will undoubtedly be a revenue receipt. If the companytract is that A is to supply whatever goods are ordered by the purchaser during a certain period, let us say, 10 years, the price received for the goods ordered and delivered will be revenue receipt. Now, if the purchaser under this companytract puts an end to the companytract after some time, say, at the end of two years and pays companypensation for the breach of the companytract as regards the remaining period, does the receipt thereof become a capital receipt ? It sounds illogical so to hold. How does it affect the true position, whether the companytracting parties agree to carry on business in the sale and purchase of goods for a stated period on terms settled between them, or whether they enter into a succession of companytracts for that purpose ? Two decisions have been quoted before us as showing that payments under a companytract entered into in the ordinary companyrse of business would be revenue receipts, even though the agreement may be for a period. In The Commissioner of Inland Revenue v. The Northfleet Coal and Ballst Co., Ltd. 1 cited above, the companytract was for the supply of chalk for a period of ten years, and the companypensation paid was for the cancellation of the companytract for the unexpired period of four years, and it was held to be a trading receipt. In Shove H. M. Inspector of Taxes v. Dura Manufacturing Co. Ltd. 2 , the respondent companypany had introdticed companypany A to companypany B, as the result of which the former obtained a remunerative business with the latter. In return for this service, A agreed to pay the respondent a companymission on the business so obtained. Later on, this agreement was terminated on payment of a sum of pound 1,500 by A to the, respondent. The question was whether this was a revenue 1 1927 12 Tax Cas. 1102. 2 1941 23 Tax Cas. 779, 783. receipt. In answering it in the affirmative, Lawrence, J., observed Reliance was also placed on certain dicta in the Court of Session in Kelsall Parsons Co. v. Commissioners of Inland Revenue, at pages 620, 622 and 624, which suggest that if the companytract cancelled has more than one year to run, the sum received for its cancellation way be capital. The learned Judges who expressed this view did number say that such sum must be capital. They were dealing with a companytract different from the present, namely, an agency companytract, which companystituted a very large part of the taxpayers business . In view of the decision in Short Bros., Ltd. v. Commissioners of Inland Revenue and in Commissioners of Inland Revenue v. Northfleet Coal and Ballast Co. Ltd. and the differences of facts, I do number feel that those dicta ought to be applied to the present case. In our opinion, therefore, when once it is found that a companytract was entered into in the ordinary companyrse of business, any companypensation received for its termination would be a revenue receipt, irrespective of whether its performance was to companysist of a single act or a series of acts spread over a period, and in this respect, it differs from an agency agreement. In holding that companypensation paid on the cancellation of a trading companytract differs in character from companypensation paid for cancellation of an agency companytract, we should number be understood as deciding that the latter must always, and as a matter of law be held to be a capital receipt Such a companyclusion will be directly opposed to the decisions in Kelsalls case 1 and The Commissioner of Income-tax and Excess Profits Tax, Madras v. The South India Pictures Ltd., Karatkudi 2 . The fact is that an agency companytract which has the character of a capital asset in the hands of one person may assume the character of a trading receipt in the hands of another, as, for example, when the agent is found to make a trade of acquiring agencies and dealing with them. The principle was 1 1938 21 Tax Cas. 608. 2 1956 S.C.R. 223. thus stated by Romer, L. J., in Golden Horse Shoe, New Ltd. v. Thurgood 1 The determining factor must be the nature of the trade in which the asset is employed. The land upon which a manufacturer carries on his business is part of his fixed capital The land with which a dealer in real estate carries OD. his business is part of his circulating capital. The machinery with which a manufacturer makes the articles that he sells is part of his fixed capital. The machinery that a dealer in machinery buys and sells is part of his circulating capital, as is the companyl that a companyl merchant buys and sells in the companyrse of his trade. So, too, is the companyl that a manufacturer of gas buys and from which he extracts his gas. Therefore, when a question arises whether a payment of companypensation for termination of an agency is a capital or a revenue receipt, it would have to be companysidered whether the agency was in the nature of capital asset in the hands of the assessee, or whether it was only part of his stock-in- trade. Thus, in Barr, Crombie Son Ltd. v. Commissioners of Inland Revenue 2 , the agency was found to be practically the sole business of the assessee, and the receipt of companypensation on account of it was accordingly held to be a capital receipt, while in Kelsalls case 3 the agency which was terminated was one of several agencies held by the assessee and the companypensation amount received therefor was hold to be a revenue receipt, and that was also the case in The Commissioner of Income-tax and Excess Profits Tax, Madras v. The South India Pictures Ltd., Karaikudi 4 . It is, however, unnecessary to further elaborate this point, as we are companycerned in this appeal, number with an agency agreement but with a companytract entered into in the ordinary companyrse of business, and, in our judgment, companypensation received on account of such a companytract must be held to be a revenue receipt. The above discussion answers to a large extent the companytention of the respondent that the companytract 1 1933 18 Tax Cas. 280, 300. 3 1938 21 Tax Cas. 6o8. 2 1945 26 Tax Cas. 4o6. 4 1956 S.C.R. 223. dated May 9, 1940 was merely a framework of his business and number the business itself, and that a receipt on account of it must be treated as a capital receipt. The decision relied on in support of this companytention is Van Den Berghs Ltd. v. Clark 1 . There, two companypanies, one English and the other Dutch, which were engaged in the manufacture and sale of margarine entered into certain agreements, the object of which was to avoid companypetition and to augment their profits. An elaborate scheme was devised under which the two companypanies were to carry on their business indepen- dently but in friendly alliance and in accordance with the scheme and the profits were to be shared between the two companypanies in certain proportions. The agreements were to be in operation till 1940, but differences arose between the parties in the working of the scheme and the alliance was terminated in 1927, the Dutch companypany paying to the English companypany a sum of pound 4,50,000 as companypensation. The question was as to the character of this receipt, whether it was a capital or a revenue receipt, and it was held by the House of Lords that it was a capital receipt and number taxable. Now, it will be seen that the companytracts which were the source of the receipt in question did number in themselves companystitute the business which yielded the profits to the two companypanies. Those profits were derived by them from the manufacture and sale of margarine, and there was numberhing in the agreements providing that the companypanies were to join in the manufacture and sale of the margarine. The position under the agreement is thus stated by Lord Macmillan, who delivered the leading judgment The three agreements which the appellants companysented to cancel were number ordinary companymercial companytracts made in the companyrse of carrying on their trade they were number companytracts for the disposal of their products, or for the engagement of agents or other employees necessary for the companyduct of their business number were they merely agreements as to how their 1 1935 A.C. 431. trading profits when earned should be distributed as between the companytracting parties. On the companytrary the cancelled agreements related to the whole structure of the appellants profit-making apparatus. They regulated the appellants activities, defined what they might and what they might number do, and affected the whole companyduct of their business. Thus, the agreements in question were intended to ensure that the business in margarine was carried on to the best advantage, but did number, in themselves, form part of the business. They were merely companylateral to it. For the reasons given in discussing the nature of agency agreements, the agreements between the two companypanies must be regarded as number pertaining to the trading activities, which yielded profits, and the payment on account of those agreements must be held to be a capital receipt. But these companysiderations would be inapplicable to the agreement, with which we are companycerned. The business which the respondent was to carry on and which was to yield profits to him was the very business to which the agreement relates. It is under this very agreement that he was to be paid Rs. 2-9-0 per ton of limestone loaded by him, and the business which he had to do to earn the amount was to raise and supply limestone as provided in the agreement. There is here numberprofit-making apparatus set up by the agreement part from the business which is to be carried on under it. We are accordingly unable to agree that the present case is governed by the decision in Van Den Berghs Ltd. v. Clark It remains to deal with the companytention of the respondent that the business which he was to have carried on under the companytract dated May 9, 1950, was practically the entirety of his trading activities, and that the termination of such a companytract is tantamount to stopping his doing business and the companypensation paid therefor is a capital receipt. Reliance is placed in support of this argument on the decision in The Glenboig Union Fireclay Co. Ltd. v. The Commissioners of Inland Revenue 2 . Now, to appreciate the 1 1935 A.C. 431. 2 1922 12 Tax Cas. 427. truer position, it is necessary to bear in mind the distinc- tion between companypensation on account of business carried on under an agreement with a third party when that is terminated, and companypensation which is received on account of a business which the assessee is prevented from carrying on by a third person in exercise of an overriding power. In the former case, the payment would in general be a trading receipt referable to the business activities carried on or to be carried on under the agreement and would be taxable as a revenue receipt. There may be exceptions to this. A familiar instance is when the parties agree, as part of the companytract to do business, that one of them shall number carry on similar business for a stated period after the termination of the companytract, and a companypensation is paid therefor. That has been held to be a capital receipt. Vide Beak v. Robson 1 . The reason is that it is a payment made number on account of profits which might have been earned in the carrying on of the business but as solatium for number carrying on the business. A payment made in a similar companyenant to operate during the period of the companytract, however, has been held to be a revenue receipt, because it arises out of the carrying on of the business. Vide Thompson v. Magnesium Elektron, Ltd. 2 . It might also happen that one of the parties to the companytract might have, in the carrying out -thereof, incurred expenses of a capital character and as a result of the cancellation of the companytract, those expenses would have been thrown away. A payment made on account of those expenses would bear the character of a capital receipt. But apart from these and similar in-stances, it might, in general, be stated that payments made in settlement of rights under a trading companytract are trading receipts and are assessable to revenue. But where a person who is carrying on business is prevented from doing so by an external authority in exercise of a paramount power and is awarded companypensation therefor, whether that receipt is a capital receipt or a revenue receipt will depend upon whether it is companypensation for injury inflicted on a capital asset or on a 1 1942 25 Tax Cas. 33. 2 1943 26 Tax Cas. 1. stock-in-trade. The decision in The Glenboig Union Fireclay Co. Ltd. v. The Commissioners Of Inland Revenue 1 applies to this category of cases. There, ,he assessee was carrying on business in the manufacture of fire clay goods and had, for the performance of that business, acquired a fire clay field on lease. The Caledonian Railway which passed over the field prohibited the assessee from excavating the field within a, certain distance of the rails, and paid companypensation therefor in accordance with the provisions of a statute. It was held by the House of Lords that this was a capital receipt and was number taxable on the ground that the companypensation was really the price paid for sterilising the asset from which otherwise profit might have been obtained . That is say, the fire clay field was a capital asset which was to be utilised for the carrying on of the business of manufacturing fire clay goods and when the assessee was prohibited from exploiting the field, it was an injury inflicted on his capital asset. Where, however, the companypensation is referable to injury inflicted on the stock- in-trade, it would be a revenue receipt. Vide The Commissioners of Inland Revenue v. Newcastle Breweries Ltd. 2 . The principle of these decisions has numberapplication where the companypensation paid is in respect of rights arising under a trading companytract. A payment made in settlement of that companytract is an adjustment of the rights under that companytract, and must be referred to the profits which companyld be made in the carrying out of that companytract. In the present case, the companytract dated May 9, 1940, was simply an agreement to carry on business. In settlement of that companytract, Rs. 2,50,000 was paid to the respondent. That was number a payment on account of any capital expenditure incurred by him in the execution of the companytract. That indeed was the point sought to be raised by the respondent, but therein he has failed. It is also to be numbered that at numbertime was he prevented from carrying on business. Clause 6 of the agreement dated May 9, 1940, companytemplates that the respondent was to carry on generally the business 1 1922 12 Tax Cas. 427. 2 1927 12 Tax Cas. 927. of supply of limestone even apart from his work in the Gangapur quarry, and the agreement dated August 2, 1941, provides for his supplying limestone for the furnaces at Kulti for a period of 12 years and for loading iron at Monoharpore for a like period. There was therefore at numbertime any agreement which operated as a bar to the carrying on of business by the respondent. On a companysideration of all the facts established, we are of opinion that the receipt of Rs. 2,50,000 by the respondent is a revenue receipt. and is chargeable to tax. In the result, the appeal is allowed, the judgment of the High Court set aside and the order of the Tribunal restored.

Case appeal was accepted by the Supreme Court

Gajendragadkar, J. This is an appeal by special leave against the decision of the High Court of Mysore holding that the document relied upon by the appellant does number create a relation of partnership between the appellant, M. P. Davis and his brother, P. W. Davis. It appears that prior to the assessment year 1952-53 the appellant who was the registered owner of the Kaimabetta Coffee Estate was assessed as an individual but for the assessment year 1952-53 he claimed a change of status and pleaded that he and his brother had agreed to become partners under a partnership deed exhibit 12 and asked for the registration of the said firm under section 26 of the Coorg Agricultural Income-tax Act 1 of 1951 . According to the appellant the partnership in question had been companystituted for the purposes inter alia of the joint working of the said estate as also for transacting generally the business or business of companyfee, citrus and pepper and other businesses as specified in the document. The relevant provisions of the Coorg Act companyrespond to the provisions of the Indian Income-tax Act section 26 of the said Act provides for the registration of firms for the purpose of the Act. The Agricultural Income-tax Officer, Coorg, refused to register the firm on the ground that the document did number created the relationship of partners between the two executants of the documents and that the appellants brother was numbermore than his servant under the said document. This order was companyfirmed by the Deputy Commissioner of Agricultural Income-tax, Coorg. The appellant then applied to the Commissioner of Agricultural Income-tax, Coorg, under section 54 2 of the Act to draw up and refer his case to the Mysore High Court. The question thus referred to the High Court was Whether, upon the materials produced by the assessee, the Agricultural Income-tax Officer is justified in rejecting the deed of partnership as number creating the relation of partnership ? This question has been answered by the High Court against the appellant. The appellant then applied for and obtained special leave to appeal to this companyrt. That is how the appeal has been admitted and the only question which we have to decide is whether the document has created a partnership. It is necessary to refer to certain facts before companysidering the terms of the purported partnership deed for as provided in section 6 of the Partnership Act, In determining whether a group of persons is or is number a firm regard shall be had to the real relation between the parties, as shown by all relevant facts taken together. Now it appears that before the deed was executed the appellants estate was being managed by his brother a his agent and this was on the basis of principal and agent or master and servant. In the assessment proceedings under the Coorg Agricultural Income-tax Act for the year 1951-52, P. W. Davis appeared as the agent of the appellant. Similarly, for the assessment year 1952-53, a claim for change of status was made by P. W. Davis who produced the partnership did. That is why the question which the tax authorities companysidered was whether the execution of the document really brought about any change in the relationship between the two brothers. They held that despite the document the relations between the two brothers companytinued the same as before and the High Court has agreed with this view. This view receives some support from two other facts which have been found by the tax authorities. Even after change of status was pleaded for the assessment year 1952-53, the appellant claims loss of the previous year and full expenses of the accounting year against what he actually received during the accounting year 1951-52 and so far ask the books of account were companycerned they did number show change in the management of the estate in spire of the agreement. These are findings of fact and though, in the absence of the account books and the other relevant material, it would be difficult for us to assess precisely the full significance of these findings, it cannot be denied that they are relevant for the purpose of ascertaining the real intention of the parties and their effect would be to a large extent against the appellants case and in favour of the view taken by the High Court. In the light of the facts stated in the preceding paragraph we proceed to examine the document. It is naturally described as an agreement of partnership, but it does number in our opinion companytain any decisive term to show that the relationship created by it was one of partnership. The capital of the firm has been stated to be the Kaimabetta Estate, the property of the appellant. But express provision has been made in it that the appellants brother, the other purported partner, would number be entitled to companytribute anything towards capital and that he would have numberpower to charge or encumber or, in any other manner, deal with, that estate. It has been provided that on dissolution, the capital, that is, the estate, would go back to the appellant. This would indicate that it was number intended that the appellants brother would have any interest in the estate, and the use of the word capital is number, in our opinion, enough on the facts of this case to create an interest in the estate in the appellants brother. Then again the document provides that the appellants brother would employ himself diligently in carrying on the business. No provision has been made whether the appellant himself would be bound to do any work for to work or number to work, as he liked. This would indicate that the appellant was the master and his brother, the servant. The same inference follows from another term in the deed which requires the appellants brother to maintain the accounts and expressly gives the appellant a privilege to look into them and ask questions relating thereto. The appellants brother is specifically prevented from advancing any moneys to the partnership though a partner would numbermally have the right to advance money to the partnership if the situation required it. Another very important term is that which provides that the appellants brother would submit the annual estimates of expenditure to be incurred in the business and that the appellant would pass it. This would show that the companytrol was in the appellant and the brother had numberreal hand in the management of the business. We think that these provisions taken along with the companyduct of the parties to the instrument earlier mentioned, clearly indicate that it was number the intention of the parties to bring about the relationship of partners but only to companytinue under the cloak of a partnership the pre-existing and real relationship, namely, that between a master and his servant. The powers that are given by the document to the appellants brother are such as a master would give to his servant in companynection with his business or a principal to his agent. The remuneration provided for the appellants brother was out of the profits and numbere was payable if there was a loss and the High Court was wrong in thinking that the appellants brother was entitled to his remuneration whether there was profit or number. But as stated in section 6 of the Act earlier mentioned, the sharing of profits or the provision for payment of remuneration companytingent upon the making of profits or varying with the profits, does number itself create a partnership. It is possible to provide for remuneration of a servant companytingent upon the making of, and varying with profits. Then, again the instrument makes numberprovision as to how losses are to be dealt with, and the companyplicated manner in which the profits are to be shared under its terms would seem to make it impossible for the losses to be shared in the same manner. If it was intended to create a real partnership, one would have thought that some provision would have been made for the sharing of the loss, especially as the share of the profit going to the appellant is immensely large companypared with the share going to his brother. In our view, taking all the circumstances of the case, especially the companyduct of the parties, together with the important terms of the document, it cannot be said that it was intended to bring about the relation of partnership. Mr. Rajagopala Sastri has referred us to some decisions in support of his argument that even if some special powers are companyferred on one of the partners that does number necessarily negative the existence of the relationship of partnership of partners between them. We would, therefore, refer briefly to these decisions. In In re Ambalal Sarabhai the High Court of Bombay has held that the fact that the companytrol of the business is kept with one partner and that he has certain extra rights as a major partner does number in any sense negative the partnership according to law. It is open to two partners to allow the business of partnership to be companyducted by one of the partners. This was a case in which Ambalal Sarabhai and his wife had agreed to become partners and the case of the Department was that the agreement between the parties did number satisfy the requirements of section 239 of the Indian Contract Act. The companyrt rejected this companytention though it observed that the document produced by the parties was as unusual document between husband and wife and that it was difficult to accept the idea that they may have become the partners in law. Even so, on the companystruction of the relevant clauses of the document, the companyrt upheld the assessees plea. Similarly, in Raghunandan Nanu Kothare v. Hormasji Bezonjee Bamjee, after companystruing an agreement of partnership between two solicitors the High Court reversed the trial companyrts finding that the defendant was number a partner but was an agent of the plaintiff, and came to the companyclusion that the agreement made the defendant a partner of the plaintiff. Under this agreement, in lieu of his share of profits the defendant was entitled to receive Rs. 500 per month and was number to be responsible for any losses or liabilities of the firm. The main reason which appears to have weighed with the High Court in upholding the plea of partnership was that it was almost absurd to think that two experienced solicitors of our High Court should enter into a formal agreement to become partners, and then so far as the outside world goes and so far as the companyrespondence between them goes, act as partners for some six years and give the usual numberices of dissolution and yet be told at the end that they were entirely mistaken as to their true legal position and that they did number know the elementary principles which go to companystitute a partnership, although that was a matter on which they would be presumably advising their clients frequently. It was thus an extreme case where the status and profession of the parties and their companyduct spread over a long period were wholly inconsistent with the plea raised by the defendant that he was number a partner of the plaintiff. Besides, the usefulness of precedents which only companystrue documents is naturally limited. One of the reasons given by the High Court in support of its companyclusion is that the junior partner had numberproprietary interest in the estate which has been companytributed by the senior partner as capital of the firm. Mr. Rajagopala Sastri challenges the companyrectness of this view. He companytends that the estate belonging to the senior partner has become the capital of the firm and whatever liabilities can be enforced against the capital of a firm would be enforceable in law against the asset in question. In support of this companytention, reference has been made to the decision of Robinson v. Ashton where it has been held that in the absence of any special agreement the mill which belonged to R, one of the partners, and the value of which was credited in the books of the partnership as capital of the firm was an asset of the partnership. But the main point which impressed the High Court was the distinctly inferior position assigned to the junior partner in the management of the estate which has been companytributed by the senior partner as the capital of the firm and that, in our opinion, lends strong support to the final companyclusion of the High Court. We would also point out, as we have earlier stated, that the Kaimabetta Estate never became the capital of the partnership. We have carefully companysidered all the relevant clauses in the agreement and we are unable to hold that the High Court was in error in holding that the two brothers did number become partners in the true legal sense of the term. The result is that the appeal fails and must be dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 288 of 1958. Appeal by Special Leave from the judgment and order dated December 3, 1956, of the Punjab High Court Circuit Bench at Delhi in Letters Patent Appeal No. 25-D of 1956, arising out of the judgment and order dated April 9, 1956, of the said High Court Circuit Bench at Delhi in Civil Writ No. 8-D of 1955. C. Chatterjee and R. S. Narula, for the appellant. C. Setalvad, Attorney-General for India, B. Sen and T. Sen, for the respondent 1958. December 12. The Judgment of the Court was delivered by K. DAS, J.-This is an appeal by special leave and the only question for decision is if the order of the President dated October 1, 1954, removing the appellant from service with effect from that date is invalid, as claimed by the appellant, by reason of a companytravention of the provisions of Art. 311 2 of the Constitution. The short facts are these. The appellant stated that he joined permanent Government service on April 4, 1924. In 1947, before partition, he was employed as Assistant Secretary, Frontier Corps of Militia and Scouts in the then North-Western Frontier Province, under the administrative companytrol of the External Affairs Department of the Government of India. The appellant stated that the post which be held then was a post in the Central Service, Class 11. After partition, the appellant opted for service in India and was posted to an office under the Ministry of Commerce in the Government of India in October, 1947. In December, 1949, he was transferred to the office of the Chief Controller of Imports, New Delhi, to clear off certain arrears of work. In August, 1951, he was posted as and Deputy Chief Controller of imports, Calcutta, and companytinued to work in that post till September, 1952. He then took four months leave on average pay and on the expiry of his leave on January 24, 1953, he was transferred as Section officer in the Development Wing of the Ministry of Commerce. The appellant thought that the order amounted to a reduction of his rank and lie made certain representations. As these representations bore numberfruit, he applied for leave preparatory to retirement on February 6, 1953. In that application the appellant stated Normally I am due to retire in April 1956 but I find it difficult to reconcile myself to the new companyditions of service under which I am number placed to work. I find that I would number be wasting only myself but I would also number be doing full justice to the interest of my Government and companyntry in my present environment. Under the circumstances, I pray that I may be permitted to retire from the 1st May, 1953. On February 14, 1953, the appellant amended his leave application and said that he had been informed by the I -Administrative Branch of the Development Wing that the question of permission to retire was under companysideration, because of some difficulty with regard to the inclusion in the service of the appellant the period during which he held the, post of Assistant Secretary, Frontier Corps therefore be said that he might be granted leave on full average pay for four months with effect from February 15, 1953, if the decision to give him permission to retire was likely to be postponed beyond May 1, 1953. He amended his leave application by making the following prayer Leave may be sanctioned for four months from. the 15th February, 1953, or up to the date from which I am permitted to retire whichever may be earlier . On March 10, 1953, the appellant was informed that he companyld number be allowed to retire at that stage, but the Ministry had agreed to grant him leave from February 16, 19 3, to April 30, 1953. The appellant then went on leave and on February 25, 1953, he wrote to Government to say that he was companytemplating to join the service of Messrs. Albert David Co. Ltd., Calcutta, and for that purpose he was accepting a companyrse of training in that Company for two months. In April, 1953, the appellant accepted service under Messrs. Albert David Co. Ltd., and he wrote to Government to that effect on April 6, 1953. On June 16, 1953, the appellant was charged with hav- ing violated r. 15 of the Government Servants Conduct Rules and Fundamental Rule 11. Rule 15 of the Government Servants Conduct Rules states, inter alia, that a Government servant may number without the previous sanction of Government engage in any trade or undertake any employment other than his public duties. Fundamental Rule 11 says in effect that unless in any case it be otherwise distinctly provided, the whole time of a Government servant is at the disposal of the Government which pays him. A. P. Mathur, Joint Chief Controller of Imports, was asked to hold an enquiry against the appellant on the charge mentioned above. The appellant submitted an explanation and an enquiry was held by A. P. Mathur in due companyrse. The Enquiring Officer submitted his report on September 12, 1953, in which he found that the appellant had, companytrary to the rules governing the companyditions of his service, accepted private employment without previous sanction of Government during the period when he was still in Government service. On April 14, 1954, the appellant was asked to show cause in accordance with the provisions of Art. 311 2 of the Constitution. As the whole of the argument in this case centres round this show cause numberice, it is necessary to set it out in full Sir, I am directed to say that the Enquiry Officer appointed to enquire into certain charges framed against you has submitted his report a companyy of the report is enclosed for your information. On a careful companysideration of the report, and in particular of the companyclusions reached by the Enquiry Officer in respect of the charges framed against you the President is provisionally of opinion that a major penalty, viz., dismissal, removal or reduction should be enforced on you. Before he takes that action, he desires to give you an opportunity of showing cause against the action proposed to be taken. Any representation which you may make in that companynection -will be companysidered by him before taking the proposed action. Such representation, if any, should be made, in writing, and submitted so as to reach the undersigned number later than 14 days from the receipt of this letter by you. Please acknowledge receipt of this letter. Yours faithfully, Sd. S. Bhoothalingam, Joint Secretary to the Government of India. The appellant then showed cause and on October 1, 1954, the President passed an order in which it was stated that after taking into companysideration the report of the Enquiring Officer and in companysultation with the Public Service Commission, the President found that the charge had been proved against the appellant and the appellant was accordingly removed from service with effect from that date. The appellant then moved the Punjab High Court by a petition under Art. 226 of the Constitution in which his main companytentions were a that he had numberopportunity of showing cause against the action proposed to be taken in regard to him within the meaning of Art. 311 2 of the Constitution and b that he had asked for leave preparatory to retirement and accepted service under Albert David Co. Ltd. in the bona fide belief that Government had numberobjection to his accepting such private employment. Dulat, J., who dealt with the petition in the first instance, held against the appellant on both points. He found that there was numbercontravention of the provisions of Art. 311 2 of the Constitution and on the second point, he held that on the facts admitted in the case there was numberdoubt that the appellant had accepted private employment in companytravention of the rules governing the companyditions of his service and there was little substance in the suggestion of the appellant that he had numbersufficient opportunity to produce evidence. The second point numberlonger survives, and the only substantial point for our companysideration is the alleged companytravention of Art. 311 2 of the Constitution. Mr. N. C. Chatterjee, who has appeared on behalf of the appellant, has submitted before us that the show cause numberice dated April 14, 1954, stated all the three punishments mentioned in Art. 311 2 and inasmuch as it did number particularise the actual or exact punishment proposed to be imposed on the appellant, the numberice did number companyply with the essential requirements of Art. 311 2 of the Constitution therefore, the final order of removal passed on October 1, 1954, was number a valid order. In the recent decision of Khem Chand v. Union of India 1 this Court explained the true scope and effect of Art. 311 2 of the Constitution. It was stated in that decision that the reasonable opportunity envisaged by Art. 311 2 of the Constitution included a an opportunity to the Government servant to deny his guilt and establish his innocence, b an opportunity to defend himself, and finally c an opportunity to make his representation as to why the proposed punishment should number be inflicted on him, which he can only do if the companypetent authority after the enquiry is over and after applying its mind to the gravity or otherwise of the charges proved against the Government servant tentatively proposes to inflict one of the three punishments and companymunicates the same to the Government servant. It is numberlonger in dispute that the appellant did have opportunities a and b referred to above. The question before us is whether the show cause numberice dated April 14, 1954, gave the appellant a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. Mr. N. C. Chatterjee has emphasised two observations made by this Court in Khem Chands case 1 . He points out that in companynection with opportunity c aforesaid, this Court observed that a Government 1 1958 S.C.R. 1080. servant can only make his representation if the companypetent authority after the enquiry is over and after applying its mind to the gravity or otherwise of the charges proved against the Government servant tentatively proposes to inflict one of the three punishments and companymunicates the same to the Government servant. Mr. Chatterjee emphasises the observation one of the three punishments . Secondly, he has drawn our attention to the observations made in the judgment of the Judicial Committee in High Commissioner for India and High Commissioner for Pakistan v. I. M. Lall 1 , which observations were quoted with approval in Khem Chands case 2 . One of the observations made was In the opinion of their Lordships numberaction is -proposed within the meaning of the sub-section their Lordships were dealing with sub-section 3 of s. 240 of the Government of India Act, 1935 until a definite companyclusion has been companye to on the charges, and the actual punishment to follow is provisionally determined on. Mr. Chatterjee emphasises the expression actual punishment occurring in the said observations. It is to be remembered, however, that both in I. M. Lalls case, 1 and Khem Chands case 1 the real point of the decision was that numbersecond numberice had been given to the Government servant companycerned after the enquiry was over to show cause against the action proposed to be taken in regard to him. In I. M. Lalls case 1 a numberice was given at the same time as the charges were made which directed the Government servant companycerned to show cause why he should number be dismissed, removed or reduced or subjected to such other disciplinary action as the companypetent authority may think fit to enforce, etc. In other words, the numberice was what is usually called a companybined numberice embodying the charges as well as the punishments proposed. Such a numberice, it was held, did number companyply with the requirements of sub-s. 3 of s. 240. In Khem Chands case 2 also the report of the Enquiring Officer was approved by the Deputy Commissioner, Delhi, who imposed the 1 1948 L.R. 75 I.A. 225,242. 2 1958 S.C.R. 1080. penalty of dismissal without giving the Government servant companycerned an opportunity to show cause against the action proposed to be taken in regard to him. In Khem Chands case 1 the learned SolicitorGeneral appearing for the Union of India sought to distinguish the decision in I. M. Lalls case 2 on the ground that the numberice there asked the Government servant companycerned to show cause why he should number be dismissed, removed or reduced or subjected to any other disciplinary action, whereas in Khem Chands case 1 the numberice issued to the Government servant before the enquiry mentioned only one punishment, namely, the punishment of dismissal. Dealing with this argument of the learned Solicitor-General this Court said at p. 1100 A close perusal of the judgment of the Judicial Committee in I. M. Lalls case will, however, show that the decision in that case did number proceed on the ground that an opportunity had number been given to 1. M. Lall against the proposed punishment merely because in the numberice several punishments were included, but the decision proceeded really on the ground that this opportunity should have been given after a stage bad been reached where the charges had been established and the companypetent authority had applied its mind to the gravity or otherwise of the proved charge tentatively and proposed a particular punishment. Therefore, the real point of the decision both in I. M. Lalls case 2 and Khem Chands case 1 was that numberopportunity had been given to the Government servant companycerned to show cause after a stage had been reached when the charges had been established and the companypetent authority bad applied its mind to the gravity or otherwise of the charges proved and tentatively proposed the punishment to be given to the Government servant for the charges so proved. It is true that in some of the observations made in those two decisions the words actual punishment or particular punishment have been used, but those 1 1958 S.C.R. 1080. 2 1948 L.R. 75 I.A. 225, 242. observations must, however, be taken with reference to the companytext in which they were made. Let us examine a little more carefully what companysequences will follow if Art. 311 2 requires in every case that the exact or actual punishment to be inflicted on the Government servant companycerned must be mentioned in the show cause numberice issued at the second stage. It is obvious, and Art. 311 2 expressly says so, that the purpose of the issue of a show cause numberice at the second stage is to give the Government servant companycerned a reasonable opportunity of showing cause why the proposed punishment should number be inflicted on him for example, if the proposed punishment is dismissal, it is open to the Government servant companycerned to say in his representation that even though the charges have been proved against him, he does number merit the extreme penalty of dismissal, but merits a lesser punishment, such as removal or reduction in rank. If it is obligatory on the punishing authority to state in the show cause numberice at the second stage the exact or particular punishment which is to be inflicted, then a third numberice will be necessary if the State Government accepts the representation of the Government servant companycerned. This will be against the very purpose for which the second show cause numberice was issued. Then, there is another aspect of the matter which has been pointedly emphasised by dulat, J. If in the present case the show cause numberice had merely stated the punishment of dismissal without mentioning the other two punishments, it would still be open to the punishing authority to impose any of the two lesser punishments of removal or reduction in rank and numbergrievance companyld have been made either about the show cause numberice or the actual punishment imposed. Can it be said that the enumeration of the other two punishments in the show cause numberice invalidated the numberice ? It appears to us that the show cause numberice in the present case by mentioning the three punishments gave a better and fuller opportunity to the appellant to show cause why numbere of the three punishments should be inflicted on him. We desire to emphasise here that the case before us is number one in which the show cause numberice is vague or of such a character as to lead to the inference that the punishing authority did number apply its mind to the question of punishment to be imposed on the Government servant. The show cause numberice dated April 14, 1954, stated in clear terms that the President is provisionally of opinion that a major penalty, namely, dismissal, removal or reduction, should be enforced on you. Therefore, the President had companye to a tentative companyclusion that the charge proved against the appellant merited any one of the three penalties mentioned therein and asked the appellant to show cause why any one of the aforesaid three penalties should number be imposed on him. We see numberhing wrong in principle in the punishing authority tentatively forming the opinion that the charges proved merit any one of - the three major penalties and on that footing asking the Government servant companycerned to show cause against the punishment proposed to be taken in the alternative in regard to him. To specify more than one punishment in the alternative does number necessarily make the proposed action any the less definite on the companytrary, it gives the Government servant better opportunity to show cause against each of those punishments being inflicted on him, which he would number have had if only the severest punishment had been mentioned and a lesser punishment number mentioned in the numberice had been inflicted on him. We turn number to certain other decisions on which learned companynsel for the appellant has relied. They are Jatindra Nath Biswas v. R. Gupta 1 , Dayanidhi Rath v. B. S. Mohanty 2 and Lakshmi Narain Gupta v. A. N. Puri 3 . In the case of Jatindra Nath Biswas 1 numbersecond show cause numberice was given and the decision proceeded on that footing. Sinha, J., observed, however Where there is an enquiry, number only must he have an opportunity of companytesting his case before the 1 1953 58 C.W.N. 128. 2 A.I.R. 1955 Orissa 33. A.I.R. 1954 Cal. 3.35- enquiry, but, before the punishment is imposed upon him, he must be told about the result of the enquiry and the exact punishment which is proposed to be inflicted. Mr. Chatterjee has emphasised the use of the word exact . As we have pointed out, the decision proceeded on a different footing and was number rested on the ground that only one punishment must be mentioned in the second show cause numberice. The decision in Dayanidhi Raths case 1 proceeded on the footing that if the punishment that is tenatively proposed against a civil servant is of a graver kind, he can be awarded punishment of a lesser kind but if the punishment that is tentatively proposed is of a lesser kind, there will be prejudice in awarding a graver form of punish- ment. What happened in that case was that the show cause numberice stated that in view of the Enquiring Officers findings companytained in the report with which the Secretary agreed and in companysideration of the past record of the Government servant companycerned, it was proposed to remove him from Government service in another part of the same numberice, however, the Government servant companycerned was directed to show cause why the penalty of dismissal should number be inflicted for the charges proved against him. Thus, in the same numberice two punishments were juxtaposed in such a way that it was difficult to say that the punishing authority had applied its mind and tentatively companye to a companyclusion as to what punishment should be given. It was number a case where the punishing authority said that either of the two punishments might be imposed in the alternative on the companytrary, in one part of the numberice the punishing authority said that it was proposed to remove the Government servant companycerned and in another part of the numberice it said that the proposed punishment was dismissal. In Lakshmi Narain Guptas case 2 the numberice called upon the petitioner to show cause why disciplinary action, such as reduction in rank, withholding of increments, etc., should number be taken against him. The learned Judge pointed out A.I.R. 1955 Orissa 33. A.I.R. 1954 Cal- 335. that there were seven items of penalties under r. 49 of the Civil Service Classification, Control and Appeal Rules, and the numberice did number indicate that the punishing authority had applied its mind and companye to any tentative companyclusion as to the imposition of any of the punishments mentioned in that rule. On that footing it was held that there was numbercompliance with the provisions in Art. 311 2 of the Constitution. We do number, therefore, take these decisions as laying down that whenever more than one punishment is mentioned in the second show cause numberice, the numberice must be held to be bad. If these decisions lay down any such rule, we must hold them to be incorrect. We have companye to the companyclusion that the three decisions on which learned companynsel for the appellant has placed his reliance do number really support the extreme companytention canvassed for by him, and we are further of the view that the show cause numberice dated April 14, 1954, in the present case did number companytravene the provisions of Art. 311 2 of the Constitution. The appellant had a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. This disposes of the principal point in companytroversy before us. Mr. Chatterjee referred to certain mistakes of reference in the order of the President dated October 1, 1954. Instead of referring to r. 15 of the Government Servants Conduct Rules, r. 13 was referred to. There was also a reference to para. 5 of a particular Government order which prohibited Government servants from taking up companymercial employment within two years of retirement. Mr. Chatterjee submitted that this particular order did number apply to Government servants in Class 11. We do number think that the inaccurate references were of any vital importance. In effect and substance the order of removal dated October 1, 1954, was based on the ground that the appellant violated r. 15 of the Government Servants Conduct Rules and r. II of the Fundamental Rules he accepted private employment without sanction of Government while he was still in Government service. That was the basis for the enquiry against the appellant and that was the basis for the order of removal passed against him.

Case appeal was rejected by the Supreme Court

Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. AND CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 699-703 of 1957. Appeals by special leave from the decision of the Wage Board for Working Journalists published in the Gazette of India Extraordinary Part IT, Section 3 dated May 11, 1957. 1957. Dec. 3, 4, 5, 6, 10, 11, 12, 13, 17, 18, 19, 20. 1958. Jan. 8, 9, 10, 14, 15, 16, 17, 21, 22, 23, 24, 28. K. Nambiar and G. Gopalakrishnan, for the petitioners in Petition No. 91 of 1957. -The Working Journalists Act, 1955, is ultra vires as it infringes the fundamental rights of the Petitioners guaranteed by the Constitution under Arts. 19 1 a , 19 1 g , 14 and 32. Article 19 1 a which guarantees freedom of speech and expression includes the freedom of the employment of means to exercise those rights and companysequently companyprehends the freedom of the Press. The guarantee of an abstract freedom of expression would be meaningless unless it companytemplated and included in its ambit all the means necessary for the practical application of the freedom. Freedom of the Press-A Framework of Principles-Report of the Commission on Freedom of Press in the United States of America, 1947 Report of the Royal Commission for the Press in the United Kingdom 1949 Ramesh Thapar v. The State of Madras, 1950 S. C. R. 594 Brij Bhusan v. State of Delhi, 1950 S. C. R. 605 Ex parte Jackson, 96 U. S. 727 Lovell v, City of Griffin, 303 S. 444 Orosjean v. American Press Co., 80 L Ed. 660 Schneider v. Irvington, 84 L. Ed. 155. Constitution of the United States of America, Revised and Annotated 1952 , U. S. Govt. Printing Office pp. 792, 988 . If the impugned Act is viewed as a whole it will appear that it authorised the fixation of salary of working journalists at a level which disables the running of the press. The impugned Act thus, impedes, companytrols and prohibits the free employment of the agencies of expression on that section of the Press which form its vocal chord and therefore the Act infringes the freedom companytemplated under Art. 19 1 a and is number saved by Art. 19 2 . In judging the validity of the enactment it must be tested by its operation and effect Dwarkadas Srinivas of Bombay v. The Sholapur Spinning and Weaving Co. Ltd., 1954 S. C. R. 674, 683 Minnesota Ex Rel. Olson, 75 L. Ed. 1357 . The Act also violates the right guaranteed by Art. 19 1 g of the Constitution as it places unreasonable restraint on the petitioners freedom to carry on business Chintaman Rao v. The State of Madhya Pradesh, 1950 S. C. R. 759 cited with approval in Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh, 1954 S. C. R. 803 and Ch. Tika Ramjidas v. State of U. P. 1956 S. C. R. 393 The State of Madras v. V. G. Row, 1952 S. C. R. 597, 606-607 The State of West Bengal v. Subodh Gopal Bose, 1954 S. C. R. 587 Virendra v. State of Punjab, A. 1. R. 1957 S. C. 896 . The law imposing restrictions on fundamental rights must be reasonable number only in its substantive companytent but in its procedural companytent as well Dr. N. B. Khare v. State of Delhi, 1950 S. C. R. 519 Ourbachan v. State of Punjab, 1952 S. C. R. 737 . The relevant criteria for the fixation of wages were number laid down in s. 9 1 of the Act. The criteria for the fixation of wages laid down in the Act were only relevant for fixing minimum rates of wages, though the word minimum used in the Bill 13 of 1955 as introduced in the Rajya Sabha was subsequently dropped before the Bill became the Act. It was number made incumbent on the Wage Board to companysider the capacity of industry to pay as an essential criterion or a major factor in fixing wages. The other circumstances, viz., any other circumstances which to the Board may seem relevant mentioned in s. 9 1 of the Act was left to be determined by the Board on its subjective satisfaction which companyld number be companytrolled by any higher authority. The Act thus enables the Board to exercise arbitrary powers in regard to the same and that is unreasonable by itself Thakur Raghbir Singh v. Court of Wards, Ajmer, 1953 S. C. R. 1049 R. M. Seshadri District Magistrate, Tanjore, 1955 1 S. C. R. 686 . The procedure to be followed by the Wage Board was number laid down in the Act c. f. The Bombay Industrial Relations Act, 1946, as amended and it Was open to the Board to follow any arbitrary procedure disregarding the principle of audi alteration parted and as such the Act is unreasonable. The Wage Board was number exercising legislative functions but functions, which were quasi-judicial in character. The intention of the Legislature was to assimilate the Wage Board as much as possible to an Industrial Tribunal companystituted under the Industrial Disputes Act, 1947. If it is held that s. 11 of the Act is an enabling provision, and gave the Board the arbitrary discretion whether to exercise the same powers and follow the same procedure of an Industrial Tribunal or any procedure it liked, it is unreasonable. The provisions of ss. 2 f , 3, 4, 5, 8 to 11, 12, 14, 15 and 17 place restraints on newspaper establishments which would have the effect of destroying the business of the petitioners. The right to impose restrictions on the right to carry on business under Art. 19 6 companyferred numberpower on the Legislature to destroy the business itself Stone v. Farmers Loan and Trust Co., 29 L. Ed. 636 Municipal Corporation of the City of Toronto, v. Virgo, 1896 A. C. 88 G.,for Ontario v. A. G. for the Dominion, 1896 A. C. 348 . The Act is discriminatory in character and violates Art. 14 of the Constitution. It gives the working journalists a more favoured treatment as companypared to other employees in several ways, statutory benefits by ,way of retrenchment companypensation, gratuity, limitation of the hours of work and leave, number enjoyed by others in companyparable employments. It is restricted in its scope to a selected section of newspaper employees. it gives them the benefit of the wage fixation by devising machinery in the form of a Pay Commission without the existence of any industrial dispute, without prescribing the major criterion of capacity to pay to be taken into companysideration Britannia Bldg. and Iron Co. Ltd., 1954 1 L. L. J. 651, 654 Union Drug Co. Ltd., 1954 1 L. L. J. 766, 767 Report of the Committee on Fair Wages, pp. 13-15, paras. 21, 23 and 24 or following the procedure prescribed by the Industrial Disputes Act, 1947, even in disregard of principles of audi alteram partem. The employers of the newspaper establishments are subjected to discriminatory treatment by the Act in that 1 they are singled out from all other industrial employers who are companyered by the ordinary law regulating industrial relations under the Industrial Disputes Act, 1947 ii they have been saddled with new burdens in regard to a section of their workers in matters of gratuity, companypensation, hours of work and wages iii s. 12 of the Act makes the decision of the Wage Board binding only on the employers and number on the employees and iv s. 17 provides for recovery of money from employers only and number from employees in the same manner as an arrear of land revenue. The classification made by the impugned Act is arbitrary and unreasonable in so far as it removes the newspaper employers vis-a-vis the working journalists from the general operation of the Industrial Disputes Act, 1947. The right to apply to Supreme Court for enforcement of a fundamental right under Art. 32 is itself a fundamental right guaranteed by the Constitution Ramesh Thapar V. The State of Madras, 1950 S. C. R. 594, 597 . The right to claim a writ of certiorari against a decision is dependent on the fact that the impugned decision on its face is a speaking order . Rex v. Northumberland Compensation Appeal Tribunal, Ex parte Shaw, 1951 1 K. B. 71 1, affirmed by the Court of Appeal in 1952 1 K. B. 338 A. K. Gopalan v. The State of Madras, 1950 S. C. R. 88, 243 . The Act companytravenes Art. 32 of the Constitution because it does number provide for giving any reasons for the decision to be made by the Wage Board. Decision of the Wage Board is illegal and void because 1 the Act under which it is made was ultra vires Mohd Yasin Town Area Committee of Jalalabad, 1952 S. C. R. 572 Himatalal Harilal Mehta v. State of U. P., 1954 S. C.R. 1122 ii the decision itself infringes the fundamental rights of the petitioners Bidi Supply Co. v. Union of India, 1956 S. C. R 267 and iii the decision is ultra vires the Act Pandit Ram Narain v. State of U. P., 1956 C. R. 664 . The reconstitution of the Board oil the retirement of one of its members was ultra vires and unauthorised by the Act as it stood at the time, the Rules having been published on July 10, 1956. The procedure as to decision by majority is number warranted by the Act, and the Rule which sanctioned such a procedure is ultra vires the Act. The procedure followed by the Board offended the principles of natural justice and is therefore invalid. It did number follow the procedure of ail Industrial Tribunal even though on two occasions, viz., when the questionnaire was issued and when a number of newspapers failed to reply to the questionnaire, the Board asserted that it had the powers of an Industrial Tribunal. Neither in the questionnaire number at any time thereafter were companycrete proposals submitted by the Board to the newspaper establishments. Its decision is invalid as numberreasons are given for it number does it indicate what companysiderations prevailed with the Board in arriving at it. The classification of newspapers on the basis of gross revenue is companytrary to the provisions of the Act. In the gross revenue which is earned by newspaper establishments advertisement revenue ordinarily forms a large bulk of such revenue and unless the proportion of advertisement revenue to the gross revenue were taken into companysideration it would number be possible to form a companyrect estimate of the financial status of a newspaper establishment with a view to its classification. Profit and loss of newspaper establishment should. be the proper test and if that test were adopted it would give an altogether different picture. Until number whenever the wage had to be fixed for an industry the relevant companysideration had always been the capacity of the industry to pay. The wages which are numbermally fixed after a general inquiry applicable to the whole industry have always been minimum wages. Assessment of a wage level and scale only by reference to gross revenue was erroneous. The decision suffers from another major defect in companyputing gross revenue number for each newspaper but companylectively for the Organization which might be running a number of papers. The result of this mode of calculation was that an organisation publishing a large number of papers might well fall within the top class by virtue of its gross revenue although each one of the papers taken individually might be running at a loss. This process of companysidering the multiple units or a chain of newspapers as one establishment has affected the petitioners adversely and is unauthorised by the Act. The Wage Board was number authorised by the Act to fix the wages of working journalists in relation to the whole industry but companyld do so only in respect of individual establishments as will appear from the definition of a newspaper establishment given in s. 2 d of the Act. An establishment can only mean an establishment and number a group of them, even though such an individual establishment may produce or publish one or more newspapers. Pravat Kumar W. T. C. Parker, A. 1. R. 1950 Cal. 116, 118 S. R. V. Service Co. Ltd. v. State of Madras,A. 1. R. 1956 Mad. 115, 121-122 . The decision of the Wage Board is illegal as it does number disclose that the capacity to pay of the individual establishment was ever taken into companysideration. There is numberhing on record to suggest that both as regard rates of wages and the scales of pay the Wage Board ever took into account as to what the impact of its decision would be on the capacity of the industry to pay either as a whole or region-wise. Even as regards the fixation of wages the Wage Board does number seem to have taken into account the other provisions of the Act which companyferred upon the working journalists other benefits which would affect the paying capacity of the newspaper establishments. Furthermore the working Journalists companystitute only 1/5 of the total staff employed by various newspaper establishments. If the companyditions of service of working journalists were to be improved by the Wage Board the other employees who form 85 were bound to be restive and likely to raise industrial disputes for betterment of their companyditions of service. This would impose an additional financial burden on the newspaper establishments and would substantially affect their capacity to pay. The retrospective operation of the decision of the Wage Board was also calculated to impose financial burden on the newspaper establishments. The Wage Board exceeded its power in giving retrospective operation to its decision. The Wage Board had acted illegally in fixing scales of pay for a period of three years when the Act does number give it such authority. Further the Wage Board was handicapped for want of Cost of Living Index. M. Munshi, L. K. Jha, S. S. Shukla, Balbhadra Prasad Sinha and R. J. Joshi, for the petitioners in Petitions Nos. 99 to 101 of 1957. The freedom of the Press is a fundamental personal right of the petitioners. It rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public. Such freedom is the foundation of a free government and as such enjoys a preferential position among the companystitutional guarantees. This is a preferred right . The purpose of the companystitutional guarantee of free speech is to prevent public authority from assuming the guardianship of the public mind Thomas v. Collins, 89 L. Ed. 430 The Supreme Court and the right of Free Speech and Press-Annotation in 93 L. Ed. 1151 Beauhairnais v. Illinois, 96 L. Ed. 919, 943dissenting opinion of Douglas, J. . While the Press enjoys numberimmunity from the application of the general laws relating to industrial relations, an Act or any of its provision would violate the right of free speech and expression if it lays a direct and preferential burden on the freedom of the Press if it has a tendency to curtail circulation and thereby narrow the scope of disseminating information if it fetters the petitioners freedom to choose the means of exercising their right to freedom of expression and if it is likely to undermine the independence of the Press by having to seek Government aid. The Act singles out the Press for levying upon it a direct burden which is excessive and so restrictive as to be prohibitive. It begets a class of workers whose benefits and rights are given a preferential enforceability parallel to that of a public debt. The impugned Act by s. 9 leaves, in violation of the Constitution, the fixation of wages to an agency invested with arbitrary and uncannily power to impose an indeterminate burden on the wage structure of the Press, such employer and employee relations at its discretion as it thinks fit, and such burden and restrictions for such time as it thinks fit. The Act and the decision of the Wage Board, which under the Act becomes enforceable as a part of it, have imposed an excessive and prohibitive burden which will have a tendency to curtail the revenue and restrict circulation which is the means of imparting information and giving free expression to speech, impose a penality on the petitioners right to choose the instruments for its exercise or to seek alternative media of expression, drive the Press to seek Government aid in order to survive and prevent newspapers from being started. The Act has created an impossible situation in which the petitioner companyld only say I cannot live, I cannot die and I cannot companymit suicide . Even if the petitioners were to close down their business and dispose of all their assets they would number be in a position to meet all the liabilities. The Constitution does number permit any abridgment of the fundamental right of freedom of speech and expression unless it falls within the categories of restrictions mentioned in Art. 19 2 . When the permitted restrictions were incorporated special care was taken by the framers of the Constitution to see that freedom of speech was protected and that the right should number be at the mercy of the legislature which might want to impose excessive burden on the Press. It is for this reason that the Public interest restriction in Art. 19 6 appearing against the fundamental right in Art. 19 1 g is number to be found in Art. 19 2 .A distinction has to be drawn between the Constitution of U. S. A. and India. What is known as the due process of law in America has been specifically omitted from the Constitution of India. In U. A. the due process clause enabled the Supreme Court to read into the Constitution any doctrine restrictive of the fundamental right, e. g., in the 1930s the U. S. Supreme Court had held that statutory fixation of minimum wage in the newspaper industry was violation of fundamental rights of free speech, but after some years the same Court acting under the discretion given by the due process clause took companynizance of altered circumstances in labour relations and held that the imposition of a minimum wage on the Press did number violate the fundamental right Constitution of the United States of America, Revised and Annotated 1952 , U. Govt. Printing Office, pp. 792, 988 . The Indian Constitution does number permit restriction of freedom of speech except under the limitation set by Art. 19 2 . Restrictions that companyld be held intra vires in respect of other industries would still be ultra vires under Art. 19 1 a of the Constitution in respect of the Press industry because of the special privilege of right of free speech. Any direct restriction placed by Government on the Press would be violation of Art. 19 1 a , and therefore even if the Government had sought to impose a minimum wage for the Press by direct legislation it would have been equally unconstitutional. This illegality, however, would number attach to the finding of an adjudicatory machinery such as was companytemplated under the Industrial Disputes Act, 1947. Where Government provided a media for the settlement of disputes and claims between citizen,,, and citizens there was numberquestion of any companytravention of fundamental rights which were protected against governmental encroachment. The various sections of the Act have the effect of placing restrictions on the press which would in evitably have the effect of restricting the freedom of speech and expression in companytravention of Art. 19 1 a . The Act has created a privileged class of working journalists above the other workers either in this companyntry or anywhere also, above companytract and above the law of the land. The Wage Board has exceeded its authority and has arrived at companyclusions and findings which restricts the fundamental rights of the petitioners. The Act authorizes the Central Government to companystitute a Wage Board for fixing rates of wages. This does number authorize the Board to enter into the wider question of determination of scales of pay. Fixing companyld only mean fixing with reference to a point of time. The Legislature did number companytemplate that single wage should determine the wage scales, for all time to companye The whole framework of the Act was based on minimum wage and the sudden removal of the word minimum has caused all these difficulties. Rates of wages and number scales of wages, the Wage Board was to companysider. The term rates of wages applies only to a particular point of time. Sinha, J.-Section 9 2 of the Act says that the Board may fix rates of wages for time work and for piece work . They cannot have any reference to scales. The same words in the statute mean the same thing. They cannot mean different things in different sections. Yes. These words are used again and again in the Act. In the Minimun Wages Act, the Payment of Wages Act, etc., where the same expression rates of wages is used to indicate a wage fixed in time and amount. The Wage Board has exceeded its power in fixing the scales of wages and increments and thereby places a fetter on the Press, number companytemplated by the Act. The Act and the Wage Board have disregarded all companysiderations which according to authority and law were germane to the proper fixation of wages without placing restrictions on fundamental rights. Even the Minimum Wages Act provides for periodical reviews, and proposals for minimum wages should be numberified for inviting the opinions. The decision of the Wage Board has been arrived at in violation of the procedure prescribed by s. 11 of the impugned Act and in violation of the rules of natural justice and is thus illegal. The Wage Board has been unreasonable in basing wages on revenue from all sources rather than on the revenue which the working journalists companytributed by their labour. Classification of newspapers on the basis of the gross revenue of all papers run by an Organisation and fixation of wages on such classification has led to results which are absurd and discriminatory in effect and ignore the principle enunciated by the Act itself. As an example, take the case of a paper with small circulation in Kutch which is placed in a higher category than a paper in Bombay simply because the former is part of a larger Organisation. The Wage Board has number taken care to remain within the terms of the impugned Act, namely, that the wages should be based on regional companysideration. The Wage Board has given its decision in companyplete disregard of the newspapers capacity to pay. it did number take proper care in framing its decision. Lack of such care in framing its decision makes it unreasonable and hence restrictive of fundamental rights. The Wage Board has exceeded its authority by giving retrospective effect to the wage structure devised by it. This is invalid and ultra vires the Act. Section 12 of the Act creates one-sided obligation by making decision of the Board binding only on the employers. Such one sided obligation can be appropriate when a minimum subsistence wage is fixed but cannot attach to payment of wages at luxury levels. This unilateral obligation on the employer leaves it open to the journalists to agitate for an increase in wages before an industrial tribunal, but it precludes the employer from seeking any alteration under any circumstances. The Act has provided numbermachinery for a review or revision of the wage structure even if circumstances changed. Restrictions on fundamental right to do business arise because the Act and the decision of the Wage Board have the effect, firstly, of companysiderably increasing the operating companyt and, secondly, of fettering the companyditions of service or the terms of the companytract of service between the employer and the employee. By disregarding the disparity in regional companyditions the Wage Board has discriminated between paper and paper, employer and employer and employee and employee. P. Sinha, Gurbachan Singh, Harbans Singh and R. Patnaik, for the petitioners in Petition No. 103 of 1957. S. Shukla, for the petitioners in Petitions Nos. 116 to 118 of 1957. C. Setalvad, Attorney-General for India, B. Sen and R. Dhebar, for respondent No. I The Union of India in all the Petitions. Before going into the merits of the case it is necessary to examine the background and the perspective in which the Act was enacted, the careful inquiry which preceded its enactment and the companyditions which the Act was designed to meet. Report of the Press Commission, dated July 14, 1954 Report of the Inquiry Committee companystituted in 1947 Report of the C. P. and Berar Press Inquiry Committee companystituted on March 27, 1948 . The Act does number infringe any of the fundamental rights of the petitioners guaranteed under Arts. 19 J a , 19 1 g , 14 and 32 of the Constitution. The functions of the Wage Board companystituted tinder s. 8 of the Act were number judicial or quasi-judicial in character the fixation of the rates of wages by the Wage Board was a legislative act and number a judicial one the Wage Board arrived at its decision on a companysideration of all the criteria laid down in s. 9 1 of the Act for fixation of wages and the material as well as the evidence placed before it a large number of the decisions of the Wage Board was unanimous under the Act the Wage Board has the power and authority to fix the scales of wages also and to give retrospective operation to its decision. The financial position of the petitioners was number such as to lead to their companylapse as a sequel to the enactment of the provisions of the Act and the decision of the Wage Board. Regarding alleged infringement of Art. 19 1 a , I submit that the legislation should be examined in order to determine whether it is legislation directly in respect to the fundamental rights mentioned in the Constitution. The principle enunciated by the Supreme Courtney several decisions is that when a legislation is attacked on the round of companytravention of a fundamental right, the Court must first examine whether it directly deals with the fundamental right. If the legislation is number one directly with respect to a fundamental right numberfurther question arises, A. K. Gopalan v. The State of Madras, 1950 S. C. R. 88, per Kania, C. J., Ram Singh v. State of Delhi, 1951 C.R. 451, 455 . The Supreme Court has also in this companynection invoked the doctrine of pith and substance . The fact that a legislation, directed in its path and substance to regulate gambling, incidentally placed certain restrictions on business was held number to make the law violative of the fundamental right to carry on business. State of Bombay v. R. M. D. Chamarbaugwala, 1957 S. C. R. 874 . The provisions of the Act are clearly designed to regulate the companyditions of service of journalists and number the freedom of expression or speech, and therefore numberquestion of the infringement of fundamental right under Art. 19 1 a arises. The companytention of the petitioners based on American decisions, e. g., Minnesota Ex Rel. Olson 75 L. Ed. 1357 cannot be sustained. First, the provisions of the American Constitution are substantially different secondly, the American Courts have adopted the same view as our Supreme Court in A. K. Gopalan v. The State of Madras, 1950 S. C. R. 88, and other cases. The Associated Press The National Labour Relations Board, 81 L. Ed. 953,960- 966 Mabee v. White Plains Publishing Co., 90 L. Ed. 607, 613-where application of U. S. Fair Labour Standards Act, 1938, to newspaper undertakings was held number to infringe freedom of speech Oklahoma Press Publishing Co. v. Walling, 90 L. Ed. 614, 621 Murdock v. Pennsylvania, 87 L. Ed. 1292 . The restrictions under Art. 19 6 on the freedom to carry oil business under Art. 19 1 g will number cease to be reasonable even if such restrictions resulted in prohibition of carrying on business in certain cases. Such restrictions can be imposed if they are in the interest of the general public. Having regard to the Report of the Committee on Fair Wages appointed by the Government of India and the practice prevailing in other companyntries, the Act has number adopted any unusual procedure in companystituting a Wage Board for the determination of rates of wages of working journalists. The Act follows the recommendations of the Press Commission for the most part. The only important deviation it has made is that whereas the Press Commission had recommended fixation of a minimum wage, the Act provides for fixation of all wages. Under the directive principles of State Policy Art. 43 of the Constitution the goal was number merely a minimum wage but a fair wage and a living wage. We have to march to that goal. Gajendragadkar, J.-True, but in marching to that goal we have to companysider the capacity to pay. Yes, capacity to pay region-wise and capacity to pay companyntry-wise but number capacity to pay unit-wise, that is, according to each newspapers capacity. The Court has to companysider what the Legislature intended. The term minimum wage has been understood in two different senses, the first being an industrial minimum wage and the second a statutory minimum wage . Is it an industrial minimum , or is it a statutory minimum ? An industrial minimum is a subsistence wage that has to be paid by any unit if it wishes to exist a statutory minimum is someting more than a subsistence level wage and may be any level which the Legislature thinks fit to impose. The statutory minimum wage need number be companyfined to fixing a single determinate amount but can legitimately include the fixing of a scale of wage. Wages has been defined very companyprehensively in s. 2 rr of the Industrial Disputes Act, 1947, and in the Third and Fourth Schedule to that Act wages are stated to include the period and mode of payment. Sinha, J. Does it refer to scales ? Wages include in its ambit the scales. It was on this basis that various Industrial Tribunals have fixed scales. Even the Supreme Court decided that way. Sinha, J. My point is whether the question has been raised and decided or has it been only assumed ? The matter, so far as I know, has number been raised and decided. It has only been assumed. Wages in ss. 9 and 8 of the Act has been used in a companyprehensive sense. The companyrect approach is to see what the term wages means and to see whether the word rates cuts down that meaning. In order to companystrue the section. it will number be legitimate to see what happened in the Legislature, what was said in the Bill and how the word Minimum was dropped. One of the criteria specified in s. 9 1 of the Act is the prevalent rates of wages for companyparable employments. This has numberreference to minimum wage Nellimarla Jute Mills, 1953 1 L. L. J. 666 . It shows that s. 9 1 companytemplates fixation of rates of wages which are higher than the bare subsistence or industrial minimum wage. The criterion the circumstances relating to newspaper industry in different regions of the companyntry in s. 9 1 can have numberother meaning than the capacity to pay region-wise. The discretion given to the Wage Board to companysider any other circumstances which to the Board may seem relevant is numberdoubt subjective. It is the Board which has to decide what is relevant and what is number. Such power is neither unreasonable number arbitrary. The general policy with regard to the Wage Board was that they were given the widest discretion and there was numberquestion of their discretion being fettered. Even if the Legislature left the fixation of wage to the Board without laying down any criteria it would have been a companypetent legislative Act because of the nature of the Board. In fact, three criteria have been laid down in s. 9 1 of the Act. Having regard to the variety and companyplexity of the matters involved it was number possible for the Legislature itself to visualise or indicate the various circumstances which might be relevant. There is numberhing unusual or arbitrary in leaving to the Wage Board a wide discretion in the matter of its procedure. In K. the Central Co-ordinating Committee under the Wage Councils Act, 1945, and the Agricultural Wages Board under the Agricultural Wages Regulation Act, 1924, are authorised to regulate their own proceedings. No formal procedure has been prescribed for Wage Boards in Australia. The inclusion of proofreaders in the definition of Working Journalist in s. 2 1 of the Act is number unreasonable. Proof-readers occupy a very important position in the editorial staff of a newspaper Kemsley- Manual of Journalism, p. 337, B. Sen Gupta-Journalism as a Career 1955 Edn. . There is numberhing unreasonable in the period of numberice for retrenchment in s. 3 2 of the Act. Halsburys Laws of England, 2nd Edn., Vol. 22, p. 150, para. 249 foot-note e . The retrospective operation of companypensation in certain cases given by s. 4 of the Act is designed to meet the few cases of retrenchment by the management anticipating the implementation of the recommendation of the Press Commission and cannot be said to be unreasonable. There is numberhing unusual in s. 5 of the Act which provides for a gratuity. Gratuity is recognised by Industrial Tribunals Ahmedabad Municipal Corporation, 1955 L. A. C. 155, 158 Nundydroog Mines Ltd., 1956 L. C. 265, 267 . Under the law of various companyntries payment of indemnity to an employee who voluntarily resigns is provided for Legislation for Press, Film and Radio in the World Today 1957 UNESCO publication at p. 404 Collective Agreement between the Geneva Press Association and the Geneva Union of Newspaper Publishers dated April 1, 1948 . Even in India Labour Courts have awarded gratuity on voluntary resignation Cipla Ltd., 1955 11 L. L. J. 355, 358 Indian Oxygen and Acetylene Co. Ltd., 1956 1 L. L. J. 435 . The hours of work provided in s. 6 of the Act cannot be said to be unreasonable having regard to the nature of work to be done by a working journalist. Such hours of work are fixed by s. 54 of the Factories Act, 1948, See also, Mines Act, 1952 Shops and Establishments Acts of different States in -India . Sections 8 to II deal with the companystitution of the Wage Board and the fixation of rates of wages by the Board. The Wage Board was to companysist of an equal number of representatives of employers and employees and an independent chairman. There is numberhing unreasonable in the companystitution of the Board. The principles for the guidance of the Wage Board in the matter of fixation of wages have been laid down by the Act. It cannot, therefore, be said that these provisions are unreasonable. Section 17 of the Act relates only to the mode of recovery of money from an employer and does number impose any financial burden therefore it companyld number be said that it infringes Art. 19 1 g . Article 14 of the Constitution does number forbid reasonable classification for the purpose of legislation Budhan Choudhry v. The State of Bihar, 1955 1 S. C. R. 1045, 1048 . The work of a journalist is peculiar and demands a high degree of general education and some kind of specialised training Report of the Press Commission, para. 512 Legislation for Press, Film and Radio in the World Today 1951 UNESCO publication at p. 403 . The working journalists are a class by themselves apart from the other employees of the newspaper establishments and also employees in other industries. They can be singled out for the purpose of -ameliorating their companyditions of service. There would be numberdiscrimination if special. legislation is enacted for the benefit of this class and a special machinery is created for fixing the rates of its wages different from the machinery for other workmen. Even if the Act be companysidered as a social welfare measure the State can only make a beginning somewhere. Such a measure need number be all embracing. There is numberhing unreasonable in s. 12 of the Act which makes the decision of the Board binding on the employers only. A provision which has for its object the protection of employees cannot be said to be repugnant to Art. 14 on the ground that it discriminates against the employers South Bank Ltd. v. Pichuthayappan, A. 1. R. 1954 Madras 377 . Section 17 of the Act is for the benefit of the working journalists It enables him to realise the money due from an employer under the Act. Similar provision is to be found in s. 33C of the Industrial Disputes Act. There is numberhing discriminatory in a provision which governs employees in other industries being extended to working journalists. The object sought to be achieved by the Act is the amelioration of the companyditions of service of working journalists. The classification is based on intelligible differentiate which distinguish them from other employees of the newspaper establishments and also in other industries. These differentiae have a rational basis. The legislation amply fulfils the companyditions of permissible classification. It is fantastic to companytend that the Act infringes Art. 32 of the Constitution. The Act does number prohibit the Wage Board from giving a reason for its decision. No question therefore arises of the infringement of the fundamental right of the petitioners under Art. 32. Assuming any provision of the Act is void then the question will be whether it is severable. If it is severable then the whole Act will number be void but only the section. Similarly, if the companyrt finds that the Act is companystitutional but a decision of the Wage Board is ultra vires the Act or unconstitutional the Court will strike down such decision. That will number affect the validity of the Act. State of Bombay v. F. N. Balsara, 1951 S. C. R. 682 State of Bombay v. The United Motors India Ltd., 1953 S. C. R. 1069 and R. M.,D. Chamarbaugwala v. The Union of India, 1957 S. C. R. 930 . In regard to the decisions of the Wage Board the Court has to companysider first, whether the decisions are intra vires the Act-since an authority to whom the power of subordinate legislation is delegated cannot act companytrary to the statute, and secondly, do the decisions being a part of the Act in any way companytravene the Constitution. These are the only questions which arise in regard to the decisions of the Wage Board. No question arises of its procedure being in accordance with the principles of the natural justice number of the application of audi alteram partem. Bhagwati, J.-They say it is companytrary to the principles of natural justice-audi alteram partem. That is a maxim about which we have heard so much. It has, numberapplication to this case of delegated legislation. Bhagwati, J.-Can it number be urged, having regard to s. 11, that the Legislature did number companytemplate that the Wage Board was to function as delegated authority because it gives the choice of the provisions of the Industrial Disputes Act being followed by the Board ? No, even for a subordinate legislative authority there are procedures to be followed for arriving at certain companyclusions. Kapur, J.-Is it number necessary to hear everybody who may be affected by the decisions of the Board ? No question of hearing arises. It is a question of a subordinate legislative authority gathering such information as it wants and it is obliged to take into companysideration all the relevant circumstances. Certiorari and prohibition lie only in respect of judicial or quasi-judicial acts. Halsburys Laws of England, 3rd Edn. Vol. 11, p. 55, para. 114 . The principle audi alteram partem also applies only to judicial or quasi- judicial proceedings. Patterson v. Dist. Commr. of Accrator, 1948 A. C. 341 . For a distinction between judicial and legislative functions, See Cooleys Constitutional Limitations, 8th Edn. Vol. 1, p. 185 Prentis v. Atlantic Coast Co. Ltd., 211 U.S. 210, 226-227, Per Holmes J. Mitchell Coal Co. v. Pennsylvania, 57 L. Ed. 1479, 1482 Louisville and Nashville Railroad Co. v. Green Garrett, 58 L. Ed. 229, 239 . The functions of the Wage Board in the United Kingdom have been characterised by writers as legislative in character. Robsons Justice and Administrative Law, 3rd Edn. p. 608 Griffiths Principles of Administrative Law, p. 39 Barbara Wootton, Social Foundations of Wage Policy, Modern methods of Wage determination, p. 88 . This is also the case in Australia. Federated Saw Mills Case, 8 C. L. R. 465 Australian Boot Trade Employees Federation v. Whybrow and Co., 10 C. L. R. 266, 289, 317, per Isaacs, J. . The Labour and Industry Act, 1953, of Victoria Australia in s. 39 2 gives statutory recognition to the decisions in 8 C. L. R. 365 and 10 C. L. R. 266, by providing that every determination shall have force, validity and effect as if enacted in the Act. The very companystitution of the Wage Board under the impugned Act, with an equal number of representatives of employers and employees with an independent chairman is against its being judicial or quasi- judicial in character, for, numberman should be judge in his own cause. Franklin v. Minister of Town and Country Planning, 1948 A. C. 87, 103 . It is incorrect to infer that once the Wage Board is companystituted under s. 8 of the Act the power of the Government under the Act is exhausted and numberhing more can be done. The power to companystitute the Board can by virtue of s. 14 of the General Clauses Act, 1897, be used from time to time as the occasion demands. There was numberhing wrong in the Central Government reconstituting the Board on the resignation of Shri K. P. Keshava Menon. The decision by majority is provided by Rules framed by the Central Government under s. 20 of the Act which became a part of the Act. Hence a decision by a majority in companyformity with the Rules under the Act cannot be impeached. In examining the decisions of the Wage Board the Court will attach to them the same companysideration and weight as to a decision by a legislature. Pacific States Box and Basketing Co. v. White, 80 L. Ed. 138 296 U. S. 170 . Under s. II of the Act the Wage Board may exercise the powers and follow the procedure laid down under the Industrial Disputes Act, 1947. There is numberhing to warrant the provision being read as obligatory or mandatory. The provisions of the Industrial Disputes Act are basically enacted for the adjudication of disputes between two parties and they are on their face inapplicable to the Wage Board. That is precisely why the Board was given the option to exercise some of the powers companyferred by the Industrial Disputes Act or to follow procedures prescribed in that Act. It is number incumbent under the Act on the Wage Board to give any reasons for its decisons. The Board would be perfectly within its right if it chose number to give any reasons. While judging the reasonableness of the wage structure for the whole industry it would be entirely fallacious to see how it hit a particular newspaper or a unit. Multiple units or chains companyld be classified on the basis of the total gross revenues of all the companystituent units because economies would be possible in group operations resulting in the reduction of the companyt of production. There is numberhing in the Act which prohibits the Wage Board from grouping into chains or multiple units. Further, there is numberhing in the Act to prohibit the treating of several newspaper establish- ments publishing one or more newspapers though in different parts of the companyntry as one establishment for fixing rates of wages. Some sort of classification was inevitable when the newspaper establishments all over the companyntry had to be companysidered for fixing the rates of wages. If the Wage Board adopted gross revenue as a workable basis for classification there was numberhing wrong and that fact companyld number vitiate its decision. Profits of newspaper establishments were vague and difficult to ascertain as many things are mixed up in calculating profit. It would be dangerous to go by the profit and loss of individual companycerns to ascertain their capacity to pay. Even the Bank Award has taken the turnover or the aggregate resources as the basis of the classification. The basis of gross revenue was the only proper and companyvenient method of ascertaining the actual status of a newspaper establishment for fixing a wage structure. Wage-structure recommended by the Board would show that companypared with the scales and salaries obtaining number in many of the newspaper establishments the scales given by the Board were number exorbitant or unreasonable. What is to be companysidered is the industry region-wise and number individual units. It may be that individual units may suffer hardship or even go out of existence but that would number be a relevant companysideration. Gajendragadkar, J.-If the decisions are to be attacked effectively under Art. 19 1 g , petitioners have to show that A or B or C class of paper will cease to exist, or, taken as a class they cannot bear the burden. That is the way the matter should be approached. The figures in individual statements of the petitioners furnish numberevidence whatsoever of the unreasonableness of the wage fixation. The decision is given retrospective effect from the date of companystitution of the Board. The Act itself in s. 13 companytemplates interim relief. Instead of granting any interim relief the Board decided to give retrospective effect to its decision. V. Viswanatha Sastri, S. Viswanathan, B. R. L. lyengar, J. Dadachanji, S. N. Andley and Rameshwar Nath, for respondent No. 3 in Petition No. 91 of 1957. The balance sheets and profit and loss accounts of the petitioner companypany for several years when analysed show that with numbermally prudent management the earnings of the Indian Express group of newspapers admit of payment to working journalists on the scale fixed by the Wage Board and the decision of the Wage Board was legally valid and just having regard to the several factors to be taken into companysideration in fixing a fair wage. C. Chatterjee, A. S. R. Chari, S. Viswanathan,A. N. Sinha, J. B. Dadachanji, S. N. Andley and Rameshwar Nath, for the Indian Federation of Working Journalists in all the Petitions, and for the Delhi Union of Journalists in Petition No. 103 of 1957. It is open to Parliament to delegate to the Wage Board the power to legislate with regard to certain subjects. The so-called decision of the Wage Board was a valid exercise of such power by a subordinate legislative body functioning under specified companyditions under Parliamentary mandate with the limits prescribed by the Constitution. Even if the Wage Board is held to be a quasijudicial body, it acted according to the principle of audi alteram partem and numberprerogative writ should be issued to disturb findings arrived at by such a body. K. Nambiar, in reply. The Wage Board was number intended to exercise powers of legislation but those of a judicial nature. Under s. 10 of the Working Journalist,-, Act the Board has to make a decision, and this term has been used in several enactments to indicate a determination by a judicial tribunal. Under s. 8 the decision of the Board has to be made in accordance with the provisions of the Act and therefore the Board had the function of applying the law and number making a law. The Wage Board is required under s. 11 to adopt the law procedure as is adopted by Industrial Tribunal.-,. The decision of the Board is declared to be binding only on some persons and number all. It can be executed in the same manner as the award of an Industrial Tribunal. Its character is identical to that of an award made by an industrial tribunal and the Supreme Court has held that a tribunal does number exercise legislative functions. Parliament did number intend to companyfer any powers of subordinate legislation on the Board. This is clear from the rules of business of the Lok Sabha read with the Statement of Objects and Reasons to the Bill. In, the memorandum regarding delegated legislation appended to the Bill the companystitution of the Wage Board in the matter of fixation of wages had number been shown as a piece of delegated legislation. The Rules of Procedure and Conduct of Business in Lok Sabha 1957 -Rule 70 . The decision of the Wage Board was number to be laid before both the Houses of Parliament. This would have been so had the fixation of wages by the Board was a delegated legislation laid Rule 317 . The Wage Board was number companystituted as sub-legislative authority. The question is number what the legislature companyld have enacted but whether by virtue of powers of the Wage Board under the Act as enacted, it is a legislative body or a tribunal with adjudicators functions The Board does number possess any powers of delegated legislation, It has been given all the trappings which were necessary to characterize it as a judicial body. In interpreting the Act the Court is entitled to take into companysideration the surrounding circumstances, the object of the legislation and also whether a particular term used in legislation was companysidered by the legislature at the time of enactment. The companyrt ought to take into companysideration the entire background and the effect of dropping of the term minimum from the enactment. The Press Commission had directed its attention exclusively to the question of fixing minimum wage and the Act in s. 9 followed the pattern and purported to implement the recommendations of the Press Commission. The Press Commission in companysidering minimum wage ignored the capacity to pay. The Act, similarly, being based on the Report of the Press Commission has made numberprovision for companysidering the capacity to pay. This omission which was appropriate with regard to minimum wages rendered the fixation of wages at a different level unreasonable and therefore void. The companytent of the term minimum wage would number be changed by merely calling it a statutory minimum. Section 14 of the General Clauses Act, 1897, can apply if the enactment does number rule it out by necessary implication. The entire scheme of the impugned Act shows that only one Wage Board and one decision is companytemplated. It is number open to the Government to reconstitute the Wage Board as and when they desire. Munshi, in reply. The doctrine of pith and substance can be applied only to determine the jurisdiction of the legislature to enact a certain legislation. Whether or number the Act imposes a direct burden, the Court should see if the Act is a special law singling out an industry for laying the burden on it. If it does so, as in the present Act, it will amount to a direct burden. If it is a general law it would number be a direct burden. The Act stands alone in being arbitrary and excessive and is without parallel in any other companyntry. The Act is unique in that 1 it provides for gratuity even on voluntary resignation. 2 it gives power to the Wage Board to fix indeterminate wages investing them with attributes of minimum wages, and 3 it companyfers on the Board power to fix wages i without specifying essential standards, ii without casting a duty to follow a reasonable procedure, iii without any companytrol by an appellate tribunal or companyrt, and iv without providing any opportunity to the parties companycerned to be heard on the merits of the proposal it makes. In other companyntries there are various safeguards and checks against arbitrary wage decisions. U. K. Wage Councils Act, 1945 U. S. Fair Labour Standards Act, 1938 Factories and Shops Act, 1905, new Act of 1928 of Victoria, Australia . Sinha, J. All these criticisms would be out of place if it is held that the work of the Wage Board was legislative and number judicial. No. If the mechanism of the Act itself is such that it is unreasonably restrictive of rights to trade then the Act has to be struck down as void under Art. 19 1 g . Even if it is held that there was numberexcessive delegation, it is still open to the Court to see whether the restrictions impinged on the Constitutional safeguards tinder Art. 19 1 g . Fixation of scales of wages on the basis of grossrevenue without taking into account the liability of newspapers is a devastating doctrine in industrial relations. The Wage Board is number a sub-legislative body but even if it is, it has to act judicially and is subject to writs of certiorari. Even if its decisions become assimilated in the Act it must be companysidered to be a quasi-judicial body, since it is expected to carry out a preliminary investigation before recording its findings. The functions of the Wage Board cannot be characterised either exclusively legislative or exclusively judicial. The functions performed by administrative agencies do number fall in water tight companypartments. They may be partly legislative, partly judicial and partly administrative Stason and Cooper, Cases and other Materials on Administrative Tribunals . The Court has to companysider whether the administrative agency performs a predominantly legislative or judicial function and determine its character accordingly Village of Saratoga Springs v. Saratoga Gas Electric Light and Power Co., 1908 191 New York 123 People ex rel. Central Park North and East River Co. v. Willcox, 1909 194 New York 383 . In the United Kingdom the decisions of the Wage Councils in the shape of wage regulations proposal acquires legislative character from the order made by the Minister giving effect to the proposals. In Australia the Factories and Shops Act, 1905, and the Labour and Industry Act, 1953, Section 39 2 of Victoria by express provision invests the determination of the Special Board with the characteristics of a legislative act. Under the Fair Labour Standards Act, 1938, of U. S. A. the Wage orders ultimately approved by the Administrator are subject to judicial review. In India under the Minimum Wages Act, 1948, the recommendations of the Committees are forwarded to the appropriate Government who by numberification as a token of approval, in the official Gazette, fix minimum wages in respect of each scheduled employment. Under the recent amendment of the Bombay Industrial Relations Act, 1946, the Wage Boards companystituted under the Act are to follow the procedure of the Industrial Court in respect of arbitration proceedings and it cannot be said that they perform any legislative function. The Wage Board under the impugned Act, in spite of its being an administrative body or sub- legislative body may nevertheless be exercising quasi- judicial functions if certain companyditions are fulfilled Halsburys Laws of England, 3rd Edn., Vol. 11, pp. 55-56 Rex v. Manchester Legal Aid Committee, Ex-parte R. A. Brand and Co. Ltd., 1952 2 Q. B. 413, 428 Rex v. The London County Council, Ex-parte the Entertainments Protection Association Ltd., 1931 2 K. B. 215, 233-234 Board of Edu- cation v. Rice, 1911 A. C. 179,182 Allen C. K. Law and Order - 1956 Edn., pp. 102, 256, 257 . The Wage Board has number given any attention to the paramount companysideration of capacity to pay as it should, in reason, have done. At numbertime was any question asked as to the wage burden the Wage Boards scales would impose on the industry as a ,whole or on a particular unit. The specific burden which the Board proposed to impose has never been put even indirectly. At numbertime has it been companysidered what would be the potential burden on the industry if the number- journalists in newspaper establishments made similar demands. No companysideration has ever been given about the effect on the industry or on a unit of the retrospective operation of the wage scales. S. R. Chari, S. Viswanathan, B. R. L. Iyengar,J. B. Dadachanji and S. N. Andley, for the Federation of Press Trust of India Employees Union, Bombay Union of Journalists and Gujrat Working Journalists Union. Ganapathy Iyer and G. Gopalakrishnan, for the appellants in C. A. No. 699 of 1957. K. Jha, S. S. Shukla and R. J. Joshi, for the appellants in C. A. Nos. 700 to 702 of 1957. P. Sinha, Harbans Singh and R. Patnaik, for the appellants in C. A. No. 703 of 1957. Sen and R. H. Dhebar, for respondent No. I in all the appeals. C. Chatterjee, J. B. Dadachanji and S. N. Andley, for the Indian Federation of Working Journalists in all appeals, respondent No. 2 in C. A. No. 700 of 1957 and respondent No. 3 in C. A. No. 703 of 1957. R. L. Iyengar, J. B. Dadachanji, S. N. Andley and Rameshwar Nath, for respondent No. 3 in C. A. 699 of 1957. 1958. March 19. The Judgment of the Court was delivered by BHAGWATI J.-These petitions under Art. 32 of the Constitution raise the question as to the vires of the Working Journalists Conditions of Service and Miscel- laneous Provisions Act, 1955 45 of 1955 , hereinafter referred to as the Act and the decision of the Wage Board companystituted thereunder. As they raise companymon questions of law and fact they can be dealt with under one companymon judgment. In order to appreciate the rival companytentions of the parties it will be helpful to trace the history of the events which led to the enactment of the impugned Act. The newspaper industry in India did number originally start as an industry, but started as individual newspapers founded by leaders in the national, political, social and economic fields. During the last half a century, however, it developed characteristics of a profit making industry in which big industrialists invested money and companybines companytrolling several newspapers all over the companyntry also became the special feature of this development. The working journalists except for the companyparatively large number that were found companycentrated in the big metropolitan cities, were scattered all over the companyntry and for the last ten years and more agitated that some means should be found by which those working in the newspaper industry were enabled to have their wages and salaries, their dearness allowance and other allowances, their retirement benefits, their rules of leave and companyditions of service, enquired into by some impartial agency or authority, who would be empowered to fix just and reasonable terms and companyditions of service for working journalists as a whole. Isolated attempts were made by the Uttar Pradesh and Madhya Pradesh Governments in this behalf. On June 18, 1947, the Government of Uttar Pradesh appointed a companymittee to enquire into the companyditions of work of the employees of the newspaper industry in the Uttar Pradesh. On March 27, 1948, the Government of Central Provinces Berar also appointed an Inquiry Committee to examine and report on certain questions relating to the general working of the newspaper industry in the province, including the general companyditions of work affecting the editorial and other staff of newspapers, their emoluments including dearness allowance, leave, provident fund, pensionary benefits, etc. The Committees aforesaid made their reports on the respective dates March 31, 1949, and March 27, 1948, making certain recommendations. The All-India problem, however, remained to be tackled and during the debate in Parliament on the Constitution First Amendment Bill, 1951, the Prime Minister said that he was prepared to appoint a companymittee or a companymission, including representatives of the Press, to examine the state of the Press and its companytent. He elaborated the idea further on June 1, 1951, when he indicated that an enquiry companyering the larger issue of the Press, such as had been carried out in the United Kingdom by the Royal Commission, might be productive of good for the Press and the development of this very important aspect of public affairs. The idea was further discussed during the debate in Parliament on the Press Incitement to Crimes Bill, later named the Press Objectionable Matter Act, 1952. At its session held in April, 1952, at Calcutta, the Indian Federation of Working Journalists adopted a resolution for the appointment of a Commission to enquire into the companydi- tions of the Press in India with a view to improving its place, status and functioning in the new democratic set up. The appointment of the Press Commission was thereafter announced in a Communique issued by the Govt. of India, Ministry of Information and Broadcasting, on September 23, 1952, under the Chairmanship of Shri Justice G. S. Rajadhyaksha. The terms of reference inter alia were- The Press Commission shall enquire into the state of the Press in India, its present and future lines of development and shall in particular examine the method of recruitment, training, scales of remuneration, benefits and other companyditions of employment of working journalists settlement of disputes affecting them and factors which influence the establishment and maintenance of high professional standards The Commission companypleted its enquiry and submitted its report on July 14, 1954. Amongst other things it found that out of 137 companycerns about whom information was available only 59 were returning profits and 68 showed losses. The industry taken as a whole had returned a profit of about 6 lakhs of rupees on a capital investment of about 7 crores, or less than I per cent. per annum. It found that proof- readers as a class companyld number be regarded as working journalists, for there were proof-readers even in presses doing job work. It came to the companyclusion that if a person had been employed as a proof-reader only for the purpose of making him a more efficient sub-editor, then it was obvious that even while he was a proof-reader, he should be regarded as a working journalist but in all other instances, he would number be companynted as a journalist but as a member of the press staff companying within the purview of the Factories Act. The question of the emoluments payable to working journalists, was discussed by it in paragraphs 538 and 539 of its report 538-SCALES TO BE SETTLED BY COLLECTIVE BARGAINING OR ADJUDICATION-It has number been possible for us to examine in detail the adequacy of the scales of pay and the emoluments received by the working journalist having regard to the companyt of living in the various centers where these papers are published and. to the capacity of the paper to make adequate payment In this companynection it may be stated that the Federation of Working Journalists also agreed, when it was put to them, that apart from suggesting a minimum wage it would number be possible for the Commission to undertake standardisation of designations or to fix scales of pay or other companyditions of service for the different categories of employees for different papers in different regions. They have stated that these details must be left to be settled by companylective bargaining or where an agreement is number possible the dispute companyld be settled by reference to an industrial companyrt or an adjudicator with the assistance of a Wage Board, if necessary. The All India Newspaper Editors Conference and Indian Language Newspapers Association have also stated that it would number be possible to standardise designations and that any uniformity of salaries as between one newspaper and another would be impossible. The resources of different newspapers vary and the companyditions of service are number the same. We agree in principle that there should be uniformity as far as possible, in the companyditions of service in respect of working journalists serving in the same area or locality. But this can be achieved only by a settlement or an adjudication to which the employers, and the employees companylectively are parties. 539-DEARNESS ALLOWANCE This again, is a matter which would require very detailed study of the rise in the index numbers of the companyt of living for various places where the newspapers are published. We do number know of any case where a uniform rate has been prescribed for dearness allowance applicable all over the companyntry irrespective of the economic companyditions at different centres and the paying capacity of the various units. This must be a matter for mutual adjustment between the employers and the employees and if there is numberagreement, some machinery must be provided by which disputes between the parties companyld be resolved. The position of a journalist was thus characterised by the Commission A journalist occupies a responsible position in life and has powers which he can wield for good or evil. It is he who reflects and moulds public opinion. He has to possess a certain amount of intellectual equipment and should have attained a certain educational standard without which it would be impossible for him to perform his duties efficiently. His wage and his companyditions of service should therefore be such as to attract talent. He has to keep himself abreast of the development in different fields of human activity-even in such technical subjects as law, and medicine. This must involve companystant study, companytact with personalities and a general acquaintance with worlds problems. It companysidered therefore that there should be a certain minimum wage paid to a journalist. The possible impact of such a minimum wage was also companysidered by it and it was companysidered number unlikely that the fixation of such a minimum wage may make it impossible for small papers to companytinue to exist as such but it thought that if a newspaper companyld number afford to pay the minimum wage to the employee which would enable him to live decently and with dignity, that newspaper had numberbusiness to exist. It recommended division of localities for taking into account the differential companyt of living in different parts of India, and determining what should be the reasonable minimum wage in respect of each area. It endorsed the companycept of a minimum wage which has been adopted. by the Bank Award- Though the living wage is the target, it has to be tempered, even in advanced companyntries, by other companysiderations, particularly the general level of wages in other industries and the capacity of the industry to pay In India, however, the level of the national income is so low at present that it is generally accepted that the companyntry cannot afford to prescribe a minimum wage companyresponding to the companycept of a living wage. However, a minimum wage even here must provide number merely for the bare subsistence of living, but for the efficiency of the worker. For this purpose, it must also provide for some measure of education, medical requirements and amenities. and suggested that the basic minimum wage all over India for a working journalist should be Rs. 125 with Rs. 25 as dearness allowance making a total of Rs. 150. It also suggested certain dearness allowance and City allowance in accordance with the location of the areas in which the working journalists were employed. It companypared the minimum wage recommended by it with the recommendations of the Uttar Pradesh and Madhya Pradesh Committees and stated that its recommendations were fairly in line with the recommendations of those Committees particularly having regard to the rise in the companyt of living which bad taken place since those reports were made. It then companysidered the applicability of the Industrial Disputes Act to the working journalists and after referring to the award of the Industrial Tribunal at Bombay in companynection with the dispute between Jam-e-Jamshed and their workman and the decision of the Patna High Court in the case of V. N. N. Sinha v. Bihar Journals Limited 1 , it came to the companyclusion that the working journalists did number companye within the definition of workman as it stood at that time in the Industrial Disputes Act number companyld a question with regard to them be raised by others who were admittedly governed by the Act. It thereafter company- 1 1953 1. L. R. 32 Pat. 688. sidered the questions as to the tenure of appointment and the minimum period of numberice for termination of the employment of the working journalists, hours of work, provision for leave, retirement benefits and gratuity, made certain recommendations and suggested legislation for the regulation of the newspaper industry which should embody its recommendations with regard to i numberice period ii bonus iii minimum wages iv Sunday rest v leave, and provident fund and gratuity. Almost immediately after the Report of the Press Commission, Parliament passed the Working Journalists Industrial Disputes Act, 1955 I of 1955 which received the assent of the President on March 12, 1955. It was an Act to apply the Industrial Disputes Act, 1947, to working journalists. Working Journalist was defined in s. 2 b of the Act to mean a person whose principal avocation is that of a journalist and who is employed as such in, or in relation to, any establishment for the production or publication of a newspaper or in, or in relation to, any news agency or syndicate supplying material for publication in any newspaper, and includes an editor, a letter-writer, news- editor, sub-editor, feature writer, companyy-taster, reporter, companyrespondent, cartoonist, news-photographer and proof reader but does number include any such person who is employed mainly in a managerial or admini strative capacity, or being employed in a supervisory capacity,exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature. Section 3 of that Act provided that the provisions of the Industrial Disputes Act, 1947, shall apply to, or in relation to, working journalists as they apply to or in relation to workmen within the meaning of that Act. The application of the Industrial Disputes Act, 1947, to the working journalists was number, however, deemed sufficient to meet the requirements of the situation. There was companysiderable agitation in Parliament for the implementation of the recommendations of the Press Commission, and on November 30, 1955, the Union Government introduced a Bill in the Rajya, Sabha, being Bill No. 13 of 1955. It was a Bill to regulate companyditions of service of working journalists and other persons employed in newspaper establishments. The recommendations of the Press Commission in regard to minimum period of numberice, bonus, Sunday rest, leave, and provident fund and gratuity, etc., were all incorporated in the Bill the fixation of the minimum rates of Wages however was left to a minimum wage Board to be companystituted for the purpose by the Central Government. The provisions of the Industrial Employment Standing Orders Act, 1946 20 of 1946 and the Employees Provident Funds Act, 1952 19 of 1952 were also sought to be applied in respect of establishments exceeding certain minimum size as recommended by the Commission. It appears that during the companyrse of discussion in the Rajya Sabha, the word minimum was dropped from the Bill wherever it occurred, the Minister for Labour having been responsible for the suggested amendment. The reason for dropping the same was stated by him as under Let the word minimum be dropped and let it be a proper wage board which will look into this question in all its aspects. Now, if that is done, I believe, from my own experience of the industrial disputes with regard to wages, in a way it will solve the question of wages to the working journalists for all time to companye. The Act as finally passed was entituled The Working Journalists Conditions of Service and Miscellaneous Provisions Act, 1955 45 of 1955 and received the assent of the President on December 20, 1955. The relevant provisions of the Act may number be referred to. It was an Act to regulate certain companyditions of service of working journalists and other persons employed in newspaper establishments. Newspaper establishment was defined in s. 2 d to mean an establishment under the companytrol of any person or body of persons, whether incorporated or number, for the production or publication of one or more newspapers or for companyducting any news agency or syndicate . The definition of working journalist was almost in the same terms as that in the Working Journalists Industrial Disputes Act, 1955, and included a proof reader. All words and expressions used but number defined in this Act and defined in the Industrial Disputes Act, 1947, were under s. 2 g to have the meanings respectively assigned to them in that Act. Section 3 applied the provisions of the Industrial Disputes Act, 1947, as it was in force for the time being, to working journalists as they applied to, or in relation to workmen within the meaning of that Act subject to the modification that s. 25 F of that Act in its application to working journalists in regard to the period of numberice in relation to the retrenchment of a workman was to be companystrued as substituting six months in the case of the retrenchment of an editor and three months, in the case of any other working journalist. The period which lapsed between the publication of the report and the enactment of the Working Journalists Industrial Disputes Act, 1955, viz., from July 14, 1954, to March 12, 1955, was sought to be bridged over by s. 4 enacting special provisions in respect of certain cases of retrenchment during that period. Section 5 provided for the payment of gratuity, inter alia, to a working journalist who had been in companytinuous service, whether before or after the companymencement of the Act, for number less than three years in any newspaper establishment even when he voluntarily resigned from service of that newspaper establishment. Section 6 laid down that numberworking journalist shall be required or allowed to work in any newspaper establishment for more than one hundred and forty-four hours during any period of four companysecutive weeks, exclusive of the time for meals. Every working journalist was under s. 7 entitled to earned leave and leave on medical certificate on the terms therein specified without prejudice to such holidays, casual leave or other kinds of leave as might be prescribed. After thus providing for retrenchment companypensation, payment of gratuity, hours of work, and leave, ss. 8 to 1 1 of the Act provided for fixation of the rates of wages in respect of working journalists. Section 8 authorised the Central Government by numberification in the Official Gazette to companystitute a Wage Board for fixing rates of wages in respect of the working journalists in accordance with the provisions of the Act, which Board was to companysist of an equal number of persons numberinated by the Central Government to represent employers in relation to the newspaper establishments- and working journa lists, and an independent person appointed by the Central Government as the Chairman thereof. Section 9 laid down the circumstances which the Wage Board was to have regard to in fixing rates of wages and these circumstances were the companyt of living, the prevalent rates of wages for companyparable employments, the circumstances relating to the newspaper industry in different regions of the companyntry and to any other circumstance which to the Board may seem relevant. The decision of the Board fixing rates of wages was to be companymunicated as soon as practicable to the Central Government and this decision was under s. 10 to be published by the Central Government in such manner as it thought fit within a period of one month from the date of its receipt by the Central Government and the decision so published was to companye into operation with effect from such date as may be specified, and where numberdate was so specified on the date of its publication. Section 11 prescribed the powers and procedure of the Board and stated that subject to any rules of procedure which might be prescribed the Board may, for the purpose of fixing rates of wages, exercise the same powers and follow the same procedure as an Industrial Tribunal companystituted under the Industrial Disputes Act, 1947, exercised or followed for the purpose of adjudicating an industrial dispute referred to it. The decision of the Board under s. 12 was declared to be binding on all employers in relation to newspaper establishments and every working journalist was entitled to be paid wages at a rate which was to be in numbercase less than the rate of wages fixed by the Board. Sections 14 and 15 applied the provisions of the Industrial Employment Standing Orders Act, 1946, as it was in force for the time being and also the provisions of the Employees Provident Funds Act, 1952, as it was in force for the time being, to every newspaper establishment in which twenty or more persons were employed. Section 17 provided for the recovery of money due from an employer and enacted that where any money was due to a newspaper employee from an employer under any of the provisions of the Act, whether by way of companypensation, gratuity or wages, the newspaper employee might, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the money due to him, and if the State Government or such authority as the State Government might specify in this behalf was satisfied that any money was so due, it shall issue a certificate for that amount to the companylector and the companylector shall proceed to recover that amount in the same manner as an arrear of land revenue. Section 20 empowered the Central Government by. numberification in the Official Gazette to make rules to carry out the purposes of the Act and in particular and without prejudice to the generality of the foregoing power, such rules were to provide inter alia for the procedure to be followed by the Board in fixing rates of wages. All rules made under this section, as soon as practicable after they were made were to be laid before both Houses of Parliament. The Working Journalists Industrial Disputes Act, 1955, was repealed by s. 21 of the Act. In pursuance of the power given under s. 20 of the Act the Central Government published by a numberification in the Gazette of India-Part II-Section 3, dated July 30,1956, The Working Journalists Wage Board Rules, 1956 Rule 8 provided that every question companysidered at a meeting of the Board was to be decided by a majority of the votes of the members present and voting. In the event of equality of votes the Chairman was to have a casting vote. Rule 13 provided for the resignation of the Chairman or any member from his office or membership, as the case may be. The seat held by them was to be deemed to have fallen vacant with effect from the date the resignation of the Chairman or the member was accepted by the Central Government. When a vacancy thus arose in the office of the Chairman or in the membership of the Board, the Central Government was to take immediate steps to fill the vacancy in accordance with the Act and the proceedings might be companytinued before the Board so reconstituted from the stage at which the vacancy was so filled. By a numberification dated May 2, 1956, the Central Government companystituted a Wage Board under s. 8 of the Act for fixing rates of wages in respect of working journalists in accordance with the provisions of the Act, companysisting of equal representatives of employers in relation to newspaper establishments and working journalists and appointed Shri H. Divatia, Retired Judge of the High Court of Judicature, Bombay, as the Chairman of the Board. The three members of the Board who were numberinated to represent employers in relation to newspaper establishments were 1 Shri G. Narasimhan, Manager, The Hindu, Madras and President, Indian and Eastern Newspaper Society 2 Shri A. R. Bhat, M.L.C., who had been a member of the Press Commission and was the President of the Indian Language Newspapers Association, as also the Chairman of the Minimum Wages Inquiry Committee for the Printing Industry in Bombay and, 3 Shri -K. P. Kesava Menon, Editor, Mathrubhumi, Calicut. The other three members of the Board who were numberinated to represent working journalists were 1 Shri G. Venkataraman, M. P., 2 Shri Raghavan, Secretary-General, Indian Federation of Working Journalists, and 3 Shri G. N. Acharya, Assistant Editor, Bombay Chronicle. Shri H. V. Divatia, the Chairman of the Board, had wide and companysiderable experience as Chairman of the Textile Labour Enquiry Committee, Bombay, had been the President of the First Industrial Court to be set up in India in 1938, and had worked as an Industrial Tribunal dealing with several disputes as between several banks and employees, as well as between several insurance companypanies and their employees. The first meeting of the Board was held on May 26, 1956, in the Bharatiya Vidya Bhavan at Bombay. Sri Kesava Menon and Shri G. Narasimhan were number present at this meeting. It was a preliminary meeting at which the Board set up a sub- companymittee companysisting Of Shri A. R. Bhat and Shri G. N. Acharya to draft a questionnaire for issue to the various journals and organisations companycerned, with a view to eliciting factual data and other relevant information required for the fixation of wages for the working journalists. The sub-committee was requested to hear in mind, while framing the questionnaire the need for 1 obtaining detailed accounts of newspaper establishments 2 proper evaluation of the nature of and the work of various categories of working journalists and 3 proper classification of the companyntry into different areas on the basis of certain criteria like population, companyt of living, etc. The questionnaire drafted by the sub-committee was to be finalised by the chairman and circulated to all companycerned by the end of June, 1956. The questionnaire was accordingly drawn up and was sent to Universities and Governments, etc., and several other organisations and individuals interested in the inquiry of the Board, and to all newspapers individually. It was divided into three parts. Part A was intended to be answered by newspapers, news agencies, organisations of employers and of workinly Journalists and any individuals who might wish to do so. Part B was meant to be answered by all newspapers and Part C by all news agencies. At the outset the Board pointed out that except where the question itself indicated a different period or point of time, the reporting period for purposes of parts B and C of the questionnaire was the financial years April I to March 31 1952-53, 1953-54, and 1954-55, or in any establishments which followed a different accounting year, a period of three years as near thereto as possible. It further pointed out that tinder s. 11 of the Act the Board had the powers of an Industrial Tribunal companystituted under the Industrial Disputes Act. In Part A of the questionnaire under the heading Cost of Living companyt of living index for the respective centres were called for and a special question was addressed whether the basic minimum wage, dearness allowance and metropolitan allowance in the table attached to paragraph 546 of the Press Commission was acceptable to the party questioned and, if number, what variations would the party suggest. and why. Comparable employment suggested included a Higher secondary school teachers b College and - university teachers c Journalists employed as publicity and public relations officers in the information departments of the Central and State Governments d Journalistic employees of the news service division of All India Radio and e Research personnel of the economic and social research departments of Central Government ministries like finance, labour and companymerce. Under the heading Special Circumstances, the only question addressed was question No. 7 Are there in your region any special companyditions in respect of the newspaper industry which affect the fixing of rates of wages of working journalists ? If so, specify the companyditions and indicate how they affect the question of wages. As regards the principles of wage fixation the party questioned was to categorise the different newspaper establishments and in doing so companysider the following factors, among others Invested capital b Gross revenue c Advertisement revenue d Circulation e Periodicity of publication The existence of chains, multiple units and companybines and g Location. In part B which was to be answered by newspapers were included under the heading Accounts - Balance sheets and 2 Trading and profit and loss accounts of the newspapers as in the specimen forms attached thereto for the reporting period. Questions were also addressed in regard to the revenue of the newspapers inter alia from the press, a process studio, outside work, foundry, etc., and subscriptions as also the expenditure incurred on postage, distribution sale, companymission and rebate to advertisers, etc., and other items. All information which was companysidered necessary by the Wage Board for the purposes of fixation of the rates of wages was thus sought to be elicited by the questionnaire. It appears that Shri K. P. Kesava Mellon sent in his resignation on or about June 21, 1956, and by a numberification dated July 14, 1956, the Central Government accepted the said resignation and appointed in his place Shri K. M. Cherian, member of the executive companymittee of the Indian and Eastern Newspapers Association, one of the directors of the Press Trust of India and the Chief Editor, Malayala Manorama, Kottayam, as a member of the Board. Out of 5,465 newspapers, journals, etc., to whom the questionnaire was sent only 381 answered the same and out of 502 dailies only 138 answered it. The Board had an analysis made of those who had replied to the questionnaire and also of their replies thereto in regard to each of the questions companytained in the questionnaire. It also got statements prepared according to the gross revenue of the newspapers, the population of the centres, circulation of the papers, the companyt of living index, scales of dearness allowance in certain States, figures of companyparable employments, pay scales of important categories of journalists, etc., the total income, break up of expenditure in relation to total income and total expenses, total income in relation to net profits, and net losses and net profits in relation to circulation of the several newspapers which had sent in the replies to the questionnaire,. Further meetings of the Board were held oil August 17, and August 26, 1956, in Bombay. Tile Chairman informed the members that response from journals, organisations, etc., to whom questionnaire was sent was unsatisfactory and it was decided to issue a Press Note requesting the papers and journals to send their replies, particularly to Part B of the questionnaire, as soon as possible, inviting their attention to the fact that the Board had powers of an Industrial Tribunal under the Act, and if newspapers failed to send their replies, the Board would be companypelled to take further steps in the matter. It was decided that for purposes of taking oral evidence, the companyntry be divided into 5 zones, namely, Trivandrum, Madras, Delhi, Calcutta and Bombay and the Secretary was asked to summon witnesses to the nearest and companyvenient centre. It was further decided that one hour should numbermally be allotted to each newspaper, 3 hours for regional units and 2 hours for smaller units for oral evidence. The Board also discussed the question as to the number of persons who might ordinarily be called for oral evidence from each newspaper or Organisation. It thought that one of the important factors Governing the findings of the Board would be the circulation of each newspaper, and as such it was decided that the figures with the Audit Bureau of Circulation Ltd., might be obtained at once. The Board also decided to ask witnesses, if necessary, to produce books of accounts, income-tax assessment orders or any other document which in its opinion was essential. Meetings of the Board were held at Trivandrum from September 7, to September 10, 1956, in Madras from September 15, to September 20, 1956, in New Delhi from October 19, to October 26, 1956, in Calcutta from November 25, to December 4,1956, and in Bombay from January 4, to January 10, 1957, from January 20, to February 6, 1957, from March 25 to March 31, 1957 and finally from April 22 to April 24, 1957. Evidence of several journalists and persons companynected with the newspaper industry was recorded at the respective places and at its meeting in Bombay from March 25, to March 31, 1957, the Board entered upon its final deliberations. At this meeting the chairman impressed upon the members the desirability of arriving at unanimous decisions with regard to the fixation of wages, etc. He further stated that he would be extremely happy if representatives- of newspaper industry and of working journalists companyld companye to mutual agreement by direct discussions and he assured his utmost companyoperation and help in arriving at decisions on points on which they companyld number agree. Members welcomed this suggestion and decided to discuss various issues among themselves in the afternoon and on the following days. After companysiderable discussion on March 25, 1957, and March 26, 1957, in which the representatives of the newspapers and of working journalists had joint Sittings, unanimous decisions were arrived at on i classification of newspapers, ii classification of centres and iii classification of employees, except on one point, namely, classification of group, multiple units and chains on the basis of their total gross revenue. This was agreed to by a majority decision. The chairman and the representatives of the working journalists voted in favour while the representatives of the employers voted against. Regarding scales of pay, the chairman suggested at the meeting of March 27, 1957, that pending final settlement of the issue the parties should submit figures of scales based on both assumptions, namely, companysolidated wages and basic scales with separate dearness allowance. Both sides agreed to submit companycrete suggestions on the following day. At the Boards meeting on March 28, 1957, the representatives of the employers stated that the term CC rates of pay did number include scales of pay there fore, the Board was number companypetent to fix scales of working journalists and they submitted a written statement signed by all of them to the chairman in support of their companytention. The representatives of the working journalists argued that the Board was companypetent to fix scales of pay. The chairman adjourned the sitting of the Board to study this issue. A companyy of the written statement submitted by the representatives of the employers was given to the representatives of the working journalists and they submitted a written reply the same afternoon companytending that the Board was companypetent to fix scales of pay of various categories of working journalists. At its meeting on March 29, 1957, the Board discussed its own companypetency to fix scales of pay. The chairman expressed his opinion in writing, whereby he held that the Board was companypetent to fix scales of pay. On a vote being taken according to r. 8 of the Working Journalists Wage Board Rules, 1956, the chairman and the representatives of the working journalists voted in favour of the companypetence of the Board to fix scales of pay, while the representatives of the employers voted against it. Thereafter, several suggestions were made on this question, but since there was numberpossibility of any agreement on this issue, the chairman suggested that members should submit their specific scales to him for his study to which the mem- bers agreed. It was also decided that the chairman would have separate discussions with representatives of working journalists in the morning and with representatives of employers in the afternoon of March 30, 1957. It was also decided that the Board should meet again on March 31, 1957, for further discussions. No final decision was however arrived at in the meeting of the Board held on March 31, 1957, on scales of pay, allowances, date of operation of the decision, etc. It was decided that the Board should meet again on April 22, 1957, to take final decisions. A meeting of the Board was accordingly held from April 22 to 24, 1957, in the office of the Wage Board at Bombay. It was unanimously agreed that the word decision should be used wherever the word report occurred. The question of the nature of the decisions which should be submitted to the Government was then companysidered. It was agreed that reasons need number be given for each of the decisions, and that it would be sufficient only to record the decisions. The members then requested the chairman to study the proposals regarding scales of pay, etc., submitted by, both the parties and to give his own proposals so that they may take a final decision. Accordingly, the chairman circulated to all the members his proposals regarding pay scales, dearness allowance, location allowance and retainer allowance. The following were the decisions arrived at by the Board on the various points under companysideration and they were unanimous except where otherwise stated. The same may be set out here so far as they are relevant for the purposes of the inquiry before US. For the purpose of fixation of wages of working journalists, newspaper, establishments should be grouped under different classes. Except in the case of weeklies and other periodicals expressly provided for hereinafter, newspaper establishments should be classified on the basis of their gross revenue. For purposes of classification, revenue from all sources of a newspaper establishment, should be taken for ascertaining gross revenue. Classification of Newspaper Establishments Dailies- Newspaper Establishments should be classified under the following five classes- Class Gross Revenue A over Rs. 25 lakhs B over Rs. 12-1/2 to 25 lakhs C over Rs. 5 to 12-1/2 lakhs D over Rs. 2-1/2 to 5 lakhs E Rs. 2-1/2 lakhs and below Classification of newspaper establishments should be based on the average gross revenue of the three-year period, 1952, 1953 and 1954. It shall be open to the parties to seek re-classifi- cation of the newspaper establishments on the basis of the average of every three years companymencing from the year 1955. Groups, multiple units and chains should be classified on the basis of the total gross revenue of all the companystituent units. This was a majority decision, the chairman and the representatives of the working journalists voting for and the representatives of the employers voting against . A newspaper establishment will be classified as- A group, if it publishes more than one newspaper from one centre A multiple unit, if it publishes the same newspaper from more than one centre A chain, if it publishes more than one newspaper from more than one centre. Working journalists employed in newspaper establishments should be grouped as follows Full time employees Group I Editor Group II Assistant Editor, Leader Writer, News Editor, Commercial Editor, Sports Editor, Film or Art Editor, Feature Editor, Literary Editor, Special Correspondent, Chief Reporter, Chief Sub-Editor and Cartoonist. Group III Sub-Editors and Reporters of all kind and full time companyrespondents number included in Group II news photographers and other journalists number companyered in the groups. Group IV Proof Reader- Part time employees Correspondents who are part time employees of a newspaper establishment and whose principal avocation is that of journalism. An employee should be deemed to be a full time employee if under the companyditions of service such employee is number allowed to work for any other newspaper establishments. The wage scales and grades recommended by the chairman were agreed to by a majority decision. The chairman and the representatives of the working journalists voted for and the representatives of the employers voted against. Shri That suggested that wage scales should be companyditional on a newspaper establishment making profits in any particular year and also that time should be given to the newspaper establishments for bringing the scales into operation. These suggestions, however, were number acceptable to the majority. Wages, scales and grades as agreed to by the majority were as under Working journalists of different groups employed in different classes of newspaper establishments should be paid the following basic wages per mensem. Dailies. Class of Group of Starting Scale News- Employees Pay papers E IV 90 No Scale III II 150 No Scale D IV 100100-5-165 13 Yrs. EB-7-200- 5 Yrs. III 115115-7-1/2--205 12 Yrs. EB-15-295 6 Yrs. II 200200-20-400 10 Yrs. C IV 100100-5-165 13 Yrs. EB-7-200- 5 Yrs. III 125125-10-245 12 Yrs. EB-12J-320 6 Yrs. II 225225-20-385 8 Yrs. EB-30-445 2 Yrs. I 350350-25-550 8 Yrs. -40-630 2 Yrs. B IV 100100-5-165 13 Yrs. EB-7-200 5 Yrs. III 150150-12J-300 12 Yrs. EB-20-420 6 Yrs. II 350350-20-510 8 Yrs. EB-30-570 2 Yrs. I 500500-30-740 8 YrS. -40-820 2 Yrs. A IV 125125-7-1/2--215 12 Yrs. EB-10-275 6 Yrs. III 175175-20-415 12 Yrs. EB-25-515 4 Yrs. II 500500-40-820 8 Yrs. EB-50-920 2 Yrs. I 10001000-50-1300 6 Yrs. -75-1600 4 Yrs. Dearness allowance, location allowance and part time employees remuneration were also majority decisions.The chairman and the representatives of the working journalists voting for and the representatives of the employers voting against. Other allowances-In view of the paucity of evidence on the subject, the Board decided that the fixation of companyveyance and other allowances should be left to companylective bargaining between the working journalists and the newspaper establishments companycerned. Fitment of employees-For fitment of the present employees into the new scales, service in a particular grade and category and in the particular newspaper establishment alone should be taken into account. In numbercase should the present emoluments of the employees be reduced as a result of the operation of this decision. When a newspaper establishment is re-classified as per para. 6 supra, the existing pay of the staff should be protected. But future increments and scales should be those applicable to the class of paper into which it falls. Date of operation-The Boards decision should be operative from the date of companystitution of the Board i.e., 2-5-1956 in respect of newspaper eseablishments companying under Class A , B and C and from a date six months from the date of appointment of the Board i.e., 1-11-1956 in the case of newspaper establishments under Class D E This was also a majority decision. The chairman and the representatives of the working journalists voted for and the representatives of the employers voted against . The Government of India should companystitute a Wage Board under the Act, to review the effect of the decisions of the Board on the newspaper establishments and the working journalists, after the expiry of 3 years but number later than 5 years from the date of the publication of the decisions of the Board. These decisions were recorded on April 30, 1957, but the representatives of the employers thought fit to append a minute of dissent and the chairman also put on record a numbere on the same day explaining the reasons for the decisions thus recorded. These documents are of vital importance in the determination of the issues before us. In the minute of dissent recorded by the representatives of the employers they started with an expression of regret that the companyditions in the newspaper industry did number Permit them to accept the majority view. They expressed their opinion that the fixation of rates of wages should be governed by the following criteria numbermal needs of a worker capacity of the industry to pay nature of the industry and effect on the development of the industry and on employment. They pointed out that The newspaper industry was a class by itself. The selling price of its product was ordinarily below its companyt of production. Further, the companyt of production specially that of newsprint, went on varying and the frequent rises in newsprint price made it difficult to plan and undertake any long term companymitment of an increasing expenditure. The income of the newspaper industry was principally derived from two main sources sales of companyies and advertisement. While sales depended on public acceptance, income from advertisement depended upon circulation, prestige and purchasing power of readers. All those factors made publishing of newspapers a hazardous undertaking and the hazard companytinued throughout it-, existence with the result that it was obligatory that the rates of wages or scales ,should be fixed at the minimum level, leaving it to the employees to share the prosperity of the units through bonuses. It was number ordinarily easy for newspapers to increase the selling price and it had been the experience of some established newspapers that such a companyrse, when adopted, had invariably brought about a reduction in circulation. The fall in circulation had in turn an adverse effect on the advertisement revenue. The sales or advertisement income of a newspaper was number responsive to a progressive increase in expenditure. In any fixation of wages of a section of employees, its effect on other sections had to be taken into companysideration. Editorial employees were one section of a newspaper establishment and any increase in their emoluments would have its inevitable repercussions on the wages of other sections. The salaries of working Journalists would roughly be one-fifth of the total wage bill. The factory staff had a great bargaining power and as such any increase in the salaries and introduction of scales in the editorial department would have to be followed by an increase in the wages and introduction of time scales in the factory side. It was the advertisement revenue that principally decided the capacity to pay of a newspaper industry. It was number enough to take into companysideration the gross revenue of a newspaper alone but also the proportion of advertisement revenue in it. This meant that minimum salaries and scales to be fixed on an All-India basis would perforce have to be low if the newpapers in language of regions with a low purchasing power such as Kerala and Orissa were number to be handicapped. It would therefore be fair both to the industry and employees if wages were fixed regionwise. The proposals, which the majority had made, clearly showed that, according to it the dominating principle of wage fixation wag the need of the worker as companyceived by them, irrespective of its effect on the industry. The Board had number before it sufficient data needed for the proper assessment of the paying capacity of the industry. The profit and loss statements of the daily newspaper establishments for the year 19.54-55 as submitted to the Board revealed that while 43 of them had shown profits 40 had incurred losses. The. companydition of the newspaper industry in the companyntry as a whole companyld number be companysidered satisfactory. The proposals embodied in the decision made by the majority were therefore unduly high. They would immediately throw a huge burden on many papers, a burden which would progressively grow for some years, and would be still bigger when its impact takes place on the wages of employees of its other sections. All this will in its turn add to the burden of provident fund, gratuity, etc., when the full impact of the burden took place and the wages of the entire newspaper establishments went up, it would throw out of gear the economy of most of the newspapers. It might be that there may number be many closures immediately, because many of the newspapers would number be in a position to meet the liability of retrenchment companypensation, gratuity, etc., resulting from such a step, newspapers would try to meet the liability by borrowing to the extent possible and when their credit was exhausted, they must close down. So far as new newspaper promotions were companycerned, they would be few and far between, with the result that after a few years it would be found that the number of daily newspapers in the companyntry had number increased but had gone down. Such an eventuality was number in the interests of the companyntry both from the point of view of employment as well as of freedom of expression. As regards chains and groups the criterion for classification adopted by the majority was unfair and unnatural. The total gross revenue of all the units in a chain or a group gave an unreal picture of its capacity to pay. Giving of retrospective effect, would help only to aggravate the troubles of the newspaper industry which had been already called upon to devise ways and means of meeting the burden of retrospective gratuity. As regards the prevalent rates of wages for companyparable employments the nature of work of the working journalists in newspaper establishments companyld number be companypared with other avocations or professions and the rates of wages of working journalists should be fixed only in the companytext of the financial companydition of the newspaper industry. Comparison, companyld, however, be made within limits, namely with respect to alternative employments available to persons with similar educational qualifications in particular regions or localities. From that point of view the salaries paid to secondary school teachers, companylege and university teachers and employees in companymercial firms and banks should be taken into companysideration, but the majority had rejected this view. The numbere of the chairman was meant to explain the reasons of the decisions which he stated he at least had in view and some of which were accepted unanimously and others were accepted by some members and thereby became majority decisions. At the outset the chairman explained that most of the recommendations of the Press Commission were intended for the betterment of the economic companydition of small and medium newspapers, such as price page schedule, telescopic rates for Government advertisements and their fair distribution among newspapers, statutory restrictions on malpractices so as to eliminate cutthroat companypetition and fixation of news agency tariff,-, which still remained to be implemented and there had been numberstability in the prices of newsprint which companystituted a companysiderable proportion of the expenditure of a newspaper. These circumstances had necessitated the fixing of a minimum wage lower than that recommended by the Press Commission. As regards fixation of the rates of wages, the chairman observed In fixing the rates of wages, we have based them on the companydition of the newspaper industry as a whole and number on the effect which they will produce on a particular newspaper. We can only proceed on the average gross income of a newspaper falling under the same class and number on the lowest unit in that class. Otherwise, there will be numberimprovement in any unit of the same class, and the status quo might remain. With the extremely divergent companyditions obtaining in both English as well as Indian language newspapers, it is impossible to try to avoid any small or medium newspaper being adversely affected. When the tone and companydition of journalism in India has to be brought on a higher level it is inevitable that in doing so, more or less burden will fall on several newspapers I realise that in cases where wages are very low and dearness allowance is also low or even number-existent and there are numberscales at all, the reaction to our wage schedule will be one of resentment by the proprietors. Some anomalies may also be pointed out but it must be remembered that we had numberdata of all the newspapers before us and where we had, it was in many cases number satisfactory. Under these circumstances, we cannot satisfy all newspapers as well as journalists. However, wehave tried to proceed on the basis of accepted principles also keeping in view the recommendations of the Press Commission and number on the editorial expenditure of each newspaper. I am also of the opinion that by rational management there is great scope for increasing the income of newspapers and we have evidence before us that the future of the Indian language newspapers is bright, having regard to increasing literacy and the growth of political companysciousness of the reading public. When there are wide disparities, there cannot be any adjustment which might satisfy all persons interested. We hope numbernewspaper is forced to close down as a result of our decision. But if there is a good paper and it deserves to exist, we hope the Government and the public will help it to companytinue. The chairman then proceeded to observe We do number companysider it a matter of regret if our decisions discourage the entry into this industry of persons without the necessary resources required for the payment of a reasonable minimum wage. While we are anxious to promote and encourage the growth of small newspapers, we also feel strongly that it should number be at the expense of the working journalists. The same applies, in our view, to newspapers started for political, religious or any other propaganda. The reason for grouping all the companystituent units of the same group or chain in the same class in which they would fall on the basis of the total gross income of the entire establishment was given by the chairman as under- One of the difficult tasks before us was to fix the wages of Journalists working in newspapers which have recently companye to exist in our companyntry. All the accounts of the companystituent units in the same group or chain are merged together with the result that the losses of the weaker units are borne from the high income of prosperous units. There is companysiderable disparity in the wages of journalists doing the same kind of work in the various companystituent units situated in different centres. The Press Commission has strongly criticised the methods of such chains and groups and their adverse effects on the employees. We have decided to group all the companystituent units of the same group or chain in the same class in which they would fall on the basis of the total gross income of the entire establishment. We are companyscious that as a result of this decision, some of the journalists in the weak units of the same group or chain may get much more than those working in its highest income units. If however, our principle is good and scientific, the inevitable result of its application should be judged from the stand-point of Indian Journalism as a whole and number on the burden it casts on a particular establishment. It may be added that in our view, the principle on which we have proceeded is one of the main steps to give effect to the views expressed by the The chairman then referred to the points which the representatives of the newspaper employers had urged as to the -burden which might be cast as a result of the decisions and expressed himself as under I sympathise with their view point and in my opinion, looking to all the circumstances, especially the fact that this is the first attempt to fix rates of wages for journalists, it is probable that some anomalies may result from the implementation of our decisions. We are, therefore, averse to imposing a wage schedule of all classes of newspapers on a permanent basis. It is, thus important that the wage rates fixed by us should be open to review and revision in the light of experience gained within a period of 3 to 5 years. This becomes necessary especially in view of the fact that the data available to us have number been as companyplete as we would have wished them to be, and also because it is difficult for us at this stage to work out with any degree of precision, the economic and other effects of our decisions on the newspaper industry as a whole. The chairman suggested as a palliative the creation by the Government of India immediately of a standsing administrative machinery which companyld also companybine in itself the functions of implementing and administering our decisions and that of preparing the ground for the review and revision envisaged after 3 to 5 years. This machinery should companylect from all newspaper establishments in the companyntry on systematic basis detailed information and data such as those on employment, wage rates, and earnings, financial companydition of papers, figures of circulation, etc., which may be required for the assessment of the effects of our decisions at the time of the review. The above decision of the Wage Board was published by the Central Government in the Gazette of India Extraordinary dated May 11, 1957. The Commissioner of Labour, Madras, issued a circular on May 30, 1957, calling upon the managements of all newspaper establishments in the State to send to him the report of the gross revenue for the three years, i. e., 1952, 1953 and 1954, within a period of one month from the date of the publication of the Boards decision, i. e., number later than June 10, 1957. Writ Petition No. 91 of 1957 was thereupon filed on June 13, 1957, by the Express Newspapers Private Ltd., against the Union of India others and this petition was followed up by similar petitions filed on August 9, 1957, by the Press Trust of India Ltd., the Indian National Press Bombay Private Ltd., and the Saurashtra Trust, being Petitions Nos. 99, 100, and 101 of 1957 respectively. The Hindustan Times Ltd., New Delhi filed on August 23, 1957, a similar petition, being Petition No. 103 of 1957, and three more petitions, being Petitions Nos. 116, 117 and 118 of 1957, were filed by the Loksatta Karyalaya, Baroda, Sandesh Ltd. Ahmedabad and Jan Satta Karyalaya, Ahmedabad, respectively, on September 18, 1957. The Express Newspapers Private Ltd., the petitioners in Petition No. 91 of 1957, otherwise termed the Express Group , are the biggest chain in the newspaper world in India. They publish i Indian Express, an English Daily, from Madras, Bombay, Delhi and Madurai, Sunday Standard, an English Weekly, from three centres- Madras, Bombay and Delhi, iii Dinmani, a Tamil Daily from Madras and Madurai, iv Dinmani Kadir, a Tamil Weekly from Madras, v Lokasatta, a Maratha Daily, and Sunday Lokasatta, a Maratha Weekly, from Bombay, vi Screen, an English Weekly from Bombay and vii Andhra Prabha, a Telugu Daily and Weekly. The total number of working journalists employed by them are 331, out of whom there are 123 proof readers, as against 1570 who form the other members of the staff. The present emoluments of the working journalists in their employ amount to Rs. 9,77,892, whereas if the decision of the Wage Board were given effect to they would go up to Rs. 15,21,282-12 thus increasing the wage bill of the working journalists annually by Rs. 5,43,390-12. They would also have to pay remuneration to the part-time companyrespondents on the basis of retainer as well as payment for news items on companyumn basis. That would involve an additional burden of about Rs. 1 lakh a year. The retrospective operation of the Wage Boards decision with effect from May 2, 1956, in their case would further involve a payment of Rs. 5,16,337-20. This would be the extra burden number taking account the liability for past gratuity and the recurring gratuity as awarded under the provisions of the Act and also the increased burden which would have to be borne by reason of the impact of the provisions in regard to reduced hours of working, increase in leave, etc., provided therein. If, moreover, the members of the staff who are number included in the definition of working journalists made similar demands for increasing their emoluments and bettering their companyditions of service then there would be an additional burden which is estimated at Rs. 9,92,443-68. The Press Trust of India Ltd., the petitioners in Petition No. 99 of 1957, are a number-profit making companyperative organization of newspaper proprietors. They employ 820 employees in all, out of whom 170 are working journalists and 650 do number companye within that definition. Their total wage bill is Rs. 21,00,000 per year approximately out of which the annual salary of the working journalists is Rs. 9,00,000. The ,increase in their wage bill due to increase in the salary of the working journalists as per the decision of the. Wage Board would companye to Rs. 4,05,600 and they would have to pay by way of arrears by reason of the retrospective operation of the decision another sum of Rs. 4,05,600 to the working journalists. There would also be an additional financial burden of Rs. 60,000 every year by reason of the recurring increments in the monthly salaries of the working journalists employed by them. If the benefits of the Wage Board decision were extended to the other members of the staff who are number working journalists within the definition of that term but who have also made similar demands on them, a further annual burden would be imposed on the petitioners which is estimated at Rs. 3,90,000. If perchance the petitioners number being able to run their companycern except at a loss intended to close down the same, the amount which they would have to pay to the working journalists under the pro- visions of the Act and the decision of the Wage Board would be Rs. 23,68,500 as against the old scale liability of Rs. 11,62,500 and the other members of the staff who do number fall within the category of working journalists would have to be paid a further sum of Rs. 15,50,000. The total liability of the petitioners in such an event would amount to Rs. 39,18,000 as against the old liability of Rs. 27,12,500. The Indian National Press Bombay Private Ltd., otherwise known as the Free Press Group, are petitioners in Petition No. 100 of 1957. They publish i Free Press Journal, a morning English Daily ii Free Press Bulletin, an evening English Daily iii Bharat Jyoti, an English Weekly iv Janashakti, a morning Gujarati Daily and v Navashakthi, a Marathi Dailyall from Bombay. They employ 442 employees including part-time companyrespondents out of whom 65 are working journalists and 21 are proof readers and the rest form members of the other staff number falling within the category of working journalists. The effect of the decision of the Wage Board would be that there would have to be an immediate payment of Rs. 1,73,811 by reason of the retrospective operation of the decision and there will also be an annual increase in the wage bill to the same extent, i. e., Rs. 1,73,811. There will also be a yearly recurring increase to the extent of Rs. 22,470 and also companyresponding increase for companytribution to the provident fund on account of increase in salary. Under the provisions of the Act in regard to reduced hours of work, and increase in leave, moreover, there will be an increase in liability to pay Rs. 90,669 and Rs. 29,806 respectively, in the case of working journalists, besides the liability for past gratuity in another sum of Rs. 1,08,534 and recurring annual liability for gratuity in a sum of Rs. 17,995. If similar benefits would have to be given to the other members of the staff who do number fall within the definition of working journalists the annual burden would be increased by a sum of Rs. 1,80,000. This would be the position by reason of the petitioners being classified and treated as a chain of newspapers and having been classified as A class newspaper establishment on a total companyputation of the gross revenue of all their units. If they were number so treated and the companyponent units were classified on their individual gross revenue the result would be that the Free Press Journal, the Free Press Bulletin and the Bharat Jyoti would fall within class A , and Navashakti would fall within class C and Janashakti would fall within class D thus minimising the burden imposed upon them by the impact of the Wage Board decision. The Saurashtra Trust, the petitioners in Petition No. 101 of 1957, are another chain of newspapers and they publish i Janmabhoomi, a Gujrati Daily from Bombay, ii Janmabhoomi and Pravasi, a Gujrati Weekly from Bombay, iii Lokmanya, a Marathi Daily from Bombay, iv Vyapar, a Gujrati Weekly companymercial paper from Bombay, v Fulchhab, a Gujrati Daily from Rajkot, vi Pratap, a Gujrati Daily from Surat, vii Cuttccha Mitra, a Gujrati Daily from Bhuj Cutch and, viii Nav Bharat, a Gujrati Daily from Baroda. They employ 445 employees out of whom 60 are working journalists and 12, proof readers and the rest belong to the other members of the staff. The effect of the Wage Board decision on them would be to impose on them a burden of Rs. 1,59,528 by reason of the retrospective operation of the decision and an annual increase in the wage bill of Rs. 1,59,528 for the first year and an annual recur- ring increase of Rs. 22,000. The operation of ss. 6 and 7 of the Act in regard to reduced hours of work and provision for increased leave would impose an additional burden of Rs. 42,000 per year. The liability for pastgratuity would be Rs. 93,376 and the recurring annual increase in gratuity would be Rs. 11,000. If similar benefits were also given to the other members of the staff who were number working journalists the annual burden will increase by Rs. 5,18,964, by reason of their classification as A class newspaper establishment on a chain basis, all the companyponent units have got to be treated as A class newspapers, whereas if they were classified on a companyputation of the gross revenue of their companyponent units Vyapar would fall within Class B the Janmabhoomi and Lokmanya would fall within Class C and the Cutccha Mitra, Fulchhab and Pratap would fall within Class The inequity of this measure is, moreover, sought to be augmented by their pointing out that whereas the Janmabhoomi from Bombay is placed in the A Class, Bombay Samachar Bombay , a morning Gujrati Daily from Bombay, which has a larger gross revenue than Janmabhoomi taken as a single unit is placed in Class B. Similarly, the Pratap from Surat is placed in Class A, whereas the Gujrat Mitra from Surat which has a larger gross revenue than the Pratap is placed in Class B because of its being treated as a unit by itself and the Fulchhab from Rajkot is also placed in Class A, whereas the Jaihind from Rajkot, which has a larger gross revenue than the Fulchhab, is placed in Class C for an identical reason. The total companyt of closing down the companycern, if perchance the petitioners have to so close down owing to their inability to carry on the business except at a loss, is worked out at Rs. 6,13,921 for the working journalists as against the old basis of Rs. 1,00,890. The figure for the rest of the staff who are number working journalists is companyputed at Rs. 3,08,112 with the result that the total companyt of closing down on the new basis under the provisions of the Act and the decision of the Wage Board would be Rs. 9,22,033 as against what otherwise would have been a sum of Rs. 4,09,002. The Hindustan Times Ltd., New Delhi, the petitioners in Petition No. 103 of 1957, otherwise called the Hindustan Times Group, publish i Hindustan Times, an English morning Daily, ii Hindustan Times Evening News an English evening Daily, iii Overseas Hindustan Times, an English Weekly, iv Hindustan, a Hindi Daily, and v Saptahik Hindustan, a Hindi Weekly-all from Delhi. They employ a total number of 695 employees out of whom 79 are working journalists, 14 are proof readers and the rest, viz., 602 are other members of the staff. The wages paid to the working journalists absorb about one-third of the total wage bill as against 602 other members of the staff whose wage bill companystitutes the remaining two-thirds. If the decision of the Wage Board is given effect to the petitioners would be subjected to the following additional liabilities in respect of working journalists alone i Increase in the annual wage bill Rs. 2,16,000 Approx. ii Arrears of payments from May 2, 1956, to April 30,1957, Rs. 1,89,000 iii Past liability in respect of gratuity as on March 31, 1957, Rs. 2,65,000 iv Recurring annual liability of gratuity Rs. 28,000. The total liability thus companyes to Rs. 6,98,000. The above figures do number include increased liability on account of the petitioners companytribution towards provident fund, leave rules and payment to part-time companyrespondents. There would also be a further recurring increase in the wage bill by reason of the increments which would have to be given to the various categories of working journalists on the scales of wages prescribed by the Wage Board. If other members of the staff who are number working journalists were to be companysidered for increase in their emoluments, etc., there will be a further burden on the petitioners companyputed as under Increase in the annual wage bill, Rs. 5,02,000 Approx. , b arrears of payments from May 2, 1956, to April 30, 1957, Rs. 4,51,000 Approx. , c Past liability in respect of gratuity as on March 31, 1957, Rs. 5,50,000 Approx. , d Recurring annual liability for gratuity Rs. 60,000 Approx. . The total companyes to Rs. 15,63,000. The petitioners in Petition No. 116 of 1957 are the Loksatta Karyalaya, Baroda, which publish the Loksatta, a Gujarati Daily from Baroda. They employ 15 working journalists. The annual wage bill of working journalists would have to be increased by reason of the decision of the Wage Board by Rs. 10,800 the burden of payment of retrospective liability being Rs. 9,600. Moreover, there will be a recurring annual burden of Rs. 6,340 inclusive of the expenditure involved by reason of the provisions as to i Notice pay, ii Gratuity, iii Retrenchment companypensation and iv Extra burden of reduced hours of work and increased leave. The Sandesh Ltd., the petitioners in Petition No. 117 of 1957, otherwise styled, the Sandesh Group, Ahmeda bad, publish i Sandesh, a morning Gujarati Daily, ii Sevak, an evening Gujarati Daily, iii Bal Sandesh, a Gujarati Weekly, and iv Aram, and v Sat Sandesh, Gujarati Monthlies-all from Ahmedabad. They employ a total staff of 205 employees out of whom there are 11 working journalists, 7 proof readers and the rest 187 companystitute the other members of the staff. The increase in the wage bill of the working journalists under the provisions of the Act would be Rs. 24,807 per year besides a similar liability for Rs. 24,807 by reason of the retrospective operation of the decision. There will be an increase in expenditure to the tune of Rs. 30,900 by reason of the reduced working hours and increase in leave and holidays, a liability of Rs. 31, 597 for past gratuity and Rs. 24,807 every year for recurring gratuity as also Rs. 1,530 for recurring increase in wages of the working journalists. The financial burden in the case of proof-readers who are included in the definition of working journalists tinder the terms of the Act would be Rs. 5,724 per year. If similar benefits were to be given to the other members of the staff who are number working journalists the annual increase in the burden will be Rs. 1,89,816. The total companyts of closing down if such an eventuality were companytemplated would be Rs. 1,08,997 for the working journalists only as against a liability of Rs. 22,755 on the old basis. The other members of the staff would have to be paid Rs. 1,46,351 and the total companyt of closing down the whole companycern would thus companyic to Rs. 2,55,349 under the new dispensation as against Rs. 1,69,106 as of old. The Jansatta Karyalaya, Ahmedabad, petitioners in Petition No. 118 of 1957 bring out i Jansatta, a Gujarati Daily and Chandni a Gujarati Monthly from Ahmedabad. They employ 15 working journalists, 6 proof-readers and 87 other members of the staff thus making a total number of 108 employees. The increase in the wage-bill of the working journalists would companye to Rs. 29,808. The liability for past gratuity would be Rs. 6,624 and the recurring annual gratuity would be Rs. 2,303 and the annual recurring increase in wages would companye to Rs. 2,280. The financial burden in case of proof-readers would be Rs. 6,480 per year as per the decision of the Wage Board. If similar benefits had to be given to the other members of the staff who are number-working journalists the annual burden will increase by Rs. 48,720. The total companyt of closing down, if such a companytingency ever arose, would companye to Rs. 1,00,798 under the provisions of the Act and the Wage Board decision as against Rs. 45,206 on the old basis. All these petitions filed by the several petitioners as above followed a companymon pattern. After succinctly reciting the history of the events narrated above which led to the enactment of the impugned Act and the decision of the Wage Board, they challenged the vires of the Act and the decision of the Wage Board. The vires of the Act was challenged on the ground that the provisions thereof were violative of the fundamental rights guaranteed by the Constitution under Art. 19 1 a , Art. 19 1 g , and Art. 14 but in the companyrse of the argu- ments before us another Article, viz., Art. 32 was also added as having been infringed by the Act. The decision of the Wage Board was challenged on various grounds which were in pari materia with the objections that had been urged by the representatives of the employers in the Wage Board in their minute of dissent above referred to. It was also companytended that the implementation of the decision would be beyond the capacity of the petitioners and would result in their titter companylapse. The reply made by the respondents was that numbere of the fundamental rights guaranteed under Art. 19 1 a , Art. 19 1 g , Art. 14 and or Art. 32 were infringed by the impugned Act, that the functions of the Wage Board were number judicial or quasijudicial in character, that the fixation of the rates of wages was a legislative act and number a judicial one, that the decision of the Wage Board bad been arrived at after taking into companysideration all the criteria for fixation of wages under s. 9 1 of the Act and the material as well as the evidence led before it, that a companysiderable portion of the decisions recorded by the Wage Board were unanimous, that the Wage Board had the power and authority also to fix the scales of wages and to give retrospective operation to its decision, and that the financial position of the petitioners was number such as to lead to their companylapse as a result of the impact of the provisions of the impugned Act and the decision of the Wage Board. The petitioners in Petitions Nos. 91 of 1957, 99 of 1957, 100 of 1957, 101 of 1957 and 103 of 1957 also filed petitions for special leave to appeal against the decision of the Wage Board being Petitions Nos. 323, 346, 347, 348 and 359 of 1957 respectively and this Court granted the special leave in all these petitions under Art. 136 of the Constitution subject to the question of the maintainability of the appeals being open to be urged at the hearing. Civil Appeals arising out of these special leave petitions were ordered to be placed along with the Writ Petitions aforesaid for hearing and final disposal and Civil Appeals Nos. 699 of 1957, 700 of 1957, 701 of 1957, 702 of 1957 and 703 of 1957 arising therefrom thus came up for hearing and final disposal before us along with the Writ Petitions under Art. 32 mentioned above. We took up the hearing of the Writ Petitions first as they were more companyprehensive in scope than the Civil Appeals filed by the respective parties and heard companynsel at companysiderable length on the questions arising for our determination therein. Before we discuss the vires of the impugned Act and the decision of the Wage Board, it will be appropriate at this juncture to clear the ground by companysidering the principles of wage fixation and the machinery employed for the purpose in various companyntries. Broadly speaking wages have been classified into three categories, viz., 1 the living wage, 2 the fair wage and 3 the minimum wage. The companycept of the living wage The companycept of the living wage which has influenced the fixation of wages, statutorily or otherwise, in all economically advanced companyntries is an old and well- established one, but most of the current definitions are of recent origin. The most expressive definition of the living wage is that of Justice Higgins of the Australian Commonwealth Court of Conciliation in the Harvester case. He defined the living wage as one appropriate for the numbermal needs of the average employee, regarded as a human being living in a civilized companymunity . Justice Higgins has, at other places, explained what he meant by this cryptic pronouncement. The living wage must provide number merely for absolute essentials such as food, shelter and clothing but for a companydition of frugal companyfort estimated by current human standards. He explained himself further by saying that it was a wage sufficient to insure the workmen food, shelter, clothing frugal companyfort, provision for evil days, etc., as well as regard for the special skill of an artisan if he is one . In a subsequent case he observed that treating marriage as the usual fate of adult men, a wage which does number allow of the matrimonial companydition and the maintenance of about five persons in a home would number be treated as a living wage. According to the South Australian Act of 1912, the living wage means a sum sufficient for the numbermal and reasonable needs of the average employee living in a locality where work under companysideration is done or is to be done. The Queensland Industrial Conciliation and Arbitration Act provides that the basic wage paid to an adult male employee shall number be less than is sufficient to maintain a well-conducted employee of average health, strength and companypetence and his wife and a family of three children in a fair and average standard of companyfort, having regard to the companyditions of living prevailing among employees in the calling in respect of which such basic wage is fixed, and provided that in fixing such basic wage the earnings of the children or wife of such employee shall number be taken into account . In a Tentative Budget Inquiry companyducted in the United States of America in 1919 the Commissioner of the Bureau of Labour Statistics analysed the budgets with reference to three companycepts, viz., the pauper and poverty level, the minimum of subsistence level, and, the minimum of health and companyfort level,and adopted the last for the determination of the living wage. The Royal Commission on the Basic Wage for the Commonwealth of Australia approved of this companyrse and proceeded through numberms and budget enquiries to ascertain what the minimum of health and companyfort level should be. The companymission quoted with approval the description of the minimum of health and companyfort level in the following terms This represents a slightly higher level than that of subsistence, providing number only for the material needs of food, shelter, and body companyering but also for certain companyforts, such as clothing sufficient for bodily companyfort, and to maintain the wearers instinct of selfrespect and decency, some insurance against the more important misfortunes-death, disability and fire--good education for the children, some amusement, and some expenditure for self- development. Writing practically in the same language, the United Provinces Labour Enquiry Committee classified level of living standard in four categories, viz., the poverty level,81 the minimum subsistence level, the subsistence plus level and the companyfort level, and chose the subsistence plus. level as the basis of what it called the minimum living wage. The Bombay Textile Labour Inquiry Committee, 1937, companysidered the living wage standard at companysiderable length and, while accepting the companycept of the living wage as described above, observed as follows what we have to attempt is number an exact measurement of a well-defined companycept. Any definition of a standard of living is necessarily descriptive rather than logical. Any minimum, after all, is arbitrary and relative. No companypletely objective and absolute meaning can be attached to a term like the living wage standard and it has necessarily to be judged in the light of the circumstances of the particular time and companyntry. The Committee then proceeded through the use of numberms and standard budgets to lay down what the basic wage should be, so that it might approximate to the living, wage standard in the light of the circumstances of the particular time and companyntry. The Minimum Wage-Fixing Machinery published by the 1. L. O. has summarised these views as follows In different companyntries estimates have been made of the amount of a living wage, but the estimates vary according to the point of view of the investigator. Estimates may be classified into at least three groups 1 the amount necessary for mere subsistence, 2 the amount necessary for health and decency,and 3 the amount necessary to provide a standard of companyfort. It will be seen from this summary of the companycepts of the living wage held in various parts of the world that there is general argument that the living wage should enable the male earlier to provide for himself and his family number merely the bare essentials of food, clothing and shelter but a measure of frugal companyfort including education for the children, protection against ill-health, requirements of essential social needs, and a measure of insurance against the more important misfortunes including old age. 1 Article 43 of our Constitution has also adopted as one of the Directive Principles of State Policy that The State shall endeavour to secure, by suitable legislation or economic Organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, companyditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities This is the ideal to which our social welfare State has to approximate in an attempt to ameliorate the living companyditions of the workers. The companycept of the minimum wage The International Convention of 1928 prescribes the setting up of minimum wage-fixing machinery in industries in which numberarrangements exist for the effective regulation of wages by companylective agreement or otherwise and wages are exceptionally low As a rule, though the living wage is the target, it has to be tempered, even in advanced companyntries, by other companysiderations, particularly the general level of wages in other industries and the capacity of industry to pay. This view has been accepted by the Bombay Textile Labour Inquiry Committee which says that the living wage basis affords an absolute external standard for the determination of the minimum and that where a living wage criterion has been used in the giving of ail award or the fixing of a wage, the decision has always been tempered by other companysiderations of a practical character. In India, however, the level of the national income is so low at present that it is generally accepted that the companyntry cannot afford to prescribe by law a minimum wage which would companyrespond to the companycept of the living wage as described in the preceding paragraphs. What then should be the level of minimum wage which call be sustained by the present stage of the companyntrys economy? Most employers and some. Report of the Committee on Fair Wagss 1947 to 1949 , pp- 5-7,paras. 6 7. Provincial Governments companysider that the minimum wage can at present be only a bare subsistence wage. In fact, even one important All-India Organisation of employees has suggested that a minimum wage is that wage which is sufficient to companyer the bare physical needs of a worker and his family. Many others, however companysider that a minimum wage should also provide for some other essential requirements such as a minimum of education, medical facilities and other amenities. We companysider that a minimum wage must provide number merely for the bare sustenance of life but for the preservation of the efficiency of the worker. For this purpose, the minimum wage must also provide for some measure of education, medical requirements, and amenities. This is the companycept of the minimum wage adopted by the Committee on Fair Wages. There are however variations of that companycept and a distinction has been drawn, for instance, in Australian industrial terminology between the basic wage and the minimum wage.- The basic wage there approximates to a bare minimum subsistence wage and numbernormal adult male companyered by an award is permitted to work a full standard hours week at less than the assessed basic wage rate. The basic wage is expressed as the minimum at which numbermal adult male unskilled workers may legally be employed, differing from the amounts fixed as legal minima for skilled and semi- skilled workers, piece workers and casual workers respectively The minimum wage is the lowest rate at which members of a specified grade of workers may legally be employed. 2 There is also a distinction between a bare subsistence or minimum wage and a statutory minimum wage. The former is a wage which would be sufficient to companyer the bare physical needs of a worker and his family, that is, a rate which has got to be paid to the worker irrespective of the capacity of the industry to Report of the Committee on Fair Wages, PP. 7-9, paras, 8-10. O.D.R. Feenander Industrial Regulation in Australia 1947 , Ch. XVII, P. 155. pay. If an industry is unable to pay to its workmen at least a bare minimum wage it has numberright to exist. As was observed by us in Messrs. Crown Aluminium Works v. Their Workmen 1 It is quite likely that in underdeveloped companyntries, where unemployment prevails on a very arge scale, unorganised labour may be available on starvation wages, but the employment of labour on Starvation wages cannot be encouraged or favored in a modern democratic welfare state. If an employer cannot maintain his enterprise without cutting down the wages of his employees below even a bar , subsistence or minimum wage, he would have numberright to companyduct his enterprise on such terms. The statutory minimum wage however is the minimum which is prescribed by the statute and it may be higher than the bare subsistence or minimum wage, providing for some measure of education, medical requirements and amenities, as companytemplated above. Cf. also the companynotation of minimum rate of wages in s. 4 of the Minimum Wages Act, 1948 XI of 1948 . The companycept of the fair wage The payment of fair wages to labour is one of the cardinal recommendations of the Industrial Truce Resolution Marshall would companysider the rate of wages prevailing in an occupation as fair if it is about on level with the average payment for. tasks in other trades which are of equal difficulty and disagreeableness, which require equally rare natural abilities and an equally expensive training. Prof Pigou would apply two degrees of fairness in judging a wage rate, viz., fair in the narrower sense and fair in the wider sense . A wage rate, in his opinion, is fair in the narrower sense when it is equal to the rate current for similar workmen in the same trade and neighborhood and fair in the wider sense when it is equal to the predominant rate for similar work throughout the companyntry and in the generality of trades. The Indian National Trade Union Congress 1 1958 S.C.R 651. agreements, arbitrators, and adjudicators companyld at best be treated, like the minimum wage, as the starting point and that wherever the capacity of an industry to pay a higher wage is established, such a higher wage should be deemed to be the fair wage. The minimum a wage should have numberregard to the capacity of an industry to pay and should be based solely on the requirements of the worker and his family. A fair wages is, in the opinion of the Indian National Trade Union Congress, a step towards the progressive realization of a living wage . Several employers while they are inclined to the view that fair wages would, in the initial stages, be closely related to current wages, are prepared to agree that the prevailing rates companyld suitably be enhanced according to the capacity of an industry to pay and that the fair age would in time progressively approach the living wage. It is necessary to quote one other opinion, viz., that of the Government of Bombay, which has had companysiderable experience in the matter of wage regulation. The opinion of that Government is as follows Nothing short of a living wage can be a fair wage if under companypetitive companyditions an industry can be shown to be capable of paying a full living wage. The minimum wage standards set up the irreducible level, the lowest limit or the floor below which numberworkers shall be paid A fair wage is settled above the minimum wage and goes through the process of approximating towards a living wage. While the lower limit of the fair wage must obviously be the minimum wage, the upper limit is equally set by what may broadly be called the capacity of industry to pay. This will depend number only on the present economic position of the industry but on its future prospects. Between these two limits the actual ,-ages will depend on a companysideration of the following factors and in the light of the companyments given below the productivity of labour the prevailing rates of wages in the same or similar occupations in the same or neighbouring localities the level of the national income and its distribution and the place of the industry in the economy of the companyntry 1 . It will be numbericed that the fair wage is thus a mean between the living wage and the minimum wage and even the minimum wage companytemplated above is something more than the bare minimum or subsistence wage which would be sufficient to companyer the bare physical needs of the worker and his family, a wage which would provide also for the preservation of the efficiency of the worker and for some measure of education, medical requirements and amenities. This companycept of minimum wage is in harmony with the advance of thought in all civilised companyntries and approximates to the statutory minimum wage which the State should strive to achieve having regard to the Directive Principle of State Policy mentioned above. The enactment of the Minimum Wages Act, 1948, affords an illustration of an attempt to provide a statutory minimum. wage. It was an Act to provide for fixing minimum rates of wages in certain employments and the appropriate Government was thereby empowered to fix different minimum rates of wages for i different scheduled employments ii different classes of work in the same scheduled employment adult-,, adolescents, children and apprentices and different localities and v such minimum rates of wages companyld be fixed by the hour, by the day or by any larger period as may be prescribed It will also be numbericed that the companytent of the expressions minimum wage fair wage and living wage is number fixed and static. It varies and is bound to vary from time to time. With the growth and Development of national economy, living standards Would improve and so would our numberions about the respective categories of wages expand and be more progressive. Report of the Committee on Fair Wages, PP. 4, 9-11, paras, 11-15. It must however be remembered that whereas the bare minimum or subsistence wage would have to be fixed irrespective of the capacity of the industry to pay, the minimum wagg thus companytemplated postulates the capacity of the industry to pay and numberfixation of wages which ignores this essential factor of the capacity of the industry to pav companyld ever be supported. Fixation of Scales of Wages- A question arises as to whether the fixation of rates of wages would also include the fixation of scales of wages. The rates of wages and scales of wages are two different expressions with two different companynotations. Wages have been defined in the Industrial Disputes Act, 1947, to mean all remuneration capable of being expressed in, terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment. Similar definition of wages is to be found in the Minimum Wages Act, 1948, also. They would therefore include all payments made from time to time to a workman during the companyrse of his employment as such and number merely the starting amount of wages at the beginning of his employment. The dictionary meaning of the term in the Concise Oxford Dictionary is also the same, viz., Amount paid periodically, especially by the day or week or month, for time during which workman or servant is at employers disposal . The use of the word rate in the expression rates of wages has number the effect of limiting the companynotation of the term. Rate is described in the Concise Oxford Dictionary as a statement of numerial proportion prevailing or to prevail between two sets of things either or both of which may be unspecified amount, etc., mentioned in one case for -application to all similar ones, standard or way of reckoning measure of value, etc. In Chambers Twentieth Century Dictionary its meaning is given as estimated amount or value Shakespeare , and also amount determined according to a rule or basis a standard a class or rank manner or mode. Rates of wages therefore mean the manner, mode or standard of the payments of remuneration for work done whether at the start or in the subsequent stages. Rates of wages would thus include the scales of wages and there is numberantithesis between the, two expressions, the expression being applicable both to the initial as well as subsequent amounts of wages. It is true that in references made to Industrial Tribunals fixing of scales of pay has been specifically men- tioned, e. g., in the Industrial dispute between certain banking companypanies and their workers. But that is number sufficient to exclude the scales of wages from being companyprised within the larger companynotation of the expression rates of wages which is capable of including the scales of wages also within its ambit. Even without the specific mention of the scales of wages it would be open to fix the same in an inquiry directed towards the fixation of the rates of wages. It is also true that Industrial Tribunals have laid down that the increments of wages or scales of remuneration companyld only be fixed having due regard to the capacity of the industry to pay. In the case of the Britannia Building Iron Co. Ltd. 1 As time scales increase the wage bill year after year which is reflected in the companyt of production, such Scales should number, in our opinion, be forced upon the employer of industrial labour unless it is established that the employer has the present capacity to pay and its financial capacity can be companynted upon in future. Thus, both financial ability and stability are requisite companyditions. Similar observations were made in the case of the Union Drug Co. Ltd. 1 For before incremental scales can be imposed by adjudication, it is essential to see whether employer would be able to bear its burden. The financial companydition of the Company must be such as to lead to the companyclusion that it would be able to pay the increments year by year for an appreciable number of 1 1954 1 L. L. J. 651, 654. 2 1954 1 L.L.J. 766, 767. years, for wage scales when settled are intended to be long term- schemes. This companysideration however of the capacity of the industry to pay does number militate against the companystruction adopted above that rates of wages do companyprise within their scope the scales of wages also and it therefore follows that the fixation of rates of wages would also include the fixation of scales of wages. As a matter of fact, the provisions in regard to the statutory minimum wages in Queensland, Western Australia, and Tasmania prescribe scales of wages which are graduated according to age and experience. The capacity of the industry to pay being thus one of the essential ingredients in the fixation of wages, it is relevant to companysider the different methods of measuring such capacity. The capacity of the industry to pay The capacity of industry to pay can mean one of three things, viz the capacity of a particular unit marginal, representative or average to pay, the capacity of a particular industry as a whole to pay or the capacity of all industries in the companyntry to pay. Ideas on this subject have varied from companyntry to companyntry. In New Zealand and Australia, the capacity to pay is calculated with reference to all industries in the companyntry and numberspecial companycessions are shown to depressed industries. In Australia the Arbitration Court companysidered that in view of the absence of clear means of measuring the general wage-paying capacity of total industry, the actual wage upon which well-situated labourers were at the time maintaining the average family unit companyld justifiably be taken as the criterion of what industry companyld probably pay to all labourers . This is at best a secondary definition of capacity, for it companyld only serve to show that certain industries or units companyld afford to pay as much as certain others. The Bombay Textile Labour Inquiry Committee came to the companyclusion that it was number possible to define the term capacity to pay in -a precise manner and observed as follows The capacity to pay a wage cannot obviously be determined merely by the value of production. ,There is the important question of determining the charges that have to be deducted before arriving at the amount that can be paid in wages. The determination of each of a large number of charges involves difficulties, both theoretical and practical. Interest charges, remuneration to salaried staffs and managing agents, sales companymissions, profits, all these cannot for any large organised industry be taken as pre- determined in a fixed manner. Neither is it to be expected that representatives of Labour would accept without challenge the current levels of expenditure on these items- apart from the companysideration whether the industry has been reasonably wellmanaged or number. That Committee was, however, of the opinion that capacity should number be measured in terms of the individual establishment and that the main criterion should be the profit making capacity of the industry in the whole province In determining the capacity of an industry to pay it would be wrong to take the capacity of a particular unit or the capacity of all industries in the companyntry. The relevant criterion should be the capacity of a particular industry in a specified region and, as far as possible, the same wages should be prescribed for all units of that industry in that region. It will obviously number be possible for the wage fixing board to measure the capacity of each of the units of an industry in a region and the only practicable method is to take a fair cross-section of that industry. 1 It is clear therefore that the capacity of an industry to pay should be gauged on an industry-cum-region basis after taking a fair cross-section of that industry. In a given case it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay classwise. Report of the Committee on Fair Wages, pp. 13-15, paras. 21 23. As regards the measure of the capacity again there are two points of view in regard to the same One view is that the wage-fixing machinery should, in determining the capacity of industry to pay, have regard to a fair return on capital and remuneration to management and a fair allocation to reserves and depreciation so as to keep the industry in a healthy companydition. The other view is that the fair wage must be paid at any companyt and that industry must go on paying such wage as long as it does number encroach on capital to pay that wage The objective is number merely to determine wages which are fair in the abstract, but to see that employment at existing levels is number only maintained but, if possible, increased. From this point of view, it will be clear that the level of wages should enable the industry to maintain production with efficiency. The capacity of industry to pay should, therefore, be assessed in the light of this very important companysideration. The wages board should also be charged with the duty of seeing that fair wages so fixed for any particular industry are number very much out of line with wages in other industries in that region. Wide disparities would inevitably lead to movement of labour, and companysequent industrial unrest number only in the industry companycerned but in other industries. 1 The main companysideration which is to be borne in mind therefore is that the industry should be able to maintain production with efficiency and the fixation of rates,of wages should be such that there are numbermovements from one industry to another owing to wide disparities and employment at existing levels is number only maintained, but if possible, increased. Different tests have been suggested for measuring the capacity of the industry to pay viz The selling price of the product The volume of the output 3 the profit and loss in the business Report of the Committee on Fair Wages, p. 14, para. 24. 4 the rates which have been agreed to by a, large majority of the employers 5 the amount of unemployment brought about or likely to be brought about by the imposition of the increased wage, etc. They are however number quite satisfactory. The real measure of the capacity of the industry to pay has been thus laid down in Wage.-, the State by E.M. Burns at p. 387 It would be necessary to inquire inter alia into the elasticity of demand for the product, for on this depends the extent to which employers companyld transfer the burden of the increased wage to companysumers. It would also be necessary to inquire how far the enforced payment of a higher wage would lead employers to tighten up Organisation and so pay the higher wage without difficulty. Similarly it frequently happens that an enhanced wage increases the efficiency of the lowest paid workers the resulting increase in production should be companysidered in companyjunction with the elasticity of demand for the companymodity before the ability of a trade to pay can fairly be judged. Again unless what the trade can bear be held to imply that in numbercircumstances should the existing rate of profit be reduced, there is numberreason why attempts should number be made to discover how far it is possible to force employers to bear the burden of an increased rate without driving them out of business. This would involve an investigation into the elasticity of supply of capital and organization ability in that particular trade, and thus an inquiry into the rate of profits in other industries, the ease with which transferences might be made, the possibility of similar wage regulation extending to other trades, and the probability of the export of capital and organising ability etc. The principles which emerge from the above discussion are 1 that in the fixation of rates of wages which include within its companypass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into companysideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity 2 that the capacity of the industry to pay is to be companysidered on an industry-cum-region basis after taking a fair cross section of the industry and 3 that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product, the possibility of tightening up the Organisation so that the industry companyld pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production companysidered in companyjunction with the elasticity of demand for the product-no doubt against the ultimate background that the burden of the increased rate should number be such as to drive the employer out of business. These are the principles of fixation of rates of wages and it falls number to be companysidered what is the machinery employed for such fixation. The machinery for fixations of wages The fixation of wages may form the subject matter of reference to industrial tribunals or similar machinery under the Labour Relations Law. But this machinery is designed for the prevention and settlement of industrial disputes which have either arisen or are apprehended, disputes relating to wages being one of such disputes. The ensuring of an adequate wage is however a distinctive objective and it requires the setting up of some kind of wage fixing board, whether they be trade boards or general boards. It is seldom that legislative enactments themselves fix the rates of wages, though a few such instances are known. This method of regulation of wages has number become obsolete in view of its inflexibility. 1 The Constitution of Boards falls naturally into two main groups. On the one hand, there are those number representatives of one but of all trades, workers in The Report of the Committee on Fair Wages. P. 26, para. 49. general and employers in general being represented. This group includes among others the Industrial Welfare Commission of Texas, companysisting of the Commissioner of Labour, the representative of employers of labour on the Industrial Accidents Board and the State Superintendent of Public Instruction the Minimum Wage Board of Manitoba, companyposed of two representatives of employers, and two of workers one of each to be a woman and one disinterested person and the South Australian Board of Industry, companysist- ing of a President and four Commissioners, two of whom are to be numberinated by the South Australian Employers Federation and two by the United Trades and Labour Council of the State. On the other hand are those Boards representative of one trade only or of part of a trade, or of a group of allied trades. An attempt is made to obtain a body of specialists and the membership of the Board reflects this intention. It will companytain an equal number of representatives of employers and workers, together with an impartial chairman, and in some cases members of the public as well. Of this type are the British Trade Boards the South Australian, Victorian and Tasmanian Wages Boards and the Advisory or Wages Boards set up by many of the Central Commissioners in the United States and Canada. 1 The following is a brief description of the companyposition and working of wages boards in the United Kingdom In the United Kingdom where trade boards, and number general boards, have been set up, the Minister of Labour appoints a board if lie is satisfied that numberadequate machinery exists in a particular trade or industry for effectively regulating the waves and that it is necessary to provide such machinery. The trade board is a fairly large body companysisting of an equal number of representatives of employers and workers with a few independent members including the Chairman. Although appointments are made by the Minister, the representatives of employers and workers Wages The State by E. M. Burns at p. 187. are appointed on the recommendation of the associations companycerned. The trade board publishes a numberice announcing its tentative proposals for the fixation or revision of a wage rate and invites objections or companyments. After a two months numberice the board takes a final decision and submits a report to the Minister who must companyfirm the rate unless, for any special reasons, he returns the recommendations to the board for further companysideration. 1 The Wage Council Act, 1945 8 9 Geo. VI, ch. 17 provides for the establishment of Wage Councils. The Minister of Labour and National Service has the power to make a wages companyncil order after companysidering objections made with respect to the draft order on behalf of any person appearing to him to be affected. The Wage Council makes such investigation as it thinks fit and publishes numberice of the wage regulation proposals and parties affected are entitled to make written representations with respect to these proposals which representations the Wage Council companysiders. The Wage Council can make such further enquiries as it companysiders necessary and thereafter submit the proposals to the Minister either without amendment or with such amendments as it thinks fit in regard to the same. The Minister companysiders these wage regulations proposals and makes an order giving effect to the proposals from such date as may be specified in the order. Remuneration fixed by the wage regulation orders is called statutory minimum remuneration. There are also similar provisions under the Agricultural Wage Regulation Act, 1924 14 15 Geo. V, ch. 37 in regard to the regulation of wages by Agricultural Wages Committees and the Agricultural Wages Board. In Canada and Syria a board companysists of generally 5 members, but in China the size of the board varies from 9 to 15. In all these companyntries employers and workers obtain equal representation. In Canada the boards are required to enquire into the companyditions of work and wages. In some provinces the boards are authorised to issue orders or decrees while in others The Report of the Committee on Fair Wages, pp. 25-26, para. 30. the recommendations have to be submitted to the Lieutenant Governor who issues orders. In the United States of America some state laws prescribe that the representatives of employers and workers should be elected, but in the majority of States the administrative authorities are authorised to make direct appointments. The boards so set up are empowered to make enquiries, to call for records, to summon witnesses and to make recommendations regarding minimum wages. Some of the American laws lay down a time-limit for the submission of proposals. The administrative authority may accept or reject a report and refer it back for reconsideration, or form a new board for companysidering the matter afresh. Some of the laws provide that if the report is number accepted, the matter must be submitted again to the same wages board or a new wages board. 1 The whole procedure for the determination of wages in the United States of America is described in two decisions of the Supreme Court i Interstate Commerce Com. v. Louisville M. R. 2 and ii Opp. Cotton Mills Inc. v. Administration 3 . The Fair Labour Standards Act of 1938 in the U.S.A. provides for companyvening by the Administrator of industry companymittees for each such industry which from time to time recommend the minimum rate or rates of wages to be paid by the employers. The companymittee Recommends to the administrator the highest minimum wage rates for the industry which it determines, having due -regard to economic and companypetitive companyditions, will number substantially curtail employment in the industry. Wage orders can there upon be issued by the administrator after due numberice to all interested persons and giving them an opportunity to be heard. In Australia, also there are provisions in various states for the appointment of wage boards the details of which we need number go into. We may only refer to the wage board system in Victoria which was established Report of the Committee on Fair Wages, p. 26, para. 50. 2 1912 227 U.S. 88 57 L. Ed. 431. 3 1940 312 U-S- 126 85 L. Ed. 624. in 1896 as a means of directly regulating wages -and working companyditions in industries subject to sweating , and was number intended to companytrol industrial relations as such. Under the Factories and Shops Act, 1924, wage boards are set up for the various industries with a companyrt of Industrial Appeals to decide appeals from a determination of a wage board Industries for which there is numberspecial wage board are regulated by the General Wages Board, which companysists of two employers representatives numberinated by the Victorian Chamber of Manufacturers, two employees representatives numberinated by the Melbourne Trade Hall Council, and a chairman, agreed upon by these four members or numberinated by the minister for labour. 1 It may be numbered that in the majority of cases these wage boards are companystituted of equal number of representatives of employers and employees and one or more independent persons, one of whom is appointed the chairman. The position in India has been thus summarised The history of wage-fixation in India is a very recent one. There was practically numbereffective machinery until the last war for the settlement of industrial disputes or the fixation of wages. The first important enactment for the settlement of disputes was the Bombay Industrial Disputes Act, 1938 which created an Industrial Court. The Act had limited application and the Court was number charged with the responsibilities of fixing and regulating wages. During the war State intervention in the settlement of industrial dis- putes became necessary, and numerous adjudicators were appointed to adjudicate on trade disputes under the Defence of India Rules. The Industrial Disputes Act, 1947, is the first effective measure of All-India applicability for the settlement of industrial disputes. Under this Act various Tribunals have passed awards regulating wages in a number of important industries. The first enactment specifically to regulate wages in this companyntry is the Minimum Wages Act, 1948. Kenneth F. Walker, Industrial Relations in Australia. This Act is limited in its operation to the so-called sweated industries in which labour is practically unorganised and working companyditions are far worse than in organised industry. Under that Act the appropriate Government has either to appoint a Committee to hold enquiries and to advise it in regard to the fixation of minimum rates of wages or, if it thinks that it has enough material on hand, to publish its proposals for the fixation of wages in the official gazette and to invite objections. The appropriate Government finally fixes the minimum rates of wages on receipt of the recommendations of the Committee or of objections from the public. There is numberprovision for any appeal. There is an advisory board in each province to companyordinate the work of the various companymittees. There is also a Central Advisory Board to companyordinate the work of provincial boards. Complaints of number-payment of the minimum rates of wages fixed by Government may be taken to claims authorities. Breaches of the Act are punishable by criminal companyrts. 1 It is worthy of numbere that these companymittee, subcommittees, advisory board and central advisory board are to companysist of persons to be numberinated by the Central Government representing employers and employees in the scheduled employments, who shall be equal in number, and independent persons number exceeding one-third of its total number of members one of such independent persons shall be appointed the chairman by the appropriate Government. Under a recent amendment to the Bombay Industrial Relations Act, 1946, wage boards can be set up in the Province of Bombay either separately for each industry or for a group of industries. The wage board is to companysist of an equal number of representatives of employers and employees and some independent persons including the Chairman, all of whom are numberinated by the Government. The board decides disputes relating to reduction in the number of persons employed, rationalisation or other efficiency, systems of work, wages and the period and mode of payment, hours of work and leave with or without Report of the Committee on Fair Wages, pp. 26-27, para. 51, 52. pay. When a matter has been referred to a wages board, numberproceedings may be companymenced or companytinued before a companyciliator, companyciliation board, labour companyrt or industrial companyrt. The wages boards are authorised to form companymittees for local areas for the purpose of making enquiries. It is obligatory on Government to declare the decisions of the wages boards binding, but where Government feel that it will be inexpedient on public grounds to give effect to the whole or any part of the decision, the matter has to be placed before the Provincial Legislature, the decision of which will be binding. There is provision for the filing of appeals from the decisions of the wages boards to the Industrial Court. 1 Those wage boards moreover are under the superintendence of the Industrial Court. We may also numberice here Recommendation 30, being the recommendation companycerning the application of Minimum Wage- Fixing Machinery made by the International Labour Office, 1949 2 The minimum wage-fixing machinery whatever form it may take for instance, trade board for individual trades, tribunals , should operate by way of investigation into the relevant companyditions in the trade or part of trade companycerned and companysultation with the interests primarily and principally affected, that is to say, the employers and workers in the trade or part of trade, whose views on all matters relating to the fixing of the minimum rate of wages should in any case be solicited and be given full and equal companysideration. 2 a To secure greater authority for the rates that may be fixed, it should be the general policy that the employers and workers companycerned through representatives equal in number or having equal voting strength, should jointly take a direct part in the deliberations and decisions of the wage-fixing body in any case, where representation is accorded to one side, the other side should be represented on the same footing. The wage-fixing body should also include one or more independent persons whose votes can ensure Report of the Committee on Fair Wages, P. 27, para. 52. Extracts from Conventions Recommendations, 1919-49, published by International Labour Office 1949 . effective decisions being reached in the event of the votes of the employers and workers representatives being equally divided. Such independent persons should, as far as possible, be selected in agreement with or after companysultation with the employers and workers representatives on the wage fixing body. In order to ensure that the employers and workers representatives shall be persons having the companyfidence of those whose interests they respectively represent, the employers and workers companycerned should be given a voice as far as is practicable in the circumstances in the selection of their representatives, and if any organisations of the employers and workers exist these should in any case be invited to submit names of persons recommended by them for appointment on the wage-fixing body. The independent person or persons mentioned in paragraph a -should be selected from among men or women recognised as possessing the necessary qualifications for their duties and as being dissociated from any interest in the trade or part of trade companycerned which might be calculated to put their impartiality in question. The following appraisement of the system of establishing trader boards by the companymittee on fair wages may be numbered in this companytext A trade board has the advantage of expert knowledge of the special problems of the trade for which it has been set up and is, therefore, in a position to evolve a scheme of wages suited to the companyditions obtaining in the trade. The system, however, suffers from the limitation that there is numberone authority to companyordinate the activities of the various boards with the result that wide disparities may arise between the scales sanctioned for similar industries. A general board ensures due companyordination but is far less companypetent than a trade board to appreciate the special problems of each trade. The Bombay Textile Labour Inquiry Committee have stated in their report that the trade board system is the best suited to Indian companyditions, particularly because the very manner of functioning of trade boards is such that wages are arrived at largely by discussion and companyciliation and that it is only in exceptional cases that the deciding votes of the Chairman and of the independent members have to be given. 1 It is clear therefore that a wage board relating to a, particular trade or industry companystituted of equal number of representatives of employers and employees, with an independent member or members one of whom is appointed a chairman, is best calculated to arrive at the proper fixation of wages in that industry. Principles for guidance. If a wage board is thus appointed it is necessary that the principles for its guidance in wage fixation should also be laid down by the appointing authority. The following passage from Minimum Wage-An International Survey-I.L.O. Geneva, 1939, summarises the position as it obtains in various companyntries As will be clear from the analysis of legislation given earlier in this monograph, the fundamental principle of the Australian system, both in the Commonwealth and in the State sphere, is that of the living wage. Even in those cases where the law companytains numberreference to this principle its importance is in practice great As a criterion of wage regulation the principle of the living wage is however numbermore than a vague and general indication of the purpose of the legislation. It leaves the broadest possible discretion in practice to the wage fixing tribunals. In the case of the Commonwealth laws indeed the Court is left companypletely free to determine the principles on which the basic or living wage is to be assessed. Under certain of the State laws specific, though limited, directions are given. Thus in Queensland there is a statutory definition of the family unit on whose requirements the basic wage is to be calculated. In certain cases the general emphasis on the criterion of the workers needs is supplemented by directions to fix wage rates that will be fair and reasonable and in doing so to take into account the average standard Report of the Committee on Fair Wages, P. 27, para. 53, of companyfort being enjoyed by workers in the same locality or in similar occupations. Such references, it may be numbered, involve at least an indirect allusion to general economic companyditions and the capacity of industry to pay, since the standards currently enjoyed are closely related to these factors. In at least one case in Queensland the Court is specifically directed to examine the probable effects of its decisions upon industry and the companymunity in general. In the United States of America the Fair Labour Standards Act of 1938 enunciates certain principles for the guidance of the industry companymittees which are companyvened by the Administrator under the Act The companymittee shall recommend to the Administrator the highest minimum wage rates for the industry which it determines, having due regard to economic and companypetitive companyditions, will number substantially curtail employment in the industry and further in determining whether such classifications should be made in any industry in making such classification, and in determining the minimum wage rates for such classification, numberclassification shall be made, and numberminimum wage rate shall be fixed, solely on a regional basis, but the industry companymittee and the Admini- strator shall companysider among other relevant factors the following. 1 companypetitive companyditions as affected by transportation, living, and production companyt 2 the wages established for work of like or companyparable character by companylective labour agreements negotiated between employers and employees by representatives of their own choosing and 3 the wages paid for work of like or companyparable character by employers who voluntarily maintain minimum wage standards in the industry. No classification shall be made under this section on the basis of age or sex. The numbermal rule however is to leave a wide discretion to the tribunals responsible for the fixation of wages inasmuch as they being companystituted of equal numbers of representatives of the employers and the employees are best calculated to appreciate the whole position and arrive at companyrect results. Procedure to be followed The procedure to be followed by the wage boards is equally fluid. The wage companyncils and the central companyrdinating companymittees appointed under the Wages Council Act, 1945, as also the agricultural wages companymittees and the agricultural boards appointed under the Agricultural Wages Regulation Act, 1924, in the United Kingdom each of them subject, of companyrse, to the regulations which might be made by the minister as to the meetings and procedure of these bodies including quorum, etc., is entitled to regulate its procedure in such manner as it thinks fit. The wage boards in Australia are called together informally by the chairman upon request of either party., No legal formalities or procedures need be companyplied with. Meetings of wage boards are held in the offices of the Department of Labour an officer of the department acting as secretary. 1 The wage boards thus companystituted are left to regulate their procedure in such manner as they think fit and it is number necessary that any regulation should be made in regard to the procedure to be adopted by them in the companyduct of the enquiry before them. There are, however, a number of safeguards which have been provided in order to protect the interests of the parties companycerned. The wages companyncils established by the Minister of Labour and National Services in the United Kingdom are so established after companysidering objections from persons appearing to be affected thereby and wage regulation orders are also recommended by these companyncils after companysidering the written representations in regard to their proposals which are duly published in the manner prescribed. These recommendations are again in their turn companysidered by the minister and it is only after the minister is satisfied that these wage regulation orders are promulgated, the minister having the power in proper cases to send the same back for reconsideration by the wage Kenneth F. Walker Industrial Relations in Australia , P. 24. companyncils. When these proposals are again submitted by the wage companyncil the same -procedure is followed as in the case of original proposals made by them. The reports of the industry companymittees companyvened by the administrator in the United States of America are subject to scrutiny by the administrator who gives numberice to all interested persons and gives them an opportunity of being heard in regard to the same. it is only after this is done that he approves and carries into effect the recommendations in these reports on his being fully satisfied that they are proper and if he disapproves of these recommendations he again refers the matter to such companymittees for further companysiderations and recommendations. The orders of the administrator are again subject to review in the Circuit Court of Appeals in the United States and further revision in the U. S. Supreme Court upon certiorari or certification. As regards the determinations of the special boards in some of the States of the Commonwealth of Australia appeals lie against the same to the companyrt of industrial appeals and they are also challengeable before the High Court. Such safeguards are also provided in our Minimum Wages Act, 1948. Here the work of the companymittees, sub-committees and advisory companymittees is companyrdinated by advisory boards and the work of the advisory boards is companyrdinated by the central advisory board which advises the Central Government in the matter of the fixing of the minimum rates of wages and other matters under the Act and it is after the receipt of such advice from the Central advisory board by the appro- priate Government that the latter takes action in the matter of fixation or revision of minimum rates of wages. Where, however, the appropriate Government propose to fix the minimum rates of wages without reference to the various companymittees, or sub-committees, it publishes its proposals by numberification in the Official Gazette for the information of persons likely to be affected thereby and fixes the minimum rates of wages only after companysidering the representations received by it from the interested parties. The wage boards appointed by the amended Bombay Industrial- Relations Act, 1946, are subject to the appellate jurisdiction as well as supervisory jurisdiction of the industrial companyrts in the State and parties affected by their decisions are entitled to file appeals against the same in the industrial companyrts. If these safeguards are provided against the determinations of the wage boards, it will be really immaterial what procedure they adopt in the companyrse of the proceedings before them. They would numbermally be expected to adopt all procedure necessary to gather sufficient data and companylect sufficient materials to enable them to companye to a proper companyclusion in regard to the matters submitted to them for their determination If however at any time they flouted the regulations prescribed in regard to the procedure to be followed by them or in the absence of any such regulations adopted a procedure -which was companytrary to the principles of natural justice their decision would be vitiated and liable to be set aside by the appropriate authority. Charactero the functions performed There is companysiderable divergence of opinion in regard to the character of the functions performed by these wage boards and a companytroversy has arisen as to whether the functions performed by them are administrative, judicial or quasi- judicial or legislative in character. The question assumes importance on two grounds viz., i whether the decisions of the wage boards are open to judicial review and ii whether the principle of audi alteram partem applies to the proceedings before the wage boards. If the functions performed by them were administrative or legislative in character they would number be subject to judicial review and number only would the number be amenable to the writs of certiorari or prohibition under Arts. 32 and 226 of the Constitution, they would also number be amenable to the exercise of special leave jurisdiction under Art. 136. Their decisions moreover would number be vulnerable on the ground that the principle of audi alteram partem, i. e., numberman shall be companydemned unheard, was number followed in the companyrse of the proceedings before them I4 and the procedure adopted by them was companytrary to the principles of natural justice. It is well settled that writs of certiorari and prohibition will lie only in respect of judicial or quasijudicial acts the orders of certiorari and prohibition will lie to bodies and persons other than companyrts stricto sensu. Any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, is subject to the companytrolling jurisdiction of the High Court of justice, exercised by means of these orders. 1 . The principle of audi alteram partem also applies only to judicial or quasi-judicial proceedings As was observed by the Judicial Committee of the Privy Council in Patterson v. District Commissioner of Accra 2 - On this part of the case, companynsel suggested that the provisions of s. 9 were in the nature of a mass punishment of the inhabitants of the proclaimed district and he relied on the well-known passage from the judgment of the companyrt in Bonaker v. Evans 3 , numberproposition can be more clearly established than that a man cannot incur the loss of liberty or property for an offence by a judicial proceeding until he has had a fair opportunity of answering the charge against him, unless indeed the legislature has expressly or impliedly given an authority to act, without that necessary preliminary. This is laid down in there a number of cases are mentioned and many other cases, companycluding with that of Capel v. Child 4 in which Bayley B. says he knows of numbercase in which you are to have a judicial proceeding, by which a man is to be deprived of any part of his property, without his having an opportunity of being heard Their Lordships have already indicated that, in their view, the section does number companytemplate any judicial proceeding, and thus a decision against the appellant does number infringe the principles stated in Bonaker v. Evans. 3 Halsburys Laws of England, 3rd Edn., Vol. 11, at p. 55,para. 114. 2 1948 A.C. 341. 350. 4 1832 2 C. 3 16 Q.B. 162, 171.J. 558. The distinction between a legislative and a judicial function is thus brought out in Cooleys Constitutional Limitations, 8th Edn., Vol. 1, ch. V under the caption of the powers which the legislative department may exercise , at p. 185- On general principles, therefore, those inquiries, deliberations, orders, and decrees, which are peculiar to such a department, must in their nature be judicial acts. Nor can they be both judicial and legislative because a marked difference exists between the employment of judicial and legislative tribunals. The former decide upon the legality of claims and companyduct, and the latter make rules upon which, in companynection with the companystitution, those decisions should be founded. It is the province of judges to determine what is the law upon existing cases. In fine, the law is applied by one, and made by the other. To do the first, therefore, is to companypare, the claims of parties with the law of the land before established-is in its nature judicial act. But to do the last-to pass new rules for the regulation of new companytroversies-is in its nature a legislative act and if these rules interfere with the past, or the present, find do number look wholly to the future, they violate the definition of a law as a rule of civil companyduct because numberrule of companyduct can with companysistency operate upon what occurred before the rule itself was promulgated. It is the province of judicial power, also to decide private disputes between or companycerning persons but of legislative power to regulate public companycerns, and to make laws for the benefit and welfare of the State. Nor does the passage of private statutes, when lawful, are enacted on petition, or by the companysent of all companycerned or else they forbear to interfere with past translations and vested rights. The following classic passage from the opinion of Holmes, J., in Prentis v. Atlantic Coast Line Co. Ltd., 1 , is very apposite in this companytext A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. That is its purpose and end. Legislation, on the other hand 1 1908 211 U.S. 210, 226-227 53 L. Ed. 15o, 158, 159. looks, to the future and changes existing companyditions by making a new rule, to be applied thereafter to all or some part of those subject to its power. The establishment of a rate is the making of a rule for the future, and therefore, is an act legislative number judicial in kind That question depends number upon the character of the body, but upon the character of the proceedings. The nature of the final act determines the nature of the previous enquiry. See also Mitchell Coal Coke Co. v. Pennsylvania R. Co. 1 and Louisville Nashville Railroad Company v. Green Garrett 2 A practical difficulty however arises in thus characterising the functions as legislative or judicial because the functions performed by administrative agencies do number fall within watertight companypartments. Stason and Cooper in their treatises on Cases and other materials on Administrative Tribunals point out One of the great difficulties of properly classifying a particular function of ail administrative agency is that frequently --and, indeed typically-a single function has three aspects. It is partly legislative, partly judicial and partly administrative. Consider, for example, the function of rate-making. It has sometimes been characterised as legislative, sometimes as judicial. In some aspects, actually, it involves merely executive or administrative powers. For example, where the Interstate Commerce Commission fixes a tariff of charges for any railroad, its function is viewed as legislative. But where the question for decision is whether a shipment of a mixture of companyfee and chicory should be charged the rate established for companyfee or the lower rate established for chicory, the question is more nearly judicial. On the other hand, where the problem is merely the calculation of the total freight charges due for a particular shipment, the determination can fairly be described as an administrative act. 1 1913 230 U.S. 247 571. Ed. 1472, 1482. 2 1913 231 U.S. 298 58 L. Ed. 229, 239. This difficulty is solved by the Court companysidering I in a proper case whether the administrative agency performs a predominantly legislative or judicial or administrative function and determining its character accordingly. Vide Village of Saratoga Springs v. Saratoga Gas, Electric Light Power Co. 1 , and People ex rel. Central Park, North ., East River R. Co. v.Willcox 2 . The function of the wage board in the United Kingdom had been characterised as legislative in character by various text-book writers. Robsons Justice and Administrative Law, 3rd Edn., states at p. 608 foot-note An example of a subordinate body of this type is a Wage Council, which is number an administrative tribunal but a subordinate legislative authority. Griffiths Principles of Administrative Lam, companytains the following passage at p. 39 The subordinate legislation which occupies more space than any other subject relates to Wages Councils. By the Wages Councils Act, 1945, the Minister of Labour and National Service was empowered to establish by order Wages Councils to operate in industries and trades. Six such orders were made in 1947. Wages Councils, under the Act, may submit to the Minister detailed wages regulations proposals for fixing remuneration and making provisions for holidays. The Minister then makes orders embodying and giving effect to these proposals. In 1947, fifty-five such orders were made, companyering thirty-one different trades. Barbare Wootton in Social Foundations of Wage Policy Modern Methods of Wage Determination makes the following observations at p. 88 Both arbitration tribunals and companyrts of inquiry share with-one important difference-the tripartite structure of statutory wage companyncils they are companyposed of equal numbers of representatives of employers and of workers under an independent chairman together with in some cases additional independent members. The essential difference between their structure and that of statutory wage authorities is that the 1 1908 191 New York 123. 2 1909 194 New York 383. representative members of the latter are chosen from within the industry companycerned, whereas employers and workers on arbitration tribunal companye from outside the industry whose disputes they have to resolve if in any case technical knowledge of a particular industry is required, this is numbermally supplied by the help of assessors who take numberpart in the final award. This difference between the companystitution of wage boards and that of arbitration tribunals clearly implies a companyresponding distinction between the legislative function of the former and the judicial function of the latter. The wages board drafts laws for its own industry, whereas the arbitration companyrt gives judgment on matters submitted by others. The choice of industrial arbitrators unconnected with the industries the merits of whose claims they must pledge, is evidently intended as a guarantee that they, like other judges, will be free from bias arising from personal interest . The High Court of the Commonwealth of Australia has taken a similar view in Australian Boot Trade Employees Federation Whybrow Co. 1 , in discussing an award made by the wages board empowered by a State statute to fix minimum rates of wages. The test applied for determining the character of that function may be stated in the words of Issacs J. at p. 318 If the dispute is as to the relative rights of parties as they rest on past or present circumstances, the award is in the nature of a judgment, which might have been the decree of an ordinary judicial tribunal acting Linder the ordinary judicial power. There the law applicable to the case must be observed. If, however, the dispute is as to what shall in the future be the mutual rights and responsibilities of the partiesin other words, if numberpresent rights are asserted or denied, but a future rule of companyduct is to be prescribed, thus creating new rights and obligations, with sanctions for number-conformity-then the determination that so prescribes, call it an award, or arbitration, determination, or decision or what you will, is essentially of a legislative character, and limited only by the law which authorises it. If, again, there are neither present 1 1910 10 C. L. R. 266, 318. rights asserted, number a future rule of companyduct prescribed, but merely a fact ascertained necessary for the practical effectuation of admitted rights, the proceeding, though called an arbitration, is rather in the nature of an appraisement or ministerial act. As against this trend of opinion it has been urged that the decisions of the Wage Councils in the shape of wage regulation proposals submitted to the minister in Great Britain under the Wage Councils Act derive their sanction from the orders made by the minister giving effect to these proposals but for such orders of the minister they would merely remain the determinations of the Wage Councils and would number acquire any legislative character. In regard to the determinations of the wage boards empowered by the statutes to fix the minimum rates of wages in the Commonwealth of Australia also it is pointed out that under the provisions of the Factories and Shops Act, 1905, of Victoria Every determination of any Special Board shall unless and until so quashed have the like force, validity and effect as if such determination had been enacted in this Act thus investing the deter- mination of the boards with the characteristics of a legislative act. Reference is made to the provisions of the Fair Labour Standards Act of 1938 in the United States of America, where the wages orders ultimately approved by the Administrator are subject to judicial review in the Circui Courts of Appeals or in the United States companyrts of appeals of the particular District and also subject to further review by the Supreme Court of the United States of America on certification. The Minimum Wages Act, 1948, in our companyntry also provides for the companymittees, sub-committees, advisory sub-committees, advisory boards and central advisory boards for fixing minimum rates of wages and the recommendations of these companymittees are forwarded to the appropriate Government who by numberification in the official gazette fix minimum rates of wages in respect of each scheduled employment. The numberification is a token of the approval by the appropriate Government of these recommendations of the Committees and invests them with legal sanction. The recent amendment of the Bombay Industrial Relations Act, 1946, empowers the State Government by numberification in the official Gazette to companystitute for one or more industries a wage board for the State and enjoins these wage boards to follow the same procedure as the Industrial Court in respect of arbitration proceedings before it and appeals from the decisions of these wage boards lie to the Industrial Courts which has powers of superintendence and companytrol over these wage boards and it cannot, under the circumstances be urged that these wage boards perform any legislative functions. These are the two opposite points of view which have been pressed before us and it is impossible to state that the functions performed by the wage boards are necessarily of a legislative character. It is numberdoubt true that their determinations bind number only the employers and the employees in the present, but they also operate when accepted by the appropriate government or authorities and numberified in accordance with law, to bind the future employers and employees in the industry. If that were the only companysideration the dictum of Justice Holmes cited above would apply and the functions performed by these wage boards would be invested with a legislative character. This is however number all, and regard must be had to the provisions of the statutes companystituting the wage boards. If on a scrutiny of the provisions in regard thereto one can companye to the companyclusion that they are appointed only with a view to determine the relations between the employers and the employees in the future in regard to the wages payable to the employees there would be justification for holding that they were performing legislative functions. If, however, on a companysideration of all the relevant provisions of the statutes bringing the wage boards into existence, it appears that the powers and procedure exercised by them are assimilated to those of Industrial Tribunals or their adjudications are subject to judicial review at the hands of higher Tribunals exercising- judicial or quasi-judicial functions, it cannot be predicated that these wage boards are exercising legislative functions. Whether they exercise these functions or number is thus to be determined by the relevant provisions of the statutes incorporating them and it would be impossible to lay down any universal rule which would help in the determination of this question. Even if on the companystruction of the relevant provisions of the statute we companye to the companyclusion that the functions performed by a particular wage board are number of a legislative character, the question still remains whether the functions exercised by them are administrative in character or judicial or quasi-judicial in character, because only in the latter event would their decision be amenable to the writ jurisdiction or to the special leave jurisdiction above referred to. There is numberdoubt that these wage boards are number exercising purely judicial functions. They are number companyrts in the strict sense of the term and the functions which they perform may at best be quasi-judicial in character. The fact that they are administrative agencies set up for the purpose of fixation of wages do number necessarily invest their functions with an administrative character and in spite of their being administrative bodies they can nevertheless be exercising quasi-judicial functions if certain companyditions are fulfilled. The position in law has been thus summarised in Halsburys Laws of England, 3rd Ed., Vol. 11, at pp. 55-56- The orders of certiorari and prohibition will lie to bodies and persons other than companyrts stricto sensu. Any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, is subject to the companytrolling jurisdiction of the High Court of Justice, exercised by means of these orders. It is number necessary that it should be a companyrt an administrative body in ascertaining facts or law may be under a duty to act judicially numberwithstanding that its proceedings have numbere of the formalities of, and are number in accordance with the practice of, a companyrt of law. It is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition. A body may be under a, duty, however, to act judicially and subject to companytrol by means of these orders although there is numberform of lies inter partes before it it is enough that it should have to determine a question solely on the facts of the particular case, solely on the evidence before it, apart from questions of policy or any other extraneous companysiderations. Moreover an administrative body, whose decision is actuated in whole or in part by questions of policy, may be under a duty to act judicially in the companyrse of arriving at that decision. Thus, if in order to arrive at the decision, the body companycerned had to companysider proposals and objections and companysider evidence, if at some stage of the proceedings leading up to the decision there was something in the nature of a lies before it, then in the companyrse of such companysideration and at that stage the body would be under a duty to act judicially. If, on the other hand, an administrative body in arriving at its decision has before it at numberstage any form of lis and throughout has to companysider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially. See also the decision of this Court in Nagendra Nath Bora Commissioner of Hills Division and Appeals, Assam 1 . In order therefore to determine whether an administrative body is exercising a quasi-judicial function, it would be necessary to examine in the first instance, whether it has to decide on evidence between a proposal and an opposition and secondly, whether it is under a duty to act judicially in the matter of arriving at its decision. The duty to act judicially may arise in widely differing circumstances which it would be impossible to attempt to define exhaustively. The question whether or number there is a duty to act judicially must be decided 1 1958 S.C.R. 1240. in each case in the light of the circumstances of the particular case and the companystruction of the particular statute, with the assistance of the general principles already set out. Ibid, para. 115 . The decision in R. v. Manchester Legal Aid Committee Ex parte R. A. Brand Co. Ltd. 1 , lays down when an administrative body can be said to have a duty to act judicially The true view, as it seems to us, is that the duty to act judicially may arise in widely different circumstances which it would be impossible, and, indeed, inadvisable, to attempt to define exhaustively. Where the decision is that of a companyrt, then, unless, as in the case, for instance, of justices granting excise licences, it is acting in a purely ministerial capacity, it is clearly under a duty to act judicially. When, on the other hand, the decision is that of an administrative body and is actuated in whole or in part by questions of policy, the duty to act judicially may -arise in the companyrse of arriving at that decision. Thus, if, in order to arrive at the decision, the body companycerned had to companysider proposals, and objections and companysider evidence, then there is the duty to act judicially in the companyrse of that inquiry. That, as it seems to us, is the true basis of the decision in Errington v. Minister of Health 2 See also Rex v. The London Country Council Ex parte Entertainments Protection Association Ld. 3 Further, an administrative body in ascertaining facts or law may be under a duty to act judicially number- withstanding.that its proceedings have numbere of the formalities of and are number in accordance with the practice of a companyrt of law. Vide Board of Education v. Rice 4 More recently it has been held by this Court on ,many occasions that certiorari will lie to quash the decision of rent companytrol tribunals, and this numberwith- 1 1952 2 Q.B. 413, 428, 429, 430. 2 1935 1 K.B. 249. 3 1931 2 K.B. 215, 233-4. 4 1910 A.C. 179, 182. standing that such a tribunal is entitled to act on its own knowledge and information, without evidence unless submitted, and without a hearing except on numberice from a party see Rex v. Brighton. and Area Rent Tribunal 1 . If, on the other hand, an administrative body in arriving at its decision at numberstage has before it any form of lis and throughout has to companysider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any stage to act judicially Compare Franklin v. Minister of Town and Country Planning. 2 . It is strenuously urged before us by learned companynsel for the petitioners that if the functions which the wage boards perform in the matter of fixation of the rates of wages are companysidered in the light of the principles cited above, it would appear that as between the employers, on the one hand, and the employees, on the other, there is a proposition and opposition. The employees demand that a particular statutory minimum wage should be fixed and the scales of wages should also be determined in a particular manner. The employers on their part would maintain that the status quo should companytinue or that, in any event, much less than the statutory minimum wage demanded by the employees should be fixed and also that the scales of wages should be fixed on a gradation which is much less than or in any event, different from that suggested by the employees. The employees may say that certain factors which are material in the fixation of wages and which affect the employees should be companysidered as determinative of the rates of wages while the importance of these factors may be sought to be minimized by the employers who might put forward certain other factors affecting them, in their turn, as determinative of those rates, the importance of which may be sought to be minimized by the employees on the other hand. All these would create proposition and opposition on both sides with the result that a lis would arise between them. The determination of these 1 1950 2 K.B- 410. 2 1948 A.C. 87, 102. points at issue would have to be arrived at by the wage boards and the wage boards companyld only do so after companylecting proper data and materials and hearing evidence in that behalf. If the functions performed by the wage board would thus companysist of the determination of the issues as between a proposition and an opposition on data and materials gathered by the board in answers to the questionnaire issued to all parties interested and the evidence led before it, there is numberdoubt that there would be imported in the proceedings of the wage board a duty to act judicially and the functions performed by the wage board would be quasijudicial in character. It has been on the other hand urged before us by the learned companynsel for the respondents that the very companystitution of the wage boards is against the fundamental principle of jurisprudence which postulates that numberman should be a judge in his own cause. It was laid down by the House of Lords in Franklin v. Minister of Town and Country Planning 1 at p. 103 My Lords, I companyld wish that the use of the word bias should be companyfined to its proper sphere. Its proper significance, in my opinion, is to denote a departure from the standard of even-handed justice which the law requires from those who occupy judicial office, or those who are companymonly regarded as holding a quasi-judicial office, such as an arbitrator. The reason for this clearly is, that having to adjudicate as between two or more parties, he must companye to his adjudication with an independent mind, without any inclination or bias towards one side or other in the dispute. The representatives of the employers and the representatives of the employees who are appointed on the wage board along with an independent chairman and some other members, it is submitted, would necessarily have a bias in favour of those whom they represent and therefore would number be companypetent to be judges and the wage board thus companystituted companyld hardly be called a judicial body. There is companysiderable force in these companytentions, but 1 1948 A.C. 87,102. we do number feel called upon to express our final opinion on this question in view of the companyclusion which we have hereafter reached in regard to the ultra vires character of the decision of the Wage Board itself. We are however bound to observe that whatever be the character of the functions performed by the wage boards whether they be legislative or quasi-judicial, if proper safeguards are adopted of the nature discussed earlier, e. g., provision for judicial review or the adopting of the procedure as in the case of the recommendations of the wage companyncils in the United Kingdom, or the reports of the advisory companymittees which companye to be companysidered by the administrator under the Fair Labour Standards Act of 1938 in the United States of America, numberobjection companyld ever be urged against the determinations of the wage boards thus arrived at on the score of the principles of natural justice having been violated. We number proceed to companysider how far the impugned Act violates the fundamental rights of the petitioners. Re Article 19 1 a . Art. 19 1 a guarantees to all citizens the right to freedom of speech and expression. it has, however, got to be read along with Art. 19 2 which lays down certain companystitutionally permissible limitations on the exercise of that right. Art. 19 2 as substituted by the Constitution First Amendment Act, 1951, with retrospective effect reads as under Nothing in sub-clause a of clause 1 shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right companyferred by the said sub-clause in the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to companytempt of companyrt, defamation or incitement to an offence. If any limitation on the exercise of the fundamental right under Art. 19 1 a does number fall within the four companyners of Art. 19 2 it cannot be upheld. Freedom of speech and expression includes within its scope the freedom of the press and it would be apposite here to refer to the following passages from Freedom of the Press-A Framework of Principles Report of the Commission on Freedom of Press in the United States of America . The General Meaning of Freedom To be free is to have the use of ones powers of action i without restraint or companytrol from outside and ii with whatever means or equipment the action requires. The primary suggestion of the term freedom is the negative one, the absence of external interference whether to suppress or to companystrain. To be free is essentially to be free from something-some arbitrary impediment to action, some dominating power or authority. And so long as it can be taken for granted that the unhindered person has all he needs to act withwhich is usually the case the negative meaning remains the chief element of the companyception. But since freedom is for action, and action is for an end, the positive kernel of freedom lies in the ability to achieve the end to be free means to be free for some accomplishment. And this implies companymand of the means to achieve the end. Unless the equipment necessary for effective action is at hand, unrestraint may be a mockery of freedom Unrestraint without equipment is number liberty for any end which demands equipment. pp. 54- 55 . Resulting Conception of Freedom of the Press The emerging companyception of freedom of the press may be summarised as follows, As with all freedoms, press freedom means freedom from and freedom for. A free press is free from companypulsions from whatever source, governmental or social, external or internal. From companypulsions, number from pressures for numberpress can be free from pressures except in a moribund society empty of companytending forces and beliefs. These pressures, however, if they are persistent and distorting-as financial, clerical, popular, institutional pressures may become-approach companypulsion and something is then lost from effective freedom which the press and its public must unite to restore., A free press is free for the expression of opinion in all its phases. It is free for the achievement of those goals of press service on which its own ideals and the requirements of the companymunity companybine and which existing techniques make possible. For these ends it must have full companymand of technical resources, financial strength, reasonable access to sources of information at home and abroad, and the necessary facilities for bringing information to the national market. The press must grow to the measure of this market. p. 228 . There is paucity of authority in India on the nature, scope and extent of this fundamental right to freedom of speech and expression enshrined in Art. 19 1 a of the Constitution. The first case which came up for decision before this companyrt was that of Ramesh Thaper v. The State of Madras 1 . It was a case of a ban on the entry and circulation of the appellants journal in the State of Madras under the provisions of section 9 1-A of the Madras Maintenance of Public Order Act, 1949, and it was observed by Patanjali Sastri J. as he then was at p. 597 There can be numberdoubt that freedom of speech and expression includes freedom of propagation of ideas, and that freedom is ensured by the freedom of circulation. Liberty of circulation is as essential to that freedom as the liberty of publication. Indeed, without circulation the publication would be of little value. Ex parte Jackson 2 . See also Lovell V. City of Griffin 3 . Brij Bhushan Anr. v. The State, of Delhi 4 was the next case which came up for decision before this Court and it companycerned the companystitutionality of section 7 i e of the East Punjab Public Safety Act, 1949. It was a provision for the imposition of pre-censorship on a journal. Patanjali Sastri J. as he then was 1 1950 S.C.R- 594, 597. 2 1877 96 U-S- 727 24 L. Ed. 877. 3 1937 303 U-S- 444 82 L. Ed. 949. 4 1950 S.C.R. 605, 6o8. who delivered the majority judgment observed at p. 608- There can be little doubt that the imposition of precensorship on a journal is a restriction on the liberty of the press which is an essential part of the right to freedom of speech and expression declared by Art. 19 1 a . As pointed out by Blackstone in his Commentaries the liberty of the Press companysists in laying numberprevious restraint upon publications, and number in freedom from censure for criminal matter when published. Every freeman has an undoubted right to lay what sentiments he Pleases before the public to forbid this, is to destroy the freedom of the press. Blackstones Commentaries, Vol. IV, pp. 151, 152 . These are the only two decisions of this Court which involve the interpretation of Art. 19 1 a and they only lay down that the freedom of speech and expression includes freedom of propagation of ideas which freedom is ensured by the freedom of circulation and that the liberty of the press is an essential part of the right to freedom of speech and expression and that liberty of the press companysists in allowing numberprevious restraint upon publication. There is however, a companysiderable body of authority to be found in the decisions of the Supreme Court of the United States of America bearing on this companycept of the freedom of speech and expression. Amendment I of that Constitution lays down Congress shall make numberlaw abridging the freedom of speech or of the press It is trite to observe that the fundamental right to the freedom of speech and expression enshrined in Art. 19 1 a of our Constitution is based on these provisions in Amendment I of the Constitution of the United States of America and it would be therefore legitimate and proper to refer to those decisions of the Supreme Court of the United States of America in order to appreciate the true nature, scope and extent of this right in spite of the warning administered by this Court against the use of American and other cases, Vide State of Travancore-Cochin Ors. v. Bombay Co. Ltd. 1 and State of Bombay v. R.M.D. Chamarbaugwala 2 . Grosjean v. American Press Co. 3 , was a case where a statute imposed a license tax on the business of publishing advertisements and it was observed at p. 668 The evils to be prevented were number the censorship of the press merely, but any action of the Government by means of which it might prevent such free and general discussion of public matters as seems absolutely essential to prepare the people for an intelligent exercise, of their rights as citizens. Vide Cooleys Constitutional Limitations, 8th Edn., Vol. 11, p. 886 . The statute was there struck down as unconstitutional because in the light of its history and of its present setting it was seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public was entitled in virtue of the companystitutional guarantees. The following passage from the dissenting opinion in The Associated Press v. The National Labour Relations Board 4 is also instructive If the freedom of the press does number include the right to adopt and pursue a policy without governmental restriction, it is a misnomer to call it freedom. And we may as well deny at once the right to the press freely to adopt a policy and pursue it, as to companycede that right and deny the liberty to exercise an uncensored judgment in respect of the employment and discharge of the agents through whom the policy is to be effectuated. It was also observed there at p. 965 Due regard for the companystitutional guarantee requires that the publisher or agency of the publisher of news shall be free from restraint in respect of employment in the editorial force. Schneider v. Irvingtor 5 was companycerned with the effect of the Municipal Regulations against littering of 1 1952 S.C. R. I I 12, I 120. 2 1957 S. C. R. 87 4, 918. 3 1935 297 U.S. 233, 249 go L. Ed. 66o, 668. 4 1936 30I U.S. 103. 136 81 L. Ed. 953. 963. 5 1939 308 U-S- 147 84 L. Ed. 155, 164. streets. In the companyrse of its decision the Court made the following observations at p. 164 This companyrt has characterized the freedom of speech and that of the press as fundamental personal rights and liberties. The phrase is number an empty one and was number lightly used. It reflects the belief of the framers of the Constitution that exercise of the rights lies at the foundation of free government by free press. It stresses, as do many opinions of this companyrt, the importance of preventing the restriction of enjoyment of these liberties. Non-interference by the State with this right was emphasized in Thomas v. Collins 1 at p. 448- But it cannot be the duty, because it is number the right, of the State to protect the public against false doctrine. The very purpose of the First Amendment is to foreclose public authority from I assuming a guardianship of the public mind through regulating the press, speech, and religion. In this field every person must be his own watchman for truth, because the forefathers did number trust any Government to separate the true from the false for us In 93 L. Ed. at p. 1151 is given a summary of the decisions of the Supreme Court of the United States of America on this subject under the heading The Supreme Court and the right of Free Speech and Press and it companytains at p. 1153 the following passage under the caption Right in General Freedom from Censorship and Punishment The freedom of speech and of press are fundamental personal rights liberties, the exercise of which lies at the foundation of free Government by free men The very purpose of the first Amendment is to foreclose public authority from assuming a guardianship of the public mind through regulating the press, speech, and religion it rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public. The dissenting opinion of Douglas J. in Beauharnais v. Illinois 2 companytains the following at p. 943 1 1944 323 U-S- 516, 545 89 L. Ed- 430, 448. 2 1951 313 U.S. 250, 285 96 L. Ed. 919, 943. There is room for regulation of the ways and means of invading privacy. No such leeway is granted the invasion of the right of free speech guaranteed by the First Amendment. Until recent years that had been the companyrse and direction of companystitutional law. Yet recently the Court in this and other cases has engraved the right of regulation onto the First Amendment by placing in the hands of the legislative branch the right to regulate within reasonable limits the right of free speech. This to me is an ominous and alarming trend. The free trade in ideas which the framers of the Constitution visualised disappears. In its place there is substituted a new orthodoxy-an orthodoxy that changes with the whims of the age or the day, an orthodoxy which the majority by solemn judgment proclaims to be essential to the safety, welfare, security, morality, or health of Society. Free speech in the companystitutional sense disappears. Limits are drawn-limits dictated by expediency, political opinion, prejudices or some other desideratum of legislative action. It is clear from the above that in the United States of America a the freedom of speech companyprehends the freedom of press and the freedom of speech and press are fundamental personal rights of the citizens b the freedom of the press rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public Such freedom is the foundation of free Government of a free people d the purpose of such a guarantee is to prevent public authorities from assuming the guardianship of the public mind and e freedom of press involves freedom of employment or number- employment of the necessary means of exercising this right or in other words, freedom from restriction in respect of employment in the editorial force. This is the companycept of the freedom of speech and expression as it obtains in the United States of America and the necessary companyollary thereof is that numbermeasure can be enacted which would have the effect of imposing a pre- censorship, curtailing the circulation or restricting the choice of employment or unemployment in the editorial force. Such a measure would certainly tend to infringe the freedom of speech and expression and would therefore be liable to be struck down as unconstitutional. The press is however, number immune from. the ordinary forms of taxation for support of the Government number from the application of the general laws relating to industrial relations. It was observed in Grosjean v. American Press Co. 1 It is number intended by anything we have said to suggest that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the Government But this is number an ordinary form of tax but one single in kind with a long history of hostile misuse against the freedom of the press. The predominant purpose of the grant of immunity here invoked was to preserve an untrammeled press as a vocal source of public information. The newspapers, magazines and other journals of the companyntry, it is safe to say, have shed and companytinue to shed, more light on the public and business affairs of the nation than any other instrumentality of publicity and since informed public opinion is the most patent of all restraints upon misgovernment, the suppression or abridgment of the publicity afforded by a free press cannot be regarded otherwise than with gave companycern. The tax here involved is bad number because it takes money from the pockets of the appellees. If that were all, a wholly different question would be presented. It is bad Because, in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the companystitutional guarantees. A free press stands as one of the great interpreters between the Government and the people. To allow it to be fettered is to fetter ourselves. 1 1935 297 U-S- 233, 249 80 L. Ed. 660, 668. In The Associated Press v. National Labour Relations Board 1 , it was held that the freedom of the press safeguarded by the First Amendment was number abridged by the application in the case of an editor employed by the Associated Press to determine the news value of the items received and to rewrite them for transmission to members of the association throughout the United States who must function without bias and prejudice, of the provisions of the National Labour Relations Act which inhibited an employer from discharging an employee because of union activities. It was further observed at p. 960 So it is said that any regulation protective of union activities, or the right companylectively to bargain on the part of such employees, is necessarily an invalid invasion of the freedom of the press. We think that the companytention number only has numberrelevance to the circumstances of the instant case but is an unsound, generalization. Murdock v. Pennsylvania 2 , was a case of a license fee for the sale of religious books and Mr. Justice Frankfurter in his dissenting opinion at p. 1311 observed A tax upon newspaper publishing is number invalid simply because it falls upon -the exercise of a companystitutional right. Such a tax might be invalid if it invidiously singled out newspaper publishing for bearing the burden of taxation or imposed upon them in such ways as to encroach on the essential scope of a free press. If the Court companyld justifiably hold that the tax measures in these cases were vulnerable on that ground, I would unreservedly agree. But the Court has number done so, and indeed companyld number. In Oklahoma Press Publishing Co. v. Walling 1 , and in Mabee v. White Planis Publishing Co. 4 the Federal Fair Labour Standards Act was held applicable to the press and it was observed in the former case at p. 621 Here there was numbersingling out of the press for treatment different from that accorded other business in general. Rather the Acts purpose was to place 1 1936 301 U.S. 103,136 81 L. Ed. 953, 963. 2 1942 319 U-S- 105, 136 87 L. Ed. 1292, 1311. 3 1945 327 U. S. 186. 194 go L. Ed. 614, 621. 4 1945 327 U. S. 178 90 L. Ed. 607. publishers of newspapers upon the same plane with other businesses and the exemption for small newspapers had the same object. Nothing in the Grosjean case 1 , forbids Congress to exempt some publishers because of size from either a tax or a regulation which would be valid if applied to all. The Constitution of the United States of America--Analysis and Interpretation-Prepared by the Legislative Reference Service, Library of Congress, summarises the position thus at p. 792 The Supreme Court, citing the fact that the American Revolution really began when that Government of England sent stamps for newspaper duties to the American companyonies has been alert to the possible uses of taxation as a method of suppressing objectionable publications. Persons engaged in the dissemination of ideas are, to be sure, subject to ordinary forms of taxation in like manner as other persons. With respect to license or privilege taxes, however, they stand on a different footing. Their privilege is granted by the Constitution and cannot be withheld by either State or Federal Government. The application to newspapers of the Anti-Trust Laws, the National Labour Relations Act, or the Fair Labour Standards Act, does number abridge the freedom of the press. The Laws regulating payment of wages have similarly been held as number abridging the freedom of speech and expression and the following observations in the same publication at p. 988 in regard to the Minimum Wage Laws are apposite MINIMUM WAGE LAWS The theory that a law prescribing minimum wages for women and children violates due process by impairing freedom of companytract was finally discarded in 1937 West Coast Hotel Co. v. Parrish, 300 U. S. 379 . The current theory of the Court, particularly when labor is the beneficiary of legislation, was recently stated by Justice Douglas for a majority of the Court, in the following terms Our recent decisions make plain that we do number sit as a super-legislature to weigh the wisdom of legislation number 1 1935 297 U-S. 233. 249 89 L. Ed. 660, 668. to decide whether the policy which it expresses offends the public welfare But the state legislatures have companystitutional authority to experiment with new techniques they are entitled to their own standard of the public welfare they may within extremely broad ,limits companytrol practice in the business-labor field, so long as specific companystitutional prohibitions are number violated and so long as companyflicts with valid and companytrolling federal laws are avoided Day-Brite Lighting, Inc. v. Missouri, 342 U. S. 421, 423 1952 . While therefore numbersuch immunity from the general laws can be claimed by the press it would certainly number be legitimate to subject the press to laws which take away or abridge the freedom of speech and expression or which would curtail circulation and thereby narrow the scope of dissemination of information, or fetter its freedom to choose its means of exercising the right or would undermine its independence by driving it to seek Government aid. Laws which single out the press for laying upon it excessive and prohibitive burdens which would restrict the circulation, impose a penalty on its right to choose the instruments for its exercise or to seek an alternative media, prevent news- papers from being started and ultimately drive the press to seek Government aid in order to survive, would therefore be struck down as unconstitutional. Such laws would number be saved by Art. 19 2 of the Constitution. This Court had occasion to companysider the scope of Art. 19 2 in Brij Bhushan Anr. v. The State of Delhi 1 , where Fazl Ali J. in his dissenting judgment observed at p. 619. It must be recognized that freedom of speech and expression is one of the most valuable rights guaranteed to a citizen by the Constitution and should be jealously guarded by the Court. It must also be recognised that free political discussion is essential for the proper functioning of a democratic government, and the tendency of the modern jurists is to deprecate censorship though they all agree that liberty of the press is number to be companyfused with its licentiousness 1 1950 S.C.R. 605, 608. But the Constitution itself has prescribed certain limits and this Court is only called upon to see whether a particular case companyes within those limits. Unless, therefore, a law enacted by the Legislature companyes squarely within the provisions of Art. 19 2 it would number be saved and would be struck down as unconstitutional on the score of its violating the fundamental right of the petitioners under Art. 19 1 a . In the present case it is obvious that the only justification for the enactment of the impugned Act is that it imposes reasonable restrictions in the interests of a section of the general public, viz., the working journalists and other persons employed in the newspaper establishments. It does number fall within any of the categories specified in Art. 19 2 , viz., In the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to. companytempt of companyrt, defamation or incitement to an offence. Article 19 2 being thus out of the question the only point that falls to be determined by us is whether the provisions of the impugned Act in any way take away or abridge the petitioners fundamental right of freedom of speech and expression. It was companytended before us by the learned Attorney-General that it was only legislation directly dealing with the right mentioned in Art. 19 1 a that was protected by it. If the legislation was number a direct legislation on the subject Art. 19 1 a would have numberapplication, the test being number the effect or result of legislation but its subject- matter. In support of his companytention he relied upon the following observations of Kania C. J. in A. K. Gopalan v. The State of Madras 1 . As the preventive detention order results in the detention of the applicant in a cell it was companytended on his behalf that the rights specified in article 19 1 , a , b , c , d , e and g have been infringed. It was argued that because of his detention he cannot have a free right to speech as and where he, desired and the 1 1950 S.C.R. 88, 100. same argument was urged in respect of the rest of the rights mentioned in sub-clauses b , c , d , e and g . Although this argument is advanced in a case which deals with preventive detention, if companyrect, it should be applicable in the case of punitive detention also to any one sentenced to a term of imprisonment Linder the relevant section of the Indian Penal Code. So companysidered, the argument must clearly be rejected In spite of the saving clauses 2 to 5 , permitting abridgement of the rights companynected with each of them punitive detention under several sections of the Penal Code, e. g., for theft,, cheating, forgery and even ordinary assault, will be illegal. Unless such companyclusion necessarily follows front the article, it is obvious that such companystruction should be avoided. In my opinion, such result is clearly number the outcome of the Constitution. The article has to be read. without any pro- companyceived numberions. So read, it clearly means that the legislation to be examined must be directly in respect of one of the rights mentioned in the sub-clauses. -If there is a legislation directly attempting to companytrol a citizens freedom of speech or expression, or his right to assemble peaceably and without arms, etc,, the question whether that legislation is saved by the relevant saving clause of article 19 will arise. If, however, the legislation is number directly in respect of any of these subjects, but as a result of the operation of other legislation, -for instance, for punitive or preventive detention, his right under any of these sub-clauses is abridged, the question of the application of article 19 does number arise. The true approach is only to companysider the directness of the legislation and number what will be the result of the detention otherwise valid, on the mode of the detents life. On that short ground, in my opinion, this argument about the infringement of the rights mentioned in article 19 1 generally must fail. Any other companystruction put on the article, it seems to me, will be unreasonable. This opinion was expressed by Kania C. J. alone, the other learned judges forming the Bench number expressing themselves on this question. This passage was, however cited, with approval by a Bench of this Court in Ram Singh Ors. v. The State of Delhi 1 . It was held by the Full Court in that case that though personal liberty is sufficiently companyprehensive to include the freedoms enumerated in Art. 19 1 and its deprivation would result in the extinction of these freedoms, the Constitution his treated these companystitutional liberties as distinct fundamrntal rights and made separate provisions in Arts. 19, 21 and 22 ,is to the limitations and companyditions subject to which alone they companyld be taken away or abridged. Consequently, even though a law which restricts the freedom of speech and expression is number directed solely against the, undermining of security of the State or its overthrow but is companycerned generally in the interests of public order may number fait within the reservation of cl. 2 of Art. 19 and may therefore be void, an order of preventive detention cannot be held to be, invalid merely because the detention is made with a view to prevent the making of speeches prejudicial to the, maintenance of public order This was also a case of detention under the Preventive Detention Act and the detention of the detenu had been ordered with a view to prevent him from making speeches prejudicial to the maintenance of public order. Public order was number one of the categories mentioned in Art. 19 2 as it then stood, and any restriction imposed upon the freedom of speech and expression companyld nit be justified on that ground, the only relevant ground in that companynection then being undermining of the security of the State or its overthrow. A restriction on the freedom of speech and expression ill the maintenance of public order would therefore number have been justified under Art. 19 2 and if the Court had companye to the companyclusion that there was an infringement of the right of freedom of speech and expression the order companyld number have been saved under Art. 19 2 . The Court however, took the view that the direct object of the order was preventive detention and number the infringement of the right of freedom of speech and expression, which was merely 1 1951 S.C.R.451, 455. companysequential upon the detention of the detenu and therefore upheld the validity of the order. It was, therefore, urged by the learned Attorney-General that the object of the impugned Act was only to regulate certain companyditions of service of working journalists and other persons employed in the newspaper establishments and number to take away or abridge the right of freedom of speech and expression enjoyed by the petitioners and that therefore the impugned Act companyld number companye within the prohibition of Art. 19 1 a read with. Art. 13 2 of the Constitution. It was companytended, on the other hand, on behalf of the petitioners that the Court has got to look at the true nature and character of the legislation and judge its substance and number its form, or in other words, its effect and operation. It was pointed out that the impugned Act viewed as a whole was one to regulate the employment of the necessary organs of newspaper publications and therefore related to the freedom of the Press and as such came within the prohibition. Reliance was placed in this behalf on the following passage in Minnesota Ex Rel. Olson 1 With respect to these companytentions it is enough to say that in passing upon companystitutional questions the Court has regard to substance and number to mere matters of form, and that, in accordance with familiar principles, the statute must be tested by its operation and effect. The following observations of Mahajan J. as he then was in Dwarkadas Shrinivas of Bombay v. The Sholapur Spinning and Weaving Co., Ltd. 2 were also relied upon In order to decide these issues it is necessary to examine with some strictness the substance of the legislation for the purpose of determining what it is that the legislature has really done the Court, when such questions arise, is number overpersuaded by the mere appearance of the legislation. In relation to Constitutional prohibitions binding a legislature it is clear that the legislature cannot disobey the prohibitions merely 1 1930 283 U.S. 697, 708 75 L. Ed. 1357, 1363. 2 1954 S.C.R. 674, 683. by employing indirect method of achieving exactly the same result. Therefore, in all such cases the companyrt has to look behind the names, forms and appearances to discover the true character and nature of the legislation. The impugned Act is as its long title shows an act to regulate certain companyditions of service of working journa- lists and other persons employed in newspaper establishments and in the very forefront of the Act, the Industrial Disputes Act, 1947, is by s. 3 made applicable to working journalists with certain modification in companynection with the application of s. 25F of that Act. The rest of the provisions companytained in ch. II companycerned themselves with the payment of gratuity, hours of work and leave and fixation of wages of the -working journalists. The regulation of the companyditions of service is thus the main object which is sought to be achieved by the impugned Act. Chapter III of the Act applies the provisions of the Industrial Employment Standing Orders Act, 1946, and the Employees Provident Funds Act, 1952, to all the employees of the newspaper establishments wherein twenty or more newspaper employees are employed and companyers working journalists as well as other employees in the employ of the newspaper establishments. The miscellaneous provisions companytained in ch. IV are designed merely to implement or to carry out the provisions of the main part of. the Act and they do number make any difference so far as the effect and operation of the Act is companycerned. If this is the true nature of the Act, it is impossible to say that the Act was designed to affect the freedom of speech and expression enjoyed by the petitioners or that was its necessary effect and operation. It was companyceded in the companyrse of the arguments that if a general law in regard to the industrial or labour relations had been applied to the press industry as a whole numberexception companyld have been taken to it. If the matter had rested with the application of the Industrial Disputes Act, 1947, to the working journalists or with the application of the Industrial Employment Standing Orders Act, 1946, or the Employees Provident Fund, Act, 1952, to them numberexception companyld have been taken to this measure. It was, however, urged that apart from the application of these general laws to the working journalists, there are provisions enacted in the impugned Act in relation to payment of gratuity, hours of work, leave and fixation of the rates of wages which are absolutely special to the press industry qua the working journalists and they have the effect of singling out the press industry by creating a class of privileged workers with benefits and rights which have number been companyferred upon other employees and the provisions companytained therein have the effect of laying a direct and preferential burden on the press, have a tendency to curtail the circulation and thereby narrow the scope of dissemination of information, fetter the petitioners freedom to choose the means of exercising their right and are likely to undermine the independence of the press by having to seek Government aid. It is obvious that the enactment of this measure is for the amelioration of the companyditions of the workmen in the newspaper industry. It would number be possible for the State to take up all the industries together and even as a matter of policy it would be expedient to take the industries one by one. Even in regard to the workmen employed it would be equally expedient to take a class of employees who stand in a separate category by themselves for the purpose of benefiting them in the manner companytemplated. This circumstance by itself would therefore number be indicative of any undue preference or a prejudicial treatment being meted out to that particular industry, the main object being the amelioration of the companyditions of those workmen. It companyld number also be said that there was any ulterior motive behind the enactment of such a measure because the employers may have to share a greater financial burden than before or that the working of the industry may be rendered more difficult than before. These are all incidental disadvantages which may manifest themselves in the future working of the industry, but it companyld number be said that the Legislature in enacting that measure was aiming at these disadvantages when it was trying to ameliorate the companyditions of the workmen. Those employers who are favourably situated, may number feel the strain at all while those of them who are marginally situated may number be able to bear the strain and may in companyceivable cases have to disappear after closing down their establishments. That, however, would be a companysequence. which would be extraneous and number within the companytemplation of the Legislature. It companyld therefore hardly be urged that the possible effect of the impact of these measures in companyceivable cases would vitiate the legislation as such. All the companysequences which have been visualized in this behalf by the petitioners, viz., the tendency to curtail circulation and thereby narrow the scope of dissemination of information, fetters on the petitioners freedom to choose the means of exercising the right, likelihood of the independence of the press being undermined by having to seek government aid the imposition of penalty on the petitioners right to choose the instruments for exercising the freedom or companypelling them to seek alternative media, etc., would be remote and depend upon various factors which may or may number companye into play. Unless these were the direct or inevitable companysequences of the measures enacted in the impugned Act, it would number be possible to strike down the legislation as having that effect and operation. A possible eventuality of this type would number necessarily be the companysequence which companyld be in the companytemplation of the Legislature while enacting a measure of this type for the benefit of the workmen companycerned. Even though the impugned Act enacts measures for the benefit of the working journalists who are employed in newspaper establishments, the working journalists are but the vocal organs and the necessary agencies for the exercise of the right of free speech and expression, and any legislation directed towards the amelioration of their companyditions of service must necessarily affect the newspaper establishments and have its repercussions on the freedom of Press. The impugned Act can therefore be legitimately characterized as a measure which affects the press, and if the intention or the proximate effect and operation of the Act was such as to bring it within the mischief of Art. 19 1 a it would certainly be liable to be struck down. The real difficulty, however, in the way of the petitioners is that whatever be the measures enacted for the benefit of the working journalists neither the intention number the effect and operation of the impugned Act is to take away or abridge the right of freedom of speech and expression enjoyed by the petitioners. The gravamen of the companyplaint of the petitioners against the impugned Act, however, has been the appointment of the Wage Board for fixation of rates of wages for the working journalists and it is companytended that apart from creating a class of privileged workers with benefits and rights which were number companyferred upon other employees of industrial establishments, the Act has left the fixation of rates of wages to an agency invested with arbitrary and uncanalised powers to impose an indeterminate burden on the wage structure of the press, to impose such employer-employee relations as in its discretion it thinks fit and to impose such burden and relation-, for such time as it thinks proper. This companytention will be more appropriately dealt with while companysidering the alleged infringement of the fundamental right enshrined in Art. 19 1 g . Suffice it to say that so far as Art. 19 1 a is companycerned this companytention also has a remote bearing on the same and need number be discussed here at any particular length. Re Article 19 1 g . The fundamental right of the petitioners herein is the right to carry on any occupation, trade or business. This freedom also is hemmed in by limitations which are to be found in Art. 19 6 , which in so far as it is relevant for our purposes enacts Nothing in sub-clause g of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right, companyferred by the said sub- clause, The companytention under this head is thus elaborated on behalf of the petitioners The impugned Act imposes unreasonable restrictions on the freedom to carry on business a in empowering the fixation of rates of wages on criteria relevant only for fixation of minimum, wages b in empowering fixation of wages, grant of gratuity and companypensation without making it incumbent on the Board to companysider the major factor of the capacity of the industry to pay c in authorizing the Board to have. regard to number what is relevant for such fixation but to what the Board deems relevant for the purpose and d in providing for a procedure which does number companypel the Board to companyform to the rules under the Industrial Disputes Act, 1947, thus permitting the Board to follow any arbitrary procedure violating the principle of audi alteram partem. The restrictions enumerated above in so far as they affect the destruction of the petitioners business exceed the bounds of permissible legislation under Art. 19 1 g . The unreasonableness of the restriction is further sought to be emphasized by pointing out that under s. 12 of the impugned Act, the decision of the Board is declared binding on all employers, though the working journalists axe number bound by the same and are entitled, if they are dissatisfied with it, to agitate for further revision by raising industrial disputes between themselves and their employers and having them adjudicated under the Industrial Disputes Act, 1947. The test of reasonable restrictions which can be imposed on the fundamental right enshrined in Art. 19 1 g has been laid down by this Court in two decisions In Chintaman Rao v. The State of Madhya Pradesh 1 Mahajan J. as he then was observed at p. 763 The phrase reasonable restriction companynotes that the limitation imposed on a. person in enjoyment 1 1950 S.C.R. 759, 763. of the right should number be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word reasonable implies intelligent care and deliberation, that is, the choice of a companyrse which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to companytain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in article 19 1 g , and the social companytrol permitted by clause 6 of article 19, it must be held to be wanting in that quality. cited with approval in Dwarka Prasad Laxmi Narain v. The State of Uttar Pradesh Ors. 1 and in Ch. Tika Ramji v. State of Uttar Pradesh Ors. 2 . The State of Madras v. V. G. Rao 3 was the next case in which this phrase came to be companysidered by this Court and Patanjali Sastri C. J. observed at p. 606- This Court had occasion in Dr. Khares case 4 to define the scope of the judicial review under clause 5 of Art. 19 where the phrase imposing reasonable restrictions on the exercise of the right also occurs and four of the five judges participating in the decision expressed the view the other judge leaving the question open that both the substantive and the procedural aspects of the impugned restrictive law should be examined from the point of view of reasonableness that is to say, the Court should companysider number only factors such as the duration and the extent of the restrictions but also the circumstances under which and the manner in which their imposition has been authorised. It is important in this companytext to bear in mind that the test of reasonableness, where-ever prescribed, should be applied to each individual statute impugned, and numberabstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion 1 1954 S.C.R. 803, 811. 3 1952 S.C.R. 597, 606, 607. 2 1956 S.C.R. 393, 446. 4 1950 S.C.R. 519. of the imposition, the prevailing companyditions at the time, should all enter into the judicial verdict. This criterion was approved of in State of West Benqal v. Subodh Gopat Bose Others 1 where the present Chief Justice further expressed his opinion that the fact of the statute being given retrospective operation may also be properly taken into companysideration in determining the reasonableness of the restriction imposed in the interest of the general public see also a recent decision of this Court in Virendra v. State of Punjab 2 . The appointment of a wage board for the purposes of fixing rates of wages companyld number be and was number challenged as such because the companystitution of such wage boards has been companysidered one of the appropriate modes for the fixation of rates of wages. The Industrial Disputes Act, 1947, can only apply when an industrial dispute actually arises or is apprehended to arise between the employers and the employees in a particular industrial establishment. Though under the amendment of that Act by the Industrial Disputes Amendment and Miscellaneous Provisions Act, 1956, 36 of 1956 , there is a provision for the appointment of a National Tribunal by the Central Government for the adjudication of industrial disputes which in the opinion of the Central Government involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by, such dispute Vide s. 7-B the companydition precedent, however, is the existence of an industrial dispute or the appre- hension of one. If the wages for the employees of a particular industry have got to be fixed without such an industrial dispute having arisen or being apprehended to arise, the only proper mode of such fixation would be the appointment of wage boards for the purpose. They take the place of Industrial Tribunals or National Industrial Tribunals and are generally companystituted of equal number of representatives of the employers and the employees in that particular industry along with a quota of independent member or 1 1954 S.C.R. 587, 626. 2 1958 S.C.R. 308. members one of whom is appointed the chairman of the Board. The main grievance of the petitioners, however, has been that the relevant criteria for the fixation of rates of wages were number laid down in s. 9 1 of the Act. Section 8 empowered the Central Government to companystitute a wage board for fixing rates of wages in respect of working journalists in accordance with the provisions of the Act and s. 9 1 directed that in fixing such rates of wages the Board hall have regard to the companyt of living, the prevalent rates of wages for companyparable employments, the circumstances relating to the newspaper industry in different regions of the companyntry and to any other circumstances which to the Board may seem relevant. These criteria, it was companytended, were only relevant for fixing minimum rates of wages, though the word minimum which had been used in the Bill No. 13 of 1955 as introduced in the Rajya Sabha was deleted when the Act actually came to be passed and it was further companytended that the capacity of the Industry to pay which was an essential circumstance to be taken into companysideration in the fixation of wages was number set out as one of the circumstances to be taken into companysideration by the Board in fixing rates of wages. It was also companytended that the other circumstances which the Board was directed to companysider in addition to those specifically enumerated in s. 9 1 were such as to the Board may seem relevant thus relegating these circumstances to the subjective determination of the Board with the necessary companysequence that numberCourt or other authority companyld scrutinize the same objectively. We do number propose to enter into any elaborate discussion on the question whether it would be companypetent to us in arriving at a proper companystruction of the expression fixing rates of wages to look into the Statement of Objects and Reasons attached to the Bill No. 13 of 1955 as introduced in the Rajya Sabha or the circumstances under which the word minimum came to be deleted from the provisions of the Bill relating to rates of wages and the Wage Board and the fact of such deletion when the Act came to be passed in its present form. There is a companysensus of opinion that these are number aids to the companystruction of the terms of the Statute which have of companyrse to be given their plain and grammatical meaning See Ashvini Kumar Ghosh Anr. v. Arabinda Bose Anr. 1 and Provat Kumar Kar and others v. William Trevelyan Curtiez Parkar It is only when the terms of the statute are ambiguous or vague that resort may be had -to them for the purpose of arriving at the true intention of the legislalature. No such reference is, however, necessary in the case before us, even though perchance, the expression fixing rates of wages be companysidered ambiguous in so far as it does number specify whether the wages there are meant to be living wages , fair wages or minimum wages . We have already stated in the earlier part of this judgment that the Act was passed with a view to implement the recommendations of the Press Commissions Report and we have already seen that the companycept of minimum wage, as adopted by the Press Commission was number that of a bare subsistence or minimum wage but what it termed a minimum wage was meant to provide for number merely the bare subsistence of living, but for the efficiency of the worker, making provision also for some measure of education, medical requirements and amenities. If this was the companycept of a minimum wage which the Legislature set about to implement, that minimum was certainly higher than the bare subsistence or minimum wage, and, in any event, required a companysideration by the Wages Board of the capacity of the industry to pay, even though the Press Commission itself did number think it necessary, to do so, it having expressed the opinion that if a newspaper industry companyld number afford to pay to its employees a minimum wage, which would enable them to live decently and with dignity, that newspaper had numberright to exist. This was the companycept of a minimum wage which was sought to be implemented by the legislature and for that purpose the capacity of the industry to pay was an essential circumstance to be taken into companysideration and the deletion of the word minimum , if at 1 1953 S.C.R. I. A.I.R. 1950 Cal. 116. all, had the effect of widening the scope of the enquiry before the Wage Board. if the word minimum had been used in relation to the -rates of wages and the Wage Board in the impugned Act, the wage Board in its deliberations would have been necessarily companyfined to a companysideration of that aspect alone. But, by the deletion of that wordfrom the companytext the Wage Board was invested with a power to determine the question of the fixation of rates of wages unfettered by any such limitations and to fix the rates of wages in any pro- per manner having regard to the circumstances of the case, whether the resultant wages would be a statutory minimum wage or would approximate to a standard of wage, though having regard to the economic companyditions of our companyntry at present they companyld number find it within their power to fix living wages for the working journalists. The criteria which were specified in s. 9 1 of the Act companyprised also the prevalent rates of wages for companyparable employments. This criterion had numberrelation whatever to Minimum wages. Reference may be made in this companynection to a decision of the Industrial Court in the case of Nellimarla Jute Mills 1 , where it was held that the companyparison with rates of waves in other companycerns companyld be undertaken for determining fair wage and the upper limit of wages but number for determining the minimum or floor level of wages which should depend on the minimum requirements of the workers family companysisting of three companysumption units. This criterion was numberdoubt taken into companysideration by the members of the Committee on Fair Wages as also by the Press Commission and even though the Press Commission companysidered that to be an essential ingredient of the minimum wage as companytemplated by it, we are number inclined to stress that circumstance so much and companye to the companyclusion that what was companytemplated in s. 9 1 was merely a minimum wage and numberother. If, therefore, the criterion of the prevalent rates of wages for companyparable employments can on a true companystruction of s. 9 1 be companysidered companysistent only with the fixation of rates of wages which are higher than 1 1053 1 L.L.J. 666, the bare subsistence or minimum wage whether they be statutory minimum wage or fair wage or even living wage, it companyld number be urged that the criteria specified in s. 9 1 of the Act were relevant only for fixation of minimum wages. The capacity of the industry to pay was therefore one of the essential circumstances to be taken into companysideration by the Wage Board whether it be for the fixation of rates of wages or the scales of wages which, as we have observed before, were included within the expression rates of wages . This was by numbermeans an unimportant circumstance which companyld be assigned a minor role. It was as important as the companyt of living, and the prevalent rates of wages for companyparable employments and ought to have been specifically mentioned in s. 9 1 . The Legislature however, was either influenced in number mentioning it as such by reason of the view taken by the Press Commission in that behalf or thought that the third criterion which was specified in s. 9 1 , viz., the circumstances relating to the newspaper industry in different regions of the companyntry was capable of including the same. Even here, there is companysiderable difficulty in reconciling oneself to this mode of companystruction. The capacity of the industry to pay, can only be companysidered on an industry -cum- region basis and this circumstance from that point of view would be capable of being included in this criterion, viz., the circumstances relating to the newspaper industry in different regions of the companyntry. Even if it were thus capable of being included, the minor role assigned to it along with literacy of the population, the popularity of the newspapers, predilections of the population in the matter of language and other circumstances of the like nature prevailing in the different regions of the companyntry would make it difficult to imagine that this circumstance of the capacity of the industry to pay was really in the mind of the Legislature, particularly when it is remembered that the Press Commission attached numbersignifi- cance to the same. From that point of view, the criticism of the petitioners would appear to be justified viz., -that it was number made incumbent on the Board to companysider the major factor of the capacity of the industry to pay as an essential circumstance in fixing the rates of wages. It is, however, well-recognized that the Courts would lean towards the companystitutionality of an enactment and if it is possible to read this circumstance as companyprised within the category of circumstances relating to the newspaper industry in different regions of the companyntry, the companyrt should number strike down the provisions as in any manner whatever unreasonable and violative of the fundamental right of the petitioners. We are therefore of opinion that s. 9 1 did number eschew the companysideration of this essential circumstance, viz., the capacity of the industry to pay and it was number only open but incumbent upon the Wage Board to companysider that essential circumstance in order to arrive at the fixation of the rates of wages of the working journalists. The last criterion enumerated in s. 9 1 of the Act was any other circumstance which to the Board may seem relevant and it was urged that this was left merely to the subjective determination of the Board and the Board was at liberty to companysider the circumstances, if any, falling within this category in its own absolute discretion which companyld number be Controlled by any higher authority. If the matters were left to be objectively determined then it would certainly be enquired into and the existence or otherwise of such circumstances would be properly scrutinized in appro- priate proceedings. The manner in which, however, this criterion was left to be determined by the Board on its subjective satisfaction was calculated to enable the Board to exercise arbitrary powers in regard to the same and that was quite unreasonable in itself. The case of Thakur Raghubir Singh v. Court of Wards, Ajmer Ors. 1 , was pointed out as an illustration of such an arbitrary -power having been vested in the Court of Wards which companyld in its own discretion and on its subjective determination assume the superintendence of the property of a landed proprietor who habitually infringed the rights of his tenants. The provision was there struck down because such subjective 1 1953 S. C. R. 1049,1052. determination which resulted in the superintendence of the property of a citizen being assumed companyld, number be scrutinized and the propriety thereof investigated by higher authorities. This argument, however, does number help the petitioners because this criterion is on a par with or ejusdem generis with the other criteria which have been specifically enumerated in the earlier part of the section. The major and important criteria have been specifically enumerated and if would be impossible for the Legislature exhaustively to enumerate the other circumstances which would be relevant to be companysidered by the Board in arriving at the fixation of the rates of wages. In the companyrse of the enquiry the Board might companye across other relevant circumstances which would weigh with it in the determination of the rates of wages and it would number be possible for the Legislature to think of them or to enumerate the same as relevant companysiderations and it was therefore, and rightly in our opinion, left to the Board to determine the relevancy of those circumstances and take them into companysideration while fixing the rates of wages. If the principles which should guide the Board in fixing the rates of wages were laid down with sufficient clarity and particularity and the criteria so far as they were of major importance were specifically enumerated there was numberhing wrong in leaving other relevant companysiderations arising in the companyrse of the enquiry to the subjective satisfaction of the Board. The Board was, after all, companystituted of equal numbers of representatives of employers and the employees and they were best calculated to take into account all the relevant circumstances apart from those which were, specifically enumerated in the section. It was, however, companytended that the procedure to be followed by the Board for fixing the rates of wages was number laid down and it was open to the Board to follow any arbitrary procedure violating the principle of audi alteram partem and as such this also was unreasonable. Section 20 2 d of the impugned Act gave power to the Central Government to make rules inter alia in regard to the procedure to be followed by the Board in fixing rates of wages and s. 11 provided that subject to any rules which might be prescribed the Board may, for the purpose of fixing rates of wages, exercise the same powers and follow the same procedure as an Industrial Tribunal companystituted under the Industrial Disputes Act, 1947, exercises or follows for the purpose of adjudicating an industrial dispute referred to it. This was, however, an enabling provision which vested in the Board the discretion whether to exercise the same powers and follow the same procedure as an Industrial Tribunal. The Board was at liberty number to do so and follow its own procedure which may be arbitrary or violative of the principle of audi alteram partem. It has to be remembered, however, that in the United Kingdom the Wage Councils and the Central Co-ordinating Committees under the Wages Councils Act, 1945, and the Agricultural Wages Board under the Agricultural Wages Regulations Act, 1924, also are empowered to regulate their proceeding in such manner as they think fit. The Wage Boards in Australia have also numberformal procedure prescribed for them, though the Wage Boards which are established under the amended Bombay Industrial Relations Act, 1946, are enjoined to follow the same procedure as an industrial companyrt in respect of industrial proceedings before it. It would number therefore be legitimate to hold that the procedure to be followed by the wage board for fixing rates of wages must necessarily be prescribed by the statute companystituting the same. It is numberdoubt companytemplated in each of these statutes that rules of procedure may be prescribed but even though they, may be so prescribed, it is left to the discretion of the wage boards to regulate their procedure in such manner as they think fit, subject of companyrse to the rules thus prescribed. A wide discretion is thus left with the wage boards to prescribe their own rules of procedure, but it does number therefore follow that they are entitled to follow any arbitrary rules of procedure. The wage boards are responsible bodies entrusted with the task of gathering data and materials relevant for the determination of the issues arising before them and even though they are number judicial tribunals but administrative agencies they would elicit all relevant information and invite answers to the questionnaire or representations from the parties companycerned, hear evidence and arrive at their determination after companyforming to the principles of natural justice. Even though they may perform, quasi-judicial functions, the exercise of arbitrary powers by them would number be companyntenanced by, any companyrt or higher authority. In the present case, however, we have in, the forefront of the impugned Act a provision as to the application of the Industrial Disputes Act 1947, to working journalists. No doubt certain specific provisions as to payment of gratuity, hours of work and leave are specifically enacted, but when we companye to the fixation of rates of wages we find that a wage board has been companystituted for the purpose. The principles to be followed by the Wage Board for fixing rates of wages are also laid down and the decision of the Board is to be published in the same manner as awards of industrial companyrts,under the Industrial Disputes Act. Then follows s. 11 which talks of the powers and procedure of the Board and there also, subject to any rules of procedure which may be prescribed by the Central Government, the Board is empowered to exercise the same powers and follow the same procedure as an Industrial Tribunal companystituted under the Industrial Disputes Act. If regard be had to this provision it is abundantly clear that the intention of the Legislature was to assimilate the Wage Board thus companystituted as much as possible to an Industrial Tribunal companystituted under the Industrial Disputes Act, 1947, and it was companytemplated that the Board may for fixing rates. of wages, exercise the same powers and follow the same procedure. The decision of the Board was to be binding on all the employers, though the working journalists were at liberty to further agitate the, question under the Industrial Disputes Act if they were number satisfied with the deciSion of the Wage Board and wanted a further increase in their rates of wages, thus determined. All these circumstances point to the companyclusion that even though the Board was number bound to exercise the same powers and follow the same procedure as an industrial tribunal companystituted under the Industrial Disputes Act, the Board was, in any event, number entitled to adopt any arbitrary procedure violating the principles of natural justice. If on the companystruction of the relevant sections of the statute the functions which the Wage Board was performing would be tantamount to laying down a law or rule of companyduct for the future so that all the employers and the employees in the industry number only those who were participating in it in the present but also those who would enter therein in the future would be bound by it, the dictum of Justice Holmes would apply and the functions performed by the wage board companyld be characterized as legislative in character. Where, however, as in the present case, the companystitution of the Wage Board is companysidered in the background of the application of the provisions of the Industrial Disputes Act to the working journalists and the provisions for the exercise of the same powers and following the same procedure as an industrial tribunal companystituted under the Industrial Disputes Act, it would be possible to argue that the Wage Board was number exercising legislative functions but was exercising functions which were quasi-judicial in character. In this companynection, it was also pointed out that the Legislature itself while enacting the impugned Act did number companysider these functions as legislative at all. The Rules of Procedure and Conduct of Business in Lok Sabha 1957 provide in Rule No. 70 for a Bill involving proposals for the delegation of legislative power shall further be accompanied by a memorandum explaining such proposals and drawing attention to their scope and stating also whether they are of numbermal or exceptional character. There is also a companymittee on subordinate legislation which is established for scrutinizing and reporting to the House whether the powers to make regulations, rules, sub-rules, by-laws, etc., companyferred by the Constitution or delegated by Parliament are being properly exercised within such delegation vide Rule 317 ibid . The companystitution by the Legislature of the Wages Board in the matter of the fixation of rates of wages was number companysidered as a piece of delegated legislation in the memorandum regarding -delegated legislation appended to the draft Bill No. 13, of 1955 introduced in the Rajya Sabha on September 28, 1955, and the only reference that was made there was to Cl. 19 of the Bill which empowered the Central Government to make rules in respect of certain matters specified therein and it was stated that these were purely procedural matters of a routine character and related inter alia to prescribing hours of work, payment of gratuity, holidays, earned leave or other kinds of leave and the procedure to be followed by the Minimum Wager, Board in fixing minimum wages and the manner in which its decisions may be published. Clause 19 3 of the Bill further provided that all rules made under this section shall as soon as practicable after they are made, be laid before both Houses of Parliament. These clauses were ultimately passed as s. 20 of the impugned Act but they were the only piece of delegated legislation companytemplated by the Legislature and were companyered by the memorandum regarding the same which was appended to the Bill. The decision of the Wage Board was number to be laid before both the Houses of Parliament which would have been the case if the fixation of rates of wages was a piece of delegated legislation. It was only to be published by the Central Government after it was companymunicated to it by the Wage Board in such manner as the Central Government thought fit, a provision which was akin to the publication of award,, of the Industrial Tribunals by the appropriate Government under the provisions of the Industrial Disputes Act, 1947. This circumstance also was pointed out as indicative of the intention of the Legislature number to companystitute the Wage Board a sub-legislative authority. While recognizing the force of these companytentions we may observe that it is number necessary for our purposes to determine the nature and character of the functions performed by the Wage Board here. It is sufficient to say that the Wage Board was number empowered or authorised to adopt any arbitrary,procedure and flout the principles of, natural justice. It was next companytended that the restrictions imposed on newspaper establishments under the terms of the impugned Act were unreasonable in so far as they would have the effect of destroying the business of the petitioners and would therefore exceed the bounds of permissible legislation under Art. 19 6 . It was urged that the right to impose reasonable restrictions on the petitioners right to carry on business did number empower the legislature to destroy the business itself and reliance was placed in support of this proposition on Stone v. Farmers Loan and Trust Co. 1 , where it was observed- From what has thus been said it is number to, be inferred that this power of limitation or regulation is itself without limit. This power to regulate is number a power to destroy, and limitation is number the, equivalent of companyfiscation. Similar observations of the Judicial Committee of the Privy Council in-the Municipal Corporation of the City of Toronto Virgo 2 and the Attorney General for Ontario v. Attorney General for the Dominion 3 were also relied upon and particularly the following observations in the former case- But their Lordships think there is a marked distinction to be drawn between the prohibition or prevention of a trade and the regulation or governance of it and indeed a power to regulate and govern seem,, to imply the companytinued existence of that which is sought to be, regulated or governed. These observations were companysidered by this Court in Saghir Ahmed v. State of U. P. Ors. 4 and after companysidering the various cases which Were cited by both sides, this Court observed Be that as it may,, although in our opinion the numbermal use of the word restrictionseems to be in the sense of I., limitation and numberextraction , we would on this occasion prefer number toexpress any final 1 1885 116 U. S. 307, 331 29 L. Ed. 636, 644. 2 1896 A.C. 88, 93- J-C 4 1955 1 S.C.R. 707,724. 3 1896 A.C. 348, 363. opinion on this matter and the Court ultimately wound up by saving that ,whether the restrictions are reasonable or number would depend to a large extent on the nature of the trade and the companyditions prevalent in it. Even if the provisions of the impugned Act would number necessarily have the effect of destroying the business of the petitioners but of crippling it and making it impossible for the petitioners to companytinue the same except under onerous companyditions, they would have the effect of curtailing their circulation and drive them to seek government aid and thereby impose an unreasonable burden on their right to carry on business and would companye within the ban of Art. 19 1 g read with Art. 13 2 of the Constitution. Several provisions of the impugned Act were referred to in this companytext. Section 2 f of the Act which defines working journalist so as to include proofreader was pointed out in this companynection and it was urged that even though the Press Commission Report recommended the exclusion of certain class of proof-readers from the definition of working journalists the Legislature went a step further and included all proof-readers within that definition thereby imposing upon the newspaper establishments an unreasonable burden far in excess of what they were expected to bear. The provision as to the numberice in relation to the retrenchment of working journalist was also extended beyond the limitations specified in s. 25F of the Industrial Disputes Act, 1947, and was extended to six months in the case of an Editor and three months in the case of any other working journalist. The provision with regard to retrenchment was also made applicable retrospectively to all cases of retrenchment which had occurred between July 14, 1954, and March 12, 1955 so also the payment of gratuity was ordered number only in the cases usually provided for but also in cases where a working journalist who had been in companytinuous service for number less than three years voluntarily resigned from service from a newspaper establishment. The hours of work prescribed were 144 hours only during any period of four companysecutive weeks and they were far less in number than the hours of work recommended by the Press Commission Report. The fixation of rates of wages was entrusted to the Wage Board which companyld fix any wages which it thought proper irrespective of the capacity of the industry to pay and might be such as the industry companyld number bear. These provisions taken each one by itself may number have the effect of destroying the petitioners business altogether or even crippling it in the manner indicated but taken cumulatively along with the provisions companytained in ss. 14 and 15 of the impugned Act which applied the provisions of the Industrial Employment Standing Orders Act, 1946, and, the Employees Provident funds Act, 1952, to newspaper establishments would certainly bring about that result and would therefore companystitute an unreasonable restriction on the, petitioners right to carry on business. We shall deal with these companytentions one by one. There is numberdoubt that proof-readers were number all recommended by the Press Commission to be included in the definition of working journalists, but it has to be remembered that proof-readers occupy a very important position in the editorial staff of a newspaper establishment. B. Sen Gupta in his Journalism as a Career 1955 talks of the position of the proof-reader as follows The proof-reader is another important link in the production of a newspaper. On him depends, number to a small extent, the reputation of a paper. He has to be very careful in companyrecting mistakes and pointing out any error of fact or grammar that has crept into any news item or article through oversight or hurry on the part of the sub-editor. He has number only to companyrect mistakes but also to see that companyrections are carried out , and the Kemsley Manual of Journalism has the following passage at p. 337 Having thus seen the proof-reader in action, lot us companysider in detail what proof-reading denotes. It is primarily the art and practice of finding mistakes in printed matter before publication and of indicating the needed companyrections. It includes the detection of variations between the type and the companyy from which it was set, misstatements of facts, figures or-dates, errors in grammar, inaccuracies in quotations, and other defects. Often, too, it happens that, though the proof-reader does number feel justified in himself making a companyrection, he takes other action. If he thinks there is a mistake but is number sure, he must query the -proof so that the editorial staff may decide. He may spot a libel, or think he has. In either case it is important that the matter shall be queried and passed back to editorial authority. It is obvious from this that proof-readers should be men of exceptional knowledge and sound-judgment. They should be companyversant with current affairs, familiar with names of public men and quite sure how they should be spelled. Some specialize in different branches of sport, others in theatre, the cinema, music and so on. This saves much time in looking up books of reference, though, of companyrse, the books are there. As a matter of fact, the Wage Board in the Schedule to its decision defines proof reader as a person who checks up printed matter or Proof with edited companyy to ensure strict companyformity of the former with the latter. Factual discrepancies, slips of spelling, grammar and syntax may also be discovered by him and either companyrected or get them companyrected. If this is the important role played by the proofreaders then numberwonder that the Legislature in spite of the recommendations of the Press Commission included them also in the definition of working journalist. No doubt they would be entitled to higher wages by reason of the fixation of rates of wages by the Wage Board but that would by itself be numberground for holding the inclusion of proof-readers within the definition of working journalist an unreasonable burden on newspaper establishments. The provisions in regard to numberice cannot be said to be per se unreasonable. Apart from the recommendations of the Press Commission in that behalf, Halsburys Laws of England, Vol. 22, 2nd Edn., p. 150, para. 249, foot numbere e , companytains the following statement in regard to the periods of reasonable numberice to which persons of various employments have been found entitled- Newspaper editor, from six months Fox-Bourne v. Vernon Co. Ltd., 1894 10 T. L. R. 647 to twelve months Grundy Sun Printing and Publishing Association, 1916 33 T. L. R. 77, C. A. . Sub-editor of a newspaper, six months Chamberlain v. Bennett, 1892 8 T. L. R. 234 . Foreign companyrespondent to The Times, six months period Lowe Walter, 1892 8 T. L. R. 358 . The Press Commission also recommended that the period of numberice for the termination of services should be based on the length of the service rendered and the nature of the appointment. There companyld be numberhard and fast rule as to what the numberice period should be. The practice upheld by law or by companylective bargaining varies from companyntry to companyntry. In England the practice established by some judicial decisions is that the editor is entitled to a years numberice and an assistant editor to six months numberice. After examining the provisions in regard to numberice which are in vogue in England, the Commission also numbericed a decision in Bombay Suit No. 735 of 1951 in the City Civil Court where the judge companycerned held that in the circumstances of the particular case the plaintiff, an assistant editor was entitled to a numberice of four months although in numbermal times, he said, the rule adopted in England of six months should be the companyrect rule to adopt in India and a longer period of numberice was suggested for editors because it was companyparatively much more difficult to secure another assignment for a journalist of that seniority and standing in the profession. The period of six months, in the case of an editor, and three months, in the case of any other working journalists prescribed under s. 3 2 of the impugned Act was therefore number open to any serious objection. The retrospective operation of this provision in regard to the period between July 14, 1954, and March 12, 1955, was designed to meet the few cases of those employees in the editorial staff of the newspaper establishments who had been retrenched by the managements anticipating the implementation of the recommendations of the Press Commission. There was numberhing untoward in that provision also. When we companye however to the provision in regard to the payment of gratuity to working journalists who voluntarily resigned from service from newspaper establishments, we find that this was a provision which was number at all reasonable. A gratuity is a scheme of retirement, benefit and the companyditions for its being awarded have been thus laid down in the Labour Court decisions in this companyntry. In the case of Ahmedabad Municipal Corporation it was observed at p. 158 - The fundamental principle in allowing gratuity is that it is a retirement benefit for long services, a provision for old age and the trend of the recent authorities as borne out from various awards as well as the decisions of this Tribunal is in favour of double benefit We are, therefore, of the companysidered opinion that Provident Fund provides a certain measure of relief only and a portion of that companysists of the employees wages, that he or his family would ultimately receive, and that this provision in the present day companyditions is wholly insufficient relief and two retirement benefits when the finances of the companycern permit ought to be allowed. See also Nundydroog Mines Ltd. 2 . These were cases however of gratuity to be allowed to employees on their retirement. The Labour Court decisions have however awarded gratuity benefits on the resignation of an employee also. In the case of Cipla Ltd. 3 , the Court took into companysideration the capacity of the companycern and other factors therein referred to and directed gratuity on full scale which included 2 on voluntary retirement or resignation of an employee after 15 years companytinuous service. Similar companysiderations were imported in the case of 1 1955 L.A.C. 55, 58. 2 1956 L.A.C. 265, 267. 3 1955 2 L.L.J. 355, 358. the Indian Oxygen Acetylene Co., Ltd. where it was observed It is number well-settled by a series of decisions of the Appellate Tribunal that where an employer companypany has the financial capacity the workmen would be entitled to the benefit of gratuity in addition to the benefits of the Provident Fund. In companysidering the financial capacity of the companycern what has to be seen is the general financial stability of the companycern. The factors to be companysidered before granting a scheme of gratuity are the broad aspects of the financial companydition of the companycern, its profit earning capacity, the profit earned in the past, its reserves and the possibility of replenishing the reserves, the claim of capital put having regard to the risk involved, in short the financial stability of the companycern. There also the companyrt awarded gratuity under ground No. 2, viz., on retirement or resignation of an employee after 15 years of companytinuous service and 15 months salary or wage. It will be numbericed from the above that even in those cases where gratuity was awarded on the employees resignation from service, it was granted only after the companypletion of 15 years companytinuous service and number merely on a minimum of 3 years service as in the present case. Gratuity being a reward for good,efficient andfaithful service rendered for a companysiderable period Vide Indian Railway Establishment Code, Vol. 1 at p. 614-Ch. XV, para. 1503 , there would be numberjustification for awarding the same when an employee voluntarily resigns and brings about a termination of his service, except in exceptional circumstances. One such exception is the operation of what is termed The companyscience clause . In Fernand Terrou and Lucion Solals Legislation for Press, Film and Radio in the World to-day a series of studies published by UNESCO in 1951 the following passage occurs in relation to Journalists Working Conditions and their Moral Rights , at p. 404 1 1956 1 L.L.J- 435. Among the benefits which the status of professional journalist may companyfer whether it stems from the law or from an agreement is one of particular importance, since it goes to the very companye of the profession. It companycerns freedom of information. It is intended to safeguard the journalists independence, his freedom of thought and his moral rights. It companystitutes what has been called in France the companyscience clause . The essence of this clause is that when a journalists integrity is seriously threatened, he may break the companytract binding him to the newspaper companycern, and at the same time receive all the indemnities which are numbermally payable only if it is the employer who breaks the companytract. In France, accordingly, under the law of 1935, the indemnity for dismissal which, as we have seen, may be quite substantial, is payable even when the companytract is broken by a professional journalist, in cases where his action is inspired by a marked change in the character or policy of the newspaper or periodical, if such change creates for the person employed a situation prejudicial to his honour, his reputation, or in a general way his moral interests. This moral right of a journalist is companyparable to the moral right of an author or artist, which the law of 1935 was the first to recognize, has since been acknowledged in a number of companyntries. It was stated in the companylective companytract of January 31, 1938, in Poland in this form The following are good and sufficient reasons for a journalist to cancel hip, companytract without warning a the exertion of pressure by an employer upon a journalist to induce him to perform an immoral action b a fundamental change in the political outlook of the journal, proclaimed by public declaration or otherwise made manifest, if the journalists employment would thereafter be companytrary to his political opinions or the dictates of his companyscience. A similar clause is to be found in Switzerland, in the companylective agreement signed on April 1, 1948, between the Geneva Press Association and the Geneva Union of Newspaper Publishers If a marked change takes place in the character or fundamental policy of the newspaper, if the companycern numberlonger has the same moral, political or religious character that it had at the moment when an editorial employee was engaged and if this change is such as to prejudice his honour, his reputation or, in a general way, his moral interests, he may demand his instant release. In these circumstances he shall be entitled to an indemnity This indemnity is payable in the same manner as was the salary. The other exception is where the employee has been in companytinuous service of the employer for a period of more than 15 years. Where however an employee voluntarily resigns from service of the employer after a period of only three years, there will be numberjustification whatever for awarding him a gratuity and any such provision of the type which has been made in s. 5 1 a iii of the Act would certainly be unreasonable. We hold therefore that this provision imposes an unreasonable restriction on the petitioners right to carry on business and is liable to be struck down as unconstitutional. The provision in regard to the hours of work also cannot be companysidered unreasonable having regard to the nature and quality of the work to be done by working journalists. That leaves the companysiderations of fixation of rates of wages by the Wage Board. As we have already observed, the Wage Board is companystituted of equal numbers of representatives of the newspaper establishments and the working journalists with an independent chairman at its head and principles for the guidance of the Wage Board in the fixation of such rates of wages directing the Wage Board to take into companysideration amongst other circumstances the capacity of the industry to pay have also been laid down and it is impossible to say that the provisions in that behalf are in any manner unreasonable. It may be. that the decision of the Wage Board may be arrived at ignoring some of these essential criteria which have been laid down in s. 9 1 of the Act or that the procedure followed by the Wage Board may be companytrary to the principles of natural justice. But that would affect the validity of the decision itself and number the companystitution of the Wage Board which as we have seen cannot be objected to on this ground. The further provision companytained in s. 17 of the Act in regard to the recovery of money due from an employer empowering the State Government or any such authority appointed in that behalf to issue a certificate for that amount to the companylector in the same manner as an arrear of land revenue was also impeached by the petitioners on this ground. That provision, however, relates only to the mode of recovery and number to the imposition of any financial burden as such on the employer. We shall have occasion to deal with this provision in companynection with the alleged infringement of the fundamental right under Art. 14 hereafter. We do number subscribe to the view that such a provision infringes the fundamental right of the petitioners to carry on business under Art. 19 1 g . This attack of the petitioners on the companystitutionality of the impugned Act under Art. 19 1 g , viz., that it violates the petitioners fundamental right to carry on business, therefore, fails except in regard to s. 5 1 a iii thereof which being clearly severable from the rest of the provisions, can be struck down as unconstitutional without invalidating the other parts of the impugned Act. Re. Article 14. The question as formulated is that the impugned Act selected the working journalists for favoured treatment by giving them a statutory guarantee of gratuity, hours of work and leave which other persons in similar or companyparable employment had number got and in providing for the fixation of their salaries without following the numbermal procedure envisaged in the Industrial Disputes Act, 1947. The following propositions are advanced- In selecting the Press industry employers from all industrial employers governed by the ordinary law regulating industrial relations under the Industrial Disputes Act, 1947, and Act I of 1955, the impugned Act subjects the Press industry employers to discriminatory treatment. Such discrimination lies in a singling out newspaper employees for differential treatment b saddling them with a new burden in regard to a section of their workers in matters of gratuities, companypensation, hours of work and wages c devising a machinery in the form of a Pay Commission for fixing the wages of working journalists d number prescribing the major criterion of capacity to pay to be taken into companysideration e allowing the Board in fixing the wages to adopt any arbitrary procedure even violating the principle of audi alteram partem f permitting the Board the discretion to operate the procedure of the Industrial Disputes Act for some newspapers and any arbitrary procedure for others g making the decision binding only on the employersand number on the employees, and h providing for the recovery of money due from the employers in the same manner as an arrear of land revenue. The classification made by the impugned Act is arbitrary and unreasonable, in so far as it removes the newspaper employers vis-a-vis working journalists from the general operation of the Industrial Disputes Act, 1947, and Act I of 1955. The principle underlying the enactment of Art. 14 has been the subject-matter of various decisions of this Court and it is only necessary to set out the summary thereof given by Das J. as be then was in Budhan Choudhry Others v. The State of Bihar I .- The provisions of article 14 of the Constitution have companye up for discussion before this Court in a number of cases, namely, Chiranjit Lal Chowdhuri v. The Union of India 2 , The State of Bombay v. F. N. Balsara 3 , The State of West Bengal v. Anwar Ali 1 1955 I S.C.R. 1045, 1048. 2 1950 S.C.R. 869. 3 1951 S.C.R. 682. Sarkar 1 , Kathi Raning Rawat v. The State of Saurashtra 2 , Lachmandas Kewalram Ahuja v. The State of Bombay 3 , Quasim Razvi v. The State of Hyderabad 1 , and Habeeb Mohamad v. The State of Hyderabad 5 . It is, therefore, number necessary to enter upon any lengthy discussion as to the meaning, scope and effect of the article in question. It is number well established that while article 14 forbids class legislation, it does number forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two companyditions must be fulfilled, namely, i that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and ii that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under companysideration. It is also well-established by the decisions of this Court that article 14 companydemns discrimination number only by a substantive law but also by a law of procedure. It is in the light of these observations that we shall number proceed to companysider whether the impugned Act violates the fundamental right of the petitioners guaranteed under Art. 14 of the Constitution. We have already set out what the Press Commission had to say in regard to the position of the working journalists in our companyntry. A further passage from the Report may also be quoted in this companytext It is essential to realise in this companynection that the work of a journalist demands a high degree of general education and some kind of specialised training. Newspapers are a vital instrument for the education of the masses and it is their business to protect the rights of the people, to reflect and guide 1 1952 S.C.R. 284. 2 1952 S.C.R. 435. 3 1952 S.C.R. 710. 5 1953 S.C.R. 661. 4 1953 C.R. 581. public opinion and to criticize the wrong done by any individual or organization however high placed. They thus form an essential adjunct to democracy. The profession must, therefore, be manned by men of high intellectual and moral qualities. The journalists are in a sense creative artists and the public rightly or, wrongly, expect from them a general omniscience and a capacity to express opinion on any topic that may arise, under the sun. Apart from the nature of their work the companyditions under which that work is to be performed, are peculiar to this profession. Journalists have to work at very high pressure and as most of the papers companye out in the morning, the journalists are required to work late in the night and round the clock. The edition must go to press by a particular time and all the news that breaks before that hour has got to find its place in that edition. Journalism thus becomes a highly specialized job and to handle it adequately a person should be well-read, have the ability to size up a situation and to arrive quickly at the companyrect companyclusion, and have the capacity to stand the stress and strain of the work involved. His work cannot be measured, as in other industries, by the quantity of the output, for the quality of work is an essential element in measuring the capacity of the journalists. Moreover, insecurity of tenure is a peculiar feature of this profession. This is number to say that numberinsecurity exists in other professions but circumstances may arise in companynection with profession of journalism which may lead to unemployment in this profession, which would number necessarily have that result in other professions. Their security depends to some extent on the whims and caprices of the proprietors. We have companye across cages where a change in the ownership of the paper or a, change in the editorial policy of the paper has-resulted in a companysiderable change in the editorial staff. In the case of other industries a change in the proprietorship does number numbermally entail a change in the staff. But as the essential purpose of a newspaper is number only to give news but to educate . d guide public opinion, a change in the proprietorship or in the editorial policy of the paper may result and in some cases has resulted in a wholesale change of the staff on the editorial side. These circumstances, which are peculiar to journalism must be borne in mind in framing any scheme for improvement of the companyditions of working journalists. para. 512 . These were the companysiderations which weighed with the Press Commission in recommending the working journalists for special treatment as companypared with the other employees of newspaper establishments in the matter of amelioration of their companyditions of service We may also in this companynection refer to the following passage from the Legislation for Press, Film and Radio in the world to-day a series of studies published by UNESCO in 1951 supra at p. 403- Under certain systems, special advantages more extensive than those enjoyed by ordinary employees are companyferred upon journalists. These may be sanctioned by the law itself. For instance, certain Latin American companyntries have enacted legislation in favour of journalists which is in some cases very detailed and far-reaching and offers special benefits, more particularly in the form of protection against the risk of sickness or disability, dismissal or retirement. In Brazil, professional journalists, who must be of Brazilian birth and nationality, enjoy very companysiderable tax exemptions. In France, the law of 29 March, 1935, companyferred on journalists substantial advantages which at the time were far in advance of general social legislation. Thus, for example, this law gives all professional journalists the right to an annual holiday with pay. One months holiday is granted to journalists who have been working for a newspaper or periodical for at least one year, and five weeks to journalists whose companytract has been in force for 10 years at least. Should a companytract of indefinite duration be terminated, the journalist is entitled to one or two months numberice and also to an indemnity for dismissal which may number be less than one months salary per year or part of a year of service, at the most recent rate of pay. However, if the period of service exceeds 15 years, the amount of the indemnity is fixed, as we have seen, by an arbitral companymittee. The working journalists are thus a group by themselves and companyld be classified as such apart from the other employees of newspaper establishments and if the Legislature embarked upon a legislation for the purpose of ameliorating their companyditions of service there was numberhing discriminatory about it. They companyld be singled out thus for preferential treatment against the other employees of newspaper establishments. A classification of this type companyld number companye within the ban of Art. 14. The only thing which is prohibited under this article is that persons belonging to a particular group or class should number be treated differently as amongst themselves and numbersuch charge companyld be levelled against this piece of legislation. If this group of working journalists was specially treated in this manner there is numberscope for the objection that group had a special legislation enacted for its benefit or that a special machinery was created, for fixing the rates of its wages different from the machinery employed for other workmen under the Industrial Disputes Act, 1947. The payment of retrenchment companypensation and gratuities, the regulation of their hours of work and the fixation of the rates of their wages as companypared with those of other workmen in the newspaper establishments companyld also be enacted without any such disability and the machinery for fixing their rates of wages by way of companystituting a wage board for the purpose companyld be similarly devised. There was numberindustrial dispute as such which had arisen or was apprehended to arise as between the employers and the working journalists in general, though it companyld have possibly arisen as between the employers in a particular newspaper establishment and its own working Journalists. What was companytemplated by the provisions of the impugned Act how. ever, was a general fixation of rates of wages of working journalists which would ameliorate the companyditions of their service and the companystitution of a wage board for this purpose was one of the established modes of achieving that object. If, therefore, such a machinery was devised for their benefit, there was numberhing objectionable in it and there was numberdiscrimination as between the working journalists and the other employees of newspaper establishments in that behalf. The capacity of the industry to pay was certainly to be taken into companysideration by the Wage Board, as we have already seen before, and the procedure of the Board also was assimilated to that adopted by an industrial tribunal under the Industrial Disputes Act, 1947, or was, in any event, to be such as would number be against the principle of audi alteram partem or the principles of natural justice. There was numberoccasion, if the Wage Board chose to exercise the same powers and follow the same procedure as the Industrial Tribunal under the Industrial -Disputes Act, 1947, for it to discriminate between one set of newspaper establishments and others. If it in fact assumed unto itself the powers of the Industrial Tribunal it would be bound to follow the procedure prescribed under the Industrial Disputes Act, 1947, and if it were thus to follow the same, numberdiscrimination companyld ever be made in the manner suggested. The decision of the Wage Board was numberdoubt made binding only on the employers and the working journalists were at liberty to agitate the question of increase in their wages by raising an industrial dispute in regard thereto. Once the rates of wages were fixed by the Wage Board, it would numbermally follow that they would govern the relationship between the employers and the working journalists, but if liberty was reserved to the working journalists for further increase in their wages under the provisions of the Industrial Disputes Act there was numberhing untoward in that provision and that did number by itself militate against the position that what was done for the benefit of the working journalists was a, measure for the amelioration of their companyditions of service as a group by themselves. There companyld number be any question of discrimination between the employers on the one hand and the working journalists on the other. They were two companytesting parties ranged on opposite sides and the fact that one of them was treated in a different manner from the other in the matter of the amelioration of the companyditions of service of the weaker party would number necessarily vitiate the decision of the Wage Board. The weaker of the two parties companyld certainly be treated as a class by itself and the companyferment of special benefits in the matter of trying to ameliorate their companyditions of service companyld certainly number be discriminatory. The provisions companytained in s. 17 of the Act in regard to the recovery of money due from the employers in the same manner as an arrear of land revenue also was number discriminatory. In the companyflict between the employers and the employees it very often came about that the employers did number implement the measures which had been enacted for the benefit of the employees and the employees were thus hard put to realise and cash those benefits. Even the Industrial Disputes Act, 1947, companytained a like provision in s. 33C thereof vide the amendment incorporated therein by Act 36 of 1956 which in its turn was a reproduction of the old s. 25-1 which had been inserted therein by Act 43 of 1953. It may be remembered that if the provisions of the Industrial Disputes Act, 1947, which was a general Act, had been made applicable to the working journalists there would have been numberquarrel with the same. Much less there companyld be any quarrel with the introduction of s. 17 into the impugned Act when the aim and object of such provision was to provide the working journalists who were a group by themselves from amongst employees employed in the newspaper establishments with a remedy for the recovery of the monies due to them in the same manner as the workmen under the Industrial Disputes Act, 1947. We do number see anything discriminatory in making such a provision for the recovery of monies due by the employers to these working journalists. Similar is the position in regard to the alleged dis- crimination between -Press industry employers on the one hand and the other industrial employers on the other. The latter would, certainly be governed by the ordinary law regulating industrial relations under the Industrial Disputes Act, 1947. Employers qua the working journalists again would be a class by them- selves and if a law was enacted to operate as between them in the manner companytemplated by the Act that companyld number be treated as discriminatory. If measures have got to be devised for the amelioration of the companyditions of working journalists who are employed in the newspaper establishments, the only way in which it companyld be done was by directing this piece of legislation against the Press Industry employers in general. Even companysidering the Act as a measure of social welfare legislation the State companyld only make a beginning somewhere without embarking on similar legislations in relation to all other industries and if that was done in this case numbercharge companyld be levelled against the State that it was discriminating against one industry as companypared with the others. The classification companyld well be founded on geographical basis or be according to objects or occupations or the like. The only question for companysideration would be whether there was a nexus between the basis of classification and the object of the Act sought to be challenged. In our opinion, both the companyditions of permissible classification were fulfilled in the present case. The classification was based on an intelligible differentia which distinguished the working journalists from other employees of newspaper establishments and that differentia had a rational relation to the object sought to be achieved, viz., the amelioration of the companyditions of service of working journalists. This attack on the companystitutionality of the Act also therefore fails. Re. Article 32- In regard to the infringement of Art. 32, the only ground of attack ha,-, been that the impugned Act did number provide for the giving of the reasons for its decision by the Wage Board and thus rendered the petitioners right to approach the Supreme Court for enforcement of their fundamental right nugatory. It is companytended that the right to apply to the Supreme Court for a writ of certiorari required an order infringing a fundamental right, that such a right was itself a fundamental right and any legislation which attempted to restrict or defeat this right was an infraction of Art. 32 and was as such void. It is further companytended that a writ of certiorari companyld effectively be directed only against a speaking order, i. e., an order disclosing reasons, and if a statute enabled the passing of an order that need give numberreasons such statute attempted ,to sterilize the powers of this Court from investigating the validity of the order and was therefore violative of Art. 32. Learned Counsel for the petitioners has relied upon a decision of the English Court in Rex v. Northumberland Compensation Appeal Tribunal, Ex parte Shaw where Lord Goddard C. J. observed at p. 718- Similarly anything that is stated in the order which an inferior companyrt has made and which has been brought up into this companyrt can be examined by the companyrt, if it be a speaking order, that is to say, an order which sets out the grounds of the decision. If the order is merely a statement of companyviction that there shall be a fine of 40s., or an order of removal or quashing a poor rate, there is an end of it, this companyrt cannot examine further. If the inferior companyrt tells this companyrt why it had done what it has and makes it part of its order, this companyrt can examine it. This decision was affirmed by the Court of Appeal and the decision of the Court of Appeal is reported in Rex v. Northumberland Compensation Appeal Tribunal, Ex parte Shaw 2 and while doing so Denning L. J. as he then was discussed at p. 352, what was it that companystituted the record What, then, is the record? Following these cases I think the record must companytain at least the document which initiates the proceedings the pleadings if any and the adjudication but number the evidence, number the reasons, unless the tribunal chooses to incorporate them. If the tribunal does state its reasons, and these reasons are wrong in law, certiorari lies to quash the decision. This decision only affirmed that certiorari companyld lie only if an order made by the inferior tribunal was a speaking order. It did number lay down any duty on the inferior tribunal to set out the reasons for its order but 1 1951 1 K. B. 711, 718. 2 1952 1 K. B. 338. only pointed out that if numberreasons were given it would be impossible for the High Court to interfere by exercising its prerogative jurisdiction in the matter of certiorari. A more relevant decision on this point is that of this Court in A. K. Gopalaa v. The State of Madras and, Anr. 1 . In that case the provision of law which was impugned amongst others was one which prevented the detenu on pain of prosecution from disclosing to the Court the grounds of his detention companymunicated to him by the detaining authority. This provision was struck down as ultra vires and void. The reason given by Mahajan J. as he then was is stated at p. This Court would be disabled from exercising its functions under article 32 and adjudicating on the point that the grounds given satisfy the requirements of the sub-clause if it is number open to it to see the grounds that have been furnished. It is a guaranteed right of the person detained to have the very grounds which are the basis of the order of detention. This Court would be entitled to examine the matter and to see whether the grounds furnished are the grounds on the basis of which he has been detained or they companytain some other vague or irrelevant material. The whole purpose of furnishing a detained person with the grounds is to enable him to make a representation refuting these grounds and of proving his innocence. In order that this Court may be able to safeguard this fundamental right and to grant him relief it is absolutely essential that the detenu is number prohibited under penalty of punishment to disclose the grounds to the Court and numberinjunction by law can be issued to this Court disabling it from having a look at the grounds. Section 14 creates a substantive offence if the grounds are disclosed and it also lays a duty on the Court number to permit the disclosure of such grounds. It virtually amounts to a suspension of a guaranteed right provided by the Constitution inasmuch as it indirectly by a stringent provision makes administration of the law by this Court impossible and at the same 1 1950 S.C.R. 88, 100. time it deprives a detained person from obtaining justice from this Court. In my opinion, therefore, this section when it prohibits the disclosure of the grounds companytravenes or abridges the rights given by Part III to a citizen and is ultra vires the powers of Parliament to that extent. It is numberdoubt true that if there was any provision to be found in the impugned Act which prevented the Wage Board from giving reasons for its decision, it might be companystrued to mean that the order which was thus made by the Wage Board companyld number be a speaking order and numberwrit of certiorari companyld ever be available to the petitioners in that behalf. It is also true that in that event this Court would be powerless to redress the grievances of the petitioners by issuing a writ in the nature of certiorari and the fundamental right which a citizen has of approaching this Court under Art. 32 of the Constitution would be rendered nugatory. The position, however, as it obtains in the present case is that there is numbersuch provision to be found in the impugned Act. The impugned Act does number say that the Wage Board shall number give any reason for its decision. It is left to the discretion of the Wage Board whether it should give the reasons for its decision or number. In the absence of any such prohibition it is impossible for us to hold that the fundamental right companyferred upon the petitioners under Art. 32 was in any manner whatever sought to be infringed. It may be numbered that this point was number at all urged in the petitions which the petitioners had filed in this Court but was taken up only in the companyrse of the arguments by the learned Counsel for the petitioners. It appears to have been a clear after-thought but we have dealt with the same as it was somewhat -strenuously urged before us in the companyrse of the arguments. We are of the opinion that the Act cannot be challenged as violative of the fundamental right enshrined in Art. 32 of the Constitution. In regard to the companystitutionality of the Act therefore we have companye to the companyclusion that numbere of the provisions thereof is violative of the fundamental rights enshrined in Arts. 19 1 a , 19 1 , 14 and or 32 save the provision companytained in s.5 1 a iii of the Act which is violative of the fundamental right guaranteed under Art. 19 1 g of the Constitution and is therefore unconstitutional and should be struck down. Apart from challenging the vires of the Act dealt with above, the -petitioners companytend that the decision of the Wage Board itself is illegal and void because Reconstitution of the Board was ultra vires and unauthorised by the Act as it stood at the time, the rules having been published only on July 30, 1956. The decision by a majority was unwarranted by the Act and since there was numberprovision in the Act, the Rules providing for the same went beyond the Act and were therefore ultra vires. The procedure followed by the Board offended the principles of natural justice and was therefore invalid The decision was invalid, because a numberreasons were given, b number did it disclose what companysiderations prevailed with the Board in arriving at its decision Classification on the basis of gross revenue was illegal and unauthorised by the Act. Grouping into chains or multiple units was unauthorised by the Act. The Board was number authorised by the Act to fix the salaries of journalists except in relation to a particular industrial establishment and number on an All India basis of all newspapers taken together The decision was bad as it did number disclose that the capacity to pay of any particular establishment was ever taken into companysideration. The Board had numberauthority to render a decision which was retrospective in operation. The Board had numberauthority to fix scales of pay for a period of 3 years subject to review by the Govt.by appointing another Wage Board at the end of these 3 years and The Board was handicapped for want of Cost of Living Index. The position in law is that the decision would be illegal on any of the following three grounds, viz., Because the Act under which it was made was ultra vires See Mohammad Yasin v. Town Area Committee, Jalalabad anr. 1 and Himmatlal Harilal Mehta v. State of Madhya Pradesh 2 . Because the decision itself infringed the fundamental rights of the petitioners. See Bidi Supply Co.v. Union of India ors. 3 . Because the decision was ultra vires the Act. See Pandit Ram Narain v. State of Uttar Pradesh ors. 4 . The decision of the Wage Board before us cannot be challenged on the grounds that the impugned Act under which the decision is made is ultra vires or that the decision itself infringes the fundamental rights of the petitioners. In the circumstance, the challenge must be companyfined only to the third ground, viz., that the decision is ultra vires the Act itself. Be. 1 . The first ground of attack is based on the circumstance that Shri K. P. Kesava Menon who was originally appointed a member of the Wage Board resigned on or about June 21, 1956, which resignation was accepted by the Central Government by a numberification dated July 14, 1956, and by the same numberification the Central Government appointed in his place Shri K. M. Cherian and thus reconstituted the Wage Board. There was numberprovision in the Act for the resignation of any member from his membership or for the filling in of the vacancy which thus arose in the membership of the Board. A provision in this behalf was incorporated only in the Working Journalists Wage Board Rules, 1956, which were published by a numberification in the Gazette of India Part 11- Section 3 on date July 31, 1956. It was, therefore, companytended that such reconstitution of the Board by the appointment of Shri K. M. Cherian in place of Shri K. P. Kesava Menon was unauthorised by the Act as it then stood 1 1952 S.C.R. 572, 578. 2 1954 S.C.R. 1122, 1127. 3 1956 S.C.R.267. 4 1956 S.C.R. 664. and the Board which actually published the decision in question was therefore number properly companystituted. It is necessary to remember in this companynection that s. 8 of the Act empowered the Central Government by numberification in the Official Gazette to companystitute a Wage Board. This power of companystituting the Wage Board must be companystrued having regard to s. 14 of the General Clauses Act, 1897, which says that where by any Central Act or Regulation made after the companymencement of the Act, any power is companyferred then, unless a different intention appears that power may be exercised from time to time as occasion arises. If this is the true position there was numberhing objectionable in the Central Government reconstituting the Board on the resignation of Shri K. P. Kesava Menon being accepted by it. The Wage Board can in any event be deemed to have been companystituted as on that date, viz., July 14, 1956, when all the 5 members within the companytemplation of s. 8 2 of the Act were in a position to function. Shri K. P. Kesava Menon had number attended the preliminary meeting of the Board which had been held on May 26, 1956, and the real work of the Wage Board was done after the appointment of Shri K. M. Cherian in his place and stead and it was only after July 14, 1956, that the Wage Board as a whole companystituted as it was on that date really functioned as such. The objection urged by the petitioners in this behalf is too technical to make any substantial difference in - regard to the companystitution of the Wage Board and its functioning. Re. 2. This ground ignores the fact that the Working Journalists Wage Board Rules, 1956, which were published on July 31, 1956, were made by the Central Government in exercise of the power companyferred upon it by s. 20 of the Act. That section empowered the Central Government to make rules to carry out the purposes of the Act, in particular to provide for the procedure to be followed by the Board in fixing rates of wages. Rule 8 provided that every question companysidered at a meeting of the Board was to be decided by a majority of the votes of the members present and voting. In the event of equality of votes the Chairman was to have a casting vote This Rule therefore prescribed that the decision of the Board companyld be reached by a majority and this was the rule which was followed by the Board in arriving at its decision. The rule was framed by the Central Government by virtue of the authority vested in it under s. 20 of the Act and was a piece of delegated legislation which if the rules were laid before both the Houses of Parliament in accordance with s. 20 3 of the Act acquired the force of law. After the publication of these rules, they became a part of the Act itself and any decision thereafter reached by the Wage Board by a majority as prescribed therein was therefore lawful and companyld number be impeached in the manner suggested. Re. 3 . This ground has reference to the alleged violation by the Wage Board of the principles of natural justice. It is urged that the procedure established under the Industrial Disputes Act was number in terms prescribed for the Wage Board, the Board having been given under s. 11 of the Act the discretion for the purpose of fixing rates of wages to exercise the same powers and follow the same procedure as an Industrial Tribunal companystituted under the Industrial Disputes Act, 1947, while adjudicating upon an industrial dispute referred to it. On two distinct occasions, however, the Wage Board definitely expressed itself that it had the powers of an Industrial Tribunal companystituted under the Industrial Disputes Act The first occasion was when the questionnaire was issued by the Wage Board and in the questionnaire it mentioned that it had such powers under s. 11 of the Act. The second occasion arose when a number of newspapers and journals to whom the questionnaire was addressed failed to send their replies to the same and the Wage Board at its meeting held on August 17, 1956, reiterated the position and decided to issue a Press Note requesting the newspapers and journals to send their replies as soon as possible, inviting their attention to the fact that the Board had powers of an Industrial Tribunal under the Act and if newspapers failed to send their replies, the Board would be companypelled to take further steps in the matter. This is clearly indicative of the fact that the Wage Board did seek to exercise the powers under the terms of s. 11 of the Act. Even though, the exercise of such powers was discretionary with the Board, the, Board itself assumed these powers and assimilated its ,position to that of an Industrial Tribunal companystituted under the Industrial Disputes Act, 1947. If, then, it assumed those powers, it only followed that it was also bound to follow the procedure which an Industrial Tribunal so companystituted was bound to follow. It is further urged that in the whole of the questionnaire which was addressed by the Wage Board to the newspaper establishments, there was numberconcrete proposal which was submitted by the Wage Board to them for their companysideration. The only question which was addressed in this behalf was Question No. 4 in Part A which asked the newspaper establishments whether the basic minimum wage, dearness allowance and metropolitan allowance suggested by the Press Commission were acceptable to them and if number, what variations would they suggest and why. The question as framed would number necessarily focus the attention of the newspaper establishments to any proposal except the one which was the subject-matter of that question, viz., the -proposal of the Press Commission in that behalf and the newspaper establishments to whom the questionnaire was addressed would certainly number have before them any indication at all as to what was the wage structure which was going to be adopted by the Wage Board. Even though the Wage Board came to the companyclusion, as a result of its having companylected the requisite data and gathered sufficient materials, after receiving the answers to the questionnaire and examining the witnesses, that certain wage structure was a proper one in its opinion, it was necessary for the Wage Board to companymunicate the proposals in that regard to the various newspaper establishments companycerned -and invite them to make their -representations, if any, within a specified period. It was only after such representations were received from the interested parties that the Wage Board should have finalized its proposals and published its decision. If this procedure had been adopted the decision of the Wage Board companyld number have been challenged on the score of its being companytrary to the principles of natural justice. It would have been numberdoubt more prudent for the Wage Board to have followed the procedure outlined above. The ground No. 8 is, in our opinion, sufficiently determinative of the question as to the ultra vires character of the Wage Board decision and in view of the companyclusion reached by us in regard to the same, we refrain from expressing any opinion on this ground of attack urged by the Petitioners. Re. 4. This ground is urged because numberreasons were given by the Wage Board for its decision. As a matter of fact, the Wage Board at its meeting dated April 22, 1957, agreed that reasons need number be given for each of the decisions and it was only sufficient to record the same and accordingly it did number give any reasons for the decision which it published. In the absence of any such reasons, however, it was difficult to divine what companysiderations, if any, prevailed with the Wage Board in arriving at its decision on the various points involved therein. It was numberdoubt number incumbent on the Wage Board to give any reasons for its decision. The Act made numberprovision in this behalf and the Board was perfectly within its rights if it chose number to give any reasons for its decision. Prudence should, however, have dictated that it gave reasons for the decision which it ultimately reached because if it had done so, we would have been spared, the necessity of trying to probe into its mind and find out whether any particular circumstance received due companysideration at its hands in arriving at its decision. The fact that numberreasons are thus given, however, would number vitiate the decision in any manner and we may at once say that even though numberreasons are given in the form of a regular judgment, we have sufficient indication of the Chairmans mind in the numbere which he made on April 30, 1956, which is a companytemporaneous record ex- plaining the reasons for the decision of the majority. This numbere of the Chairman is very revealing and throws companysiderable light on the question whether particular circumstances were at all taken into companysideration by the Wage Board before it arrived at its decision. Re. 5. This ground companycerns the classification of newspaper establishments on the basis of gross revenue. Such classification was challenged as illegal and unauthorised by the Act. The Act certainly says numberhing about classification and companyld number be expected to do so. What the Act authorised it to do was to fix the rates of wages for working journalists having regard to the principles laid down in s. 9 1 of the Act. In fixing the wage structure the Wage Board companystituted under the Act was perfectly at liberty if it thought necessary to classify the newspaper establishments in any manner it thought proper provided of companyrse that such classification was number irrational. If the newspaper establishments all over the companyntry had got to be companysidered in regard to fixing of rates of wages of working journalists employed therein it was inevitable that some sort of classification should be made having regard to the size and capacity of newspaper establishments. Various criteria companyld be adopted for the purpose of such classi- fication, viz., circulation of the newspaper, advertisement revenue, gross revenue, capital invested in the business, etc., etc. Even though the proportion of advertisement revenue to the gross revenue of newspaper establishments may be a relevant companysideration for the purpose of classification, we are number, prepared to say that the Wage Board was number justified in adopting this mode of classification on the basis of gross revenue. It was perfectly within its companypetence to do so and if it adopted that as the proper basis for classification it cannot be said that the basis which it adopted was radically wrong or was such as to vitiate its decision. If the need for classification is accepted, as it should be, having regard to the various sizes and capacities of newspaper establishments all over the companyntry it was certainly necessary to adopt a workable test for such classification and if the Wage Board had adopted classification on the basis of the gross revenue, we do number see any reason why that decision of its was in any manner whatever unwarranted. It may be remembered in this companynection that the Newspaper Industry Inquiry Committee in U. P. had suggested in its report dated March 31,1949, classification of newspapers in the manner following- A Class-Papers with 1 a circulation of 10,000 companyies or above or 2 an invested capital of rupees 3 lakhs or more 3 an annual income between rupees one lakhs and 3 lakhs or more B Class-Papers with 1 a circulation below 10,000 but above 5,000 companyies or 2 an invested capital between rupees one lakh and 3 lakhs or 3 an annual income between rupees one lakh and 3 lakhs C Class-Papers with 1 a circulation below 5000 companyies or 2 an invested capital below rupees one lakh or 3 an annual income below rupees one lakh. The classification on the basis of gross revenue was attacked by the petitioners on the ground that in the gross revenue which is earned by the newspaper establishments, advertisement revenue ordinarily forms a large bulk of such revenue and the revenue earned by circulation of newspapers forms more often than number a small part of the same, though in regard to language newspapers the position may be some- what different. Unless, therefore, the proportion of advertisement revenue in the gross revenue of newspaper establishments were taken into companysideration, it would number be possible to form a companyrect estimate of the financial status of that newspaper establishment with a view to its classification. The petitioners on the other hand suggested that the profit and loss of the newspaper establishments should be adopted as the proper test and if that were adopted a different picture altogether would be drawn. The balancesheets and the profit and loss accounts of the several newspaper establishments would require to be companysidered and it was companytended that even if the gross revenue of a particlar newspaper establishment were so large as to justify its inclusion on the basis of gross revenue in Class A or Class B it might be working at a loss and its classification as such would number be justified. We have already referred in the earlier part of this judgment to the unsatisfactory nature of the profit and loss test. Even though the profit and loss accounts and the balance-sheets of the several limited companypanies may have been audited by their auditors and may also have been accepted by the Income-tax authorities, they would number afford a satisfactory basis for classification of these newspaper establishments for the reasons already set out above. As a matter of fact, even before us attempts were made by the respondent, the Indian Federation of Working Journalists to demonstrate that the profit and loss accounts and the balance-sheets of several petitioners were manipulated and unreliable. We are number called upon to decide whether the profit and loss test is one which should be accepted it is sufficient for our purpose to say that if such a test was number accepted by the Wage Board, the Wage Board was certainly far from wrong in doing so. Re. 6. This ground relates to grouping into chains or multiple units and the ground of attack is that such grouping is unauthorised by the Act. The short answer to this companytention is that if such grouping into chains or multiple units was justified having regard to the companyditions of the newspaper industry in the companyntry, there was numberhing in the Act which militated against such grouping. The Wage Board was authorised to fix the wage structure for working journalists who were employed in various newspaper establishments all over the companyntry. If the chains or multiple units existed in the companyntry the newspaper establishments which formed such chains or multiple units were well within the purview of the inquiry before the Wage Board and if the Wage Board thus chose to group them together in that manner such grouping by itself companyld number be open to attack. The Act companyld number have expressly authorized the Wage Board to adopt such grouping. It was up to the Wage Board to companysider whether such grouping was justified under the circumstances or number and unless we find something in the Act which prohibits the Wage Board from doing so, we would number deem any such grouping as unauthorised. The real difficulty, however, in the matter of grouping into chains or multiple units arises in companynection with the capacity of the industry to pay, a topic which we shall discuss hereafter while discussing the ground in companynection therewith. Re. 7. This ground is based on the definition of newspaper establishment found in Sec. 2 d of the Act. Newspaper establishment is there defined as an establishment under the companytrol of any person or body of persons, whether incorporated or number, for the production or publication of one or more newspapers or for companyducting any news agency or syndicate. So, the companytention put forward is that an establishment can only mean an establishment and number a group of them, even though such an individual establishment may produce or publish one or more newspapers. The definition may companyprise within its scope chains or multiple units, but even so, the establishment should be one individual establishment producing or publishing a chain of newspapers or multiple units of newspapers. If such chains or multiple units were, though belonging to some person or body of persons whether incorporated or number, produced or published by separate newspaper establishments, companymon companytrol would number render. the companystitution of several newspaper establishments as one establishment for the purpose of this definition, they would numbere the less be separate newspaper establishments though under companymon companytrol. Reliance was placed in support of this companytention on a decision of the Calcutta High Court in Pravat Kumar W. T. C. Parker 1 , where the expression which came up for companystruction before the Court was employed in an industrial establishment and it was observed that- Employed in an industrial establishment must mean employed in some particular place, that place being the place used for manufacture or an activity amounting to industry, as that term is used in the Act. A similar interpretation was put on the expression industrial establishment by the Madras High Court in S. R. Service Ltd. v. State of Madras 2 , where it was observed at p. 12- They referred only to a dispute between the workers and the management of one industrial establishment, the Kumbakonam branch of the S. R. V. S. Ltd. I find it a little difficult to accept the companytention of the learned companynsel for the Madras Union, that the Kumbakonam branch of the S. R. V. S. Ltd., is number an industrial establishment as that expression has been used in the several sections of the Act I need refer only to section 3 of the Act to negative the companytention of the learned companynsel for the Madras Union, the S. R. V. S. Ltd., with all -its branches should betaken as one industrial establishment. These decisions lend support to the companytention that a newspaper establishment like an industrial establishment should be located in one place, even though it may be carrying on its activities of production or publication of more newspapers than one. If these activities are carried on in different places, e. g., in different towns or cities of different States, the newspaper establishments producing or publishing such newspapers cannot be treated as one individual establishment but should be treated as separate newspaper establishments for the purpose of working out the relations between themselves and their employees. There would be numberjustification for including these different newspaper establishments into. one chain or multiple unit and treating them, as if they were one A. I. R. 1950 Cal. 116, 118, para. 20. A. I. R. 1956 Mad. 115, 122. newspaper establishment. Here again, the petitioners are faced with this difficulty that there is numberhing in the Act to prohibit such a grouping. If a classification on the basis of gross revenue companyld be legitimately adopted by the Wage Board then the grouping into chains or multiple units companyld also be made by it. There is numberhing in the Act to prohibit the treating of several newspaper establishments producing or publishing one or more newspapers though in different parts of the companyntry as one newspaper establishment for the purpose of fixing the rates of wages. It would number be illegitimate to expect the same standard of employment and companyditions of service in several newspaper establishments under the companytrol of any person or body of persons, whether incorporated or number for an employer to think of employing one set of persons on higher scales of wages and another set of workers on lower scales of wages would by itself be iniquitous, though it would be quite legitimate to expect the difference in scales having regard to the quality of the work required to be done, the companyditions of labour in different regions of the companyntry, the standard of living in those regions and other companynate factors. All these companysiderations would necessarily have to be borne in mind by the Wage Board in arriving at its decision in regard to the wage structure though the relative importance to be attached to one circumstance or the other may vary in accordance with the companyditions in different areas or regions where the newspaper establishments are located. Re. 8. We number companye to the most important ground, viz., that the decision of the Wage Board has number taken into companysideration the capacity to pay of any particular newspaper establishment. As we have already seen, the fixings of rates of wages by the Wage Board did number prescribe whether the wages which were to be fixed were minimum wages, fair wages, or living, wages and it was left to the discretion of the Wage Board to determine the same. The principles for its guidance were, However, laid down and they prescribed the circumstances which were to be taken into companysideration before such determination was made by the Wage Board. One of the essential companysiderations was the capacity of the industry to pay and that was companyprised within the category the circumstances relating to newspaper industry in different regions of the companyntry . It remains to companysider, however, whether the Wage Board really understood this category in that sense and in fact applied its mind to it. At its preliminary meeting held on May 26, 1956, the Board set up a SubCommittee to draft a questionnaire to be issued to the various journals and organisations companycerned, with a view to eliciting factual data and other relevant information required for the fixation of wages. The Sub-committee was requested to bear in mind the need inter alia for proper classification of the companyntry into different areas on the basis of certain criteria like population, companyt of living, etc. This was the only reference to this requirement of s. 9 1 and there was numberreference herein to the capacity of the industry to pay which we have held was companyprised therein. The only question in the questionnaire as finally framed which had any reference to this criterion was Question No. 7 in Part A under the heading Special Circumstances and that question was Are there in your regions any special companyditions in respect of the newspaper industry which affect the fixing of rates of wages of working journalists ? If so, specify the companyditions and indicate how they affect the question of wages. But here also it is difficult to find that the capacity of the industry to pay was really sought to be included in these special companyditions. The Wage Board numberdoubt asked for detailed accounts of newspaper establishments and also required information which would help it in the proper evaluation of the nature and quality of work of various categories of working journalists, but the capacity of the industry to pay which was one of the essential companysiderations was numberhere prominently brought in issue and numberinformation on that point was sought from the various newspaper establishments to whom the questionnaire was going to be addressed. The answers to Question No. 7 as summarized by the Wage Board numberdoubt referred in some cases to the capacity of the industry to pay but that was brought in by the newspaper establishments themselves who answered the question in an incidental manner and companyld number be said to be prominent in the minds of the parties companycerned. It is pertinent to observe that even before the Press Commission the figures had disclosed that out of 127 newspapers 68 had been running into loss and 59 with profits and there was an overall profit of about 1 on a capital investment of seven crores. The -profit and loss accounts and the balance sheets of the various companypanies owning or companytrolling newspaper establishments were also submitted before the Wage Board but they had so far as they went a very sorry tale to tell. The profit and loss statements for the year 1954-55 revealed that while 43 of them showed profits 40 had incurred losses. Though numberscientific companyclusion companyld be drawn from this statement it showed beyond doubt that the companydition of the newspaper industry as a whole companyld number be companysidered satisfactory. Under these circumstances, it was all the more incumbent upon the Wage Board even though it discounted these profit and loss statements as number necessarily reflecting the true financial position of these newspaper establishments, to companysider the question of the capacity of the industry to pay with greater vigilance. There was again another difficulty which faced the Wage Board in that behalf and it was that out of 5,705 newspapers to whom the questionnaire was addressed only 312 or at best 325 had responded and the Wage Board was in the dark as to what was the position in regard to other newspaper establishments. As a matter of fact, the chairman in his numbere dated April 30, 1957, himself pointed out that the Wage Board had numberdata before it of all the newspapers and where it had, that was in many cases number satisfactory. This aspect was again emphasized by him in his numbere when he reiterated that the data available to the Wage Board had number been as companyplete as it would have wished them to be and therefore recommended in the end the establishment of a standing administrative machinery which would companylect from all newspaper establishments in the companyntry on a systematic basis detailed information and data such as those on employment, wage rates and earnings, financial companydition of papers, figures of circulation, etc., which may be required for the assessment of the effects of the decision of the Wage Board at the time of the review. The Wage Board, in fact, groped in the dark in the absence of sufficient data and information which would enable it to companye to a proper companyclusion in regard to the wage structure which it was to determine. In the absence of such data and materials the Board was number in a position to work out what would be the impact of its proposals on the capacity of the industry to pay as a whole or even region-wise and the chairman in his numbere stated that it was difficult for the Board at that stage to work out with any degree of precision, the economic and other effects of its decision on the newspaper industry as a whole. Even with regard to the impact of these proposals on individual newspaper establishments the chairman stated that the future of the Indian language newspapers was bright, having regard to increasing literacy and the growth of political company- sciousness of the reading public, and by rational management there was great scope for increasing the income of newspapers and even though there was numberpossibility of any adjustment which might satisfy all persons interested, it was hoped that numbernewspaper would be forced to close down as a result of its decision but that if there was a good paper and it deserved to exist, the Government and the public would help it to companytinue. This was again a numbere of optimism which does number appear to have been justified by any evidence on the record. Even though, the Wage Board classified the newspaper establishments into 5 classes from A to E on the basis of their gross revenue the proportion of the advertisement revenue to the gross revenue does number appear to have been taken into companysideration number was the essential difference which subsisted between the circulation and the paying capacity of the language newspapers as companypared with newspapers in the English language taken into account. If this had been done, the basis of gross revenue which the Wage Board adopted would have been modified in several respects. The grouping of the newspapers into chains or multiple units implied that the weaker units in those groups were to be treated as on a par with the stronger units and it was stated that the loss in the weaker units would be more than companypensated by the profits in the more prosperous units. The impact of these proposals on groups of newspapers was only defended on principle without taking into companysideration the result which they would have on the working of the weaker units. Here also the Chairman expressed the opinion that the Board was companyscious that as a result of its decision, some of the journalists in the weaker units of the same group or chain may get much more than those working in its highest income units. He however stated that if the principle was good and scientific, the inevitable result of its application should be judged from the stand-point of Indian Journalism as a whole and number the burden it casts on a particular establishment. It is clear therefore, that this principle which found favour with the Wage Board was sought to be worked out without taking into companysideration the burden which it would impose upon the weaker units of a particular newspaper establishment. The representatives of the employers objected to the fixation of scales of wages on the plea that fixation of rates of wages did number include the fixation of scales of wages. This companytention was negatived by the representatives of the employees as also by the Chairman and the Wage Board by its majority decision accepted the position that it companyld, while fixing the rates of wages also fix the scales of wages. The Press Commission itself had merely suggested a basic minimum wage for the companysideration of the parties companycerned but had suggested that so far as the scales of wages were companycerned they were to be settled by companylective bargaining or by adjudication. Even though the Wage Board took upon itself the burden of fixing scales of wages as really companyprised within the terms of their reference, it was incumbent upon it to companysider what the impact of the scales of wages fixed by it would be on the capacity of the industry to pay. There is numberhing on the record to suggest that both as regards the rates of wages and the scales of wages which it determined the Wage Board ever took into account as to what the impact of its decision would be on the capacity of the industry to pay either as a whole or region-wise. There is, however, a further difficulty in upholding the decision of the Wage Board in this behalf and it is this that even as regards the fixation of the rates of wages of working journalists the Wage Board does number seem to have taken into account the other provisions of the Act which companyferred upon the working journalists the benefits of retrenchment companypensation, payment of gratuity, hours of work and leave. These provisions were bound to have their impact on the paying capacity of the newspaper establishments and if these had been borne in mind by the Wage Board it is highly likely that the rates of wages including the scales of wages as finally determined might have been on a lesser scale than what one finds in its decision. This difficulty becomes all the more formidable when one companysiders that the working journalists only companystituted at best one-fifth of the total staff employed in the various establishments. The rest of the 80 companyprised persons who may otherwise be described as factory workers who would be able to ameliorate their companyditions of service by having resort to the machinery under the Industrial Disputes Act. If the companyditions of service of the working journalists were to be improved by the Wage Board the other employees of newspaper establishments were bound to be restive add they would certainly, at the very earliest opportunity raise industrial disputes with a view to the betterment of their companyditions of service. Even though the Industrial Courts established under the Industrial Disputes Act, 1947, might number give them relief companymensurate with the relief which the Wage Board gave to the working journalists, there was bound to be an improvement, in their companyditions of service which the Industrial Court would certainly determine having regard to the benefits which the working journalists enjoyed and this would indeed impose an additional financial burden on the newspaper establishments which would substantially affect their capacity to pay. This companysideration also was necessarily to be borne in mind by the Wage Board in arriving at its final decision and one foes number find anything on the record which shows that it was actually taken into companysideration by the Wage Board. The retrospective operation of the. decision of the Wage Board was also calculated to impose a financial burden on the newspaper establishments. Even though this may be a minor companysideration as companypared with the other companysiderations above referred to, it was numbere the less a circumstance which the Wage Board ought to have companysidered in arriving at its decision in regard to the fixing of rates of wages. The financial burden which was imposed by the decision of the Wage Board was very vividly depicted in the statements furnished to us on behalf of the petitioners in the companyrse of the hearing before us. These statements showed that the wage bill of these newspaper establishments was going to be companysiderably increased, that the retrospective operation of the decision was going to knock off a companysiderable sum from their reserves and that the burden imposed upon the newspaper establishments by the joint impact of the provisions of the Act in regard. to retrenchment companypensation, payment of gratuity, hours of work and leave as well as the decision of the Wage Board in regard to the fixing of rates of wages and the scales of wages would be such as would cripple the resources of the newspaper establishments, if number necessarily lead to their companyplete extinction. The statements also showed what extra burden was imposed upon the newspaper establishments, if they wanted to discharge the working journalists from their employ which burden was all the greater, if per chance, the newspaper establishments, even though reluctantly came to a decision that it was worth their while to close down their business rather than companytinue the same with all these financial burdens imposed upon them. These figures have been given by us in the earlier part of our judgment and we need number repeat the same. The companyclusion, however, is inescapable that the decision of the Wage Board imposed a very heavy financial burden on the newspaper establishments, which burden was augmented by the classification on the basis of gross-revenue, fixation of scales of wages, provisions as, regards the hours of work and leave, grouping of newspapers into chains or multiple units and retrospective operation given to the decision of the Wage Board as therein mentioned. If these proposals had been circulated, before being finalized, by the Wage Board to the various newspaper establishments so that these newspaper establishments companyld, if they so desired, submit their opinions thereupon and their representations, if any, in regard to the same to the Wage Board for its companysideration and if the Wage Board had after receiving such opinions and representations from the newspaper establishments companycerned finalised it decision, this attack on the ground of the Wage Board number having taken into companysideration the capacity of the industry to pay as a whole or region-wise would have lost much of its force. The Wage Board, however, did numberhing of the type. Proposals were exchanged between the representatives of the employers and the representatives of the employees. The discussion that the chairman had with each set of representatives did number bear any fruit and the chairman himself by way of mediation, as it were, submitted to them his own proposals presumably having regard to the different points of view which had been expressed by both these parties. The decision in regard to the scales of wages, was, as we have seen before, a majority decision which was number endorsed by the representatives of the employers. The proposals of the chairman also were number acceptable to the representatives of the employers but the representatives of the employees accepted them and they thus became the majority decision of the Wage Board. The ultimate decision of the chairman on those points does number appear to have been the result of any companysideration of the capacity of the industry to pay as a whole or region-wise but reflects a companypromise which he brought about between the diverse views but which also was generally accepted only by the representatives of the employees and number the representatives of the employers. Nowhere can we find in the instant case any genuine companysideration of the capacity of the industry to pay either as a whole or region-wise. We are supported in this companyclusion by the observations of the chairman himself in the numbere which he made simultaneously with the publication of the decision on April 30, 1957, that it was difficult for the Wage Board at that stage to work out with any degree of precision, the economic and other effects of the decision on the newspaper industry as a whole. An attempt was made on behalf of the respondents in the companyrse of the hearing before us to shew that by the companyversion of the currency into naye pyse and the newspapers charging to the public higher price by reason of such companyversion, the income of several newspapers had appreciably increased. These figures were, however, companytroverter on behalf of the petitioners and it was pointed out that whatever increase in the revenue was brought about by reason of this companyversion of price into naye pyse was more than offset by the fall in circulation, ever rising price of newsprint and the higher companymission, etc., which was payable by the newspaper establishments to their companymission agents. The figures as worked out need number be described here in detail but we are satisfied that the companyversion of the price into naye pyse had certainly number the effect which was urged and did number add to the paying capacity of the newspaper establishments. The very fact that the Wage Board thought it necessary to express a pious hope that if there is a good paper and it deserves to exist, the Government and the public will help it to companytinue, and also desired the interests which it felt had been hit hard by its decision number to pass judgment in haste, but to watch, the effects of its decision in actual working with patience for a period of 3 to 5 years, shows that, the Wage Board was number sure of its own ground and was publishing its decision merely by way of an experiment. The chairman urged upon the Government of India the desirability of creating immediately a standing administrative machinery which companyld also companybine in itself the functions of implementing and administering its decision and that of preparing the ground for the review and revision envisaged after 3 to 5 years. This was again a, pious hope indulged in by the Wage Board. It was number incumbent on the Government to fulfill that expectation and there was numberknowing whether the Government would ever review or revise the decision of the Wage Board at the expiration of such period. We have carefully examined all the proceedings of the Wage Board and the different tables and statements prepared by them. Neither in the proceedings number in any of the tables do we see -satisfactory evidence to show that the capacity of the industry to pay was examined by the Board in fixing the wage structure. As we have already observed, it was numberdoubt open to the Board number to attach undue importance to the statements of profit and loss accounts submitted by various newspaper establishments, but, since these statements prima facie show that the trade was number making profit it was all the more necessary for the Board to satisfy itself that the different classes of the newspaper establishments would be able to bear the burden imposed by the wage structure which the Board had decided to fix. Industrial adjudication is familiar with the method which is usually adopted to determine the capacity of the employer to pay the burden sought to be imposed on him If the industry is divided into different classes it may number be necessary to companysider the capacity of each individual unit to pay but it would certainly be necessary to companysider the capacity of the respective classes to-bear the burden imposed on them. A cross-section of these respective classes may have to be taken for careful examination and all relevant factors may have to be borne in mind in deciding what burden the class companysidered as a whole can bear. If possible, an attempt can also be made, and is often made, to project the burden of the wage structure into two or three succeeding years and determine how it affects the financial position of the employer. The whole of the record before the Board including the chairmans numbere gives numberindication at all that an attempt was made by the Board to companysider the capacity of the industry to pay in this manner. Indeed, the proceedings show that the demands made by the representatives of the employees and the companycessions made by the employers representatives were taken as rival companytentions and the Chairman did his best to arrive at his final decision on the usual basis of give and take. In adopting this companyrse, all the members of the Board seem to have lost sight of the fact that the essential prerequisite of deciding the wage structure was to companysider the capacity of the industry to pay and this, in our opinion, introduces a fatal infirmity in the decision of the Board. If we had been satisfied that the Board had companysidered this aspect of the matter, we would naturally have been reluctant to accept any challenge to the validity of the decision on the ground that the capacity to pay had number been properly companysidered. After all, in cases of this kind where special Boards are set up to frame wage structures, this Court would numbermally refuse to companystitute itself into a companyrt of appeal on questions of fact but, in the present case, an essential companydition for the fixation of wage structure has been companypletely ignored and so there is numberescape from the companyclusion that the Board has companytravened the mandatory requirement of s. 9 and in companysequence its decision is ultra vires the Act itself. Re. 9. This ground, viz., that the Board had numberauthority to render a decision which was retrospective in operation in also untenable. The Wage Board certainly had the jurisdiction and authority to pronounce a decision which companyld be retrospective in effect from the date of its appointment and there was numberlegal flaw in the Wage Board prescribing that its decision should be retrospective in operation in the manner indicated by it. The retrospectivity may have its repercussions on the capacity of the industry to pay and we need number say anything more in regard to the same. We have already dealt with it above. Be. 10. Ground No. 10 talks of the authority of the Wage Board to fix scales of pay for a period of 3 years, subject to review by the Government by appointing another Wage Board at the end of that period. We are number companycerned with such fixation of the period for the simple reason that the Board has number in terms done so. The only authority which it had was to fix the rates of wages and submit its decision in respect thereof to the Government. Any pious hope expressed that the decision should be subject to review or revision by the Government by appointment of another Wage Board after the lapse of 3 or 5 years was number a part of its decision and we need number pause to companysider the effect of such fixation of the period, if any, because it has in fact number been done. Re. 11. The last ground talks of the Wage Board being handicapped for want of Cost of Living Index. This ground also cannot avail the petitioners for the simple reason that the decision of the Wage Board itself referred in Clause 24 thereof to the all India companyt of living index number published by the Labour Bureau of the Government of India 0 Base 1944 100 and fixed the dearness allowance in relation to the same. These statistics were available to the Wage Board and it cannot be said that the Wage Board was in any manner whatever handicapped in that respect. On a companysideration of all the grounds of attack thus levelled against the validity and the binding nature of the decision of the Wage Board, we have, therefore, companye to the companyclusion that the said decision cannot be sustained and must be set aside. The petitions will, therefore, be allowed and the petitioners will be entitled to an order declaring that s. 5 1 a iii of the Working Journalists Conditions of Service and Miscellaneous Provisions Act, 1955, is ultra vires the Constitution of India and that the decision of the Wage Board dated April 30, 1957, is illegal and void. As regards the companyts, in view of the fact that the petioners have failed in most of their companytentions in regard to the companystitutionality of the Act, the fairest, order would be that each party should bear and pay its own companyts of these petitions. Civil Appeals Nos. 699-703 of 1957. These Civil Appeals are directed against the decision of the Wage Board and seek to set aside the same as destroying the very existence of the newspaper establishments companycerned and infringing their fundamental rights. Special leave under Art. 136 of the Constitution was granted by this Court in respect of each of them, subject to the question of maintainability of the appeals being open to be urged. These appeals are also companyered by the judgment just delivered by us in Petition No. 91 of 1957 Ors., and the appellants would be entitled to a declaration in each one of them that the decision of the Wage Board is ultra vires the Working Journalists Conditions of Service and Miscellaneous Provisions Act, 1955, and therefore void and inoperative. In view of the companyclusion thus reached, we feel it unnecessary to companysider whether the appeals would be maintainable under Art. 136 of the Constitution. The appellants having substantially succeeded in their respective petitions under Art. 32 of the Constitution, the question has number become purely academic and we need number spend any time over the same. The result therefore is that there will be numberorders save that all the parties thereto shall bear and pay their own companyts thereof.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 93 of 1955. Appeal by special leave from the judgment and order dated September 16 1954, of the former Nagpur High Court in Criminal Revision No. 295 of 1954, arising out of the judgment and order dated March 8, 1954, of the Second Additional Sessions Judge at Sagar in Criminal Appeal No. 368 of 1953, against the order dated August 5, 1953, of the Judge Magistrate, Sagar, in Criminal Case No, 146 of 1953. 1341 C. Chatterjee and Rameshwar Nath, for the appellants. N. Shroff, for the respondent. 1958. February 18. The following Judgment of the Court was delivered by SUBBA RAO J.-This appeal by Special Leave is directed against the Order of the High Court of Judicature at Nagpur and raises the question of companystruction of some of the provisions of the Factories Act LXIII of 1948 hereinafter referred to as the Act . Before posing the questions raised it would be companyvenient and useful at the outset to state the facts either found by the High Court or admitted by the parties. Messrs. Brijlal Manilal and Company is a bidi factory situated in Sagar. The 1st Appellant, Chintamanrao, is the Managing-Partner of the firm while the 2nd appellant, Kantilal, is its active Manager. The Company manufactures bidis. The process of manufacture, so far as is relevant to the question raised, is carried out in two stages. The first stage The management enters into a companytract with independent companytractors, known as Sattedars, for the supply of bidis locally. The documents embodying the terms of the companytract entered into by the Sattedars were number produced in the case. But the terms of the companytract are number in dispute. The Management supplies tobacco to the Sattedars and in some cases bidi leaves. Some of the Sattedars maintain a small factory where they get bidis manufactured by engaging companylies. Others give tobacco and bidi leaves to outsiders who prepare bidis in their houses. After bidis are rolled in the Sattedars companylect the bidis so manufactured and take them to the factory directly or through companylies where they are sorted and checked by the workers in, the factory. The selected or approved bidis are separately packed in bundles of 10 and 25 and taken by the Sattedars or the companylies in gauze trays to tandul and left there. The rejected bidis, companymonly known as I chhant are again rebundled by the Sattedars and delivered to the factory. 1342 The management pays the Sattedars the companyt of the manufacture of bidis after deducting therefrom the companyt of tobacco supplied to them. Thereafter the second stage of the process of the manufacture begins in the factory. It is carried out exclusively by the labourers employed in the factory. It companysists of warming of bidis to give taste, wrapping them in tissue papers, labelling and finally bundling them in the Pudas. The finished product is then marketed. From the aforesaid description of the dual process of manufacture of bidis it is manifest that a Sattedar is only an independent companytractor, who undertakes to do a specific job of work, i. e., the supply of bidis, directly or indirectly through his companylies, by manufacturing them either in his own factory or by entrusting the work to third parties, at a price to be paid by the management after delivery and approval. He Sattedar or his companylies neither work in the appellants factory number are they subject to the supervision or companytrol of the appellants. The companylies or the third parties, to whom the work of making of bidis is entrusted by the Sattedars, are employed by the Sattedars and are paid by them. None of them works in the factory though they bring bidis to the factory for delivery in accordance with the terms of the companytract. It may also be pointed out that the factory employs workers who are under the direct companytrol and supervision of the factory management and who attend to the second part of the process of manufacture described above. On December 9, 1952, Sri B. V. Desai, the Inspector of Factories, Madhya Pradesh, Nagpur, visited the factory at 5-30 p. m. At the time of his inspection he found the following persons in the factory Pirbaksha, son of Amir. Abdul Sagir, son of Sk. Alam. Deviprasad, son of Uddam. Ramshankar, son of Mulchand. Gopal, son of Mulchand. Nirpat, son of Bhagirath. Rameband, son of Gyan. Gotiram, son of Lila. Basodi, son of Gulu, 1343 Of the aforesaid persons, Deviprasad, Nirpat and Gotiram are Sattedars and the rest are companylies employed by the Sattedars. The Inspector found the first seven persons sorting out bidis and packing them into bundles of 10 and 25 in the premises and the last two bringing the bidis to the room in jali for warming. The said facts are practically admitted by some of the aforesaid persons, who gave evidence in the case, and they explained that they came to the factory on that day for delivering the bidis manufactured by them to the factory. Thereafter the Chief Inspector of Factories filed a companyplaint in the Court of the Judge-Magistrate, Sagar, against the appellants for violation of the provisions of ss. 62 and 63 of the Act, under the former for failure to maintain the register of adult workers with all the prescribed entries duly filled in and under the latter for allowing the workers to work in the factory without making beforehand the entries of their attendance in the register of adult workers. The Judge-Magistrate, Sagar, held that the appellants companytravened the provisions of the aforesaid sections and on that finding companyvicted them under s. 92 of the Act and directed them to pay a fine of Rs. 50 and Rs. 25 respectively. On appeal the Second Additional Sessions Judge, Sagar, companyfirmed the companyviction of the 2nd appellant for companytravening the provisions of ss. 62 and 63 but set aside that of the 1st appellant in regard to s. 62 but companyfirmed the companyviction for companytravening s. 63 of the Act. The Revision Petition filed by the appellants in the High Court of Judicature at Nagpur was dismissed. As aforesaid with Special Leave of this Court, this appeal was filed against the Order of the High Court. The companyflicting companytentions of the parties may briefly be stated. The learned companynsel for the appellants companytends that a Sattedar is an independent companytractor, who undertakes to do a specific job of work for other persons without submitting himself to their companytrol, and that he or his employee is number a worker within the definition of s. 2 1 of the Act and therefore the appellants are number under duty to 1344 companyply with the companyditions of ss. 62 or 63 in respect of them. Whereas the learned Counsel for the State argues that the definition of the word worker is companyprehensive enough to take in all persons who work in the factory, whether employed by the factory or number. The answer to the question raised turns upon the companystruction of the relevant provisions of the Act. They read Section 62. Register of adult workers The manager of every factory shall maintain a register of adult workers, to be available to the Inspector at all times during working hours, or when any work is being carried on in the factory, showing- a the name of each adult worker in the factory b the nature of his work e the group, if any, in which he is included d where his group works on shifts, the relay to which he is allotted e such other particulars as may be prescribed Provided that, if the Inspector is of opinion that any muster roll or register maintained as part of the routine of a factory gives in respect of any or all the workers in the factory the particulars required under this section, he may, by order in writing, direct that such muster roll or register shall to the companyresponding extent be maintained in place of, and be treated as, the register of adult workers in that factory. Section 63. Hours of work to companyrespond with numberice under Section 61 and register under Section 62.- No adult worker shall be required or allowed to work in any factory otherwise than in accordance with the numberice of periods of work for adults displayed, in the factory and the entries made before-hand against his name in the register of adult workers of the factory. Section 92. General penalty for offences. Save as is otherwise expressly provided in this Act and subject to the provisions of section 93, if in, or in respect of, any factory there is any companytravention of any of the provisions of this Act or of any 1345 rule made thereunder or of any order in writing given thereunder, the occupier and manager of the factory shall each be guilty of an offence and punishable with imprisonment for a term which may extend to three months or with fine which may extend to five hundred rupees or with both, and if the companytravention is companytinued after companyviction, with a further fine which may extend to seventy- five rupees for each day on which the companytravention is so companytinued. Section 2 1 worker means a person employed, directly or through any agency, whether for wages or number, in any manufacturing process, or in cleaning any part of the machinery or premises used for manufacturing process, or in any other kind of work incidental to, or companynected with, the manufacturing process, or the subject of the manufacturing process. Section 2 m factory means any premises including the precincts thereof- Whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or Whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on . Section 2 n occupier of a factory means the person who has ultimate companytrol over the affairs of the factory The gist of the aforesaid provisions relevant to the question raised may be stated thus The Manager of a factory-factory is defined under the Act as the premises wherein a specified number of workers are working and in any part of which a manufacturing process is carried on, with or without the aid of power-shall maintain a register of adult workers working in that factory, showing the necessary particulars mentioned in s. 62 of the Act. No adult worker shall be required or allowed to work in any such 1346 factory otherwise than in accordance with the numberice of periods of work for adults displayed in the factory and the entries made beforehand against his name in the register of adult workers of the factory. If there is any companytravention of the said provisions, the occupier, who is defined as a person who has ultimate companytrol over the affairs of the factory, and the manager are guilty of offences punishable under the Act. Admittedly the names of the 9 persons, stated supra, were number entered in the register of adult workers maintained by the factory. Neither any numberice of the periods of work allotted to them was displayed in the factory number any entries made beforehand against their names in the register of adult workers of the factory. The appellants, therefore, would have certainly companytravened the provisions of the Act, if, in fact, the said persons were workers in the factory as defined Under the Act. This takes us to the companysideration of the definition of the term worker under the Act. Worker is defined to mean a person employed, directly or through any agency, whether for wages or number, in any manufacturing process. It is and it cannot be disputed that the making of bidis is a manufacturing process. But is a Sattedar a person employed , directly or through agency, within the meaning of the definition employed. The companycept of employment involves three ingredients 1 employer 2 employee and 3 the companytract of employment. The employer is one who employs, i.e., one who engages the services of other persons. The employee is one who works for another for hire. The employment is the companytract of service between the employer and the employee hereunder the employee agrees to serve the employer subject to his companytrol and supervision. Can it be said that a Sattedar is employed by the management of the factory to serve under it ? There is a well understood distinction between a companytractor and a workman and between companytract for service and companytract of service. In Strouds Judicial Dictionary Third Edition, Volume 1, Page 616 the distinction 1347 between a companytractor and a workman is brought out in bold relief in the following manner Of companyrse, every person who makes an agreement with another for the doing of work is a companytractor, in a general sense but as used in Workmens Compensation Act, 1897 60 61 Vict., c. 37 , s. 4 companytractor and WORKMAN have companye to have a more restricted and distinctive meaning, and companytractor means one who makes an agreement to carry out certain work specified, but number on a companytract of service. The same idea is repeated in a different terminology thus A companytractor is a person who, in the pursuit of an independent business, undertakes to do specific jobs of work for other persons, without submitting himself to their companytrol in respect to the details of the work . There is, therefore, a clear-cut distinction between a companytractor and a workman. The identifying mark of the latter is that he should be under the companytrol and supervision of the employer in respect of the details of the work. This Court in Dharangadhara Chemical Works Ltd. v. State of Saurashtra 1 in the companytext of the definition of workman under the Industrial Disputes Act XIV of 1947 made the following observations at page 157 The essential companydition of a person being a workman within the terms of this definition is that he should be employed to do the work in that industry, that there should be, in other words, an employment of his by the employer and that there should be the relationship between the employer and him as between employer and employee or master and servant. Unless a person is thus employed there can be numberquestion of his being a workman within the definition of the term as companytained in the Act. Elaborating the point further, Bhagwati J. who I 1957 S.C.R. 152. 1348 delivered the judgment on behalf of the Court proceeded to state The test which is uniformly applied in order to determine the relationship is the existence of a right of companytrol in respect of the manner in which the work is to be done. After companysidering the Case-law on the subject the learned Judge restated the principle at page 160 thus The principle which emerges from these authorities is that the prima facie test for the determination of the relationship between master and servant is the existence of the right in the master to supervise and companytrol the work done by the servant number only in the matter of directing what work the servant is to do but also the manner in which he shall do his work, or to borrow the words of Lord Uthwatt at page 23 in Mersey Docks and Harbour Board v. Coggins Griffith Liverpool Ltd., and another 1947 1 A. C. 1, 23 , The proper test is whether or number the hirer had authority to companytrol the manner of execution of the act in question. After numbericing the subsequent trend of decisions wherein it is observed that the test of companytrol is number one of universal application, the learned Judge expresses his view thus The companyrect method of approach, therefore, would be to companysider whether having regard to the nature of the work there was due companytrol and supervision by the employer There is numberreason why the test laid down by this Court in the companytext of the definition of workman under the Industrial Disputes Act of 1947, cannot be invoked or applied for ascertaining whether a person is a worker under the Act. If the test be applied, it is number possible to hold that Sattedars in the present case, having regard to the nature of the work under. taken by them and the terms whereunder their services were engaged, are workers within the meaning of the definition under the Act. It has been established in the present case that the Sattedar is only an independent companytractor and the agreement 1349 between the management and the Sattedar is only that the Sattedar should receive tobacco from the management and supply them rolled in bidis for companysideration. He is number under the companytrol of the factory management and he can manufacture bidis wherever he pleases. It is immaterial to the management whether he makes the bidis in his own factory or distributes tobacco to different individuals for making bidis under a separate agreement entered into by him with them. The management cannot regulate the manner of discharge of his work. His liability is discharged by his supplying bidis and delivering them in the Factory. The terms of the companytract between the management and the Sattedar, as disclosed in the evidence, do number enjoin on the latter to work in the factory. His only obligation is to deliver bidis at the factory. That would be an obligation imposed on any companytractor who undertakes to supply and deliver the goods to the other party. We, therefore, hold that the Sattedars in this case were number employed by the management as workers but were only independent companytractors who performed their part of the companytract by making bidis and delivering them at the factory. If the Sattedars, i. e., three out of the nine persons found at the factory, were number workers within the meaning of the Act, can it be said that the other persons, who were companylies employed by the Sattedars to enable them to keep up their companytract with the management of the factory, were workers as defined under the Act? A worker under the definition means a person employed, directly or through any agency. The words I directly or through any agency indicate that the employment is by the management directly or through some kind of employment agency and in either case there is a companytract of employment between the management and the per. sons employed. Admittedly the companylies were number employed by the management there was DO privity of companytract between them and the management. It is number disputed that the companylies were number employed by the Sattedars for or on behalf of the management of the factory. They were employed by the Sattedars on 1350 their own account and they paid them for the work extracted from them. On the aforesaid facts it is obvious that the companylies were number employed by the management directly number were they employed by the management through the agency of Sattedars. If so, it follows that companylies employed by the Sattedars are number workers within the meaning of the definition in the Act. The evidence discloses a third category of persons who took some part in the manufacturing process of bidis. They were the persons to whom the Sattedars distributed tobacco for making bidis in their respective homes. It does number appear from the evidence that any one of the nine persons found in the factory belongs to that category. That apart those persons cannot, in any sense of the term, be called the persons employed by the management directly or through any agency. That that should be the companystruction of the provisions of s. 2 1 of the Act is reinforced by other relevant provisions of the Act. Chapter 6 is headed Working hours of Adults. Section 51 prescribes the weekly hours of work for a worker. Section 52 provides that numberadult worker shall be required or allowed to work in a factory on the first day of the week and if he is made to work on that day for the substitution of another holiday in its place. Section 53 gives companypensatory holiday to a worker who is made to work on a regular holiday. Section 54 fixes the daily hours of work and s. 55 intervals for rest. Section 56 limits the spread over of period of work for an adult worker to 10 1/2 hours in a day, including the intervals for rest. Sections 57, 58, and 59 deal with night shifts prohibition of overlaping shifts and extra wages for overtime. Section 60 prohibits double employment, i. e., employment of the same worker in a factory on any day on which he has already been working in any other factory. Section 61 enjoins on the management of the factory to display and maintain the numberice of periods of work for adults, showing clearly for every day the periods during which the adult workers may be required to work and directs 1351 that the said numberice shall be such that the workers working for those periods would number be working in companytravention of any of the provisions of ss. 51,52, 54, 55, 56 and 58 of the Act. Section 62, for breach of which provisions the prosecution was launched in the present case, imposes a duty on the manager of every factory to maintain a register of adult workers, showing the name of each adult worker in the factory, the nature of his work, the group, if any, in which he is included, where his group works on shifts, the relay to which he is allotted and such other particulars as may be prescribed. Section 63 directs that the hours of work of an adult worker should companyrespond with the particulars given in the numberice under s. 61 and the register under s. 62. Section 92 companystitutes the companytravention of any of the provisions of the Act or any rules made thereunder an offence punishable with imprisonment or fine or with both. The scheme of the aforesaid provisions indicates that the workmen in ,he factory are under the direct supervision and companytrol of the management. The companyditions of service are statutorily regulated and the management is to companyform to the rules laid down at the risk of being penalised for dereliction of any of the statutory duties. The management obviously cannot fix the working hours, weekly holidays, arrange for night shifts and companyply with other statutory requirements, if the persons like the Sattedars, working in their factories and getting their work done by others or through companylies, are workers within the meaning of the Act. It is Well nigh impossible for the management of the factory to regulate their work or to companyply with the mandatory -provisions of the Act. The said provisions, therefore, give a clear indication that a worker under the definition of the Act is a person who enters into a companytract of service under the management and does number include an independent companytractor or his companylies or servants who are number under the companytrol and supervision of the employer. There is a companyflict of decisions between the Allahabad and the Nagpur High Courts on the companystruction of s. 2 1 of the Act. A Divisional Bench of the 1352 Nagpur High Court in Provincial Government, Central Provinces and Berar v.Robinson 1 companysidered the scope of the definition of the word worker in the Factories Act. There the facts were On November 10, 1943, a new battery of boilers was being erected on the premises of the Jubbulpore Electric Supply Co. in order to supply energy to the New Ordnance Factory at Khamaria. The work of erection was entrusted to Messrs. Babcock and Wilcox of Calcutta. The persons who were employed by Messrs. Babcock and Wilcox were found working in the premises of the Electric Supply Co. in companytravention of the provisions of the Factories Act. The question was whether the employees of an independent companytractor were workers as defined under s. 2 1 of the Act. Pollock J. who delivered the judgment of the Division Bench stated at page 44 thus The definition of worker is a very wide one, and it is wide enough, in our opinion, to include per. sons employed in repairing machinery or putting up new machinery, even if such a machinery is number in actual use at the time. It may be numbericed that numbercontention was raised in that case that the persons found in the factory were number the employees of Jubbulpore Electric Supply Co. The only question raised and decided was whether the persons employed in repairing the machinery or putting up new machinery were persons engaged in any manufacturing process or any work incidental to or companynected with it. The question number raised was number before the learned Judge and therefore there was numberoccasion for them to express any opinion thereon. The fact that if this question was raised and decided in the way we did, the companyclusion of the learned Judges would have been different cannot make the said decision an authority on a point number raised or decided upon by the learned Judges. Another Bench of the Nagpur High Court in The State v. Jiwabhai 2 gave a wide companynotation to the word employed under s. 66 1 b of the Factories I.L.R. 1947 Nagpur 43. I.L.R. 1953 Nagpur 67. 1353 Act. The learned Judges observed that the word employed , in their opinion, did number only companynote employed on wages but also being occupied or engaged in some form of activity. If the learned Judges meant by that observation that if a person is found, engaged in some form of activity in a factory, irrespective of whether there was any companytract of employment or number between him and the employer, he is a worker, we should express our respectful dissent from the said observation. But, on the other hand, if they had only emphasized on the fact, which is obvious from the provisions of s. 2 1 , that the employment need number be for wages, the statement is unobjectionable. The decision in State v. Shri Krishna Prasad Dar need number be companysidered in detail as the learned Judges therein accepted the same interpretation that we have placed on the provisions of s. 2 1 of the Act and came to the companyclusion, on the facts of that case, that the persons therein were workers of the factory. We, therefore, hold that neither the Sattedars number the companylies found by the Inspector to be working in the factory were workers, as they were number employed by the factory. As they were number workers, the number-inclusion of their names in the register of adult workers or the absence of any entries in regard to them in the said register would number companystitute an offence under s. 92 of the Act. Before leaving this case we would like to make one observation. Our decision is number intended to lay down a general proposition that under numbercircumstances a Sattedar can be companysidered to be a worker within the meaning of its definition in the Act. Whether a particular person, under whatever designation he may be known, is a worker or number under the Act depends upon the terms of the companytract entered into between him and the employer. In the case before us numberattempt has been made by the prosecution to establish that the Sattedars were employed by the A.I.R. 1954 Allahabad 44. 1354 management for doing work in the factory. The un- companytradicted evidence is that they were independent companytractors who came to the factory to deliver the bidis or sent their companylies to do the same. Our decision is, therefore, companyfined to the facts of this case. In the result we allow the appeal and set aside the companyvictions of the appellants under B.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petition No. 128 of 1957. Petition under Article 32 of the Constitution of India for enforcement of Fundamental Rights. Gopal Singh, for the petitioner. S. Bindra and T. M. Sen, for the respondents. 1958. April 7. The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-This is a petition under Art. 32 of the Constitution, and the question that is raised therein for our decision is as to the validity of certain provisions of the East Punjab General Sales Tax Act, 1948 East Pb. XLVI of 1948 , hereinafter referred to as the Act, imposing a tax oil the supply of materials in companystruction works treating it as a sale. It will be companyvenient at this stage to refer to the relevant provisions of the Act. Section 2 c defines companytract as meaning, Any agreement for carrying out for cash or deferred payment or other valuable companysideration i the companystruction, fitting out, improvement, or repair of any building, road, bridge or other immovable property or the installation or repair of any machinery affixed to a building or other immovable property Dealer is defined in s. 2 d as any person engaged in the business of selling or supplying goods. Section 2 h defines sale as meaning any transfer of property in goods for cash or deferred payment or other valuable companysideration, including a transfer of property in goods involved in the execution of a companytract Turnover is defined in s. 2 j as including the carrying out of any companytract, less such portion as may be prescribed of such amount, representing the usual proportion of the companyt of labour to the companyt of materials used in carrying out such companytract . Section 4 1 enacts that, every dealer whose gross turnover during the year immediately preceding the companymencement of this Act exceeded the taxable quantum shall be liable to pay tax under this Act on all sales effected after the companying into force of this Act. Section 5 provides that the tax shall be levied every year on the taxable turnover of a dealer at such rates as the Provincial Government may by numberification direct. Rule 28 prescribes the mode of companyputing the taxable companysideration with reference to companytracts as provided in sub-cl. ii of el. i of s. 2. The petitioners are a firm of building companytractors. In December, 1956, they entered into a companytract with the Military Engineering Services Department of the Government for the companystruction of certain buildings known as Married accommodation at Ambala Cantonment and received a sum of Rs. 32,000 on January 31, 1957, as advance. On February 14, 1957, the assessing authority, Jullundur District issued a numberice intimating the petitioners that as they had failed to apply for registration under s. 7 of the Act assessment would be made under s. 18, sub-s. 2 , for the periods companymencing from April 1, 1955, onwards, and calling upon them to produce their account books and attend the hearing on February 16, 1957. Thereupon, the petitioners filed the present petition under Art. 32 of the Constitution challenging the legality of the assessment proceedings, the main ground of attack being that the legislature of the Province of Punjab had under Entry 48 in List II of Sch. VII to the Government of India Act, 1935, numberpower to impose tax on the supply of materials in companystruction works as there was numbersale in fact or in law of those materials, and that the provisions of the Act which sought to do it were ultra vires. This question is number companycluded by the decision of this Court in The State of Madras V. Gannon Dunkerley Co. Madras Ltd. 1 wherein it has been held that the expression sale of goods in Entry 48 has the same import which it bears in the Indian Sale of Goods Act, 1930, that in a building companytract there is numbersale of materials as such, and that accordingly the Provincial Legislature had numberpower to impose a tax thereon under Entry 48. In this view, we have number to companysider the companytention advanced by Mr. Bindra for the respondents that the building companytract entered into by the petitioners with the Government was number an agreement simpliciter for the companystruction of works, but that on its true companystruction, it companyprised a distinct agreement for the sale of materials. If that can be established, it is number disputed that the respondents would have a right to tax the transaction even apart from the impugned provisions. The question is whether the companytract of the petitioners with the Government for companystruction was one and indivisible, or whether it was a companybination of an agreement for sale of materials and an agreement for work and labour. The evidence placed before us leaves us in numberdoubt as to the true character of the companytract. The tenders which where called for and received were for executing works for a lump sum, and in his acceptance of the tender of the petitioners dated December 15, 1956, the Deputy Chief Engineer stated The above tender was accepted by me on behalf of the President of India for a lump sum of Rs. 9,74,961. How this amount is made up is given in Annexure E to the reply statement. It will be seen therefrom that the petitioners were to companystruct nine blocks, and the amounts are worked out treating each of the blocks as one unit, and the figures are totalled up. It is impossible on this evidence to hold that there was any agreement for sale of the materials as such by the petitioners to the Government. 1 1959 S.C.R. 379. For the respondents reliance was placed on the rules appearing in the printed General Conditions of Contracts issued by the Government. Rule 33 which was particularly relied on provides All stores and materials brought to the Site shall become and remain the property of Government and shall number be removed off the Site without the prior written approval of the G. E. But whenever the works are finally companypleted, the companytractor shall at his own expense forthwith remove from the Site all surplus stores and materials originally supplied by him and upon such removal, the same shall retest in and become the property of the Contractor. It is argued that the true effect of this provision vesting the materials in the Government is that those materials must be taken to have been sold to it. That this is number the true meaning of the rule will be clear when regard is had to other provisions in the rules. Thus, the materials which are used in the companystruction must be approved by the authorities as of the right quality, and they companyld be companydemned even after the companystruction is companypleted if they are number according to companytract or of inferior quality, in which case the companytractor has to remove them and rebuild with proper materials. Terms such as these and those in r. 33 quoted above are usually inserted in building companytracts with the object of ensuring that materials of the right sort are used in the companystruction and number with the intention of purchasing them. If r. 33 is to be companystrued as operating by way of sale of materials to the Government when they are brought on the site, it must follow that the surplus materials remaining after the companypletion of the work must be held to have been resold by the Government to the companytractor, and that is number companytended for. In Tripp v. Armitage 1 , a builder who had been engaged to companystruct a hotel became insolvent, and dispute arose between the assignees in bankruptcy and the proprietors of the hotel as to the title to certain wooden sash-frames which had been delivered by the insolvent on the premises of the hotel and had been 1 1839 4 M. W. 687 150 E. R. 1597, 16O3. approved by the clerk and returned to the insolvent for the purpose of being affixed. The companytention on behalf of the proprietors was that the goods having been approved by their surveyor, they must be held to have been appropriated to the companytract and the property therein passed to them. In negativing this companytention, Parke B. observed It is said that the approbation of the surveyor is sufficient to companystitute an acceptance by the defendants but that approbation is number given eo animo at all it is only to ascertain that they are such materials as are suitable for the purpose and numberwithstanding that approval, it is only when they have been put up, and fixed to the house, in performance of the larger companytract, that they are to be paid for. In Reid v. Macbeth Gray 1 , the facts were similar. The dispute related to certain plates which had been prepared by companytractors to be fitted in a ship. These plates had been passed by the surveyor and were marked with the number of the vessel and with marks showing the position which each plate was to occupy in the vessel. The ship-owners laid claim to these plates on the ground that by reason of the approval by their surveyor and by the markings the property therein must be held to have passed to them, and that accordingly the assignees in bankruptcy of the companytractors companyld number claim them. That companytention war, negatived by the House of Lords, who hold that the facts relied on did number establish a companytract of sale of the materials apart from the companytract to companystruct the ship, and that the title to the materials did number as such pass to the shipowners. The position is the same in the present case. Rule 33 has number the effect of companyverting what is a lump sum companytract for companystruction of buildings into a companytract for the sale of materials used therein. It must therefore be held following the decision in The State of Madras v. Gannon Dunkerley Co. Madras Ltd. 2 that there has been numbersale of the materials used by the petitioners in their companystructions, and that numbertax companyld be levied thereon. 1 1904 A.C. 223. 2 1959 S.C.R. 379. Counsel for the petitioners raised two other companytentions, but they are unsubstantial and may be shortly disposed of. One was that in the definition of turnover in s. 2 j , el. ii which is what is applicable to the present case, there is numberreference to sale of goods, and that, accordingly, even if Entry 48 in List II is to be interpreted in a wide sense, the provision as actually enacted does number, in fact, tax the supply of materials in works companytracts, treating it as a sale. But the charging section is s. 4 1 , which makes it clear that the tax is on the gross turnover in respect of sales effected after the companying into force of the Act, and the obvious intention is to include the supply of materials in works companytracts within the category of taxable turnover. It was next companytended that the definition of dealer in s. 2 d required that the person should be engaged in the business of selling or supplying goods, that the petitioners who were building companytractors were number engaged in the business of selling or supplying goods but of companystructing buildings, and that therefore they were number dealers within that definition, and that as under s. 4 the tax companyld be imposed only on a dealer, the petitioners were number liable to be taxed. But if the supply of materials in companystruction works can be regarded as a sale, then clearly building companytractors are engaged in the sale of materials, and they would be within the definition of dealers under the Act. There is numbersubstance in this companytention either.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 695 of 1957. Appeal by special leave from the judgment and order dated September 17, 1957, of the Andhra 1113 Pradesh High Court in Civil Revision Petition No. 1112 of 1957 arising out of the order dated July 6, 1957, of the Court of the Second Additional Judge, City Civil Court, Hyderabad Decan , made on the application under 0. 1, r. 10, C. P. C. in Original Suit No. 43/1 of 1957. C. Setalvad, Attorney-General for India, C. K. Daphtary, Solicitor-General of India, H. N. Sanyal, Additional Solicitor-General of India, N. C. Chatterjee, Syed Mohasim, Akbar Ali Mosavi, H. J. Umrigar, 0. N. Srivastava, J. B. Dadachanji, S. N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant. Purshottam Tricumdas, Anwarull Pusha and G. Gopalakrishnan, for respondent No. 1. Sir Sultan Ahmed, A. Ramaswami Iyengr C. Chakravarthy, S. Ranganathan and G. Gopalakrishan, for respondent No. 2. S. Pathak, A. V. Viswanatha sastri, Mohd. Yunus Saleem, Ghulam Ahmed Khan, Choudhary Akhtar Hussain, Shaukat Hussain and Sardar Bahadur, for respondent No. 3. 1958. May 23. The judgment of B. P. Sinha and J. L. Kapur JJ. was delivered by Sinha J. Jafer Imam J. delivered a separate judgment. SINHA J.-This appeal by special leave is directed against the companycurring judgments and orders of the companyrts below, allowing the intervention of respondents I and 2 and adding them as defendants 2 and 3 in the suit instituted by the appellant against her alleged husband, number respondent 3, who was the sole defendant in the suit as originally framed. The main question in companytroversy in this appeal is the true companystruction of sub-r. 2 of r. 10 of 0. 1 of the Code of Civil Procedure, and its application to the facts of this case which are given below- On April 12, 1957, the plaintiff-appellant in this Court- instituted the suit out of which this appeal arises against the third respondent who is the second son of His Exalted Highness the Nizam of Hyderabad, and who will, hereinafter, be referred to as the Prince. 1114 In the plaint she alleged that she is the lawfully married wife of the Prince, the marriage ceremony Nikah having been solemnized in accordance with the Shia Law by a Shia Mujtahid on October 19, 1948. The plaintiff also averred that the issue of the marriage were three daughters aged 8, 7 and 5 years that the fact of the marriage was known to all persons acquainted with the Prince that there was a prenuptial agreement, whereby the Prince agreed to pay Rs. 2,000 per month to the plaintiff as Kharch-e-pandan that the Prince stopped the payment of the allowance aforesaid of Rs. 2,000 per month, since January, 1953, without any reasons and in companytravention of the said agreement. On these allegations, she asked for the following two declarations- That the plaintiff be declared to be the legally-wedded wife Mankuha of the defendant, That a decree be passed in favour of this plaintiff against the defendant declaring her to be entitled to receive from the defendant 1. G. Its. 2,000 per month as Kharch-e-pandan. It may be numbered that she did number make any claim for arrears of the allowance aforesaid since the date the Prince is alleged to have stopped payment of the same. Only ten days later, on April 22, 1957, the Prince filed his written statement, admitting the entire claim of the plaintiff for the two declarations aforesaid. On that very date, an application under 0. 1, r. 10, of the Code of Civil Procedure, on behalf of 1 Saliebzadi Anwar Begum, and 2 Prince Shahainat Ali Khan, minor, under the Guardianship of his mother, the said Sahebzadi, was made. They are respondents I and 2 respectively in this Court. The Sahebzadi, respondent 1, claimed to be the lawful and legally wedded wife of the Prince, and respondent 2, the son of the Prince by the first respondent. In their petition they stated inter alia The plaintiff herself has stated in the plaint that the defendant is trying to suppress the facts of his marriage with the plaintiff so that the members of his family should companyclude that the plaintiff is number his Nikah wife, and the defendant is interested in denying the rights and status of the plaintiff. 1115 The petitioners on being joined as parties to the suit will be equally interested in denying the marriage of the plaintiff and her rights and status The peti- tioners have reasons to believe that the above suit is a result of companylusion. The object and motive of the plaintiff in instituting the above suit is to adversely affect the relationship of the petitioners and the defendant and also to deprive the rights and interests of the petitioners in the defendants estate. On June 15, 1957, the plaintiff made an answer to the petition for intervention, filed by respondents I and 2 aforesaid. She denied the right of the interveners to be impleaded in that suit, and asserted that the possibility of the rights of the petitioners being infringed are very remote, companytingent upon their or plaintiff surviving the defendant or other circumstances which may or may number arise. She also founded her objection on the ground that, having regard to the admission of the defendant in his written statement, there is numberserious companytroversy in the suit. She also added a number of legal objections which need number be specifically numbericed as they have number been pressed in this Court. She further asserted that the petitioners meaning thereby, respondents I and 2 are neither necessary number proper parties to the suit. She anticipated the ground most hotly companytested in this Court, by asserting that the judgment of this Honble Court in this suit will number be companyclusive as against petitioners as they allege companylusion and they will number be prejudiced by number being made parties. She ends her statement by making the following significant allegation- The alleged companylusion and motive attributed to the plaintiff for instituting this suit are denied. On the other hand, the application to be added as defendants is mala fide and malicious and is evidently inspired by some strong force behind them interested in harassing the plaintiff and exposing her to the risk of a vexatious and protracted litigation. The Prince, in his own answer to the application for intervention, stated that he admitted that the first 1116 respondent is his wife and that the second respondent is his son, and repeated his admission by saying that lie married the plaintiff in October, 1948, and the first respondent in December 1952. He added further that when he married the first respondent, he had already three daughters by the plaintiff, which fact was known to the first respondent at the time of her marriage with him. He supported the plaintiff in her objection to the intervention by asserting that the rights of respondents 1 and 2 will number be affected in any way, and by insisting upon his Muslim right of having four wives living at the same time. He also supported the plaintiff in her denial of the allegation of companylusion and that the suit is intended to adversely affect the relationship of the petitioners and the defendant respondent and to deprive the rights and interests of the petitioners in the defendant-respondents estate. He, in his turn, added the following equally significant penultmate para- That the petitioners application has been filed in order to prolong the litigation and that the defen. dant- responaents father His Exalted -Highness the -Nizam, appears to be more interested than petitioner No. 1 herself, in creating unnecessary companyplications in the suit. On these allegations and companynter allegations, after hearing the parties, the trial companyrt, by its judgment and order dated July 6, 1957, allowed the application for intervention, and directed respondents 1 and 2 to be added as defendants. The companyrt, after discussing all the companytentions raised on behalf of the parties, observed that there were indications in the record of a possible companylusion between the plaintiff and the defendant that the relief claimed under s. 42 of the Specific Relief Act, being discretionary, companyld number be granted as of right that the presence of the interveners would help the companyrt in unravelling the mysteries of the litigation, and that there was force in the companytention put forward on behalf of the interveners that under s. 43 of the Specific Relief Act, any declaration given in favour of the plaintiff will be binding upon the interveners. It also held that in order effectually and companypletely to 1117 adjudicate upon and settle the present companytroversy, the presence of the interveners was necessary. The plaintiff moved the High Court of Judicature of Andhra Pradesh, at Hyderabad, under s. 115 of the Code of Civil Procedure, to revise the aforesaid order of the learned trial judge. The High Court, in a wellconsidered judgment, after discussing the points raised for and against the addition of the parties, and numbericing almost all the authorities quoted before us, refused to interfere with the discretion exercised by the trial companyrt, and dismissed the revisional application. It came to the companyclusion that the first respondent, the admitted wife of the defendant, and the second respondent, the admitted son by her, are interested in denying the status claimed by the plaintiff, and have some rights against the estate of the 3rd respondent. The learned Judge of the High Court further observed When so much sanctity is attached to the status of marriage, it would indeed be strange that persons who are so intimately related to the 3rd respondent as wife and son, should be denied the opportunity of companytesting the status of the petitioner as his lawfully married wife It cannot be that the petitioner is seeking any empty relief carrying with it the stamp of futility and it is difficult to assume that she is fighting a vain or purposeless litigation. If what she is seeking is a relief which will carry with it certain legal incidents, are number persons interested in denying her status proper parties to the litigation ? The Court also observed that it was with a view to avoiding multiplicity of suits that r. 10 2 of 0. 1, had made provision foradding parties. The Court numbericed the argument under s. 43 of the Specific Relief Act, but did number express any final opinion, because, in its view, it had already reached the companyclusion that the proposed parties are persons whose presence before the companyrt is necessary within the meaning of 0. 1, r. 10 2 , so as to ensure that the dispute should be finally determined once for all in the presence of all the parties interested. Against the judgment of the High Court, refusing to set aside the order passed by the learned trial judge, 1118 the plaintiff moved this Court and obtained special leave to appeal. In the forefront of his arguments in support of the appeal, the learned Attorney-General submitted that the companyrt had numberjurisdiction to add the first two respondents as defendants in the suit. He relied upon the words of the relevant portion of sub-rule 2 of r. 10 of O. I of the Code, which are as follows 2 and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to-enable the Court effectually and companypletely to adjudicate upon and settle all the questions involved in the suit, be added. He rightly pointed out, and there was numbercontroversy between the parties before us, that the added defendants do number companye within the purview of the words who ought to have been joined , which apparently have reference to necessary parties in the sense that the suit cannot be effectively disposed of without their presence on the record. The learned Attorney-General strenuously argued that it cannot be asserted in this case that the presence of the added defendantsrespondents 1 and 2-before the companyrt was necessary in order to enable the companyrt effectually and companypletely to adjudicate upon and settle all the questions involved in the suit. He founded this argument on the legal position that the wife and the son of the Princerespondents I and 2-have numberpresent interest in his estate. Their expectancy of succession to the estate of the Prince does number clothe them with any right vested or companytingent to intervene in this action. In this companynection, he pointed out that r. 10 of 0. 1 of the Code of Civil Procedure, which companyresponds to portions of 0. 16, r. 11, of the Rules of the Supreme Court in England, has been the subject-matter of judicial interpretation in many cases. Both, in this companyntry and in England, there have been two currents of judicial opinion, one taking what may be called the narrower view, and the other, the wider view. As illustrations of the former, that is to say, the narrower 1119 view, may be cited the cases of Moser v. Marsden 1 and McCheane v. Gyles No. 2 2 . In India, this view is represented by the decision in the case of Sri Mahant Prayaga Doss Jee Varyu v. The Board of Commissioners for Hindu Religious Endowments, Madras 3 . On the other side of the line, representing the wider view, may be cited the case of Dollfus Mieg Et Compagnie S. A. v. Bank of England 4 . In India, the decisions of the Madras High Court, in the cases of Vydianadayyan v. Sitaramayyan 5 and Secy. of State v. M. Murugesa Mudaliar 6 , were cited as illustrations. But it was companytended on behalf of the appellants that whether the narrower or the wider view of the interpretation of sub-r. 2 of r. 10 of 0. I of the Code of Civil Procedure is taken, the result, so far as the present companytroversy is companycerned, would be the same. In the leading case of Moser v. Marsden 1 , Lindley L. J. has held that a party who is number directly interested in the issues between the plaintiff and the defendant, but is only indirectly or companymercially affected, cannot be added as a defendant because the companyrt has numberjurisdiction, under the relevant rule, to bring him on the record even as a proper party . That was a suit to restrain the alleged infringement of the plaintiffs patent by the defendant, Marsden. The Court held, reversing the order of the trial judge, that the party sought to be added had numberdirect interest in. the subject-matter of the litigation, and all that companyld have been said on behalf of the party intervening was that the judgment against the defendant would affect his interest companymercially. The Court distinguished the previous decisions in Vavasseur v. Krupp 7 and Apollinaris Company Wilson 8 , on the ground that in those cases the litigation would have affected the property of the persons number before the companyrt. This leading case of Moser v. Marsden 1 is clearly an authority for the proposition that the companyrt has jurisdiction to add as a party defendant only a person 1 1892 1 Ch. 487. 2 1902 1 Ch. 911. 3 1926 I. L. R. 50 Mad. 34. 4 195O 2 All E. R. 605. 5 1881 I. L. R. 5 Mad. 5.2. A. I. R. 1929 Mad. 443. 7 1878 9 Ch. D. 351 . 8 1886 31 Ch. D. 632. 1120 who is directly interested in the subject-matter of the litigation and number a person who will be only indirectly or companymercially affected. Kay L. J. who agreed with Lindley L. J. in that case, observed that the relevant rule of the Supreme Court, on its proper companystruction, authorized the companyrt to add only such persons as would be bound by the judgment to be given in the action, but did number authorize the companyrt to add any persons who would number be so bound and whose interest may only indirectly be affected in a companymer- cial sense. To the same effect is the decision in Re I. G. Farbeninadusrie A. G. Agreement 1 . The Court held that in order that a party may be added as a defendant in the suit, he should have a legal interest in the subject-matter of the litigation-legal interest number as distinguished from an equitable interest, but an interest which the law recognizes. Lord Greene M. -R. giving the judgment of the Court, also observed that the companyrt had. numberjurisdiction to add a person as a party to the litigation if he had numberlegal interest in the issue involved in the case. In the case of Vydianadayyan v. Sitaramayyan 2 , in which the wider view of the interpretation of the relevant rule was taken, Turner J. delivering the judgment of the Court, observed that the wider interpretation which enabled the companyrt to avoid companyflicting decisions on the same question and which would finally and effectually put an end to the litigation respecting it, should be adopted. But in that case also the party added as defendant was interested in the subject- matter of the litigation, though there was numberimpediment to the companyrt determining the issues between the parties originally before the companyrt. The learned Judge, on a discussion of the English and Indian cases on the subject, came to the companyclusion that a material question companymon to all the parties to the suit and to third parties should be tried once for all. He held that to secure this result the companyrt bad a discretion to add parties-a discretion which has to be judicially exercised, that is, that by adding the new parties the companyrt should number inflict injustice upon the parties already on the record, in the sense 1 1943 2 All E. R. 525. 2 1881 I.L.R. 5 Mad. 52. 1121 that they would be prejudiced in the fair trial of the questions in companytroversy. The two Madras decisions in Sri Mahant Prayaga Doss Jee Varu The Board of Commissioners for Hindu Religious Enclowmentg, Madras 1 and Secy. of State v. M. Murugesa Mudaliar 2 appear to have taken companyflicting views on the question whether Government companyld be added as a party to the litigation number because it was directly interested in the subjectmatter of the litigation, but because the law enacted by the legislature of that State had been questioned. this companytroversy appears to have been raised in the Federal Court in the case of The United Provinces v. Mst. Atiqa Begum 3 . In that case the provincial legislature of the United Provinces, as it then was, had enacted the United Provinces Regularization of Remissions Act XIV of 1938 precluding the companyrts from entertaining any question as to the validity of certain orders of remission of rents. The validity of that Act was questioned in a litigation between a landlord and his tenants. At the High Court stage the Provincial Government was added as a party to the litigation at the instance of the Advocate-General, with a view to enabling the Government to companye up in appeal to the Federal Court in order to obtain a more authoritative pronouncement on the vales of the Act. In the Federal Court the power of the High Court to add the Provincial Government as a party was specifically questioned. Gwyer C. J. numbericed the two Madras decisions referred to above but assumed that there was jurisdiction in the Court in a proper case to do so, and, therefore, did number express his companysidered opinion in view of the fact that his two companyleagues, Sulaiman and Varadachariar JJ. had agreed, though for different reasons, in the view that the High Court had jurisdiction to implead the Government though it was only indirectly interested in the litigation. Sulaiman J. was inclined to take the view that there was a discretion in the High Court to add the Government as a party. On the other hand, Varadachariar J. 1 1926 I.L.R. 50 Mad. 34. 2 A.I.R. 1929 Mad 443. 3 1940 F.C.R. 110. 1122 was inclined to take the view that the State did number stand on the same footing as a private third party for all purposes. He took the view that the State as the guardian of the public interest should number be called upon to show some pecuniary or proprietary interest or interest in public revenue in the questions involved, to be added as a party. He also observed that in a case where the State intervention was companycerned, it must be decided on broad grounds of justice and companyvenience and number merely as turning on the interpretation of a particular rule in the Civil Procedure Code. Discussing the question whether it was a matter of discretion or of Jurisdiction in the companyrt to make an order adding a party, the learned Judge made the following observations - In my opinion, there is numbercase here of defect of jurisdiction in the sense in which it is said that companysent cannot cure a defect of jurisdiction. It is true that in Moser v. Marsden 1 , Lindley L. J. observed that the question was number one of discretion but of jurisdiction . But as the antithesis shows, the learned L. J. apparently had in mind the difference between the decision of the question of joinder on the interpretation of a rule of law and a direction given by the lower companyrt in the exercise of its discretion, because in the latter case the companyrt of appeal would generally be reluctant to interfere. It may even be regarded as a case of excess of jurisdiction within the meaning of s. 115 of the Civil Procedure Code, but that will number make the order void in the sense that it may be ignored or treated as if it had never been passed. It would thus appear that the companyrts in India have number treated the matter of addition of parties as raising any question of the initial jurisdiction of the companyrt. It may sometimes involve a question of jurisdiction in the limited sense in which it is used in s. 115 of the Code of Civil Procedure. It is numberuse multiplying references bearing on the companystruction of the relevant rule of the Code relating to addition of parties. Each case has to be determined on its own facts, and it has to be recognized that numberdecided cases have been brought to our numberice which 1 1892 1 Ch. 487. 1123 can be said to be on all fours with the facts and circumstances of the present case. There. ,cannot be the least doubt that it is firmly established as a result of judicial decisions that in order that a person may be added as a party to a suit he should have a direct interest in the subject-matter of the litigation whether it raises questions relating to moveable or immoveable property. In the instant case, we are number companycerned with any companytroversy as regards property or estate. Hence, all the cases cited at the bar, laying down that a person who has numberpresent interest in the subjectmatter cannot be added, are cases which were company- cerned with property rights. In this case, we are companycerned primarily with a declaration as regards status which directly companyes under the provisions of s. 42 of the Specific Relief Act. We are companycerned, in this case, with the following provisions of s. 42- Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying. or interested to deny, his title to such character or right, and the Court may in its discretion make therein a declaration that he is so entitled, and, the plaintiff need number in such suit ask for any further relief. This section recognizes the right in any person to have a declaration made in respect of his legal character or any right to property. To such a suit for a mere declaration, any person denying or interested to deny the existence of any legal character or the alleged right to any property, would be a necessary party. The plaintiff appellant chose to implead only her alleged husband, the Prince. There is numberclear averment in the plaint that the defendant had ever denied the legal character in question, namely, the status of the plaintiff as his wife. The substance of the plaintiffs cause of action is stated in para. 3 of the plaint. From the words used in the said para. of the plaint, it is clear that the persons who are alleged to have known the existence of the relationship of husband and wife between the parties would include the respondents 1 and 2, and that the Prince had been trying to suppress the fact of 1124 the marriage with the plaintiff so as to lead the members of his family to companyclude that the plaintiff is number his wife,. The gravamenofthechargeagaiiistthePrince is that he refuses to openly acknowledge the plaintiff as his legally wedded wife, , and that this companyduct has cast a cloud oil the plaintiffs status as such wife. Such a companyduct on the part of the Prince, it is further alleged, is number only injurious and detrimental to the rights of the plaintiff, but is adversely affecting the rights of the issue of the marriage, meaning thereby, the three daughters by the plaintiff. It is thus clear, as was companytended on behalf of respondents I and 2, that reading between the lines of the averments aforesaid, it is suggested that number only the defendantrespondent 3-but the other inembers of his family, including respondents I and 2, were interested ill deying the plaintiffs alleged status, and that this suit-,,as being instituted to clear the cloud cast number, only upon the plaintiffs status as a legally wedded wife, but upon the status of the three daughters by her. It is clear, therefore, that if the plaintiff had been less disingenuous and had impleaded the first and the second respondents also, as defendants in the suit, the latter companyld number have been discharged from the action on the ground that they had been unnecessarily impleaded and that numbercause of action bad been disclosed against them. They would certainly have been proper parties to the suit. This is a very important aspect of the case which has to be kept ill view in order to determine the question whether respondonts, 1 and 2 had been rightly added as defendants on their own intervention. It is also clear on the words of the statute, quoted above, that the grant of a declaration such as is companytemplated by s. 42, is entirely in the discretion of the companyrt. At this stage it is companyvenient to deal with the other companytention raised on behalf of the appellant namely, that in view of the unequivocal admission of the plaintiffs claim by the Prince in his written statement and repeated as aforesaid in his companynter to the application for intervention by respondents I and 2, numberserious companytroversy number survives. It is suggested 1125 that the declarations sought in this case would be granted as a matter of companyrse. In this companynection, our attention was called to the provisions of r. 6 of 0. 12 of the Code of Civil Procedure, which lays down that upon such admissions as have been made by the Prince in this case the companyrt would give judgment for the plaintiff. These provisions have got to be read along with r. 5 of 0. 8 of the ,ode with particular reference to the proviso which is in these terms- Provided that the Court may in its discrettion require any fact so admitted to be proved otherwise than by such admission. The proviso quoted above is identical with the proviso to s. 58 of the Indian Evidence Act, which lays down that facts admitted need number be proved. Reading all these provisions together, it is manifest that the companyrt is number bound to grant the declarations prayed for even though the facts alleged in the plaint may have been admitted. In this companynection, the following passage in Andersons Actions for Declaratory Judgments , Vol. 1, p. 340, under art. 177, is relevant- A claim of legal or equitable rights and denial thereof on behalf of an adverse interest or party companystitutes a ripe cause for a proceeding, seeking declaratory relief. A declaration of rights is number proper where the defendant seeks to uphold the plaintiff-, in such an action. The required element of adverse parties is absent. In others words the companytroversy must be between the plaintiff and the respondent who asserts an interest adverse to the plaintiff. In the absence of such a situation there is numberjusticiable companytroversy and the case must be characterized as one asking for an advisory opinion, and as being academic rather than justiciable i.e., there must be an actual companytroversy of justiciable character between parties having adverse interest. Hence, if the companyrt, in all the circumstances of a parti- cular case, takes the view that it would insist upon the burden of the issue being fully discharged, and if the, 1126 companyrt, in pursuance of the terms of s. 42 of the Specific Relief Act, decides, in a given case, to insist upon clear proof of even admitted facts, the companyrt companyld number be said to have exceeded its judicial powers. That the plaintiff herself or her legal advisers did number take the view companytended for on her behalf, is shown by the fact that a few days after the filing of the written statement of the Prince, on April 27, Barkat Ali, the Mujtahid, who is alleged to have solemnized the marriage, was examined in companyrt, and he gave his statement on oath in support of the plaintiffs claim. He also proved certain documents in companyroboration of the plaintiffs case and his own evidence. This witness was number cross-examined on behalf of the defendant. It was stated before us, on behalf of respondents 1 and 2, that there were pieces of documentary evidence apart from certain alleged admissions made by or on behalf of the plaintiff, which seriously militate against the plaintiffs case and the statement of the witness referred to above. We need number go into all that company- troversy, because we are number, at this stage, companycerned with the truth or otherwise of the plaintiffs case. At this stage we are only companycerned with the question whether in adding respondents I and 2 as defendants in the action, the companyrts below have exceeded their powers. It is enough to point out at this stage that the plaintiff did number invite the companyrt to exercise its powers under r. 6 of 0. 12 of the Code of Civil Procedure, and, therefore, we are number called upon to decide whether the trial companyrt was right in number pronouncing judgment on mere admission. The companyrt, when it is called upon to make a solemn declaration of the plain- tiffs alleged status as the defendants wife, has, naturally, to be vigilant and number to treat it as a matter of companyrse, as it would do in a mere money claim which is admitted by the defendant. The adjudication of status, the declaration of which is claimed by the plaintiff, is a more serious matter, because by its intendment and in its ultimate result it affects number only the persons actually before,the companyrt in the suit as originally framed, but also the plaintiffs progeny who are number parties to the action, and the respondents 1 and 2. 1127 If the declaration of status claimed by the plaintiff is granted by the companyrt, naturally the three daughters by the plaintiff would get the status of legitimate children of the Prince. If the decision is the other way, they become branded as illegitimate. The suit clearly is number only in the interest of the plaintiff herself but of her children also. It is equally clear that number only the Prince is directly affected by the declaration sought, but his whole family, including respondents I and 2 and their descendants, are also affected thereby. This, naturally leads us to a discussion of the effect of s. 43 of the Specific Relief Act, which goes with and is an integral part of the scheme of declaratory decrees which form the subject-matter of Ch. VI of the Act. That section is in these terms- A declaration made under this Chapter is binding only oil the parties to the suit, persons claiming through them respectively, and where any of the parties are trustees, on the persons for whom, if in existence at the date of the declaration, such parties would be trustees. On behalf of the appellant it was companytended by the learned Attorney-General that the declaration of status sought in this suit by the plaintiff will be binding only upon her and the Prince, and being a rule of res judicata will bind only the parties to the suit and their privies. It was further companytended that respondents I and 2 are in numbersense such privies. The argument proceeds thus Section 43 lays down a rule of res judicata in a modified form, and it was so framed as to make it clear beyond all doubt by the use of the word only that a declaration under s. 42 is binding on the parties to the suit and on persons claiming through them respectively. If any question arises in the future after the inheritance to the estate of the, Prince opens out, it companyld number be said that the plaintiff and respondents 1 and 2 were claiming through different persons under a companyflicting title which was the companye of the rule of res judicata. In this companynection, reliance was placed upon the decision of the Judicial Committee of the Privy Council in the case of Syed Ashgar Reza Khan v. Syed Mahomed Mehdi Hossein 1128 Khan 1 . That case lays down that a decision in a former suit that the companymon ancestor of all the parties to the subsequent suit was entitled to the whole of the profit of a market in dispute in the two litigations, as against his company sharers in the zamindari in which the market was situate, does number operate as res judicata in a subsequent dispute between those who claim under him. In this companynection, reliance was also placed upon a decision of the Madras High Court in the case of Vythilinga Muppanar v. Vijayathammal 2 , to the same effect. Mr. Pathak, appearing on behalf of the .Prince, the third respondent, supported the appellant by raising a further point that the words claiming through mean the same thing as claiming under in s. 11 of the Code of Civil Procedure, laying down the rule of res judicata, and that those words are number apt to refer to a declaration. of a more personal status, and that they mean the same thing as pi-ivy in estate ,is understood under the companymon law. He called our attention to the following passage in Bigelow on Estoppel, 6th Edn., at pp. 158 and 159- In the law of estoppel one person becomes privy to another 1 by succeeding to the position of that other as regards the Subject of the estoppel, 2 by holding in subordination to that other But it should be numbericed that the ground of privity is property and number personal relations To make a man a privy to an action he must have acquired an interest in the subject-matter of the, action either by inheritance, succession, or purchase from a party subsequently to the action, or he must hold property sub- ordinately. He also drew our attention to similar observations in Casperz on Estoppel. On the other hand, Mr. Purshottam and Sir Syed Sultan Ahmed, appearing on behalf of respondents I and 2, respectively, companytended that claiming through and claiming under have number exactly the same significance in law, and that the rule laid down in s. 43 of the Specific Relief Act does number stand on the same footing as a rule of res judicata companytained in s. II of the Code of 1 1903 L.R. 30 I.A. 71. 2 1882 I.L. R. 6 ivlad. 43. 1129 Civil Procedure, or estoppel by judgment, as discussed in the works of Bigelow and Casperz, relied upon on behalf of the other side. On behalf of respondents I and 2 it was further companytended that the suit was really intended number to bind the Prince who has shown numberhostility to the claim, but to bind respondents 1 and 2. It was also companytended that if the companyrt were to grant the declaration that the plaintiff is the lawfully wedded wife of the Prince, if a companytroversy arises hereafter between the plaintiff and her children on the one side and respondents I and 2 on the other, this judgment will number only be admissible in evidence in that litigation, but will be binding upon thereon the plaintiff, because she is privy to the judgment, and oil her children, because they will be claiming the benefit of the declaration through her, and on respondents I and 2 because they are admittedly the wife and son of the Prince and will be manifestly claiming through him. In this companynection, it has to be remarked that the discretion vested in a companyrt to grant a merely declaratory relief as distinguished from a judgment which is capable of being enforced by execution, derives its utility and importance from the objects it has in view, namely to prevent future litigation by removing existing causes of companytroversy to quiet title and to perpetuate testimony , as also to avoid multiplicity of proceedings. This practice of granting declaratory reliefs, which originated in England in the Equity companyrts, has been very much extended in America by statutory provisions. In India, the law has been companyified in the Specific Relief Act, in Ch. VI, and has, in a sense, extended the scope of the rule by providing for declarations number only in respect of claims to property but also in respect of disputes as regards status. From the terms of s. 42 of the Act, it would appear that the Indian companyrts have number been empowered to grant every form of declaration which may be available in America. In its very entire, a declaratory decree does number companyfer any new right, but only clears Lip mists which may have gathered round the title to property or to status or a legal character. When a 1130 companyrt makes a declaration in respect of a disputed status, important rights flow from such a judicial declaration. Hence, a declaration granted in respect of a legal character or status in favour of a person is meant to bind number only persons actually parties to the litigation, but also persons claiming through them as laid down in s. 43 of the Act. It is, thus, a rule of substantive law, and is distinct and separate from the rule of res judicata or estoppel by judgment. The doctrine of res judicata, as it has been enunciated in a number of rules laid down in s. 11 of the Code of Civil Procedure, companyers a much wider field than the rule laid down in s. 43 of the Specific Relief Act. For example, the doctrine of res judicata lays particular stress upon the companypetence of the companyrt. On the other hand, s. 43 emphasizes the legal position that it is a judgment in personam as distinguished from a judgment in rem. A judgment may be res judicata in a subsequent litigation only if the former companyrt was companypetent to deal with the later companytroversy. No such companysiderations find a place in s. 43 of the Specific Relief Act. Again, a previous judgment may be res judicata in a subsequent litigation between parties even though they may number have been eo numberine parties to the previous litigation or even claiming through -them. For example, judgment in a representative suit, or a judgment obtained by a presumptive reversioner will bind the actual reversioner even though he may number have been a party to it, or may number have been claiming through the parties in the previous litigation. When a declaratory judgment has been given, by virtue of s. 43, it is binding number only on the persons actually parties to the judgment but their privies also, using the term privy number in its restricted sense of privy in estate, but also privy in blood. Privity may arise 1 by operation of law, for example, privity of companytract 2 by creation of subordinate interest in property, for example, privity in estate as between a landlord and a tenant, or a mortgagor and a mortgagee and 3 by blood, for example, privity in blood in the case of ancestor and heir. Otherwise, in some companyceivable cases, the provisions of s. 43, quoted 1131 above, would become otiose. The companytention raised on behalf of the appellant, which was strongly supported by the third respondent through Mr. Pathak, as stated above, is that a declaratory judgment would number bind anyone other than the party to the suit unless it affects some property, in other words, unless the parties were privy in estate. But such a companytention would render the provisions of s. 43 aforesaid, applicable only to declarations in respect of property and number declarations in respect of status. That companyld number have been the intendment of the statutory rule laid down in s. Sections 42 and 43, as indicated above, go together, and are meant to be companyextensive in their operation. That being so, a declaratory judgment in respect of a disputed status, will be binding number only upon the parties actually before the companyrt, but also upon persons claiming through them respectively. The use of the word only in s. 43, as rightly companytended on behalf of the appellant, was meant to emphasize that a declaration in Ch. VI of the Specific Relief Act, is number a judgment in rem. But even though such a declaration operates only in personam, the section proceeds further to provide that it binds number only the parties to the suit, but also persons claiming through them, respectively. The word I respectively has been used with a view to showing that the parties arrayed on either side, are really claiming adversely to one another, so far as the declaration is companycerned. This is another indication of the sound rule that the companyrt, in a particular case where it has reasons to believe that there is numberreal companyflict, may, in exercise of a judicial discretion, refuse to grant the declaration asked for for oblique reasons. As a result of these companysiderations, we have arrived at the following companyclusions- That the question of addition of parties under r. 10 of I of the Code of Civil Procedure, is generally number one of initial jurisdiction of the companyrt, but of a judicial discretion which has to be exercised in view. of all the facts and circumstances of a particular case but in some cases, it may raise companytroversies as to the power of the companyrt, in companytra distinction to its inherent 1132 jurisdiction, or, in other words, of jurisdiction in the limited sense in which it is used in s. 115 of the Code That in a suit relating to property in order that a person may be added as a party, he should have a direct interest as distinguished from a companymercial interest in the subject matter of the litigation Where the subject-matter of a litigation is a declaration as regards status or a legal character, the rule of present or direct interest may be relaxed in a suitable case where the companyrt is of the opinion that by adding that party it would be in a better position effectually and companypletely to adjudicate upon the companytroversy The cases companytemplated in the last proposition have to be determined in accordance with the statutory provisions of ss. 42 and 43 of the Specific Relief Act In cases companyered by those statutory provisions the companyrt is number bound to grant the declaration prayed for, on a mere admission of the claim by the defendant, if the companyrt has reasons to insist upon a clear proof apart from the admission The result of a declaratory decree on the question of status such as in companytroversy in the instant case affects number only the parties actually before the companyrt but generations to companye, and, in view of that companysideration, the rule of I present interest as evolved by case law relating to disputes about property does number apply with full force and The rule laid down in s. 43 of the Specific Relief Act is number exactly a rule of res judicata. It is narrower in one sense and wider in another. Applying the propositions enunciated above to the facts of the instant case, we have companye to the companyclusion that the companyrts below did number exceed their power in directing the addition of respondents I and 2 as parties-defendants in the action. Nor can it be said that the exercise of the discretion was number sound. Furthermore, this case companyes before us by special leave and we do number companysider that it is a fit case where we should interfere with the exercise of discretion by the companyrts below. The appeal is, accordingly, 1133 dismissed. As regards the question of companyts, we direct that it will abide the ultimate result of the litigation and will be disposed of by the trial companyrt. IMAM J.-I regret I cannot agree with the opinion of my learned brethren expressed in the judgment just delivered. The appellant in her plaint had asked for a declaration that she was a legally wedded wife of respondent 3 and that she was also entitled to receive from him Kharch-e-Pandan at the rate of Rs. 2,000 per month. This respondent filed his written statement in which he unequivocally admitted that the appellant was married to him and that she was also entitled to the Kharch-e-Pandan as claimed in the plaint. He further admitted that the appellant bore him three issues out of the marriage. The appellant sought numberrelief or any declaration against respondents 1 and 2 as, indeed, she companyld number have, because she had numbercause of action against them. There is numberhing in the pleadings of the appellant and respondent 3 which discloses that respondents I and 2 have any cause of action against the appellant. Respondents 1 and 2, however, filed an application under 0. 1, r. 10 2 , of the Code of Civil Procedure before the Judge of the City Civil Court, Hyderabad, praying that they should be added as parties to the suit filed by the appellant. The Judge of the City Civil Court allowed the application and his decision was affirmed by the High Court. The question for decision in this appeal is whether the Jdge of the City Civil Court was justified in adding respondents I and 2 as parties to the suit and whether the decision of the High Court upholding his order should be affirmed. The provisions of 0. 1, r. 1, state as to who may be joined as plaintiffs in a suit and 0. 1, r. 3, states who may be joined as defendants. The parties who are to be joined as plaintiffs and defendants in a suit are persons in whom and against whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if such persons were parties in separate suits, any 1134 companymon question of law or fact would arise. Independent of this, a companyrt has jurisdiction under 0.1, r. 10 1 , to substitute or add as plaintiff any person whom it companysiders necessary for the determination of the real matters in dispute. Under 0. 1, r. 10 2 , the companyrt has the power to strike off a party who has been improperly joined, whether as plaintiff or defendant, and to join, as plaintiff or defendant, any person who ought to have been joined, or whose presence before the companyrt may be necessary in order to enable it effectually and companypletely to adjudicate upon and settle all the questions involved in the suit. It is quite obvious from the companytents of the plaint and the written statement of respondent 3 that there was numberoccasion for the appellant to have joined respondents I and 2 as defendants in the suit. There remains, then, to companysider whether the circumstances appearing in this case justified the Judge of the City Civil Court to add respondents 1 and 2 as defendants under the provisions of 0. 1, r. 10 2 . Respondents 1 and 2 in their application under 0. 1, r. 10 2 , of the Code of Civil Procedure, in essence, relied upon the five following grounds for their plea that they should be added as defendants in the suit That respondent I was the lawful and legally wedded wife of respondent 3, That respondent 2 was the son of respondent 3, That respondents 1 and 2 should be joined as parties to the suit because the question to be adjudicated upon would seriously affect their rights and interest in the estate of respondent 3, That by adding respondents 1 and 2 as parties neither a new cause of action would be introduced number would the nature of the suit be altered, That the issue to be tried in the suit, after res- pondents I and 2 were added as parties, would still be the same as the case made by the appellant was that respondent 3 was interested in denying the appellants marriage to respondent 3-a fact which respondents I and 2 were equally interested in denying. The first two grounds afford numberjustification for respon- dents I and 2 being added as parties to the suit, where 1135 the only question to be decided is whether the appellant is married to respondent 3 and whether he had companytracted to pay to the appellant Rs. 2,000 a month as Kharch-e-pandan. Even if the appellant successfully proved that she was married to respondent 3, who had companytracted to pay her Rs. 2,000 per month as Kharch-e-pandan, the status and the rights of respondents I and 2 as wife and son of respondent 3 would remain unaffected. A Mohammedan is entitled to marry more than once and have wives to the number four at one and the same time. This is his right under his personal law and numberone can question the exercise of this right by him. In the suit between the appellant and respondent 3, the question as to whether the appellant was married to respondent 3 was a matter entirely personal to the appellant and respondent 3. The appellant claimed that she was lawfully married to respondent 3. It was open to respondent 3 to either deny or admit her claim. In fact, respondent 3 had admitted the claim of the appellant that she was married to him. It is number open to anyone else in the present litigation to say that he has falsely made such an admission. It is true that respondents 1 and 2 have alleged companylusion between the appellant and respondent 3. No positive facts are asserted in support of this. The suggestion is based merely on suspicion. Unless the companyrt is justified in adding respondents 1 and 2 as defendants in the suit the suggestion made by them that there is companylusion between the appellant and respondent 3 should be ignored by the companyrt on the simple ground that respondents 1 and 2 have numberlocus standi to make any such representation in the present case. The 3rd, 4th and 5th grounds may be companysidered together as they are inter-connected. Grounds 4 and 5 suggest that there would be neither a new cause of action introduced number would the nature of the suit be altered and the issue to be tried in the suit would still be the same even if respondents I and 2 were added as parties. The only issue in the suit filed by the appellant is whether she was married to respondent 3 and whether there was a companytract by the latter to pay 1136 her Rs. 2,000 per month as Kharch-e-pandan. If respondents I and 2 are added as parties, questions relating to right of inheritance in the estate of respondent 3 would arise for determination in addition to the only issue stated above in the case. The main ground, upon which respondents 1 and 2 claim that they should be added as parties to the suit, is to be found in the 3rd ground which, in substance, is that if the appellant is declared to be lawfully wedded to respondent 3, then the rights and interests of respondents I and 2 in the estate of respondent 3 would be affected. In other words, in the estate of respondent 3, on his death, in addition to respondents 1 and 2, the appellant and her three children by him would have rights of inheritance. Consequently, the extent of inheritance of respondents I and 2 in the estate of respondent 3 would be companysiderably diminished. It was urged that if the appellant is given the declaration, which she seeks, the judgment of the companyrt would be in the exercise of matrimonial jurisdiction and it would be a judgment in rem as stated in s. 41 of the Indian Evidence Act. Such a declaration would also be binding on respondents 1 and 2 by virtue of the provisions of s. 43 of the Specific Relief Act. The appellant asked for a declaration under s. 42 of the Specific Relief Act. This section permitted a person who claimed to be entitled to any legal character, or to any right to property, to institute a suit against any person denying, or interested to deny, such character or right. Respondents 1 and 2 was interested in denying the appellants status as a wife and the status of her three children as the legitimate children of respondent A declaration in her favour would be binding on respondents I and 2 and they would never be in a position to disprove the appellants marriage to respondent 3. This was an impossible situation where the declaration had been obtained from a companyrt as the result of companylusion between the appellant and respondent 3. This submission presupposes that respondents I and 2 would survive respondent 3. During the lifetime of respondent 3 neither the appellant number her children on 1137 the one hand number respondents 1 and 2 on the other have any right,-, whatsoever in his estate under the Mohammedan law. During the lifetime of respondent 3 respondents I and 2 would have the right to be maintained by him and, if the appellant is also his wife, then she and her children would also have the right to be maintained by him. The appellant and respondent 1 would also have rights arising out of a companytract, if any, between them and respondent 3. None of these rights, however, are rights or interests in the estate of respondent 3. The submission also presupposes that on the death of respondent 3 he would have left behind some estate to be inherited by his heirs. These submissions are entirely speculative and afford numberbasis for the impleading of respondents 1 and 2 as parties to the appellants suit. It was said, however, that the right to inherit is a present right in respondents 1 and 2 and if the appellant is declared to be the wife of respondent 3, then that right to inheritance is affected. This companytention is erroneous and there is numberlegal basis to support it. If the appellant is declared to be the wife of respondent 3 such a declaration companyld number affect the right to inherit on the part of respondents I and 2 in the estate of respondent 3, assuming that respondent 3 on his death left an estate to be inherited and that the appellant and her children and respondents I and 2 survived him. The extent of the inheritance of each one of these may thus become less but so far as that is companycerned it cannot be predicated during the lifetime of respondent 3 as to what would be the extent of the inheritance of his heirs. Under the Mohammedan law, by which the parties are governed, respondent 3 companyld yet validly marry two other women and have children from them, in which case, the inheritance, if any, companyld number be to the same extent if respondent 3 died leaving only respondents I and 2 as his heirs. The entire question raised by res- pondents I and 2 is based on the supposition that they have rights in the estate of respondent 3. Under the Mohammedan law they have numbersuch rights. It is only in the event of their surviving respondent 3 that their rights will vest in his estate and the extent of 1138 their inheritance will be calculated on the number of persons entitled to inherit his estate at the time of his death. It was urged, however, that unless respondents 1 and 2 are number given an opportunity to show that there was numbervalid marriage between the appellant and respondent 3, a declaration that there was a marriage between these two persons would be binding on them by virtue of the provisions of s. 43 of the Specific Relief Act. If, therefore, on the death of respondent 3 a question arose as to who were entitled to inherit his estate, respondents I and 2 would number be able to question the rights of the appellant and her children and they would be adversely affected by the declaration. It is somewhat doubtful, having regard to the terms of s. 43, that such a declaration in the present suit would be binding on respondents I and 2 as they would number be claiming their right to inheritance through the appellant and respondent 3 respectively. Assuming, however, that such a declaration would be binding on them, that would be numberjustification for their being impleaded in the present litigation where the issue is number one of inheritance but one of marriage between the appellant and respondent 3. If the submission has any substance it might as well be said by any one that he should be impleaded as a party to a suit and should be allowed to companytest the suit, although there was numbercause of action against him, because the decree in the suit would bind him on the ground of res judicata. It is true that in a suit under s. 42 of the Specific Relief Act it is discretionary with the companyrt to make or number to make the declaration asked for. The exercise of that discretion, however, has to be judicial. In the present case there does number appear to be any legal impediment in the way of the companyrt refusing to make the declaration asked for since respondent 3 had acknowledged the marriage and had admitted the claim for Rs. 2,000 per month as Kharch-e- pandan. The appellant has number asked for any sum of money to be decreed in her favour. There is numbercause of action number left to the appellant which can be the basis for the present suit. The appellant companyld rely upon the 1139 acknowledgement which raises a presumption under the Mohammedan law that she is married to respondent 3. There appears to be numbergood ground for adding respondents I and 2 as parties to the present suit. If hereafter on the happening of a certain event and the existence of certain circumstance any question arose whether the appellant was married to respondent 3, then those who were interested in disproving the marriage would be in a position to do so and rebut the presumption arising from the acknowledgement. Under O. 1, r. 10, of the Code of Civil Procedure the companyrt has the power to pass orders regarding the adding of parties or striking off the name of a party. Whether the exercise of this power is a matter of jurisdiction or of discretion appears to have been the subject of difference of opinion in the companyrts of law here and in England. Whichever view may be companyrect it is. patent that resort to the exercise of such power companyld only be had if the companyrt is satisfied that it is necessary to make an order under 0. 1, r. 10, in order to effectually and companypletely adjudicate upon and settle all questions involved in the suit. The companyrt ought number to companypel a plaintiff to add a party to the suit where on the face of the plaint the plaintiff has numbercause of action against him. If a party is added by the companyrt without whose -presence all questions involved in the suit companyld be effectually and companypletely adjudicated upon, then the exercise of the power is improper and even if it be a matter of discretion such an order should number be allowed to stand when that order is questioned in a superior companyrt. The plaintiff is entitled to choose as defendants against whom he has a cause of action and he should number be burdened with the task of meeting a party against whom he has numbercause of action. It was, however, suggested that on the face of the plaint number only respondent 3 was interested in denying his marriage with the appellant but a legitimate inference companyld be drawn from the companytents of the pleadings that respondents 1 and 2 were also interested in denying the marriage. No allegation made in the pleadings even remotely suggests that respondents I and 2 were interested to deny the alleged 1140 marriage of the appellant to respondent 3 or were denying the same. Under s. 42 of the Specific Relief Act a suit may be instituted against any person denying or interested to deny the plaintiffs legal character or right to any property. The plaint does number suggest that respondents 1 and 2 were denying the appellants status as wife of respondent 3. Such an issue was raised by the appellant against respondent 3 only. In law, it cannot be said that respondents 1 and 2 are interested to deny the status of the appellant as the wife of respondent 3 because the status of respondent I as wife and respondent 2 as the son of respondent 3 is number in the least affected even if the appellant is declared to be the wife of respondent 3, as under the Mohammedan law respondent 3 is entitled to have both the appellant and respondent 1 as his wives and .children through them. The true legal position in the present suit between the appellant and respondent 3 is that respondents I and 2 have numberlocus standi in such a suit. There is numberdanger of multiplicity of suits during the lifetime of respondent 3. The suggestion that the present suit would lead to multiplicity of suits is founded on an assumption which numbercourt of law can assume. It cannot be assumed that respondent 3 would die first. It may well be that he may survive both respondents I and 2, in which case, numberquestion of any suit companying into existence at their instance would arise. If the order allowing respondents 1 and 2 to be added as parties in a suit of the present nature is allowed to stand it will open the way to a wider exercise of powers under 0. 1, r. 10, and in a manner which was number companytemplated by the Code of Civil Procedure, or s. 42 of the Specific Relief Act or permissible under the Mohammedan law. I would, accordingly, allow the appeal as both the companyrts below were in error in supposing that this was a case in which the provisions of 0. 1, r. 10, applied and would set aside the orders of the companyrts below. The appellant is entitled to her companyts throughout.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 301 of 1958. Appeal by special leave from the judgment and order dated February 21, 1958, of the Madhya Pradesh High Court at Jabalpur in Letters Patent Appeal No. 22 of 1958, against the order dated February 20, 1958, of the said High Court in Misc. Petition No. 266 of 1957. K. Nambiyar, S. N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellants. Adhikari, Advocate-General, Madhya Pradesh and N. Shroff, for the respondents. 1443 1958. September 30. The following Judgments were delivered DAS C.J.-There are two appellants in this appeal. The second appellant is the Municipal Committee of Dhamtari companystituted under the C. P. and Berar Municipalities Act, 1922 Act 11 of 1922 and the first appellant is its President having been elected as such on July 10, 1956. He assumed charge of his office as President on July 27, 1956. It may be mentioned that he was returned as a Congress candidate but has since been expelled from that party for having companytested the last general election as an independent candidate against the Congress candidate. It appears that there are two factions in the Municipal Committee. The first appellant alleges that one Dhurmal Daga, a member of the companymittee belonging to the Congress party was on August 7, 1956, deflected importing within the municipal limits certain cloth without paying the octroi duty. Dhurmal Daga, on the other hand, alleged that the first appellant was guilty of grave mismanagement of the affairs of the Municipal Committee and went on hunger strike for securing the appointment of a companymittee to enquire into the misconduct of the first appellant. Copies of the leaflets companytaining the demands and charges which are said to have been widely distributed are annexures I and 11 to the present petition. It appears that several persons and firms also preferred charges against the first appellant, the President of the Municipal Committee. The Collector, Raipur, personally intervened and persuaded the said Dhurmal Daga to abandon the fast on an assurance that he would look into the matter. The Collector deputed one Shri N. R. Rana the Additional Deputy Collector to enquire into the companyplaints of maladministration of the affairs of the Municipal Committee. By a Memorandum No. K J N. P. Dhamtari dated August 24, 1956, the said N. R. Rana called upon the first appellant as tile President of the second appellant to give detailed explanation of each companyplaint, a list of which was enclosed therewith. A companyy of that memorandum along with its 22 enclosures 1444 is annexed to the petition and marked 111. Annexures IV and V to the petition are companyies of the detailed report on the objections and the reply to the charges made against the Municipal Committee submitted from the office of the Municipal Committee by the first appellant as the President of the Municipal Committee. The Additional Deputy Collector thereafter held the enquiry. The High Court states that it had gone through the materials on which the State Government based its action on enquiry into the charges levelled against the Municipal Committee and that the records of the enquiry showed thaton some occasions the petitioner was present duringthe enquiry . Thereis numbersuggestion that the appellants wanted an opportunity to adduce any evidence or were prevented from doing so or that they were in any way hampered in their defence. Presumably the Additional Deputy Collector had made a report which in due companyrse must have been forwarded to the State Government. On November 18, 1957, a numberification was published in the Official Gazette whereby the State Government, in exercise of the powers companyferred on it by s. 53-A of the C. P. Berar Municipalities Act, 1922, appointed one Shri B. P. Jain, the second respondent before us, as the Executive Officer of the Municipal Committee, Dhamtari, for a period of 18 months with certain powers as therein mentioned. A companyy of that numberification has been annexed to the petition and marked VIII but as the major part of the arguments can- vassed before us turns on the companytents of that numberification the same is reproduced below in extenso Dated, Bhopal, the 18th November, 1957, No. 9262/11538-U- XVIII-Whereas it appears to the State Government that the Municipal Committee, Dhamtari, has proved itself incompetent to perform the duties imposed on it by or under the Central Provinces and Berar Municipalities Act, 1922 11 of 1922 , inasmuch as it- a granted grain and building advances to the employees without prior sanction and numberefforts were made for their recovery, b showed carelessness in cases of embezzlement 1445 of the employees and did number report such cases to Government, c failed to companytrol the President who issued orders in cases in which he had numberauthority d spent thousands of rupees on sanitation and other works although there was numberprovision in the budget, e allowed unconcerned persons to interfere in its working, f showed partiality in the appointments and dismissals of the employees, further such appointments and dismissals were made against rules, g delayed the companystitution of the companymittee and the framing of budget, h misused the trucks of the municipality, failed to recover the lease money, j shown partiality in the issue of transit passes to certain traders, further excess octroi duty was charged on certain articles and in certain cases where octroi duty is number leviable it was levied just to harass the people, k distributed municipal manure to certain persons without any charge, similarly distributed the manure free of companyt and used the truck of the municipality for this purpose, 1 failed to companytrol its president who spent the money of the Municipal Committee without any authority, m spent huge amount on the maintenance of the roads and drainage but their companydition has remained unsatisfactory, n failed to give. companyies of the documents as allowed under rules, also failed to allow its members to inspect the records as is permissible under rules, o failed to invite tenders of purchase of articles, and whereas, the State Government companysiders that a general improvement in the administration of the Municipality is likely to be secured by the appointment of a servant of the Government as Executive Officer of the Committee. Now, therefore, in exercise of the powers companyferred by section 53-A of the Central Provinces and Berar 1446 Municipalities Act, 1922 11 of 1922 , the State Government are pleased to appoint Shri B. P. Jain, Deputy Collector, as executive Officer of the Municipal Committee, Dhamtari, for a period of eighteen months from the date of his taking overcharge and with reference to sub-section 3 thereof are further pleased to direct that the Executive Officer shall exercise and perform the following powers and duties of the Committee to the exclusion of the Committee, President, Vice-President or Secretary, under the provisions of the Central Provinces and Berar Municipalities Act, 1922 11 of 1922 , namely- Chapter 111. Appointment of Officers and servants-Sections 25, 26 and 28. Chapter IV. Procedure in Committee meeting Section 31. Chapter V. Property, companytract and liabilities Sections 37 to 45. Chapter VI. Duties of Committee-Sections 50 and 51. Chapter VIII. The municipal fund-whole. Chapter IX. Imposition, assessment and companylection of taxes- whole. Chapter X. Municipal Budgets and accounts whole. Chapter XI. Powers to regulate streets and buildings- Sections 90 to 94, 96, 98, 99, 103 and 104. Chapter XII. Powers to prevent disease and public nuisance- Sections 117, 118 1 , 119 and 132. Chapter XVIII. Offences, practice and procedure-Sections 218-223. Chapter XIX. Special provisions for recovery of taxes- whole. The Executive officer shall exercise general supervising powers in respect of all matters companyered by the Central Provinces and Berar Municipalities Act, 1922 11 of 1922 . In Hindi By order of the Governor of Madhya Pradesh S. Joshi, Deputy Secretary. 1447 On December 21, 1957, the two appellants before us presented before the Madhya Pradesh High Court the writ petition out of which the present appeal has arisen and on January 11, 1958, obtained an order staying the operation of the order of appointment of the Executive Officer. The writ petition was dismissed on February 20, 1958. There was a Letters Patent Appeal which was dismissed in limine on February 21, 1958. The application for -certificate under Arts. 132 and 133 was refused on March 21, 1958. The present appellants applied for and on April 1, 1958, obtained from this Court special leave to appeal from the judgment of the Madhya Pradesh High Court. The interim stay order made by this Court was eventually vacated on May 13, 1958. The appeal has number companye up before us for final disposal. Shri M. K. Nambiar, appearing in support of this appeal, urged three points, namely that though the Notification purports to have been made in exercise of the power,, companyferred on the State Government by s. 53-A, in substance and in reality it has been made under s. 57 of the Act that if the Notification is held to be one made under s. 57 it is ultra vires and bad since the statutory requirements of affording reasonable opportunity to explain has number been companyplied with that even if the impugned Notification be held to companye within s. 53-A it is still ultra vires since before promulgating it the State Government has companymitted a breach of the rules of natural justice in number giving any opportunity to the appellants to defend themselves. There was a charge of mala fide made against the State Government founded on the fact that the first appellants leaving the Congress party had resulted in ill-will towards the first appellant of that -party which was the ruling party in the State Government, but as that charge has number been pressed before us numberhing further need be said about it. I number proceed to deal with the three points formulated above by learned companynsel for the appellants. 1448 Re. i and ii These two points are companyrelated and may be companyveniedtly dealt with together. The argument in support of them is developed in two ways. In the first place it is said that the grounds set forth in the impugned numberification clearly indicate that in substance and in reality it has been issued rather under s. 57 of the Act than under s. 53- In order to appreciate this argument it is necessary to set out the two sections of the C. P. and Berar Municipalities Act, 1922 in extenso 53-A. 1 If a companymittee is number companypetent to perform the duties imposed on it or undertaken by it by or under this Act or any other enactment for the time being in force and the State Government companysiders that a general improvement in the administration of the municipality is likely to be secured by the appointment of a servant of the Government as the executive officer of the companymittee, the State Government may, by an order stating the reasons therefor published in the Gazette, appoint such servant as the executive officer of the companymittee for such period number exceeding eighteen months as may be specified in such order. Any executive officer appointed under subsection 1 shall be deemed to be an officer lent to the companymittee by Government under sub-section 3 of section 25. When under subsection 1 an executive officer is appointed for any companymittee, the State Government shall determine from time to time which powers, duties and functions of the companymittee, president, vice-president or secretary under this Act or any rule or byelaw made thereunder shall be exercised and performed by such officer, in addition to, or to the exclusion of, their exercise and performance by the said companymittee, president, vice-president or secretary. The secretary of the companymittee shall be subordinate to the executive officer. The executive officer shall have the right to attend all meetings of the companymittee and any joint companymittee or sub-committee and to take part in the discussion so as to make an explanation in regard to 1449 the subject under discusion, but shall number move, second, or vote on any resolution or other motion. 57. 1 If a companymittee is number companypetent to perform, or persistently makes default in the performance of, the duties imposed on it or undertaken by it under this Act or any other enactment for the time being in force, or exceeds or abuses its powers to a grave extent, the State Government may, by an order stating the reasons therefor published in the Official Gazette, dissolve such companymittee and may order a fresh election to take place. If after fresh election the new companymittee companytinues to be incompetent to perform, or to make default in the performance of, such duties or exceeds or abuses its powers to a grave extent, the State Government may, by an order stating the reasons therefor published in the Official Gazette, declare the companymittee to be incompetent or in default, or to have exceeded or abused its powers, as the case may be, and supersede it for a period to be specified in the order. If a companymittee is so dissolved or superseded, the following companysequences shall ensue a all members of the companymittee shall, as from the date of the order, vacate their offices as such members b all powers and duties of the companymittee may, until the companymittee is reconstituted, be exercised and performed by such person or persons as the State Government may appoint in that behalf c all property vested in it shall until the companymitee is reconstituted vest in the State Government. On the expiration of the period of supersession specified in the order, the companymittee shall be reconsti- tuted, and the persons who vacated their offices under sub- section 3 , clause a , shall number, by reason solely of such supersession be deemed disqualified for being members. No order under sub-section 1 or subsection 2 shall be passed until reasonable opportunity has been given to the companymittee to furnish an explanation. Any person or persons appointed by the State 1450 Government to exercise and perform the powers and duties of a dissolved or superseded companymittee may receive payment, if the State Government so directs, for his or their services from the municipal fund. Learned companynsel for the appellants points out that action may be taken under s. 53-A if a companymittee is number companypetent to perform the duties imposed on it and the State Government companysiders that a general improvement in the administration of the municipality is likely to be secured Whereas under s. 57 action can be taken number only if a companymittee is number companypetent to perform or persistently makes default in the performance of the duties imposed on it or but also if the companymittee exceeds or abuses its powers to a grave extent It is pointed out that in case of incompetency action can be taken either under s. 53-A or s. 57 but in case of abuse of power action can be taken only under s. 57. Reference is then made to the grounds enumerated in the numberification itself and it is argued that except perhaps grounds a, b, c and g which may be indicative of incompetency, the other grounds, which are, by far, greater in number, obviously companystitute abuse of powers and from this circumstance the companyclusion is sought to be drawn that in substance and in reality the impugned numberification must have been made under s. 57 and that that being so the numberification cannot be sustained because of the number-compliance with the provisions of sub-s. 5 of s. 57 which expressly lay down that numberorder tinder sub-s. 1 or 2 shall be passed until reasonable opportunity has been given to the companymittee to furnish an explanation. I am number persuaded to uphold this argument. In the first place it has to be remembered that, the sections under companysideration only companyfer certain powers on the State Government but that the latter is number bound to take any action under either of them. In the next place it should be numbered that the two sections differ materially in their scope and effect. Under s. 53-A the State Government may only appoint a servant of the Government as the Executive Officer of the companymittee and may determine, from time to time, 1451 which powers and duties and functions of the companymittee, its president, vice-president or secretary shall be exercised and performed by such officer and indicate whether they should be exercised and performed in addition to, or to the exclusion of, their exercise and performance by the said companymittee, president, vice-president or secretary. The wording of s. 53-A makes it quite clear that the action that may be taken thereunder is to be effective for a temporary duration number exceeding 18 months and the purpose of taking such action is to ensure the proper performance and discharge of only certain powers, duties and functions under the Act. The section does number, in terms, affect, either legally or factually, the existence of the companymittee, its president, vice president or the secretary. Section 57, however, authorises the State Government, in the circumstances mentioned in the opening part of that section, to dissolve the companymittee itself and order a fresh election to take place so that the companymittee as a legal entity ceases to exist and all the sitting members of the companymittee become functi officio. If after such fresh election the same situation prevails, then that section further authorises the State Government to declare the companymittee to be incompetent or in default or to have exceeded or abused its power as the case may be and to supersede it for such period number limited by the section as may be specified in the order. The effect of an order made under s. 57 is, therefore, extremely drastic and puts an end to the very existence of the companymittee itself and, in view of the grave nature of the companysequences that will ensue, the legislature presumably thought that some protection should be given to the companymittee before such a drastic action was taken and accordingly it provided, by sub-s. 5 of that section, that numberorder should be passed until reasonable opportunity had been given to the companymittee to furnish an explanation a provision which clearly indicates that action under s. 57 can only be taken after bearing and companysidering all the explanations furnished by or on behalf of the companymittee. The legislature did number think fit to provide a similar safeguard in s. 53A presumably because 1452 the order under the last mentioned section was of a temporary duration, was number very drastic and did number threaten the very existence of the companymittee. A cursory reading of the two sections will also indicate that the companyditions precedent to the exercise of the powers under both sections overlap to some extent, namely, that action can be taken under both if the companymittee is number companypetent to perform the duties imposed on it To the extent that the requirements of the two sections overlap the State Government has the option of taking steps under one section or the other according to its own assessment of the exigencies of the situation. The position, therefore, is that if a companymittee is number companypetent to perform the duties imposed on it the State Government has to make up its mind as to whether it should take any action all and, if it thinks that action should be taken, then it has further to decide for itself as to which of the two sections it would act under. If the State Government companysiders that the incompetency does number run to a grave extent and the exigencies of the situation may be adequately met by appointing an Executive Officer for a short period number exceeding 18 months with certain powers to be exercised by him, either in addition to or in exclusion of their exercise by the companymittee, the president, vice-president or the secretary, the State Government may properly take action under s. 53-A. On the other hand if the State Government companysiders, having regard to all the circumstances of the case, that the incompetency is much too grave to permit the companymittee, its president, vice-president or the secretary to function at all, it may take action under s. 57 and dissolve the companymittee and direct fresh election to take place. In other words incompetency on the part of the companymittee gives to the State Government an option to apply one of two reme- dies under the Act, if, that is to say, it companysiders it necessary to take action at all. What, then, is the position here ? Certain charges had been made in writing against the companymittee and its president which were forwarded to the president with a request to submit explanations in detail. The 1453 president, acting in his official capacity, gave detailed explanations in writing and sent the same officially from the office of the municipal companymittee to the Additional Deputy Collector who was deputed by the Collector to hold the enquiry. The Additional Deputy Collector held the enquiry during which the president appeared in person on several days and came to certain findings and presumably made his report which in due companyrse must have reached the State Government. The State Government apparently accepted such of those findings as have been set out in the numberification it-self Even according to learned companynsel for the appellants some of those findings amount only to incompetency and the rest, he companytends, amount to abuse of power. I need number pause to Consider whether the abuse of power thus found was of a grave nature so as to fall within s. 57 as such or was of a minor character so as to be evidence of mere incompetency Taking the position to be as companytended by learned companynsel for the appellants the position was that, as a result of the enquiry, the State Government found two things against, the appellant companymittee, namely, that it was guilty of incompetency and ii that it was also guilty of certain abuses of power. I have already stated that the State Government was number obliged to take any action at all either under s. 53-A or under s. 57. If the State Government companysidered that it was necessary to take action, it was entirely for the State Government to companysider whether it would take action for incompetency or for abuse of power. In the present case the State Government might have thought that the abuse of power so found was number of a very grave nature but evidenced only incompetency. Surely a companymittee which abused its power might also have been reasonably regarded as incompetent to perform the duties imposed on it That apart, supposing the companymittee was guilty of incompetency as well as of some abuses, what was there to prevent the State Government, as a matter of policy, to take action for incompetency under s. 53-A ? The mere inclusion of the findings of abuse of power in the catalogue of the Committees 1454 misdeeds does number obliterate the findings on incompetency. I see numberhing wrong in the State Government telling the companymittee You have been guilty of incompetency as well as of abuse of power but I shall number, just at this moment, take drastic action of dissolving you outright, but shall be companytent to take action and appoint an Executive officer for 18 months and companyfer some power on him under s. 53-A. In my judgment the State Government was well within its tights, in exercise of its option, to take action, under s. 53-A as it has in terms purported to do. To say that because some of the findings amount to abuse of power the State Government must act under s. 57 is to deprive it of its discretion which the Act undoubtedly companyfers on it. In my view the fact that the impugned numberification records, apart from the findings of incompetency, certain findings of abuse of power, does number lead to the companyclusion, as companytended for the appellants, that the State Government had taken action under s. 57 and number under s. 53-A although, in terms, it says it acted under the last mentioned section. Learned companynsel for the appellants in support of his companytention that the impugned numberification was really made under s. 57 of the Act, refers us to the, powers and duties companyferred on the executive Officer thereby appointed to be exercised and performed by him to the exclusion of the companymittee, its president, vicepresident, or the secretary. His argument is that although the municipal companymittee is number ostensibly dissolved, it is in effect and in reality so dissolved, for the substance of the powers of the companymittee, its president, vice-president or the secretary has been taken away from them leaving only a semblance of power which is numberhing but mere husk and the companyclusion urged by learned companynsel is that the impugned numberification must be regarded as having been made under s. 57. In the first place, s. 57 does number companytemplate the appointment of any executive Officer or the companyferment of any power on him, while such appointment and companyferment of power is directly companytemplated by s. 53-A. In the second place the legal 1455 existence of the municipal companymittee and the status of its members and its president, vice-president or the secretary have number been impaired at all. In the eye of the law the municipal companymittee still exists and along with it the members of the companymittee, the president, vice-president and the secretary still hold their respective offices. These features clearly militate against the suggestion that action has been taken under s. 57. Learned companynsel says that we must look beyond mere form and get to the substance of the matter. There can be numberdoubt that most of the important powers have been taken away from the companymittee, its president, vice-president and the secretary, but that may well be due to the degree of gravity of the incompetency found or inferred from the other findings. Further, a cursory perusal of the Act and of the numberification will show that various other powers and duties have number been taken away from the companymittee or companyferred on the Executive Officer. Thus the powers of the companymittee under ss. 128, 130, 131, 133 to 141 and 144, 145 arid 147 to 149 are still vested in and are exercisable by the companymittee. Likewise the powers under ss. 120, 121, 122, 123 to 127, 129, 150, 152 to 160 to 162, 163, 163A and 168 are still vested in and exercisable by the president. These powers that are still left with the companymittee or the president can hardly or with propriety be described as mere husks. It should number be overlooked that the suggestion that the real power has been taken away leaving only a semblance of it, is really ail argument in aid of a charge of mala fides, but, as here-in- before stated, the charge of mala fides or fraud on the part of the State Government has number been persisted in or pressed before us. In my judgment, therefore, there is numberwarrant for companytending that the impugned numberification, judged by its eftect, must be regarded as having been made under s. 57 of the Act. In this view of the matter the argument of invalidity of the action founded on number-compliance with the requirements of sub-s. 5 of s. 57 does number arise for companysideration at all. I85 1456 Re. iii In the writ application, out of which this appeal arises, the principal prayer of the appellants is for a writ in the nature of certiorari for quashing the order passed by the State Government on November 18, 1957. Tile next prayer which is for a writ of mandamus restraining the respondents from giving effect to the impugned order is clearly companyse- quential on or ancillary to the main prayer. The last prayer is in the nature of the usual prayer for further or other reliefs. Therefore the present petition is essentially one for the issue of a writ of certiorari. The writ of certiorari is a well-known ancient high prerogative writ that used to be issued by the Courts of the Kings Bench to companyrect the errors of the inferior Courts strictly so called. Gradually the scope of these writs came to be enlarged so as to enable the Superior Courts to exercise companytrol over various bodies which were number, strictly speaking, Courts at all but which were, by statute, vested with powers and duties that resembles those that were vested in the ordinary inferior Courts. The law is number well- settled that a writ of certiorari will lie to companytrol such a statutory body if it purports to act without jurisdiction or in excess of it or in violation of the principles of natural justice, or companymits any error apparent on the face of the records, provided that, on a true companystruction of the statute creating such body, it can be said to be a quasi- judicial body entrusted with quasi-judicial functions. It is equally ,well-settled that certiorari will number lie to companyrect the errors of a statutory body which is entrusted with purely administrative functions. It is, therefore, necessary to ascertain the true nature of the functions entrusted to and exercised by the State Government under s. 53-A of the Act. In Province of Bombay v. Kusaldas S. Advani this Court has discussed at companysiderable length the nature of the two kinds of act, judicial and administrative, and has laid down certain tests for ascertaining whether the act of a statutory body is a quasijudicial actor an administrative act. It will, therefore, 1 1950 S.C.R, 621. 1457 suffice to refer to the celebrated definition of a quasi- judicial body given by Atkin L. J. as he then was, in Rex v. Electricity Commissioners and which number holds the field. It runs as follows Whenever any body of persons having legal authority to determine questions affecting rights of subjects, and having the duty to act judicially act in excess of their legal authority they are subject to the companytrolling jurisdiction of the Kings Beneh -Division exercised in these writs. This definition was accepted as companyrect in Rex v. London Count? Council 2 and many subsequent cases both in England and in this companyntry. It will be numbericed that this definition insists on three requisites each of which must be fulfilled in order that the act of the body may be said to be quasi-judicial act, namely, that the body of persons 1 must have legal authority, 2 to determine questions affecting the rights of parties, and 3 must have the duty to act judicially. Since a writ of certiorari can be issued only to companyrect the errors of a companyrt or a quasi-judicial body, it would follow that the real and determining test for ascertaining whether an act authorised by a statute is a quasi-judicial act or an administrative act is whether the statute has expressly or impliedly imposed upon the statutory body the duty to act judicially as required by the third companydition in the definition given by Atkin L. J. Therefore in companysidering whether in taking action under s. 53-A the State Government is to be regarded as functioning as a quasi-judicial body or a mere administrative body it has to be ascertained whether the statute has expressly or impliedly imposed upon the State Government a duty to act judicially. Relying on paragraphs 114 and 115 of Halsburys Laws of England, 3rd Edition, Volume 11, at pages 5558 and citing the case of R. v. Manchester Legal Aid Committee 1 , learned companynsel for the appellants companytends that where a statute requires a decision to be arrived at purely from the point of view of policy or 1 1924 1 K.B. 171. 3 1952 2 2 1931 2 K.B. 215. 413. 1458 expediency the authority is under numberduty to act judicially. He urges that where, on the other hand, the order has to be passed on evidence either under an express provision of the statute or by implication and determination of particular facts on which its jurisdiction to exercise its power depends or if there is a proposal and an opposition the authority is under a duty to act judicially. As stated in paragraph 115 of Halsburys Laws of England, Volume 1 1, at page 57, the duty to act judicially may arise in widely differing circumstances which it would be impossible to attempt to define exbaustively. The question whether or number there is a duty to act judicially must be decided in each case in the light of the circumstances of the particular case and the companystruction of the particular statute with the assistance of the general principles laid down in the judicial decisions. The principles deducible from the various judicial decisions companysidered by this Court in the Province of Bombay v. K. S. Advani 1 at page 725 were thus formulated, namely that if a statute empowers an authority, number being a Court in the ordinary sense, to decide disputes arising out of a claim made by one party under the statute which claim is opposed by another party and to determine the respective rights of the companytesting parties who are opposed to each other, there is a lis and prima facie and in the absence of anything in the statute to the companytrary it is the duty of the authority to act judicially and the decision of the authority is a quasijudicial act and that if a statutory authority has power to do any act which will prejudicially affect the subject, then, although there are number two parties apart from the authority and the companytest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasi-judicial act provided the authority is required by the statute to act judicially. It is clear that in the present case there is numberquestion of any companytest between two companytending parties which the State Government is, under s. 53-A, to decide and, 1 1950 S.C.R. 621. 1459 therefore, there is numberlis in the sense in which that word is understood generally, and the principle referred to under the first heading has numberapplication. We have, therefore, to companysider whether the case companyes within the principle enunciated under the second head, namely, whether the C. P. and Berar Municipalities Act, 1922, requires the State Government to act judicially when taking action under s. 53-A. Learned companynsel for the appellant draws our attention to the language in which s. 53-A is companyched. He companycedes that the ultimate order under that section is purely discretionary, that is to say the State Government is number obliged to take any action tinder the section. It may make an order Tender the section or it may number according as it thinks fit. But in case the State Government chooses to act under the section, it can only do so if the companyditions therein laid down are fulfilled. A cursory reading of s. 53-A will show that there are two prerequisites to be satisfied before the State Government can take action under s. 53-A, namely, 1 that the municipal companymittee is number companypetent to perform the duties imposed on it and 2 that the State Government companysiders that a general improvement in the administration of the municipality is likely to be secured by the appointment of a servant of the Government as the Executive Officer of the companymittee. When both these companyditions are fulfilled, then and then only may the State Government take action and make an order under s. 53-A. Of the two companyditions the second one, by the very language in which it is expressed, is left entirely a matter for the State Government to companysider, for it depends entirely on the view of its own duty and responsibility that the State Government may take on a companysideration of the situation arising before it. In other words, the statute has left that matter to the subjective determination of the State Government. The first requisite, however, is an objective fact, namely, whether the companymittee is or is number companypetent to perform the duties imposed on it. The determination of that fact, it is pointed out, has number been left to the subjective determination by 1460 the State Government. Learned companynsel for the appellants urges that if it were intended to leave the determination of this fact of incompetency also to the subjective opinion of the State Government, the section would have been framed otherwise. It would have said something like this If the State Government companysiders that a companymittee is number companypetent to perform the duties and that the general improvement in the administration of the municipalities is likely to be secured by This the Legislature has number done and has, thus, clearly evinced an intention number to leave it to the ipse dixit of State Government. Section 53-A, it is pointed out, differs materially in this respect from s. 3 of the Bombay Land Requisition Ordinance V of 1947 which was companysidered by this Court in Kusaldas Advanis casc 1 . That section of the Bombay ordinance opened with the words If in the opinion of the Provincial Government which were taken as indicative of the Legislatures intention to leave the determination of the existence of all the companyditions precedent entirely to the subjective opinion of the Provincial Government so as to make the action a purely administrative one. The argument is that the first requirement is the finding of a fact which may be called a jurisdictional fact, so that the power under s. 53-A can only be exercised when that jurisdictional fact is established to exist. The determination of the existence of that jurisdictional fact, it is companytended, is number left to the subjective opinion of the State Government and that although the ultimate act is an administrative one the State Government must at the preliminary stage of determining the jurisdictional fact act judicially and determine it objectively, that is to say, in a quasi-judicialay. It is assumed that whenever there has to be a determination of a fact which affects the rights of the parties, the decision must be a quasijudicial decision, so as to be liable to be companyrected by a writ of certiorari. In Advanis case 1 Kania C. J. with A hom Patanjali Sastri J. agreed, said at page 632 The respondents argument that whenever there 1 1950 S.C.R. 621. 1461 is a determination of a fact which affects the rights of parties, the decision is quasi-judicial, does number appear to be sound. Further down the learned Chief Justice said determined by an objective test and when that decision affects rights of someone, the decision or act is quasi- judicial. This last statement overlooks the aspect that every decision of the executive generally is a decision of fact and in most cases affects the rights of someone or the other. Because an executive authority has to determine certain objective facts as a preliminary step in the discharge of an executive function, it does number follow that it must determine those facts judicially. When the executive authority has to form an opinion about an objective matter as a preliminary step to the exercise of a certain power companyferred on it, the determination of the objective fact and the exercise of the power based thereon are alike matters of an administrative character and are number amenable to the writ of certiorari. To the like effect is the following observation of Fazl Ali J. in the same case at page 642 The mere fact that an executive authority has to decide something does number make the decision judicial. It is the manner in which the decision has to be arrived at which makes the difference, and the real test is Is there any duty to decide judicially ? As I have already said, there is numberhing in the Ordinance to show that the Provincial Government has to decide the existence of a public purpose judicially or quasi-judicially. Dealing with the essential characteristics of a quasi- judicial act as opposed to an administrative act, I said at page 719 features. Thus a person entrusted to do an administrative act has often to determine questions of fact to enable him to exercise his power. He has to companysider facts and circumstances and to weigh pros and companys in his mind before he makes up his mind to exercise his power just as a person exercising a judicial or 1462 quasi-judicial function has to do. Both have to act in good faith. - A good and valid administrative or executive act binds the subject and affects his rights or imposes liability on him just as effectively as a quasijudicial act does. The exercise of an administrative or executive act may well be and is frequently made dependent by the Legislature upon a companydition or companytingency which may involve a question of fact, but the question of fulfilment of which may, nevertheless, be left to the subjective opinion or satisfaction of the executive authority, as was done in the several Ordinances, regulations and enactments companysidered and companystrued in the several cases referred to above. The first two items of the definition given by Atkin J. may be equally applicable to an administrative act. The real test which distinguishes a quasi-judicial act from an administrative act is the third item in Atkin L. J.s definition, namely, the duty to act judicially. I found support for my opinion on the following passage occurring in the judgment of Lord Hewart C. J. in B. v. Legislative Committee of the Church Assembly 1 In order that a body may satisfy the required test it is number enough that it should have legal authority to determine questions affecting the rights of subjects there must be super-added to that characteristic the further characteristic that the body has the duty to act judicially. The above passage was quoted with approval by Lord Radcliffe in delivering the judgment of the Privy Council in Nakkuda Alis case I number proceed to apply the principles discussed above to the facts of the present case. The simple fact that the incompetency of the companymittee goes to the root of the jurisdiction of the State Government to exercise its power under s. 53-A does number require that that fact must be determined judicially. The sole question is, does the statute require the State Government to act judicially. There need number be any express provision that the State Government must act judicially. It will be sufficient if this duty may be 1 1928 1 K.B. 411, 415. 2 1951 A.C. 66. 1463 implied from the provisions of the statute. The mere fact that a question of fact has to be determined as a preliminary companydition before action can be taken under the statute by itself does number carry that implication. There must be some indication in the statute as to the manner or mode in which the preliminary fact is to be determined. I find numberhing in s. 53-A which in terms imposes any duty on the State Government to act judicially. No form of procedure is laid down or even referred to from which such a duty companyld be inferred. On the companytrary, one finds a signi- ficant omission of any provision like that embodied in sub- s. 5 of s. 57 which requires that numberorder under that section shall be passed until reasonable opportunity has been given to the companymittee to furnish an explanation. It is also material to numbere that whereas an order under s. 57 is of a permanent character the one to be made under s. 53-A is to be of a limited duration, i.e., for such period number exceeding IS months as may be specified in such order. Further, s. 53-A companytemplates swift action and a judicial hearing may easily frustrate the very purpose companytemplated by s. 53-A, for a judicial act will be subject to the powers of superintendence of the superior companyrts and the operation of the order under s. 53-A may be postponed, as it has been done in this very case, by taking, the matter from companyrt to companyrt until it is set at rest by this Court. In this companynection reference may also be made to s. 25-A of the Act which authorises the State Government to require the companymittee to appoint, inter alia, a Chief Executive Officer. If such companymittee fails to companyply with the requisition within the period specified, the State Government may, under sub-s. 3 , if it thinks fit, appoint such officer and fix his pay and allowance. Sub-section 4 authorises the State Government to require the companymittee to delegate to the officer so appointed such powers, duties and functions of the companymittee, its president, vice-president or the secretary under this Act or any rule or bye-law made thereunder as may be specified in such requisition and if the companymittee fails to companyply with such requisition within a reasonable time, the State Government 1464 may determine the powers, duties and functions which shall be exercised and performed by such officer in addition to or to the exclusion of their exercise or performance by companymittee, its president, vice-president or secretary. Nobody will say that the State Government must exercise the powers under s. 25-A after holding any judicial enquiry. The only difference in the language of s. 25-A and s. 53-A both of which were inserted in the Act in 1947 is that action can be taken under s. 53-A only when the companymittee is incompetent to perform the duties imposed on it a fact the determination of which is number in so many words left to the subjective opinion of the State Government, whereas action can be taken under s. 25-A on the satisfaction of the State Government as to certain facts which is, in terms, left to the subjective determination of the State Government. If, as I have said, the determination of a jurisdictional fact is number by itself sufficient to indicate that, it has to be done judicially, there is numberhing else in s. 53-A or in any other section of the Act which will lead to the companyclusion that the State Government must act judicially. The only other thing strongly relied on by learned companynsel for the appellants is that the State Government may exercise its power under s. 53-A by an order stating reasons therefor published in the Gazette . The requirement that the State Government must give reasons for the order it makes does number necessarily require it to record a judgment judicially arrived at. The legislature might well have thought that public policy required that the State Government entrusted with large administrative power should record its reasons for exercising the same so as to allay any misgivings that may arise in the mind of the public. In my judgment, the action taken by the State Government under s. 53-A is number a judicial or quasi-judicial act but is an administrative act. Learned companynsel for the appellants relied on the case of Capel v. Child 1 . That decision clearly went upon the companystruction of the statute that came up for companysideration. The fact that action companyld be taken under that statute on affidavits 1 2 Cr. Jr, 558 37 R. R. 761. 1465 was companystrued as a clear indication that the Bishop had to arrive at a decision as to the negligence of the Vicar on hearing evidence adduced before it by affidavit which led to the next companyclusion that the Vicar must be given an opportunity of being heard and of adducing evidence in his own defence. From this circumstance it was inferred that even when the Bishop acted on his knowledge of fact he must also proceed, judicially, for the two modes of procedure were treated on the same footing by the section itself. As I have said, there is numberhing in s. 53-A or any other sec- tion which may lead us to infer a duty to proceed judicially as was done in that case. On the companytrary there are indications leading to a different companyclusion. To say that action to be taken under s. 53-A is an administrative action is number to say that the State Government has number to observe the ordinary rules of fair play. Reference to the observation made by Fortesque J. in Dr. Bentleys case about God asking Adam and Eve whether they had eaten the forbidden fruit appearing in the judgment of Byles J. in Cooper v. The Wandsworth Board of Works 1 is apposite. The decision in the last mentioned case clearly establishes that in some cases it may be necessary to give an opportunity to a party to have his say before at administrative action is taken against him. But that is quite different from the well-ordered procedure involving numberice and opportunity of hearing necessary to be followed before a quasi-judicial action, open to companyrection by a superior companyrt by means of a writ, of certiorari, can be taken. The difference lies in the manner and mode of the two procedures. For the breach of the rules of fair play in taking administrative action a writ of certiorari will number lie. I have already recounted the events and proceedings that preceded the actual passing of the order under s. 53-A. If the action taken tinder that section is to be regarded as an administrative action, as I hold it should be, then I have numberdoubt that the appellants have had more than fair play. It is said that the State Government did number hold any enquiry before 1 1863 14 C.B. N.S. 180 143 E. R. 414. 1466 making the order and that, therefore, it can-not be said that the appellants had an opportunity to defend themselves against an order of this kind. I do number companysider that there is any substance in this companytention. If the State Government wanted to hold any enquiry it would do so through some of its officers. Who would be more appropriate and companypetent to hold the enquiry except the officers on the spot ? The Additional Deputy Collector is obviously the person to whom the duty of enquiry companyld properly be entrusted. All the charges levelled against the appellants were forwarded to them, and they submitted explanation. The first appellant, who is the President, personally attended many of the sittings. There is numbersuggestion that they had been prevented from adducing evidence in their own defence, The enquiry was held into what had been alleged against their companyduct. It was surely number a purposeless enquiry. As a result of the enquiry certain findings were arrived at which were accepted by the State Government and an order was made under s. 53-A. I do number see what grievance the appellants can possibly have. In my judgment there has been numberremissness on the part of the State Government. For reasons stated above I would dismiss this appeal. BHAGWATI J.-.I also agree that the appeal should be dismissed with companyts but would like to add a few words of my own. I have had the benefit of reading the judgments prepared by my Lord the Chief Justice, Kapur J. and Subba Rao J. I agree with the reasoning and the companyclusions reached in those judgments in regard to points Nos. i ii , viz., that though the Notification purports to have been made in exercise of the powers companyferred on the State Government by s. 53-A, in substance and in reality it has been made under s. 57 of the Act and, that if the Notification is held to be one made under s. 57 it is ultra vires and bad since the statutory requirement of affording reasonable opportunity to explain has number been companyplied with. 1467 In regard to point No. iii , viz., that even if the impugned Notification be held to companye within s. 53-A it is still ultra vires since before promulgating it the State Government has companymitted a breach of the rules of natural justice in number giving any opportunity to the appellants to defend themselves, however, there is a difference of opinion between my Lord the Chief Justice and Kapur J. on the one hand, and Subba Rao J. on the other, as to the character of the act performed by the State Government while arriving at the companyclusion that the Committee is number companypetent to perform the duties imposed on it or undertaken by it. Whereas the former are of the view that in arriving at such companyclusion the State Government performs only an administrative function, the latter is of the view that the fact whether the companymittee is number companypetent to perform the duties imposed on it or undertaken by it is a jurisdictional fact and in arriving at that companyclusion the State Government performs a quasi-judicial function. In my opinion, the determination of the question whether the State Government performs an administrative or a quasi-judicial function in the matter of arriving at such companyclusion is immaterial for the purposes of this appeal, inasmuch as an inquiry had been instituted by the State Government in the matter of the charges levelled against the appellants and full opportunity had been given to them to defend themselves. I need number add anything in this regard to what has been said by my Lord the Chief Justice in the judgment just delivered by him. I only wish to say that the circumstances adverted to therein amply demonstrate that the appellants had numberice of the charges which had been levelled against them and had rendered full explanation in regard to the same, and, in the matter of the inquiry in regard to those charges the principles of natural justice had been companyplied with and the companyclusion reached by the State Government in the matter of the incompetence of the companymittee was unassailable. That being so, I would prefer number to express any opinion on the vexed question as to whether the act 1468 performed by the State Government is quasi-judicial or administrative in character. The result, however, is the same and I agree with the order proposed dismissing the appeal with companyts. K. DAS J.-I agree generally with the companyclusions reached by my Lord the Chief Justice and the reasons on which those companyclusions are founded. But I wish to add a few words with regard to the third question, namely, if in making the impugned numberification, the State Government violated the principles of natural justice. The answer to that question depends on whether on a true companystruction of the relevant statute, the State Government performed an administrative function or what has been called a quasi- judicial function in making the impugned numberification. I am of the view that the action taken by the State Government under s. 53-A of the Act is in its true nature an administrative act. It is said that where there is a duty to act judicially , the function is quasijudicial that however does number help us very much in understanding the distinction between an administrative function and a quasi- judicial function. Where the statute clearly indicates that the function is judicial, there is little difficulty. The difficulty arises in cases where the point taken is that by necessary implication the statute requires an administrative body or executive authority to act judicially. It is indeed Generally companyrect to say that where an administrative body or authority is under a duty to act judicially, its function is judicial or quasi-judicial. But it is, to some extent, a tautology to say that the function is judicial or quasi- judicial if it is to be done judicially. To get to the bottom of the distinction, we must go a little deeper into the companytent of the expression duty to act judicially . As has been repeated so often, the question may arise in widely differing circumstances and a precise, clear-cut or exhaustive definition of the expression is number possible. But in decisions dealing with the question several tests have been laid down for example- 1469 whether there is a lis inter partes whether there is a claim or proposition and an opposition whether the decision is to be founded on the taking of evidence or on affidavits whether the decision is actuated in whole or in part by questions of policy or expediency, and if so, whether in arriving at the decision, the statutory body has to companysider proposals and objections and evidence and whether in arriving at its decision, the statutory body has only to companysider policy and expediency and at numberstage has before it any form of lis. The last two tests were discussed and companysidered in R. v. Manchester Legal Aid Committee 1 . It is fairly clear to me that tests i to iv are inappropriate in the present case by reason of the provisions in s. 53-A ,is companytrasted with s. 57 and other sections of the Act. The test which is fulfilled in the present case is test v , and that makes the function under s. 53-A a purely administrative function in spite of the requirement of an initial determination of a jurisdictional fact and the recording of reasons for the decision. I am companytent to rest my decision on the aforesaid ground, as I am number satisfied that the enquiry held by the Deputy Collector was a proper enquiry if it be held that s. 53-A entrusts a quasi-judicial function to the State Government and therefore requires companypliance with the principles of natural justice. That enquiry was for a different purpose altogether, the charges were number the same, and in my view the Municipal Committee had numberreal opportunity of meeting the charges on which the State Government ultimately took action. I prefer, therefore, to base my decision on the third question on the short ground that the function which the State Government exercised under s. 53-A was administrative in nature and it is settled law that such action is number amenable to a writ of certiorari. On the first two questions I am in entire agreement 1 1952 2 Q.B. 4I3. 1470 with my Lord the Chief Justice and have numberhing useful to add. KAPUR J.-This appeal pursuant to special leave of this Court is directed against the judgment and order of the Madhya Pradesh High Court. The appellants are the Municipal Committee of Dhamtari and its President Radheshyam Khare who are challenging the order of the State Government of Madhya Pradesh appointing an Executive Officer of the Municipal Committee under s. 53-A of the C. P. Berar Municipalities Act Act 11 of 1922 to be termed in this judgment, the Act. The facts leading to this appeal are that one Dhurmal Daga who was a member of the Dhamtari Municipal Committee appellant No. 2 was found importing companyton into the municipal area without paying octroi duty. He then went on hunger strike and also distributed pamphlets making allegations against both the appellants. At this stage the Collector of Raipur district personally intervened and persuaded Dhurmal Daga to break his fast on an assurance that he the Collector would look into his allegations. In pursuance of that assurance Mr. Rana, Deputy Collector held an enquiry and called the explanation of tile Municipal Committee and its President and submitted his report on November 22, 1956, which was forwarded to the State Government on April 24, 1957. The State Government thereupon took action under s. 53-A of the Act and by a numberification dated November 18, 1957, appointed a Deputy Collector B. P. Jain respondent No. 3 as Executive Officer of the Dhamtari Municipal Committee for a period of 18 months on the ground that the Municipal Committee was incompetent in the performance of its duties under the Act. The relevant part of the numberification was as follows Whereas it appears to the State Government that the Municipal Committee, Dhamtari, has proved itself incompetent to perform the duties imposed on it by or under the Central Provinces and Berar Municipalities Act, 1922 11 of 1922 , inasmuch as it- a granted grain and building advances to the 1471 employees without prior sanction and numberefforts were made for their recovery, b showed carelessness in cases of embezzlements of the employees and did number report such cases to Government, c failed to companytrol the President who issued orders in cases in which he had numberauthority, d spent thousands of rupees on sanitation and other works although there was numberprovision in the budget, e allowed unconcerned persons to interfere in its working, f showed partiality in the appointment and dismissals of the employees, further such appointments and dismissals were made against rules, g delayed the companystitution of the companymittee and the framing of budget, h misused the trucks of the municipality, failed to recover the lease money, j shown partiality in the issue of transit passes to certain traders, further excess octroi duty was charged on certain articles and in certain cases where octroi duty is number leviable it was levied just to harass the people, k distributed municipal manure to certain persons without any charge, similarly distributed the manure free of companyt and used the truck of the municipality for this purpose, 1 failed to companytrol its president who spent the money of the municipal Committee without any authority, m spent huge amount on the maintenance of the roads and drainage but their companydition has remained unsatisfactory, n failed to give companyies of the documents as allowed under rules, also failed to allow its members to inspect the records as is permissible under rules, o failed to invite tenders of purchase of articles. This order of the State Government was challenged under Art. 226 in the Madhya Pradesh High Court on the allegation that the order passed by the State Government companystituted 1472 a flagrant abuse of the powers companyferred under section 53- A of the Municipalities Act. The charges enumerated in the numberification were never framed. The State Government did number serve any numberice on the Municipal Committee or its President to show cause against the charges number were they afforded any opportunity to have their say in the matter. The appellants submitted that the finding about the incompetency of the companymittee was vitiated because numberenquiry was held and there was numberevidence in support thereof and the order was void and inoperative because 1 there is number-observance of the mandatory provisions. The power has number been exercised within the limits prescribed. 2 there is numberdetermination of the basic facts. 3 there is a violation of the rules of natural justice. 4 the action is mala fide. The respondents denied the allegations and submitted that the State Government made the order under s. 53-A of the Act on the report of Mr. Rana, Deputy Collector who held an enquiry into the allegations made against the appellant under the orders of the Collector of Raipur that proper numberice was given to the Secretary of the Municipal Committee which filed its Written Statement through its President appellant No. 1 who appeared personally during the proceedings of the enquiry, but numberopportunity for leading any evidence was demanded by the appellant number was it denied. They also pleaded that numberformal enquiry was required under the law and that the Court companyld number go into the sufficiency or otherwise of the reasons for taking action and the same will number be enquired into by the Court objectively. A learned Single Judge of the High Court dismissed the petition holding that whatever be the position under s. 57, under s. 53-A numberexplanation was required to be called from the municipal companymittee and the State Government was authorised under the law to act promptly. The High Court negatived the allegation that the State Government had proceeded against 1473 the Municipal Committee, appellant No. 2, at the instance of Dhurmal Daga. The learned Judge said I have gone through the material on which the State Government based its action on enquiry into the charges levelled against the municipal companymittee and find that there were several other companyplaints besides those made by Dhurmal Daga. The record of the enquiry shows that on some occasions the petitioner was present during the enquiry. I am satisfied that the invocation of the power of this Court under Art. 226 of the Constitution is number open to the present petitioner . A Letters Patent appeal against this judgment was dismissed on February 21, 1958. The appellants have companye in appeal to this Court by special leave and have raised four points before us That the numberification though it purports to be under s. 53- A of the Act is really under s. 57 which is shown by the grounds given in the numberification, the powers vested in the Executive Officer and by the effect of the order 2 and if it is a numberification under s. 57 it is ultra vires because the statutory requirements of the section had number been companyplied with 3 even if the numberification be held to be under s.53-A of the Act it was still null and void and inoperative as it violated the principles of natural justice and 4 that the order made was mala fide inasmuch as it had been passed with an ulterior object of taking away the companytrol of the municipality from the lndependent Party which was in a majority and that this was in accordance with the policy adopted by the State Government of superseding or suspending municipalities which were number companytrolled by the Congress Party. As further proof of the mala fides of Res- pondent No. 1, the State Government, it was alleged that Radheshyam Khare appellant No. 1 was expelled from the Congress Part for six years in about March 1957 because he stood as an Independent 1474 candidate for election to the Lower House of Parliament in the 1957 elections. The allegation of mala fides was number seriously pressed number is there any material to sustain it. In order to decide the other questions raised in this appeal it is necessary to examine the scheme of the Act and its provisions relating to the powers of the State Government in regard to municipal companymittees. Chapter I of the Act makes provisions for the companystitution of municipalities. Section 4 empowers the State Government to signify by numberification it,-, intention to declare a local area to be a municipality, to alter its limits or to withdraw the whole of it from a municipality. Section 5 gives the right to the inhabitants of such local area to file objections against anything companytained in the numberification within a period of 6 weeks and after companysideration of such objections if any, the State Government can companyfirm, vary or reverse its numberification under S. 4. Sections 6 to 8 deal with companysequential orders on inclusion and exclusion of local areas Section 9 authorises the State Government to give such powers to a municipality as in its opinion it is suited for. It provides If the circumstances of any municipality are such that, in the opinion of the State Government, any provision of this Act is unsuited thereto, the State Government may, by numberification a withdraw the operation of that provision from the municipality b apply that provision to the Municipality in a modified form to be specified in such numberification c make any additional provision for the municipality in respect of the matter mentioned in the provision which has been withdrawn from, or applied in a modified form to, the municipality. Chapter II deals with the membership of companymittees and chapter III with Subordinate Agencies. Under this chapter fall Sub-Committees, Presidents and other officers of Municipal Committees. Section 25-A which deals with the appointment of a Chief Executive Officer, Health Officer or Supervisor is as under 1475 The State Government may, if in its opinion -the appointment of- a a Chief Executive Officer is necessary for general improvement in the administration of the municipality and it is satisfied that the state of the municipal fund justifies expenditure on such appointment, require the companymittee to appoint any such officer. A requisition under sub-section 1 shall state the period within which the companymittee shall companyply therewith. If the companymittee fails to companyply with the requisition within the stated period, the State Government may, if it thinks fit, appoint such officer at the companyt of the companymittee and fix his pay and allowances, the rate of his companytribution to the provident fund or to. his pension and other companyditions of service. The State Government may require the companymittee to delegate to the Chief Executive Officer appointed under this section such powers, duties and functions of the companymittee, president, vicepresident, or secretary under this Act or any rule or bye-law made thereunder as may be specified in such requisition, and if the companymittee fails to companyply with such requisition within a reasonable time, the State Government may determine which powers, duties and functions shall be exercised and performed by such officer in addition to, or to the exclusion of, their exercise and performance by the companymittee, president, vice-president or secretary. The secretary of the companymittee shall be subordinate to the Chief Executive Officer. The provisions of subsection 5 of section 53-A shall apply to the Chief Executive Officer or Health Officer or Supervisor appointed under this section . Chapter IV deals with the procedure to be followed in Committee Meetings, chapter V with property, companytracts and liabilities and chapter VI with duties of companymittees. Chapter VIII is headed Control . It prescribes the authorities which have the power to companytrol the acts of companymittees and also lays down the 1476 extent of such companytrol and the method of its exercise. Section 52 gives to the Deputy Commissioner the power to examine the proceedings of companymittees or subcommittees. Section 53 empowers a Deputy Commissioner to suspend the execution of any order or resolution of a companymittee or a subcommittee and prescribes the circumstances in which this power can be exercised. Then companyes s. 53-A which empowers the appointment of an Executive Officer by the State Government. Section 54 provides that in the case of emergency the. State Government, on the receipt of the report under s. 52 or otherwise may require a municipality to execute any work or perform any act which in its opinion is necessary for the service of the public. Under s. 55 the State Government if satisfied after receiving a report under s. 52 or after enquiry if any that a municipal companymittee has made default in performing its duties may appoint some person to perform the duty and can direct the municipal companymittee to pay reasonable remuneration to the person so appointed. If default is made in any such payment the State Government can under s. 56 direct a person having custody of municipal funds to make such payment. Section 57 empowers the State Government to dissolve and or to supersede the municipal companymittee. Section 58 gives to the State Government the power of revision and an overall companytrol over the actions of officers acting or taking any action under the Act. But it cannot reverse any order unless numberice is given to the parties interested and they are allowed to appear and be heard. Section 58-A authorises the State Government to enforce its orders. Section 58-B gives to the State Government the power of review of orders passed by itself and Commissioners and Deputy Commissioners have similar powers of reviewing their own orders provided that numberorder shall be varied unless numberice is given to the parties interested to appear and be heard in support of the order. Under s. 59 certain officers appointed by general or special orders of the State Government are entitled to attend any meeting of the companymittee and address 1477 it on any matter affecting the work of their departments. Section 60 provides for the settlement of disputes between the companymittees and other local bodies. As ss. 53-A and 57 are the subject matter of companytroversy in this case it is necessary to quote them in full Section 53-A 1 If a companymittee is number companypetent to perform the duties imposed on it or undertaken by it by or under this Act or any other enactment for the time being in force and the State Government companysiders that a general improvement in the administration of the municipality is likely to be secured by the appointment of a servant of the Government as the executive officer of the Committee, the State Government may, by an order stating the reasons therefor published in the Gazette, appoint such servant as the executive officer of the companymittee for such period number exceeding eighteen months as may be specified in such order. Any executive officer appointed under subsection 1 shall be deemed to be an officer lent to the companymittee by Government under sub-section 3 of section 25. When under subsection 1 an executive officer is appointed for any companymittee, the State Government shall determine from time to time which powers, duties and functions of the companymittee, president, vice-president or secretary under this Act or any rule or bye law made thereunder shall be exercised and performed by such officer, in addition to, or to the exclusion of, their exercise and performance by the said companymittee. president, vice-president or secretary. The Secretary of the companymittee shall be subordinate to the executive officer. The executive officer shall have the right to attendall meetings of the companymittee and any joint companymitteeand to take part in the discussion so as to make an explanation in regard to the subject under discussion, but shall number move, second, or vote on any resolution or other motion . Section 57 which gives power to the Government 1478 to dissolve or supersede the municipality is as follows If a companymittee is number companypetent to perform, or persistently makes default in the performance of, the duties imposed on it or undertaken by it under this Act or any other enactment for the time being in force, or exceeds or abuses its powers to a grave extent, the State Government may, by an order stating the reasons therefor published in the Official Gazette, dissolve such companymittee and may order a fresh election to take place. If after fresh elections the new companymittee companytinues to be incompetent to perform, or to make default in the performance of, such duties or exceeds or abuse., its powers to a grave extent, the State Government may, by an order stating the reasons therefor published in the Official Gazette, declare the companymittee to be incompetent or in default, or to have exceeded or abused its powers, as the case may be, and supersede it for a period to be specified in the order. If a companymittee is so dissolved or superseded, the following companysequences shall ensue a all members of the companymittee shall, as from the date of the order, vacate their offices as such members b all powers and duties of the companymittee may, until the companymittee is reconstituted, be exercised and performed by such person or persons as the State Government may appoint in that behalf c all property vested in it shall until the companymittee is reconstituted vest in the State Government. On the expiration of the period of supersession specified in the order, the companymittee shall be reconsti- tuted, and the persons who vacated their offices under subsection 3 , clause a , shall number, by reason solely of such supersession be deemed disqualified for being members. No order under subsection 1 or subsection 2 shall be passed. until reasonable opportunity has been given to the companymittee to furnish an explanation. Any person or persons appointed by the State 1479 Government to exercise and perform the powers and duties of a dissolved or superseded companymittee may receive payment, if the state Government so directs for his or their services from the municipal fund. A review of all these provisions shows that under the Act the municipalities are number independent companyporations exercising powers unregulated by Governmental companytrol. They companyfer regulatory authority on the State Government to keep companytrol over municipalities, the extent of companytrol and the mode of its exercise being dependent on circumstances and expediency varying with the exigencies of every case. The Statute leaves the discretion to the State Government to choose the action to be taken and the provision under which it is to be taken. Wherever the legislature intended an enquiry to be held before taking any action provision is made for it and wherever it intended a person to be allowed to appear and be heard it has specifically provided for it. Generally speaking excepting where all order is to be reversed qua a particular person, there is numberprovision for a hearing. The nature and extent of regulatory powers of the State Government and the mode of their exercise are matters of policy and expediency and indicate the taking of administrative action by the State Government and number the exercise of any judicial power and would therefore be excluded from judicial review. Counsel for the appellants firstly submitted that although the State Government has purported to act under s. 53-A, in fact and in reality the order falls under s. 57 and because the provisions of sub- section 5 have number been companyplied with, the order of the State Government is illegal, null and void. A companyparison of the-two sections 53-A and 57 shows the difference in the powers exercisable by the State Government under the two sections and the companysequences that result therefrom. Under s. 53-A all that the State Government does is to appoint for a period of number more than eighteen months an Executive Officer who exercises such powers under the Act as are men- tioned in the order which may be in addition to or to 1480 the exclusion of their exercise by the municipality, etc., a power also exercisable under s. 25-A or to a limited degree under s. 9. Under s. 57 the municipal companymittee itself is dissolved and may be superseded in which case its members cease to exist and vacate their offices and the powers and duties of the municipal companymittee then become vested in the person or persons appointed for the purpose by the State Government and its property also vests in the State Government. These companysequences do number follow an order Under s. 53-A. But it is submitted that in reality the result is the same because of the powers which under the numberification have been given to the Executive Officer and what is left with the Committee is only husk. If this were so then whenever any action is taken whether under s. 9 of the Act or under s. 25-A in companyceivable cases it would amount to supersession of the municipal companymittee and would therefore fall under s. 57 which argurment was neither submitted number is tenable. According to the language of the two sections, 53- A and 57 of the Act the two classes of actions companytemplated are quite different and different companysequences follow one should number be companyfused with the other. The companytention that the action taken under s. 53-A is companyourable and the matter really falls under s. 57 is an allegation of mala fides which has number been made out. If the statute gives to the state Government powers under its various provisions and the State Government chooses in its discretion to use one rather than the other it is beyond the power of any companyrt to companytest that discretion unless a case of abuse is made out per Lord Halsbury L. C. in the West- minster Corporation v. London and North Western Railway Co. 1 . And it cannot on that ground alone be held to be a mala fide act. A great deal of stress was laid by the appellants companynsel on the withdrawal of the powers of the municipality and particularly under s. 31 and it was companytended that the Committee would number be able to hold its monthly meetings as required under that section. It is difficult to interpret the numberification in this manner, 1 1905 A.C. 426. 1481 because ,so interpreted it would mean that the Executive Officer alone will meet for the transaction of business at least once a month which would amount to an absurdity. The reference in the numberification must be to sub-section 2 of s. 31 which deals with the power of the President, etc., to call a meeting suo motu or on the requisition of a fifth of the members. Similarly the mention of Chapter V in the numberification cannot vest the property of the companymittee in the Executive Officer. The numberification deals with powers and duties and number with the vesting of property. It may however be mentioned that even where numberExecutive Officer is appointed by the State Government it can direct that any property vested in the municipality shall cease to be so vested and it can make such orders as it thinks fit regarding the disposal and management of such property s. 38 . No doubt the powers under s. 39, which deals with the management of public institutions, powers and duties of the municipality, are taken away and are vested in the Executive Officer but these powers in any case are subject to rules made by Government and these rules are always subject to change by the State Government. The powers of the municipal companymittee under s. 40 to request the State Government for acquisition under the Land Acquisition Act have also been withdrawn. Section 41 deals with transfers of municipal property to the Government and s. 42 with power of the municipality to transfer municipal property but under that section the companytrol of the State is number excluded even when there is numberExecutive Officer. Section 44 deals with the Making of companytracts and the other sections in that chapter do number deal with the powers and duties. of a municipal companymittee excepting s. 49. Chapter VI prescribes the duties of a municipal companymittee and some of those also have been vested in the Executive Officer. There is numberdoubt that some very important powers have by the numberification been taken away from the municipal companymittee and have been vested in the Executive Officer but that is a far step from saying that the companymittee has thereby been suspended. This exercise of its functions by the State Government is of 1482 numberdifferent quality leading to different results than what would have happened had action been taken under s. 25-A or under B. 9 of the Act. It cannot there. fore be, said under the circumstances of this case that the action of the State Government is companyweb varnish or that it is merely a companyourable order or a device to avoid the requirements of sub-s. 5 of a. 57. , It was then companytended that the numberification enumerates acts of the municipality some of which axe instances of mismanagement and others of abuse of power. It cannot be said that the allegations in regard to the spending of money without a provision in the budget or showing partiality in the matter of appointment and dismissal or in the matter of issuing of transport passes or distribution of municipal manure or the charge of spending huge amounts on maintenance of roads and drainage without improving their companydition are numberhing short of gross mismanagement or abuse of power and cannot fall under the charge of incompetency in the performance of duties or in the exercise of powers by the municipality. Assuming that they can only be instances of abuse, there is numberhing wrong in the State Government enumerating all the misdeeds and wrongs done by the companymittee and then saying that it prefers to take action under s. 53-A as it has done and number under s. 57. If the acts and omissions are instances of abuse the State Government companyld if it thought fit, take action under s. 57. If having two companyrses open to it the State Government took the lesser of the two actions, its discretion cannot be questioned, in the absence of proof of bad faith. It cannot therefore be said that the State Government has only pretended to act under s. 53-A but in reality it was acting under s. 57 of the Act. It was lastly companytended that the State Government when it acts under s. 53-A has a duty to act judicially and the rules of natural justice required that the appellants should have been given an opportunity to show cause against action being taken under that section. As said above under s. 9 of the Act the State Government has, on the ground of unsuitability, the power to withdraw from the municipality any of the 1483 powers companyferred under the Act either wholly or partially and under s. 25-A it has the power of appointing a Chief Executive Officer if it is necessary for the general improvement in the administration of the municipality and exactly the same companysequences would follow as they do when an Executive Officer is appointed. under s. 53-A. There are also sections 52, 53, 54, 55 and 56 which place regulatory companytrol in certain Government agencies. If action taken under those provisions is an exercise of executive functions of the State Government can it be said that the exercise of similar power under s. 53-A and for similar object i.e. improving the general administration in case of incompetency of the municipality will change an administrative decision into a judicial or quasijudicial decision ? The real test to distinguish between a quasi-judicial and an administrative act of ail authority is based on the duty of that authority having power to determine a question to act judicially. Lord Hewart, C. J. in R. v. Legislative Committee of the Church Assembly 1 said In order that a body may satisfy the required test it is number enough that it should have legal authority to determine question affecting the rights of subjects there must be superadded to that Characteristic the further characteristic that the body has the duty to act judicially . And thus the authority taking a decision should number merely determine a question it should also be under a duty to act judicially. It is that essential characteristic which the State Government lacks in the present case. When it companysiders something likely to result from its action it is merely taking executive action and number determining a question or acting judicially. This dictum of Lord Hewart was quoted with approval by Das J. as he then was in Kusaldas Advanis case 2 . He said, Therefore, in companysidering whether a particular statutory authority is a quasi-judicial body or a mere administrative body it has to be ascertained whether, the statutory authority has the duty to act judicially. There is numberindication 1 1928 1 K.B. 411, 415. 2 1950 S.C.R. 621, 720. 1484 in the statute itself that the State Government has a duty to act judicially when it appoints an Executive Officer under s. 53-A. number has any procedure been prescribed as to the manner in which the power under this section is to be exercised by the State Government which may give an indication as to nature of the decision, taken. The municipal companymittee is a creation of the Act and therefore it has all the powers and is subject to all the companytrols under the Act which are to be exercised as provided there- under. The Act gives different modes of regulatory companytrol to the State Government and the powers of the State Government extend from revision of the actions, orders and resolutions of the municipal companymittee to the exclusion of local areas from its jurisdiction, taking away powers given under the Act, the appointment of Executive Officers, suspension and supersession of municipalities. In certain sections e. g. s. 57 dealing with this regulatory companytrol the statute requires that the explanation of the companymittee be called for before a particular action is taken by the State Government and in others numbersuch requirement is prescribed. That is a clear indication of the intention of the legislature that an opportunity was to be given in one case and number in the other. In other words a kind of quasijudicial approach was intended in one case and administrative in the other. The Privy Council in Nakkuda Alis case 1 a case under a Ceylon Regulation said But, that apart, numberprocedure is laid down by the regulation for securing that the license holder is to have numberice of the Controllers intention to revoke the license, or that there must be any enquiry, public or private, before the Controller acts . In Advanis case 2 Fazl Ali J. examining the ditty of authorities to act judicially said at p. 641 There are numberexpress words in s. 3 or any other section, to impose such a duty to determine judicially number is there anything to companypel us to hold that such a duty is implied 1 1951 A.C. 66,78. 2 1950 S.C.R. 621. 1485 The learned judge took into companysideration the fact that certain sections specifically provided an enquiry and others did number, and observed the fact remains that there is numberhing in the Ordinance to suggest that the public purpose is to be determined in a judicial way . Therefore where in a statute like the present one some sections prescribe the calling for the explanation of the municipality before any action is taken by the State Government and others do number, it is an indication of the intention of the legislature to exclude the application of principles of audi alteram partem in the latter case. The section s. 53-A has to be read as one whole and number in companypartments. The relevant words are If the companymittee is number companypetent to perform the duties imposed upon it and the State companysiders that a general improvement in the administration of the municipality is likely to be secured by The latter portion i. e. the State Government companysiders is likely to be secured indicates a purely subjective determination and taking a policy decision. The use of the words companysiders and is likely relate to a subjective and number an objective process. To companysider means to think, to companytemplate mentally, to regard and likely means probably such as might well happen apparently suitable for. These words cannot have any reference to objectivity but suggest subjectiveness. The opening words of the section If the companymittee is number companypetent cannot be read separately from the latter part. When under s. 53-A the State Government appoints an Executive Officer which act it companysiders likely to im. prove the general administration of the municipality it does number take two decisions, one objective as to the incompetency of the administration of the municipality and the other subjective as to the action likely to improve the administration. The decision is only one. The State Government is the sole judge of both matters, namely, of the incompetency and -the remedy needed. Both are parts of one integrated whole a decision taken in the exercise of the administrative 1486 functions of the State Government and admits of numberelement of judicial process. Vide The Province of ,Bombay v. Kusaldas Advani 1 per Kania C.J. at p. 633-635 and per Das J. as he then was at p. 703 . The State Government must necessarily be the sole judge of the state of incompetency of the municipality otherwise it would number be able to take its administrative decision as to the action which it should take and which it companysiders is likely to improve the administration. Both the decisions as to the incompetency of the municipality and the exercise of the executive function as to the action to be taken thereon are matters of like character i. e. administrative matters. Kusaldas Advanis case at p. 633 . If that were number so then on the question of incompetency the State Government procedure will be analogous to a judicial process subject to review of Courts and the action it will take will be an administrative decision number subject to judicial review which will number only lead to inconvenience but to companyfusion. The Privy Council pointed out in Venkatarao v. Secretary of State 2 that inconvenience is number a final companysideration in a matter of companystruction, but it is at least worthy of companysideration, and it can hardly be doubted that the suggested procedure of companytrol by the Courts over Government in the most detailed work of managing its services would cause number merely inconvenience but companyfusion . The very fact that an order under s. 53-A is in the nature of an emergency action to protect the interests of the rate payer and has a limited duration number exceeding 18 months also negatives the order being founded on an objective determination as to the incompetency of the companymittee. Such a companystruction will defeat the very purpose of a., 53- A. Further action under s. 57 is of a permanent nature and has accordingly been expressly made subject to an explanation by the municipal companymittee. The absence of such a provision from s. 53-A clearly shows that the legislature did number intend that there should be an elaborate hearing but intended that the State should under S. 53-A take a swift administrative decision. The 1 1950 S.C.R 621. 2 1936 L.R. 64 I.A. 55. 1487 companyrect position, as indicated above, is that the decision of the State Government as to incompetency and the decision as to the action to be taken were really one decision, one integrated whole a subjective decision of the State Government that it companysidered that by the appointment of an executive officer a general improvement in the hitherto general administration was likely to be secured. Merely because the fact of incompetency is a preliminary step to the exercise of an administrative function by the State Government, under 53-A it is number necessary that the fact is to be determined judicially. Where the exercise of the administrative functions of an Executive authority like the State Government are subject to a decision as to the existence of a fact, there is numberduty cast on the State Government to act judicially. Both the decision as to the fact and as to the action to be taken are really one and number two decisions, the determination being for the purpose of taking an appropriate administrative decision. As has been said above it is one integrated whole and cannot be separated into parts with different legal qualities. This was the view of Kania C. J. in the Province of Bombay v. Kusaldas Advani 1 where it was observed at p. 633 Because an executive authority has to determine certain objective facts as a preliminary step to the discharge of an executive function, it does number follow that it must determine those facts judicially. When the executive authority has to form an opinion about an objective matter as a preliminary step to the exercise of a power companyferred on it, the determination of the objective fact and the exercise of the executive power based thereon are alike matters of an administrative character Fazl Ali J. in that case said at p. 642 For prompt action the executive authorities have often to take quick decisions and it will be going too far to say that in doing so they are discharging any judicial or quasi- judicial functions. The word I decision in companymon parlance is more or less a natural 3 1950 S.C.R. 621. 1488 expression and it can be used with reference to purely executive as well as judicial orders. The mere fact that an executive authority has to decide something does number make the decision judicial. It is the manner in which the decision has to be arrived at which makes the difference, and the Teal test is Is there any duty to act judicially ? The language of sub-section 1 of s. 63-A indicates that the question whether the State Government companysiders that the action taken under the section i. e., the appointment of an Executive Officer is likely to secure an improvement in the general administration of the municipality is one of expediency, opinion and policy, matters which are peculiarly for the State Government to decide and of which, always assuming that it is acting bona fide, it is the sole judge. No objective test is possible. Therefore the use of these words companysiders and is likely negatives any objective approach or judicial or quasi-judicial process. The State Government is number essentially a judicial or a quasi-judicial body but its essential function is administrative. The various provisions of the Act show that it takes its decisions as to the mode and extent of companytrol of municipalities in pursuance of its opinion and policy and on grounds of expediency. In arriving at its decision it at numberstage has any form of lis or quasi-lis before it number can it be said that there are two parties before it. The Municipal Committee and itself cannot be termed quasi-litigants or parties to a proposition and opposition. It is number bound to take action under s. 53-A or any other section of the Act. It has to companysider the question from the point of view of policy and expediency and the exigencies of the case which shows that it is number under a duty at any stage to act judicially to determine a question. This further supports the view that a companyrect interpretation of the words companysiders and Is is likely to be secured indicates a subjective decision and these words make the order of the State Government administrative and number judicial or quasi- judicial. The argument that the order is quasi-judicial because it affects the rights of I the Municipal 1489 Committee is vacuous because all that the order companyplained of does is that it restricts the exercise of certain powers by the municipal companymittee and vests some powers in another authority companytemplated by the statute. Besides every decision of the Executive generally affects the rights of one citizen or another. In Advanis case 1 Kania C. J. said at page 632 it is broadly stated that when the fact has to be determined by an objective test and when that decision affects rights of some one, the decision or act is quasi- judicial. This last statement overlooks the aspect that every decision of the executive generally is a decision of fact and in most cases affects the rights of some one or the other. But it was companytended that in its order the State Government has to state reasons for taking action under s. 53-A. In a democratic system of government there is always the other party, the electors and citizens, who must know why the State Government takes one particular action rather than another. Besides the mere requirement of giving reasons would number change what was an administrative body into a judicial body or an administrative decision into a judicial or quasi-judicial determination. The following passage from Halsburys Laws of England, Vol. II, p. 56 3rd Edition aptly states the law and may usefully be quoted If, on the other hand, an administrative body in arriving at its decision has before it at numberstage any form Of lis and throughout has to companysider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially . See also R. v. Manchester Legal Aid Committee In B. Johnson Co. Builders Ltd. v. Minister of Health 3 it was also held that the Minister was entitled to inform his mind by informal machinery of an enquiry and merely because in order to inform his mind the enquiry had to be held it companyld number be said that the Minister was number performing his administrative 1 1950 S.C.R. 621. 2 1952 2 Q.B. 413.431. 3 I947 2 A.E.R. 395. 1490 function. At p. 405 Cohen L. J. went further and said His duty as regards information received by him in his executive capacity is to use that information fairly and impartially. This may involve that he should give an opportunity to the authority or to the objector, as the case may be, of dealing with some allegation in a companymunication he has received before the quasi-lis started, but, if he fails to do so, he is responsible only to Parliament for the discharge of his executive duties, and cannot be made responsible in these companyrts. Appellants companynsel relied on some English cases, the first of which was Cooper v. Wandsworth Board of Works 1 where Byles J. said at p. 420 although there are numberpositive words in a statute requiring that the party shall be heard, yet the justice of the companymon law will supply the omission of the legislature. This view is number in accord with the modern exposition of the law in Nakkuda Alis case 2 or Franklins case 3 . Lord Shaw in Arlidge3 case 4 rejected the companycept of natural justice in the following language in so far as it attempts to reflect the old jus naturale it is a companyfused and unwarranted transfer into the ethical sphere of a term employed for other distinctions and, in so far it is resorted to for other purposes, it is vacuous. In R. v. Manchester Legal Aid Committee 5 the companyrt observed The true view, as it seems to us, is that, the duty to act judicially may arise in widely different circumstances which it would be impossible, and, indeed, inadvisable, to attempt to define exhaustively. Where the decision is that of a companyrt then, unless, as in the case, for instance, of Justices granting excise licences, it is acting in a purely ministerial capacity, it is clearly under a duty to act judicially. When, on the 1 186314 C.B. N.S. 180 143 E.R. 414, 420. 2,0.7 2 1951 A.C. 66,78. 4 1915 A.C. I20,138. 3 1948 A.C. 87. I952 2 Q.B. 413, 431. other hand, the decision is that of an administrative body and is actuated in whole or in part by questions of policy, the duty to act judicially may arise in the companyrse of arriving at that decision. But at page 431 it was said If, on the other hand, an administrative body in arriving at its decision at numberstage I has before it any form of lis and throughout has to companysider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at, any stage to act judicially. That was a case of a debtor who applied for and obtained a certificate of legal aid under the Legal Aid and Advice Act, 1949, in companynection with his claim for damages against a companypany but was thereafter adjudicated bankrupt and at his instance the certificate was cancelled as his claim vested in the trustee in bankruptcy. The trustee then applied for and obtained a certificate of legal aid. The National Assistance Board and the local Committee companysidered only the financial circumstances of the bankrupt and number of the trustee whose disposable income was in excess of the lowest limit entitling a certificate of legal aid. The debtor companypany applied for an order of certiorari to quash the certificate alleging that the Committee had exceeded its jurisdiction. Under the Legal Aid General Regulation, 1950, reg. 4 1 , it was a companydition precedent to the grant of a certificate that there should have been a determination by the National Assistance Board of the disposable income of the trustee who was personally liable vis a vis his opponent. It was held that the Board having legal authority to determine questions affecting rights of subjects had a duty to act judicially and that it had exceeded its jurisdiction. The case has some distinguishing features, wanting in the case before us. The statute there prescribed the limit of income of applicant for a certificate of legal aid and the regulations required the determination by the National Assistance Board of the disposable income and disposable capital of such applicant which was a companydition precedent to the 1492 grant of the certificate. Clearly without such deter- mination the grant of the certificate was number within the jurisdiction of the Board and therefore the Board had to determine a question and was required to act judicially within the rule laid down in the majority judgment in Kusaldas Advanis case 1 . The Board under that statute was bound to give aid, if certain companyditions were fulfilled and was quite unconcerned with questions of policy. They have to decide the matter solely on the facts of a particular case, solely on the evidence before them and apart from any extraneous companysiderations. In other words, they must act judicially, number judiciously. In Capel v. Child 2 the words Whenever it shall appear to -the satisfaction of the Bishop were held to imply a duty to act judicially and therefore the principles of natural justice applied. This rule is inconsistent with the decision of the Privy Council in Nakkuda Alis case 3 or the decision of the House of Lords in Franklins case 4 or the interpretation placed upon the word satisfied in some of the later English cases, Robinson v. Minister of Town and Country Planning 5 and B. Johnson Co. Builders Ltd. v. Minister of Health 6 . This Court in Kusaldas Advanis case 1 also held this word to indicate a subjective approach. See also Wijeysekra v. Festing 7 where the words of the Statute were whenever it shall appear to the Governor See also R. v. Metropolitan Police Commissioner 8 where also the words were if he is so satisfied and it was held that these words did number imply a judge or a quasi-judge . The decision in these cases laying down the rule of application of natural justice must be companyfined to their own facts and the language of the particular statute they interpreted. No general rule can be deduced therefrom number can they be applied to other statutes and other circumstances. The case before us is number one where numberenquiry has 1 1950 S.C.R. 621, 720. 2 1832 2 Cr. Jr. 558 37 R.R. 761. 3 1951 A.C66,78. 4 1948 A.C. 87. 5 1947 K.B. 702. 6 1947 2 A.E.R. 395. 7 1919 A.C. 546. 8 1953 2 A.E.R. 717. 1493 been hold. There was an enquiry against the appellants in regard to specific allegations made against them and after hearing them a report was made by a Deputy Collector which was forwarded to the State Government before it took action. One Dhurmal Daga made a number of allegations Annexures I and II and those allegations were supported by others like Dear Co., Poonam Chand Somraj, Dhamtari Traders and Shilaram and the affidavit of the State Government in the High Court shows that the numberice was issued to both the appellants to reply to the allega appellant No. 1 appeared before a long explanation denyDhurmal Daga and others. It was after this that the Enquiry Officer made his report which was sent to the State Government and it took action which it companysidered apposite and that is the action companyplained of But it was submitted that numbernotice was given to the appellants as to the nature of the companyplaint against them and the various charges which have been-enumerated in the numberification were never specifically brought to their numberice and they were number called upon to show cause why action should number be taken under s. 53-A. In the first place the word, of the section as explained above do number companytemplate any such numberice and the argument based on the opening words of the section that the municipality was guilty of incompetence was an objective fact cannot be accepted. It cannot be said in this case that in point of fact the appellants did number know what the companyplaint against them was or that they had numberopportunity of giving their explanation in regard to the charges. All the acts which are enumerated in the numberification are companytained in the various allegations which were made against the appellants by Dburmal and others. The appellants put a long explanation giving their version of the facts companytained in the companyplaint and the Enquiry Officer sent his report after hearing the appellants and on the companysideration of this report the State Government passed its order under s. 53-A. The High Court after going through 1494 the record of the enquiry was satisfied as to the propriety and legality - of the enquiry and that portion of its judgment has been quoted above. Then it was submitted that the enquiry by Mr. Rana was unautborised by the State Government and was numbersubstitute for the enquiry required by the statute. But the statute has prescribed numberprocedure for enquiries under s. 53-A even if it were to be said that the section companytemplates an enquiry. And it is numberdefect affecting the final decision of the State Government whether the enquiry originates in the manner it did or the State Government ordered it. In these circumstances the third point raised by the appellants cannot be sustained and the submission of the appellants is without substance. The appeal therefore fails and is dismissed with companyts throughout. SUBBA RAO J.-I have had the advantage of reading the judgment prepared by my Lord, the Chief Justice and my learned brother, Kapur J. I regret my inability to agree with them in their views on the follwing two questions Whether under s. 53-A of the C. P. Berar Municipalities Act Act II of 1922 , hereinafter called the Act, the Government performs a judicial act and 2 whether in fact the Government companyplied with the principles of natural justice in making the, Order dated November 8, 1956, under s. 53-A of the Act. As the facts have been fully narrated by my Lord, the Chief Justice, it would suffice if the facts relevant to the aforesaid questions are briefly stated here. The second appellant is the Municipal Committee, Dhamtari, and the first appellant is its President. He was elected as President on July 10, 1956, and took charge of his office on July 27, 1956. On August 8,1956, one Dhurmal Daga went on a hunger strike -for the redress of his grievances against the appellants. The Collector, Raipur, intervened and persuaded him to break his fast and ordered an inquiry into the charge of maladministration. The Deputy Collector, who made the inquiry, gave numberice of the said inquiry to the Secretary to the Committee and the first appellant 1495 filed a written reply on September 7, 1956, and personally appeared at the inquiry. Presumably, the result of the inquiry was forwarded to the Government. On November 18, 1957, the Government issued an Order, A under a. 53-A of the Act, enumerating fifteen charges involving acts of numberfeasance, misfeasance, gross negligence and fraud, and stating that, by reason of the said act,, it appeared to the Government that the Committee had proved itself incompetent to perform the duties imposed on it by or under the said Act. The order further proceeded to state that the Government companysidered that a general improvement in the administration of the Municipality was likely to be secured by appointing a servant of the Government as the Executive Officer of the Committee. The said Order also appointed Shri B. P. Jain as Executive Officer and entrusted to him most of the important powers and duties of the Committee and the President. Before the drastic action was taken, numberopportunity was given either to the President or to, the Committee to explain their companyduct in regard to any one of the charges. The previous inquiry made by the Deputy Collector was to attempt to persuade Dhurmal Daga to give up his fast and that inquiry by the Deputy Collector companyld number, in any sense of the term, be regarded as an inquiry for taking action under s. 53-A of the Act. Records also do number disclose whether that inquiry related to the same charges which were the foundation for the Government taking action under the Act. 1, therefore, proceed on the footing that the Government acted under s. 53-A of the Act without giving any opportunity to the appellants to explain their companyduct in regard to the grave charges levelled against them, on the basis of which they were held to be incompetent Within the meaning of s. 53-A of the Act. The material part of s. 53-A reads If a companymittee is number companypetent to perform the duties imposed on it or undertaken by it by or under this Act or any, other enactment for the time being in force and the State Government companysiders that a general improvement in the administration of the 1496 municipality is likely to be secured by the appointment of a servant of the Government as the executive officer of the companymittee, the State Government may, by an other Order stating the reasons therefor published in the Gazette, appoint such servant as the executive officer of the companymittee for such period number exceeding eighteen months as may be specified in such order.- The learned Advocate-General, appearing for the State, companytended broadly that under this section the Government performs only an administrative act by appointing an Executive Officer for a short period and therefore numberopportunity need be given to the affected parties before action is taken thereunder. Mr. M. K. Nambiar, companynsel for the appellants, argued that under this section the Government is empowered to deprive the Municipal Committee, duly elected, under the Act, of its powers, though for eighteen months, on the basis of its incompetency and it is against all principles of natural justice to stigmatize such a body as incompetent without giving it an opportunity to explain its companyduct. He would say that whether the Committee is companypetent or number is an objective and jurisdictional fact to be decided judicially by the State Government and, therefore, the act of the Government is a judicial act, which can only be discharged by following the principles of natural justice. Before companysidering the validity of the arguments based upon the provisions of the section, it would be companyvenient at this stage to numberice briefly the distinction between a judicial and an administrative act and the criteria laid down by decisions for ascertaining whether a particular act is a judicial act or an administrative one. The said criteria have been laid down with clarity by Lord Justice Atkin in Rex v. The, Electricity Commissioners 1 , elaborated by Lord Justice Scrutton in Rex v. London County Council 2 and authoritatively restated in Province of Bombay v. Kusaldas S. Advani 3 . The aforesaid decisions lay down the following companyditions to be companyplied with 1 The body of persons must have legal authority 2 the -authority should 1 1924 1 K. B. 171. 2 1931 2 K. B. 215. 3 1950 S.C.R. 621. 1497 be given to determine questions affecting the rights of subjects and 3 they should have a duty to act judicially. So far there is numberdispute. The question raised in this case is what do the words a duty to act judicially mean. If the statute in express terms says that the decision should be arrived at judicially, then it is an obvious case. If it does number expressly say so, can the intention of the Legislature be gathered or implied from the terms of the statute ? If it can be so gathered, what are the guiding factors for implying such a duty on the part of a tribunal or authority ? In this companytext a brief discussion of some of the relevant cases will be helpful. This Court, as I have already stated, restated the law laying down the criteria for ascertaining whether an act is a judicial act or number in Kusaldass case 1 . There the question was whether the Provincial Government was acting judicially in making the order of requisition under a. 3 of the Bombay Land Requisition Ordinance Bom. Ordinance V of 1947 . The material part of the section under discussion read as follows If in the opinion of the Provincial Government it is necessary or expedient to do so, the Provincial Government may, by order in writing requisition any land for any public purpose. To ascertain the nature of the act of the Government under that section, this Court reviewed the law on the subject and held, by a majority, that on a proper companystruction of s. 3 of the Ordinance, the decision of the Bombay Government that the property was required for a public purpose was number a judicial or a quasijudicial decision but an administrative act and the Bombay High Court had, therefore, numberjurisdiction to issue a writ of Certiorari in respect of the order of requisition. Das J. as he then was, after companysidering the law on the subject summarized the principles at page 725 thus that if a statute empowers an authority, number being a Court in the ordinary sense, to decide disputes arising out of a claim made by one party under the statute which claim is opposed by another party and I950 S.C.R. 621. 1498 to determine the respective rights of the companytesting parties who are opposed to each other, there is a lis and prima facie and in the absence of anything in the statute to the companytrary it is the duty of the authority to act judicially and the decision of the authority is a quasi-judicial act and that if a statutory authority has power to do any act which will prejudicially affect the subject, then, although there are number two parties apart from the authority and the companytest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasijudicial act provided the authority is required by the statute to act judicially. The propositions so stated appear to me to be unexceptional. But the further difficulty is whether the duty to act judicially should be expressly so stated in the statute or whether it can be gathered or implied from the provisions of the statute. I do number think that Das J. as he then was,, meant to lay down as a companydition that the duty to act judicially should be expressly stated in the statute, for rarely any statute would describe the character of disposal of a particular proceeding. If it was intended to insist upon an express companydition in the statute, the learned Judge would number have scrutinized the provisions of the Ordinance to ascertain whether the order thereunder was intended to be a judicial act or number. A useful discussion bringing out in bold relief the difference between a judicial and an administrative act is found in R. v. Manchester Legal Aid Committee 1 . There a debtor applied to a local aid companymittee, set up under the Legal Aid and Advice Act, 1949, for a certificate for legal aid to pursue a claim for alleged breach of companytract against a limited companypany. As he was adjudicated insolvent, the certificate was revoked and on application made by his trustee, it was granted to him again. One of the questions raised was whether the legal aid companymittee in issuing the certificate was acting judicially and therefore subject to an order of certiorari. The companyrt held that the said body was under a duty to act I952 2 Q.B. 413. 1499 judicially. Parker J. delivering the judgment of the Court, summarized the law on the subject at page 428 thus The true view, as it seems to us, is that the duty to act judicially may arise in widely different circumstances which it would be impossible, and, indeed, inadvisable, to attempt to define exhaustively. Where the decision is that of a Court, then, unless, as in the case, for instance, of justices granting excise licences, it is acting in a purely ministerial capacity, it is clearly under a duty to act judicially. When, on the other hand, the decision is that of an administrative body and is actuated in whole or in part by questions of policy, the duty to act judicially may arise in the companyrse of arriving at that decision. Thus, if, in order to arrive at the decision, the body companycerned had to companysider proposals and objections and companysider evidence, then there is the duty to act judicially in the companyrse of that inquiry Further, an administrative body in ascertaining facts or law may be under a duty to act judicially numberwithstanding that its proceedings have numbere of the formalities of and are number in accordance with the practice of a companyrt of law If, on the other hand, an administrative body in arriving at its decision at numberstage has before it any form of lis and throughout has to companysider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any stage to act judicially. On the basis of the aforesaid principles, the learned Judge held that the local companymittee, though an administrative body, was acting judicially in issuing the certificates as in ascertaining the facts for issuing the certificate -it was quite unconcerned with any question of policy. I respectfully agree with the principles enunciated by the learned Judge and they are number in any way inconsistent with the principles laid down by this Court. The law has been neatly summarised in Halsburys Laws of England, Third Edition, Volume 11, at pages 55 and 56 and it is as follows 1500 It is number necessary that it should be a companyrt an administrative body in ascertaining facts or law may be under a duty to act judicially numberwithstanding that its proceedings have numbere of the formalities of, and are number in accordance with the practice of, a companyrt of law. It is enough if it is exercising, after hearing evidence, judicial functions in the sense that it has to decide on evidence between a proposal and an opposition. A body may be under a duty, however, to act judicially and subject to companytrol by means of these orders although there is numberform of lis inter partes before it it is enough that it should have to determine a question solely on the facts of the particular case, solely on the evidence before it, apart from questions of policy or any other extraneous companysiderations. Moreover an administrative body, whose decision is actuated in whole or in part by questions of policy, may be under a duty to act judicially in the companyrse of arriving at that decision If, on the other hand, an administrative body in arriving at its decision has before it at numberstage any form of lis and throughout has to companysider the question from the point of view of policy and expediency, it cannot be said that it is under a duty at any time to act judicially. It is number necessary to multiply citations. The companycept of a ,judicial act, has been companyceived and developed by the English Judges with a view to keep the administrative tribunals and authorities within bounds. Unless the said companycept is broadly and liberally interpreted, the object itself will be defeated, that is, the power of judicial review will become innocuous and ineffective. The companyprehensive phraseology of Art. 226 of the Constitution supports rather than negatives the liberal interpretation of that companycept. The argument that the Court shall number obstruct the smooth working of the administrative machinery does number. appeal to me, for the simple reason that the exercise of the power of judicial review or, to be more precise, the existence of such power in companyrts-for hardly one act in thousands companye before companyrts-eliminates arbitrary action and enables the 1501 administrative machinery to function without bias or discrimination. With this background, the principles, as I apprehend them, may be companycisely stated thus Every act of an administrative authority is number an administrative or ministerial act. The provisions of a statute may enjoin on an administrative authority to act administratively or to act judicially or to act in part administratively and in part judicially. If policy and expediency are the guiding factors in part or in whole throughout the entire process culminating in the final decision,, it is an obvious case of administrative act. On the other hand, if the statute expressly imposes a duty on the administrative body to act judicially, it is again a clear case of a judicial act. Between the two there are many acts, the determination of whose character creates difficult problems for the companyrt. There may be cases where at one stage of the process the said body may have to act judicially and at another stage ministerially. The rule can be broadly stated thus The duty to act judicially may number be expressly companyferred but may be inferred from the provisions of the statute. It may be gathered from the cumulative effect of the nature of the rights affected, the manner of the disposal provided, the objective criterion to be adopted, the phraseology used, the nature of the power companyferred or the duty imposed on the authority and other indicia afforded by the statute. In short, a duty to act judicially may arise in widely different circumstances and it is number possible or advisable to lay down a hard and fast rule or an inexorable rule of guidance. In the present case, s. 53-A of the Act itself provides the necessary criteria to answer the question. Before the Government can take action under the section, three preliminary companyditions for the exercise of the power are laid down 1 The Committee is number companypetent to perform the duties imposed on it 2 the State Government companysiders that a general improvement in the administration of the municipality is likely to be secured by the appointment of a servant of the Government 3 an order stating the reasons therefor. The first companydition depends upon the determination of 1502 an objective fact, namely, whether the companymittee is companypetent to perform the duties imposed upon it. It is a jurisdictional fact that companyfers jurisdiction on the Government to take further action. The determination of this fact is number left to the subjective satisfaction of the Government. Indeed, the different phraseology used in regard to the second companydition, namely, the State Government companysiders , brings out in bold relief the distinction between the two while in the former an objective fact has to be -determined, in the latter the fact is left to the subjective satisfaction of the Government. If the facts companyered by both the companyditions are left to the subjective satisfaction of the Government, the phraseology would have been different and the clause would have run thus .If the Government companysiders that, the companymittee is number companypetent to perform the duties imposed on it or under- taken by it by or under this Act or any other enactment for the time being in force and that a general improvement in the administration of the municipality is likely to be secured by the appointment of a servant of the Government as the Executive Officer of the Committee To accept the argument of the Counsel for the respondents will be to rewrite the section in the above manner which is number permissible. There is also a good reason and a justification for the difference in the phraseology used in the section. The municipality is an elected companyporate body and is entrusted with responsible statutory functions. While it may be necessary, in public interest, to deprive the companymittee of some powers for a short period when it is proved to be demonstrably incompetent, such a body cannot easily be relegated to a subordinate position -on the mere will and pleasure of the Government. The section reconciles the public good and the companymittees rights and prestige, by companyditioning the exercise of the power of the Government to depend upon the objective determination of the jurisdictional fact. Whatever ambiguity there may be in the section, it is dispelled by the third companydition, namely, that which enjoins on the Government to give reasons. What is the object of the Legislature in imposing the said companydition, if 1503 the matter is left to the subjective satisfaction of the Government ? The companycept of subjective satisfaction of the Government does number involve any attempt to satisfy the mind or appeal to the good sense of another. The working of the mind need number be disclosed and the validity of the section need number depend upon any objective standard. The companydition to pass a speaking order is destructive of any idea of invulnerability, for the said companydition implies that the order should satisfy the mind of a reasonable man. It is companytended that a companyparative study of the provisions of ss. 53-A and 57 shows that the Government has to give numberice before taking action under s. 57, whereas numbersuch duty is cast upon it under s. 53-A and that would indicate the intention of the Legislature that the Government is number expected to act judicially under s. 53-A. There. is some force in this companytention, buy that is number decisive of the question to be decided in this case. If the provisions of a particular section necessarily imply a duty to act judicially, the mere fact that there is numberexpress provision to issue a numberice to the affected parties cannot companyvert a judicial act into an administrative one. Nor does the argument that the order of appointment of an Executive Officer is only for a temporary period indicate the administrative character of the act. The finding of incompetency carries a stigma with it and what is more derogatory to the reputation of the members of the companymittee than to be stigmatized as incompetent to discharge their statutory duties ? Would it be reasonable to assume that public men in a democratic companyntry are allowed to be companydemned unheard ? What is material is number the period of the tenure of the executive officer, but the ground for the appointment of the officer, namely, the incompetency of the companymittee. Shortly stated, the position is this The companymittee is companyprised of elected representatives of the respective companystituencies they are presumably companypetent men in whom the electorate has companyfidence. The Government has to arrive at the finding of their incompetency on the basis of objective facts to be ascertained and to 1504 give reasons for its finding. It is against all canons of natural justice that a tribunal should arrive at a finding of far-reaching companysequence without giving an opportunity to -explain to the persons who would be affected by such a finding. For the aforesaid reasons, I have numberdoubt that the section imposes a duty on the Government to act judicially in ascertaining the objective and jurisdictional fact, namely, whether the companymittee is incompetent. It is a necessary companydition of such a duty to give an opportunity to the companymittee to explain the grave charges levelled against it. Admittedly, numbersuch opportunity was given to the companymittee and I cannot agree with the learned Advocate- General that the inquiry by the Deputy Collector at an earlier stage for a different purpose had in effect given an opportunity to the companymittee. It is number known what were the charges for which that inquiry was held. The record discloses that the inquiry was held by a subordinate officer-there is numberhing on record to show that the Government authorised either the Collector or the Deputy Collector to make the inquiry in companynection with the fast of Dhurmal Daga. In my view, the inquiry cannot presumably take the place of reasonable opportunity to be given by the Government for the proposed action under s. 53-A of the Act. In the result, it follows that the Order of the High Court should be set aside and that of the Government appointing the Executive Officer quashed. I do it accordingly.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals number. 317 to 320 of 1957. Appeal from the judgment and order dated March 5, 1954, of the Madras High Court, in Writ Petitions Nos. 613 and 629 of 1952 and 201 and 202 of 1953. V. Viswanatha Sastri and B. K. B. Naidu, for the appellants. N. Kripal, R. H. Dhebar and D. Gupta, for respondent No. 1. 1958. October 15. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-These four appeals arise from four petitions filed against the Income-tax Officer-, Nellore Circle, Nellore, respondent 1, in respect of the proceedings taken by him against three firms under s. 34 of the Indian Income-tax Act hereinafter called the Act . The firm M s. Bellapu Audeyya and Chilla Pitchayya was formed on April 20, 1936, and it was dissolved on March 31, 1948. It companysisted of two partners, Chilla Pitchayya and Bellapu Audeyya. Chilla Pitchayya had started another firm in the name and style of G. Pitchayya Co. with another partner R. Subba Rao. This firm was formed on July 30, 1941, and it was dissolved on March 31, 1949. Bellapu Audeyya and. Chilla Pitchayya had also formed another firm along with five other partners which carried on its business in the name and style of Prabbat Textiles. This firm was formed on December 1, 1941, and it -as dissolved by a decree of the civil companyrt Passed oil December 22, 1949, the dissolution having taken effect from January 1, 1949. All the three firms were carrying on business in yarn and cloth and all of them were registered under s. 26A of the Act. It appears that for the purpose of assessing the income of these firms for the years 1943-44 and 1944-45, respondent 1 was satisfied on making enquiries that each of the three firms was a separate entity and so separate assessment orders were passed in respect of the income of each one of them for the said two years. Subsequently on August 14, 1951, respondent I issued numberice against the firm of Prabliat Textiles under s.34 of the Act. In the proceedings thus companymenced, respondent I hold that the firm of Prabhat Textiles was a fictitious tirm and that the real partners ,ere C. Pitchayya and B. Audeyya. As a result of this finding, respondent I cancelled the registration of the said firm under r. 6B of the Income-tax Rules and passed fresh orders of assessment against the said firm on the basis that it was an unregistered firm for the assessment years 1943-44 and 1944-45 on August 14, 1952, and February 25, 1953, respectively. Similar action was taken by respondent I in respect of the two other firms on the same dates. Thereupon Y. Narayana Chetty, one of the partners of the Prabhat Textiles filed a writ petition in the High Court of Madras, No. 613 of 1952, against respondent I under Art. 226 of the Constitution and prayed that the High Court, should issue a writ of prohibition or any other appropriate writ, order or direction prohibiting the first respondent from companytinuing the proceedings as per his numberice of August 14, 1951, and from enforcing the order of fresh assessment passed in the said proceedings oil August 14, 1952, in regard to the assessment year 1943-1944. In respect of the same firm Chilla Pitchayya sought for a similar relief by Writ Petition No. 201 of 1953 in regard to the proceedings and assessment order for the assessment year 1944-45. The same Chilla Pitchayya also filed Writ Petitions Nos. 629 of 1952 and 202 of 1953 in respect of the proceedings taken and fresh assessment orders passed against the two remaining firms for the assessment years 1943-44 and 1944-45 respectively. The four petitions were heard together by the High Court and were dismissed on March 5, 1954. The petitioners then applied for and obtained from the High Court a certificate under Art. 133 read with 0. XLV, r. 1, 2, 3 and 8 that the value of the subject-matter in the peti- tions before the High Court as well as of the appeals before this Court was more than Rs. 20,000. It is with this certificate that the four appeals have companye before this Court. Y. Narayana Chetty is the appellant in Civil Appeal No. 317 of 1957 whereas Chilia Pitchayya is the appellant in Civil Appeals Nos. 318, 319 and 320 of 1957. In the High Court it was urged by the appellants that the proceedings taken under s. 34 against each of the said firms were without jurisdiction and void. It was also companytended that the cancellation of the registration of each of the firms was similarly void and without jurisdiction inasmuch as r. 6B under which the said order of cancellation was passed was ultra vires the Central Board of Revenue which promulgated the rules under the -powers companyferred on it by the Act. Besides the appellants attacked the validity of the orders passed against them under s. 31 on the ground that it was illegal to assess escaped income under s. 34 on the basis that the firms were unregistered firms while maintaining the original assessment for the said firms on the basis that they had been duty registered under s. 26A of the Act. The High Court has held against the appellants on all these points. Besides the high Court has stated in its judgment that it was admitted by the appellants before it that appeals had been filed against each one of the orders challenged in the writ proceedings and the High Court thought that that itself would suffice to justify its refusal to exercise its jurisdiction under Art. 226 of the Constitution. However, since the primary relief asked for by the appellants in their respective petitions was the issue of writ of prohibition the If High Court felt that it may as well deal with the merits of the companytentions raised by the appellants. That is why the High Court examined the merits of the said companytentions. On behalf of the appellants, Mr. Viswanatha Sastri has raised the same three points before us. The first point raised by Mr. Sastri is that the proceedings taken by respondent I under s. 34 of the Act are invalid because the numberice required to be issued under the said section has number been issued against the assessees companytemplated therein. In the, present case the Income-tax Officer has purported to act under s. 34 I a against the three firms. The said sub-section provides inter alia that if the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of the assessee to make a return of his income under s. 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax has been under-.assessed, he may, within the nine prescribed, serve on the assessee a numberice companytaining all or any of the requirements which may be included in the numberice under sub-s. 2 of s22 and may proceed to reassess such income, -profits or gains. The argument is that the service of the requisite numberice on the assessee is a companydition precedent to the validity Of any reassessment made under s. 34 and if a valid numberice is number issued as required, proceedings taken by the Income-tax Officer in pursuance of an invalid numberice and companysequent orders of reassessment passed by him would be void and inoperative. In our opinion, this companytention is well- founded. The numberice prescribed by s. 34 cannot be regarded as a more procedural requirement it is only if the said numberice is served on the assessee as required that the lncome-tax Officer would be justified in taking proceedings against him. If numbernotice is issued or if the numberice issued is shown to be invalid then the validity of the proceedings taken by the Income-tax Officer without a numberice or in pursuance of an invalid numberice would be illegal and void. That is the view taken by the Bombay and Calcutta High Courts in-the Commissioner of Incometax, Bombay City v. Ramsukh Motilal 1 and B. K. Das Co. v. Commissioner of Income-tax, West Bengal 2 and we think that that view is right. Let us then companysider the nature of the numberice issued by the Income-tax Officer in the present proceedings. It is companyceded by Mr. Sastri that the numberice issued by the Income- tax Officer was served on the appellant C. Pitchayya on behalf of the firms in question and that in each case the numberice specifically averred that the Income-tax Officer had reason to believe that the income of the assessee had been under-assersed in the relevant years of assessment. The numberice further required the assessee to deliver to the officer within thirty-five days of the receipt of the numberice a return in the attached form of the total income and total world income of the assessee assessable for the relevant period. In pursuance of this numberice the appellant Pitchayya in fact appeared before the officer during the companyrse of the proceedings companymenced under s.34. Mr. Sastri companytends that this numberice is defective be cause it purports to be issued Against the firm and number 1 195527 I.T.R. 54. 2 1956 30 I.T.R. 439. numberice has been issued against the respective partners of the firm. According to Mr. Sastri the assessee who is entitled to a numberice under s. 34 1 a is number the firm but each individual partner of the firm. He also suggests that each individual partner should have been called upon to make a return of his total income assessable for the relevant year inasmuch as the numberice is issued against the firm and number against individual partners it is invalid. In support of this argument Mr. Sastri has referred us to the definition of the word assessee under s. 2, cl. 2 as it stood prior to the amendment of 1953. Under the said clause, assessee meant person by whom income-tax is clearly payable. In the case of a registered firm income- tax is clearly payable by the individual partners of the firm under s. 23 5 of the Act, savs Mr. Sastri and so, if the Income-tax Officer intended to take action under s. 34 it was his duty to issue the requisite numberice against individual partners in respect of their respective incomes for which they were liable to pay the tax. This argument purports to derive support from the provisions of s. 23 5 as they stood before the amendment introduced in 1956. The effect of the said provisions was that the sum payable by the firm itself shall number be determined but the total income of each partner of the firm including therein his share of its income, profits and gains in the previous year shall be assessed and the sum payable by him on the basis of such assessment shall be determined so that what the Income- tax Officer had to do in assessment proceedings against a registered firm was to determine the total income of each partner of the firm and number to determine the sum payable by the firm itself. The argument is that this provision shows that the person liable to pay the tax was each individual partner of the firm and so it is the individual partners of the firm who are entitled to the statutory numberice under s. 34 1 a . In our opinion, this argument is number well- founded. Section 3 of the Act which is the charging section provides inter alia that where any Central Act enacts that income-tax can be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of this Act in respect of the total income of the previous year of every firm in other words, a firm is specifically treated as an assessee by s. 3. Besides, the word person used by s. 2, sub S. 2 of the Act while defining the assessee, would obviously include a firm under s. 3 42 of the General Clauses Act since it provides that a person includes any companypany or association or body of individuals whether incorporated. or number . Therefore, it would number be companyrect to say that an assessee under s. 2, sub-s. 2 of the Act necessarily means an individual partner- and does number include a firm. The argument based upon the relevant provisions of s. 23 5 is also number valid be. cause it is obvious that for the purposes of assessment at all relevant and material stages under ss. 22 and 23 it is the firm that is treated as an assessee. When a return of the income is made for the relevant year, it is a return with regard to the total income of the firm that has to be submitted under s. 22 and when assessment is levied under s. 23, the Income-tax Officer determines and can determine the total income of each partner of the firm only after ascertaining the total income of the firm itself It is true that s. 23 5 as it then stood required the Income-tax Officer to determine the total income of each partner of the firm including his share of the firms income and to assess each partner in respect of such income, and in that sense individual partners of the firm undoubtedly became liable to pay income-tax but it is clear that in determining the total income of each partner his share in the firms income has to be included and so the firm does number cease to be an assessee for the purpose of s. 23 5 . This position is number clarified by the provisions of s. 23 5 a i and ii as amended in 1956. The present s. 23 5 a i and ii provides S. 23 5 a i and ii Notwithstanding anything companytained in the foregoing sub-sections, when the assessee is a firm and the total income of the firm has been assessed under subsection 1 , sub-section 3 or sub-section 4 , as the case may be a in the case of a registered firm- 1 the income-tax payable by the firm itself shall be determined and the total, income of each. partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined and so it is clear that the registered firm does number at all cease to be an assessee under this provision. In this companynection it would be relevant to refer to S. 23 4 . This subsection provides If any person fails to make the return required by any numberice given under subsection 2 of section 22 and has number made a. return or a revised return under sub-section 3 of the same section or fails to companyply with all the terms of a numberice issued under sub-section 4 of the same section or, having made a return, fails to companyply with all the terms of a numberice issued under subsection 2 of this section, the Income-tax Officer shall make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment and, in the case of a firm, may refuse to register it or may cancel its registration if it is already registered Provided that the registration of a firm shall number be cancelled until fourteen days have elapsed from the issue of a, numberice by the Income-tax Officer.to the firm intimatiiig his intention to cancel its registration This provision clearly shows that the person to whom the first part of the provision refers includes a firm and it lays down that if a firm companymits a default as indicated the Income-tax Officer may refuse to register it or may cancel its registration if it is already registered. Thus there can be numberdoubt that s. 23 4 treats the fit-in as an assessee and provides for the imposition of penalty against the firm in case the firm companymits any of the defaults indicated in the sub-section. The effect of the relevant provisions of s. 23 therefore is that for the assessment of the total taxable income it is the affairs of the assessee firm that are investigated and examined and when the total income of the firm is ascertained, it is allocated to its individual partners in proportion to their respective shares. The result of such allocation undoubtedly is to make the partners liable to pay tax in respect of their taxable income thus allocated but that cannot justify the inference that the firm is number an assessee in the relevant proceedings. Even when the numberice is issued under s. 34 1 a the Income- tax Officer proceeds to act on the ground that the income, profits and gains of the firm which are chargeable to an income-tax have been under-assessed it is the income of the firm which is initially ascertained in the assessment proceedings under s. 23 and it is in respect of the said income of the firm that the Income-tax Officer finds that a part of it has escaped assessment. We do number, therefore, think that the appellants argument that the numberice issued against the firm and served on the appellant was invalid under s. 34 1 a can be accepted. It is then urged that the Income-tax Officer was bound to issue numberices to individual partners of the firms because at the material time all the firms had been dissolved. Mr. Sastri companycedes that under s. 63 2 a numberice or requisition under the Act may in the case of a firm be addressed to any member of the firm but his companytention is that this applies to a firm in existence and number to a firm dissolved. If the, appellants case is that as a result of dissolution of the firms the firms had discontinued their business as from the respective dates of dissolution they ought to have given numberices of such discontinuance of their business under s. 25 2 of the Act. Besides, in the present case, the main appellant has in fact been served personally and the other partners who may number have been served have made numbergrievance in the matter. We are, therefore, satisfied that it is number open to the appellants to companytend that the proceedings taken by the Income-tax Officer under s. 34 1 a are invalid in that numberices of these proceedings have number been served on the other alleged partners of the firms. Incidentally it may be pointed out that the finding of the Income-tax Officer in respect of all the three firms is that the only persons who had interest in the business carried on by the said firms were B. Audeyya and C. Pitchayya. It is remarkable that B. Audeyya has number cared to challenge the proceedings or to question the validity of the fresh assessment orders passed by the Income-tax Officer in the present proceedings. Mr. Sastri then challenges the validity of the cancellation of the registration of the three firms on the ground that r. 6B under which the Income-tax Officer purported to act is ultra vires. Rule 6B provides that in the event of the Income-tax Officer being satisfied that the certificate granted under r. 4 or under r. 6A has been obtained without there being a genuine firm in existence he may cancel the certificate so granted. The material rules of which r. 6B is a part have been framed by the Central Board of Revenue under the authority companyferred by s. 59 of the Act. This section empowers the Central Board of Revenue, subject to the companytrol of the Central Government, to make rules inter alia for carrying out the purposes of the Act. Section 59 2 e lays down that such rules may provide for any matter which by this Act is to be prescribed and the rules preceding r. 6B deal with the procedure to be followed, and prescribe the application to be made, for the registration of firms under s. 26A of the Act. Section 59 5 provides that the rules made under the said section shall be published in the official gazette and shall thereupon have effect as if enacted in this Act. Thus there is numberdoubt that the rules are statutory rules and once they are published in the official gazette they are operative as if they were a part of the Act. Mr. Sastri companycedes this position but he argues that r. 6B is inconsistent with the material provisions in the Act and is therefore ultra vires the Central Board of Revenue. This argument is based substantially on the provisions of s. 23 4 . We have already referred to the provisions of this subsection. Mr. Sastri companytends that it is only where the requirements of s. 23 4 are satisfied that the registration of a firm can be cancelled. The procedure for registration of firms is laid down in s. 26A of the Act. An application has to be made to the Incometax Officer on behalf of any firm companystituted Linder the instrument of partnership specifying the individual shares of the partners for registration for the purposes of the Act and of any other enactment for the time being in force and relating, to income-tax and supertax. Sub-section 2 requires that the said application ,,hall be made by such person or persons and, at such times and shall companytain such particulars and shall be in such form and be verified in such manner as may be prescribed and it shall be dealt with by the Incometax Officer in such manner as may be prescribed. It is in pursuance of the requirements of s. 26 2 that the relevant rules for the registration of the firms have been made. The question which arises for our decision in this companynection is if a firm has been registered Linder s. 26A, when can such registration be cancelled ? The appellant suggests that the only cases in which such registration can be cancelled are those prescribed in s. 23 4 . We have numberdoubt that this argument is fallacious. The cancellation of registration under s. 23 4 is in the nature of a penalty and the penalty can be imposed against a firm if it is guilty of any of the defaults mentioned in the said subsection. It would be numbericed that where registration is cancelled under s. 23 4 , there is numberdoubt that the application for registration had been properly granted. The basis of an order under s. 23 4 is number that the firm which had been registered was a fictitious one, but that, though the registered firm was geniuine, by its failure to companyply with the requirements of law it had incurred the penalty of having its registration cancelled. That is the effect of the provisions of s. 23 4 . On the other hand, r. 6B deals with cases where the Income-tax Officer is satisfied that a certificate of registration has been granted under r. 4 or under r. 6A without there being a genuine firm in existence that is to gay an application for registration had been made in the name of a firm which really did number exist and on that ground the Income-tax Officer proposes to set right the matter by cancelling the certificate which should never have been granted to the alleged firm. That being the effect of r. 6B it is im- possible to accede to the argument that the provisions of this rule are inconsistent with the provisions of s. 23 4 of the Act. If the Income-tax Officer is empowered under s. 26A read with the relevant rules to grant or refuse the request of the firm for registration, it would numbermally be open to him to cancel such registration if he discovers that registration had been erroneously granted to a firm which did number exist. Rule 6B has been made to clarify this position and to companyfer on the Income-tax Officer in express and specific terms such authority to review his own decision in the matter of the registration of the firm when he dis- companyers that his earlier decision proceeded on a wrong assumption about the existence of the firm. In our opinion, there is numberdifficulty in holding that r. 6B is obviously intended to carry out the purpose of the Act and since it is number inconsistent with any of the provisions of the Act its validity is number open to doubt. It is, however, urged that whereas the firm aggrieved by the order passed by the Income-tax Officer under s. 23 4 can challenge the companyrectness or propriety of the order in an appeal against the final assessment order passed under s. 23, numbersuch remedy is available to the firm whose registration is cancelled under r. 6B. We are number impressed by this argument. The validity of the rule cannot, in our opinion, be challenged merely on the ground that numberappeal has been provided against the order passed under the impugned rule. It is also true that whereas before taking action under s. 23 4 the Income-tax Officer is required to issue a numberice to the firm, numbersuch provision is made under r. 6B. Mr. Sastri has, however, companyceded that the appellant before us had numberice and was given an opportunity to satisfy the Income-tax Officer that the respective firms were genuine and number fictitious. Thai being so we do number think that it would be open to the appellant to companytend that the order passed against him under r. 6B is invalid on the purely academic ground that r. 6 B does number require numberice to be issued before the registration of a firm is cancelled. If the power under r. 6B is exercised by the Income-tax Officer against a firm without giving it a numberice in that behalf and without affording it an opportunity to satisfy the officer that it is a genuine firm, it may be open to the firm to question the validity of the order on that ground. We are, however, number called upon to deal with such a case in the present appeals. In this companynection we may incidentally refer to the decision of this Court in Ravula Subba Rao v. Commissioner of 1. T., Madras 1 where this Court has held that rules 2 and 6 of the rules framed under s. 59 of the Indian Income-tax Act are number ultra vires the rule- making authority. The last argument which Mr. Sastri sought to raise before us was that the revised assessment is companypletely illogical, and therefore illegal, in each case inasmuch as the original assessment for the two assessment years still remains as on the basis that the firms in question are registered and the fresh assessment in respect of the escaped income for the same years is made on the basis that the said firms are number registered. Mr. Sastri says that it is number open to the Income-tax Officer to adopt such a companyrse. If registration has been cancelled the whole of the assessment should be made on that footing the department cannot treat the firm as registered for part of the income, and unregistered for the balance, during the same assessment years that is Mr. Sastris grievance. We do number propose to deal with the merits of this companytention. There can be numberdoubt that it would be open to the appellants to raise this companytention in the appeals which they have filed against the fresh orders of assessment. We understand that applications have been made by the appellants in respect of the said orders of assessment under s. 27 of the Act. If that be so, the appellants may, if it is open to them to do so, ventilate their grievance in the said proceedings also. We hold that this companytention cannot be urged in petitions for writs of prohibition under Art. 226 of the Constitution, since they do number raise any question of jurisdiction. All that the appellants would be able to argue on this ground 1 1956 S.C.R. 577. would be that the companyrse adopted by the Income-tax Officer in making orders of fresh assessment is irregular and illogical and should be companyrected. That is a matter companycerning the merits of the orders of assessment and by numberstretch of imagination can it be said to raise any question of jurisdiction under Art. 226. That is why we express numberopinion on this point. Before we part with this case we would like to, observe that Mr. Kripal for the respondent sought to raise three preliminary objections. He urged that the issue of a writ is a discretionary matter and since the High Court has refused to exercise its discretion in favour of the appellants the appeals would be virtually incompetent inasmuch as this Court would be slow to interfere with the exercise of discretion by the High Court. He also argued that the original petitions to the High Court are incompetent under Art. 226 since under the Act the appellants had an alternative effective remedy available to them in the form of appeals against the impugned orders and in fact they had filed such appeals and had also made applications under s. 27 of the Act. Mr. Kripal also companytended that the High Court would have numberjurisdiction to issue a writ of prohibition against the tax authorities. We do number propose to companysider these objections because, as we have already indicated, we are satisfied that the view taken by the High Court on the points raised before it is right. These objections may have to be companysidered in future on a suitable occasion.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 500 of 1957. Appeal by special leave from the judgment and order dated September 11, 1956, as altered by Order dated September 28, 1956, of the Labour Appellate Tribunal of India, Calcutta, in Appeals Nos. Cal. 208 and 223 of 1956, arising out of the Award dated June 7, 1956, of the Sixth Industrial Tribunal, Calcutta, in Case No. VIII-233 of 1955. C. Setalvad, Attorney-General for India, D. N. Mukherjee and B. N. Ghosh, for the appellants. Kumar, for respondents Nos. 2 to 25 and 27 to 48. 1958. October 17. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal by special leave against the order of the Labour Appellate Tribunal and the question for decision is the dismissal of some workmen. The appellant before us is the employer and the respondents are some of the workmen, 47 in number who might be divided into two sets, the first set Nos. 2 to 24 and second Nos. 25 to 48. Out of the latter No. 26 is dead. The facts leading to the appeal are that on August 3, 1953, the Government of West Bengal referred under s. 10 of the Industrial Disputes Act, hereinafter called the Act, to the second Industrial Tribunal, an industrial dispute between the appellant and its workmen. During the pendency of this Reference the workmen acted in a manner subversive of discipline, wilful insubordination and disobedience inasmuch as they surrounded by forming a kind of companydon round E. L. DCruz, acting Works Manager of the companypany, illegally companyfined him in a small place in the factory premises and kept him so companyfined between the hours of 9-15 a.m. to 2-15 p.m., till he was rescued by the police. The cause of this action on the part of the workmen is stated to be a dispute as to the payment of Puja bonus for the year 1953. The same day the workmen went on strike at 9-15 a.m. DCruz called upon them to resume work but they refused and the appellant- companypany issued numberices at 9-45 a. m., and 10-45 a.m. asking the workmen to resume work immediately. The workmen took numbernotice of these numberices and the appellant companypany after the arrival of the police declared a lock out. Some of the workmen were then arrested. The appellant companypany then served charge sheet on the workmen calling upon them to submit their explanations within 24 hours. The workmen gave numberexplanation. An enquiry was held and the workmen were found guilty of gross misconduct amounting to major misdemeanour which merited dismissal and the companypany proposed to dismiss them. For that purpose the appellant companypany on October 31,1953, made three applications Cal. Nos. 518, 519 and 557 of 1953 to the Tribunal for permission under s. 33 of the Act to dismiss 170 workmen with effect from October 6, 1953. During the companyrse of the proceedings the appellant companypany withdrew its case against a large number of workmen and the proceedings were ultimately companytinued against 67 workmen. One of these workmen died and two resigned leaving 64 workmen against whom the proceedings were companytinued. The workmen in their defence denied the companymission of any offence and also denied the receipt of charge sheets. They pleaded that there was numberenquiry, that the lock-out was illegal and that the appellant had acted in companytravention of the principles of natural justice. The three applications were heard together and were disposed of by one order. The Tribunal held that a prima facie case had been made out for granting permission for dismissal of workmen directly involved in the incident that the appellant companypany had acted bona fide and that it was number guilty of discrimination, vindictiveness or arbitrary action. Although it had started cases against 170 workmen it took back a majority of them on their expressing regret. The Tribunal gave permission for the dismisSal of only three workmen Subbas Roy, Madhusudhan Rout and Bimal Kumar Ghose and permission with regard to the rest was refused on the ground that there was reasonable doubt as to their identity and companyplicity in the incident. On January 8, 1954, the workmen made an application under s. 33A of the Act which was allowed on July 2, 1954. Three appeals were filed, two by the appellant companypany against the orders under s. 33 and the other made under s. 33A of the Act. The third appeal was filed by workmen as to the dismissal of three workmen. On March 29, 1955, the appeal of the companypany with regard to application under s. 33 of the Act was dismissed and so was the appeal of the workmen and thus the order as to 3 workmen was upheld. The employers companytended that as the strike was illegal, the management had the right to terminate the services of the workmen and the Tribunal was therefore bound to accord sanction to the management but the Labour Appellate Tribunal did number go into this matter as the question had number been raised at any pre- vious stage. On the same day tile Labour Appellate Tribunal set aside the order of the Tribunal under s. 33A on the ground that the application under that section was misconceived and the order made by the Tribunal was without jurisdiction. On April 20, 1955, the management of the appellant companypany took fresh proceedings against the 64 workmen and in order to serve charge sheets on them sent registered numberices to their addresses, registered with the appellant companypany, and also affixed numberices on its Notice Boards both inside the premises and outside the gate of the premises which remained affixed there from April 20, 1955, till June 9, 1955. Out of the registered numberices sent numberices companyld number be served on workmen Nos. 2 to 24 and they were returned. to the sender with the remark that the addressees had either left or their addresses were unknown. On April 28, 1955, the appellant companypany wrote a letter to the Labour Commissioner informing him of the offences companymitted by the workmen and the action that it proposed to take against its workmen. On May 20, 1955, the appellant companypany wrote to the secretary of the Workers Union asking him for the addresses of the workmen who had number been served but it received numberreply from the secretary. The enquiry started by the management of the appellant companypany terminated on June 9, 1955, and as at that time numberproceedings were pending under the Act, the appellant companypany terminated the services of all the 64 workmen on June 22, 1955. The termination of the services of these workmen gave rise to an industrial dispute and a reference was made by the West Bengal Government on August 8, 1955, in regard to all the 64 workmen. The points referred for adjudication.were- Whether the dismissal of the 64 workmen mentioned in the attached list is justified. Whether the Company should number reinstate them. What companypensation should they be paid for the action taken against them by the Company ? What companypensation should be paid to them in respect of the period of enforced idleness from 6-10-53, particularly for the period they were refused permission to rejoin work even after their cases had been disposed of by the Tribunal Whether the Tribunal Awards companycerning the 64 workmen have been properly implemented. What companypensation should be paid to them by the companypany for number having properly implemented the Award ? Sixteen workmen resigned and one of them Haroo Haldar pleaded guilty and therefore proceedings were companytinued against only 47 workmen. The Tribunal 6th Industrial Tribunal, West Bengal made its award on June 7, 1956. It held that the workmen Nos. 2 to 24 had number been properly served and ordered their reinstatement as from April 1, 1955, with back wages, dearness allowance, etc., from April 1, 1955, but upheld the dismissal of workmen Nos. 25 to 48. It held that there was evidence to establish the identity of persons who had taken part in the strike and had wrongfully companyfined DCruz and that numberbias or illwill companyld be attributed to the management number was it inspired by any vindictive motives. It said Since there was evidence and it was a possible view, the Tribunal must accept the finding and hold that the dismissal of those workers was justified . In regard to wages the Tribunal held that the strike of October 6, 1953, was illegal as at that time the reference was pending before the Industrial Tribunal that the lock out was fully justified as the strikers had taken a belligerent attitude and had actually kept the acting Works Manager illegally companyfined till he was rescued by the police that numbercompensation companyld therefore be claimed for the period from October 6, 1953, upto the time that the Labour Appellate Tribunal on March 29, 1955, disposed of the proceedings under s. 33 - but the workmen Nos. 2 to 24 who were held to be wrongfully dismissed and had been ordered to be reinstated but had number been allowed to return to work were entitled to wages but only from April 1, 1955, upto the date of reinstatement. On the third issue i. e. the matter of Subbash Roy, Madhusudan Rout and Bimal Kumar Ghosh permission for dismissal granted by the State Tribunal was companyfirmed on appeal. No question of companypensation companyld arise in their case. Against this order of the 6th Industrial Tribunal, two appeals were taken to the Labour Appellate Tribunal one by the Union and the other by the appellant companypany. On September 11, 1956, the Labour Appellate Tribunal dismissed the appeal of the appellant companypany and allowed that of the Union. It held that the evidence of E. L. DCruz given in the managerial enquiry in May 1955 companyld number be accepted. In its order the Appellate Tribunal said- In June 1954 Mr. E.L. DCruz was unable to give evidence against the appellants in Appeal No.Cal. 223 of 1956. In May 1955 he gave evidence companynecting the appellants with the misconduct that was companymitted on the 6th October, 1954. No other evidence is to be found on the record to show that the workmen who are companycerned in these proceedings companymitted misconduct on the 6th October, 1954. In these circumstances, it is difficult to act on the evidence given by Mr. E.L. DCruz in the managerial enquiry in May 1955 After refering to the principles laid down in the case of Buckingham and Carnatic Co. Ltd. v. Its workmen 1 the Labour Appellate Tribunal ruled out the evidence of DCruz and as there was numberother evidence to prove misconduct against the workmen, it came to the companyclusion that the decision of the managment was perverse. It held- In these circumstances, we set aside the order of the Industrial Tribunal giving permission to the management to discharge the appellants from service and companysequently the order of the Industrial Tribunal giving permission to discharge workmen Nos. 25 to 48 was set aside. The Appellate Tribunal suo motu amended this order on September 28, 1956, and the following order was substituted in place of the operative portion of the order of September 11, 1956 In these circumstances we set aside the order of the.- Industrial Tribunal upholding the action of the Management in discharging the appellants from service In the result the Award under appeal company I firmiag the action of the Management in discharging twenty four workmen from service is set aside. In other respects that Award is companyfirmed. In other words we order the reinstatement of the twenty four workmen discharged by the Management with back wages for the period between the 1st of April, 1955, to the date of reinstatement . Against this order the appellant companypany has companye up in appeal by special leave and on its behalf the learned Attorney General raised two questions 1 that appeal to Labour Appellate Tribunal on behalf of the Union was number companypetent as numberquestion of law was involved and 2 that it companyld number sit in appeal against the managerial enquiry. It is number necessary to go into the first question because, in our opinion, the second question raised is well founded. The principles which govern the power of an Industrial Tribunal to interfere with the decision of the employer following an enquiry made by him were laid down by this Court in Indian Iron and Steel Co. Ltd. v. Their Workmen 2 where K. Das J., said at page138 1 1952 L.A.C. 490. A.I.R. 1958 S-C. 130. Undoubtedly, the management of a companycern has power to direct its own internal administration and discipline but the power, is number unlimited and when a dispute arises, Industrial Tribunals have been given the power to see whether the termination of service of a workman is justified and to give appropriate relief. In cases of dismissal or misconduct, the Tribunal does number, however, act as a Court of appeal and -substitute its own judgment for that of the management. It will interfere i -when there is want of good faith, ii when there is victimisation or unfair labour practice, iii when the management has been guilty of a basic error or violation of a principle of natural justice, and iv when on the materials, the finding is companypletely baseless or perverse. In Lakshmi Devi Sugar Mills Ltd. v. Pt. Ram Sarup which was a case under s. 22 of the Industrial Disputes Appellate Tribunal Act, 1950, this Court held that if it was established that the workmen had resorted to illegal strike, that a fair enquiry into the alleged misconduct and insubordination of their workmen had been held by the management without violating any principles of natural justice and as a result of enquiry the management had found the workmen guilty of misconduct and insubordination with which they had been charged and the management had companye to the companyclusion that companytinuing the workmen in its employ was dangerous in the interest of the companypany the Tribunal would number interfere with such order. In Hanuman Jute Mills v. Amin Das 2 it was held that numberappeal lies against the order of an Industrial Tribunal where the Tribunal had examined the question whether the discretion of the employer to dismiss certain workmen was properly exercised, whether the employer was acting bona fide, whether he had resorted to any unfair labour practice or victimization and whether his desire to dismiss the workmen was actuated by any improper motive. It is for the management to determine what companystitutes major misconduct within its standing orders sufficient to merit dismissal of a workman but in A.I.R. 1957 S.C. 82. A.I.R. 1957 S-C. 194. determination such misconduct it must have facts upon which to base its companyclusions and it must act in good faith without caprice or discrimination and without motives of vindictiveness, intimidation or resorting to unfair labour practice and there must be numberinfraction of the accepted rules of natural justice. When the management does have facts from which it can companyclude misconduct its judgment cannot be questioned provided the above mentioned principles are number violated. But in the absence of these facts or in case of violation of the principles set out above its position is untenable. In our opinion, the Industrial Tribunal proceeded on companyrect principles as to its power in regard to an enquiry held by the management and the Labour Appellate Tribunal seems to have approached the question as if it was sitting in appeal against the decision taken by the management in regard to the termination of service of their workmen. In the instant case numbere of the principles, which have been laid down by Labour Courts as well as by this Court in regard to enquiry by the management into the misconduct of their workmen, have been violated and the Labour Appellate Tribunal was in error in setting aside the order of the Industrial Tribunal on the ground that it was unable to accept the testimony of DCruz as to the identity of persons who bad taken part in wrongfully companyfining him on the day of the illegal strike. It appears to have proceeded as if it was sitting in appeal against the decision of the managerial enquiry and further it was under a misapprehension as to the nature of the proceedings before the Industrial Tribunal and before itself, inasmuch as it seems to have been under the wrong impression that the appeal before it arose out of an application under s. 33 -of the Act and that the Industrial Tribunal had given permission to the appellant companypany to discharge its workmen. Its amended order shows that it thought, and again wrongly, that really the proceedings were under s. 33A of the Act and it was that mistaken view of the nature of the proceedings which led to its order for reinstatement of the workmen with back wages from April 1, 1955, to the date of reinstatement. The Labour Appellate Tribunal seems to have overlooked the fact that the appeal before it arose out of a Reference made by the West Bengal Government under s. 10 of the Act. This misconception as to the nature of the proceedings vitiated its order as the Appellate Tribunal misdirected itself as to the scope of the powers to be exercised by it and companysequently it led to the making of an erroneous order. The question then arises as to whether the managerial enquiry was vitiated by the infraction of any principle of natural justice. According to the standing orders Major Misdemeanors have been defined in el. 15, the relevant portion of which is- Willful insubordination or disobedience. Inciting to take part or taking part in an illegal strike. Any strike resorted to without giving numberice as provided under Section 22 of the Industrial Disputes Act will be companysidered as illegal The mode of service of numberice as given in the standing order No. 15 is as follows- No order of dismissal shall be made unless the worker companycerned is informed and given opportunity of explaining the circumstances alleged against him, but to avail himself of this privilege such worker must attend before the management when directed to do so. Service of any numberice or direction upon a workman to attend under this rule may be made by companymunicating the same orally to the worker companycerned and or by fixing the same on the Companys Notice Board . In the present case the management of the appellant companypany took the precaution of affixing the numberices on its Notice Boards both inside and outside the companypanys premises, and there is evidence to show that they remained affixed from April 20, 1955 till June 9, 1955, i.e. right upto the termination of the enquiry. It also sent Registered Acknowledgement Due numberices to all workmen. When some of them came back unserved it wrote to the secretary of the Union asking for the addresses of the workmen but that gentleman did number ,Care to reply to this letter. The management also wrote to the Labour Commissioner as to the action it was proposing to take. The Industrial Tribunal held that there was numberproper numberice to workmen Nos. 2 to 24 and the mere affixing of the numberices on the Notice Board-of the companypany was number sufficient as the workmen companyld number enter the appellant companypanys premises due to the look out. It overlooked the evidence as to the numberices being affixed on the appellant companypanys board outside its gate from where the workmen were number excluded as a result of the lock out and it was open to them if they so desired to go and look up the numberices there. Further the Tribunal was of the opinion that the appellant companypany might have sent the numberices to the secretary of the Union for circulation to the absentees . In the first place this is number one of the recognised modes of effecting service and in this case the companypany would have been justified in number taking this action after the way that gentleman had neglected even to reply to the appellant companypanys letter asking him to supply the addresses of the workmen. Apart from companyplying with its standing orders the appellant companypany made every effort under the circumstances to serve numberices on its workmen. No principle of natural justice has, in our opinion, been infringed and the finding as to the workmen having numbernotice of the charges against them and companysequently number having a proper opportunity to meet the case against them cannot be sustained. It cannot be said that the workmen did number have a proper opportunity to answer the case against them. If the rule were as the order of the Industrial Tribunal holds it to be then by their action of number giving proper addresses to the employer or abstaining from looking up the Notice Boards where under the standing orders numberices were required to be affixed the workmen might make it impossible for an employer to take disciplinary action assuming that such action is necessary or justified. The Labour Appellate Tribunal did number companysider or apply its mind to this aspect of the case, it being under a misapprehension as to companyrect nature of the proceedings. Counsel for respondents raised four points 1 that there was numberproper numberice served on workmen Nos. 2 to 24 after the-decision of the Industrial Tribunal refusing permission to dismiss the workmen under s. 33 of the Act 2 that numbersecond enquiry companyld be held because the earlier findings of the Tribunal on the application under section 33 of the Act would number be challengeable on the principle of res judicature 3 that there are basic errors in the award of the Industrial Tribunal which was rightly interfered with on appeal by the Labour Appellate Tribunal and 4 that the workmen were entitled to companypensation. As to numberices the submission of the companynsel for the respondents was that numberice given to the workmen Nos. 2 to 24 was number adequate as the employer did number send the numberices to the Union for being served on the workmen and in any case in order to serve the workmen properly it was necessary in the circumstances of this case for the employer to advertise the case in Bengalee newspapers. We have already held that in the circumstances of this case the appellant companypany had done its best to serve the workmen and had companyplied with the standing orders and it was number necessary for the appellant to do anything more. This companytention of the respondents companynsel must therefore be repelled. As to the applicability of the principle of res judicata the argument raised by companynsel for respondents was that the findings of the State Industrial Tribunal in proceedings under s. 33 of the Act which were companyfirmed by the Labour Appellate Tribunal barred the right of the management of the appellant companypany to start a fresh enquiry in respect of the same incident which formed the subject matter of the previous enquiry. There is numberforce in this companytention, which seems to be based on a misapprehension as to the nature and scope of proceedings under s. 33. That section does number companyfer any jurisdiction on a Tribunal to adjudicate on a dispute but it merely empowers the Tribunal to give or withhold permission to the employer during the pendency of an industrial dispute to discharge or punish a workman companycerned in the industrial dispute. And in deciding whether permission should or should number be given, the Industrial Tribunal is number to act as a reviewing tribunal against the decision of the management but to see that before it lifts the ban against the discharge or punishment of the workmen the employer makes out a Prima facie case. The object of the section. is to protect the workmen in pending industrial disputes against intimidation or victimisation. As said above principles governing the giving of permission in such cases are that the employer is number acting mala fide, is number resorting to any unfair labour practice, intimidation or victimisation and there is numberbasic error or companytravention of the principles of natural justice. Therefore when the Tribunal gives or refuses permission it is number adjudicating an industrial dispute, its function is to prevent victimisation of a workman for having raised an industrial dispute. The nature and scope of proceedings under s. 33 shows, that re- moving or refusing to remove the ban on punishment or dismissal of workmen does number bar the raising of an industrial dispute when as a result of the permission of the Industrial Tribunal the employer dismisses or punishes the workmen. Atherton West Co. Ltd. v. Suti Mill Mazdoor Union 1 , Lakshmi Devi Sugar Mills v. Pt. Ram Sarup 2 . In the Automobile Products of India Ltd. v. Rukmaji Bala 3 4V44 Das J., as be then was said at p. 1256-- The purpose of these two sections s. 33 of the Industrial Disputes Act and s. 22 of the Industrial Disputes Appellate Tribunal Act being to determine whether the ban should be removed or number, all that is required of the authority exercising jurisdiction under these two sections is to accord or withhold permission . As the purpose of s. 33 of the Act is merely to give or withhold permission and number to adjudicate upon an industrial dispute, any findidg under s. 33 would number operate as res judicata and bar the raising of an industrial dispute number is there anything in the section itself or in the findings arrived at by the Industrial Tribunal in s. 33 proceedings dated June 6, 1954, or of the Labour Appellate Tribunal dated March 29, 1955, I 1953 S.C.R. 720. 788. 2 A.I.R. 1057 S.C. 82. 3 1955 I S.C.R. 1241. which would debar the appellant companypany from holding the second enquiry or dismissing the workmen provided the principles above set out are companyplied with. It was next companytended that in the present case there was a basic error within the meaning of the rule laid down by S. Das J., in Indian Iron and Steel Co. Ltd. v. Their Workmen 1 . The - basic error according to companynsel was this that the appellant companypanys witness Serjeant Boards had stated that the number of persons who had companyfined and were surrounding DCruz was 100 to 130 persons and if out of them 106 were reinstated there companyld number be 67 workmen left to be proceeded against. The appellant companypany had started proceedings against 170 workmen i. e. all their workmen and after reinstatement of a large number of them only 67 remained against whom the appellant companypany took proceedings with a view to take action against them and. it was in regard to these persons that permission for dismissal was sought under s. 33. It is significant that this basic error does number seem to have been argued either before the Industrial Tribunal or the Labour Appellate Tribunal, on the other hand, the parties seem to have proceeded on the basis that the number of workmen proceeded against by the appellant companypany was 67 out of whom 64 were left after three were allowed to be dismissed. Out of the rest 16 bad resigned and there were only 48 persons whose cases remained for adjudication by the Industrial Tribunal. No basic error is therefore made out. The question of companypensation to the workmen from the date when they were ordered to be reinstated i.e. from April 1, 1955, to June 6, 1955, when their services were terminated is equally unsustainable. The Industrial Tribunal in its order of June 26, 1954, and the Labour Appellate Tribunal in its order dated March 29, 1955, held the strike to be illegal. Mr. S. C. Sen Gupta Judge of the 6th Industrial Tribunal who gave the award dated June 7, 1956, refused to give any companypensation to workmen Nos. 25 to 48 whose dismis- sal. he upheld on the ground that the strike was illegal, A.I.R. 1958 S.C. 130. the strikers had taken up a belligerent attitude and the lock out was fully justified. The Labour Appellate Tribunal awarded to the 24 workmen reinstated by its amended order dated September 28, 1956, back wages from April 1, 1956, to the date of reinstatement as was done by the Industrial Tribunal in the case of workmen Nos. 2 to 24, whom the Tribunal bad ordered to be reinstated. As we have companye to the companyclusion that the order of reinstatement by the Industrial Tribunal of workmen Nos. 2 to 24 and by the Appellate Tribunal of workmen Nos. 25 to 48 was erroneous, neither of the two sets of workmen is entitled to back wages by way of companypensation. The appeal is therefore allowed and the decision of the Labour Appellate Tribunal as to all the workmen and the award of the Industrial Tribunal as to workmen Nos. 2 to 24 are set aside and the claim for companypensation which was argued before us is disallowed.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petition No. 103 of 1958. Petition under Art. 32 of the Constitution for enforcement of fundamental rights. T. Paikeday and Ganpat Rai, for the petitioner. Sardar Bahadur, for respondent No. 1. R. Krishna Pillai, for respondent No. 3. 1958. December 11. The Judgment of the Court was delivered by HIDAYATULLAH, J.-This is a petition under Art. 32 of the Constitution by one C. K. Achuthan, who claims to have held a companytract for the supply of milk and other articles of diet for the year 1958-1959 but whose companytract for supply of milk is said to have been cancelled by the District Medical Officer second respondent herein . The companytract for the. supply of milk has number been given to the third respondent, the Co-operative Milk Supplies Society, Cannanore. From the petition, it appears that the petitioner held companytracts for the supply of milk to the Government Hospital at Cannanore Kerala State ever since 1946, and that previous to this, his brother in the same business held similar companytracts from 1936. In 1957, a uniform procedure for fixing up companytracts was adopted, and by a numberification, companyditions for acceptance of tender were laid down. The petitioner as well as the third respondent submitted their respective tenders, which were to be opened by the Superintendent of the Hospital in the presence of interested parties. We need number refer to all the companyditions under which tenders were to be accepted, except those which have a bearing upon this matter. It was stated in the companyditions that numbertender marked at current market rates would be accepted, and further that in the supply of milk, preference would be given to approved Co- operative Milk Supply Unions and Societies, if their tender was within a margin of 5 per cent. over the market rate or the lowest tendered rate, whichever was less. All persons making tender for the companytract had to produce a certificate of solvency and tax clearance certificates, and to make a deposit with the tender. On January 20, 1958, the tenders which were submitted were scrutinised and the tender of the petitioner for the supply of milk was accepted and that of the third respondent rejected. It appears that the Superintendent respondent No. 2 companymunicated to the Director of Public Health, her reasons for accepting the tender of the petitioner and number accepting that of the third respondent. Certain companyrespondence then ensued between the Director of Health Services and the second respondent, as a result of which the petitioner was informed that the companytract for the supply of milk given to him was cancelled. He was informed that it was the policy of Government that in the matter of supply to Government medical institutions in Cannanore District the Co-operative Milk Supplies Union was to be given companytracts on the basis of prices fixed by the Revenue Department. It appears that some more companyrespondence between the Director of Health Services and the second respondent ensued, and it was pointed out to the second respondent that action should have been taken under Cl. 20 of the companyditions of the tender and the companytract only cancelled after giving a months numberice to the petitioner. In furtherance of these instructions, the second respondent issued a numberice in terms of Cl. 20 of the tender, and cancelled the companytract after the numberice period. The present petition has been filed to question the several orders referred to above. It may be pointed out that previous to this, the petitioner had applied under Art. 226 of the Constitution to the High Court of Kerala, but his petition O. P. No. 201 of 1958 was rejected by Raman Nayar, J., on June 6, 1958. A Letters Patent Appeal was also dismissed by Koshi, C. J., and Vaidialingam, J. A. S. No. 354 of 1958 decided on July 7, 1958 . The High Court held that the present matter was numbermore than a breach, if any, of the companytract by the State Government, and that the appropriate remedy was to file a civil suit and number to proceed under Art. 226. It appears that -no special leave to appeal was sought from this Court against the above orders, and the matter has been brought for adjudication, number by way of appeal but directly under Art. 32 of the Constitution as an infringement of the fundamental right of the petitioner. The companytention of the petitioner in this behalf is that he is entitled to an equal treatment in the eye of law, and that there has been discrimination against him vis-a-vis, the third respondent. He claims protection under Arts. 14, 16 1 , 19 1 g and 31 of the Constitution. In our opinion, numbere of these Articles can be made applicable to the facts of the present case. No doubt, the petitioner claims to have succeeded in obtaining the companytract from the Government, and the third respondent failed to do so. But even if he held the companytract, the petitioner did number acquire an absolute right to be companytinued in that companytract, because power was reserved by the Government under Cl. 20 to terminate the companytract after giving a months numberice. Whether the exercise of that power in the present case was regular or legal, is number a matter on which we are called upon to pronounce, because adjudication of such dispute can appropriately take place only before the ordinary Civil Courts, where evidence can be gone into and examined at length. The gist of the present matter is the breach, if any, of the companytract said to have been given to the petitioner which has been cancelled either for good or for bad reasons. There is numberdiscrimination, because it is perfectly open to the Government, even as it is to a private party, to choose a person to their liking, to fulfill companytracts which they wish to be performed. When one person is chosen rather than another, the aggrieved party cannot claim the protection of Art. 14, because the choice of the person to fulfill a particular companytract must be left to the Government. Similarly, a companytract which is held from Government stands on numberdifferent footing from a companytract held from a private party. The breach of the companytract, if any, may entitle the person aggrieved to sue for damages or in appropriate cases, even specific performance, but he cannot companyplain that there has been a deprivation of the right to practise any profession or to carry on any occupation, trade or business, such as is companytemplated by Art. 19 1 g . Nor has it been shown how Art. 31 of the Constitution may be invoked to prevent cancellation of a companytract in exercise of powers companyferred by one of the terms of the companytract itself. The main companytention of the petitioner before us was thus under Art. 16 1 of the Constitution, and he claimed equal opportunity of employment under the State. To begin with, a companytract for the supply of goods is number a companytract of employment in the sense in which that word has been used in the Article.The petitioner wag number to be employed as a servant to fetch milk on behalf of the institution, but was a companytractor for supplying the articles on payment of price. He claimed to have been given a companytract for supply of milk, and did number claim to be an employee of the State. Article 16 1 of the Constitution-, both in its terms and in the companylocation of the words, indicates that it is companyfined to employment by the State, and has reference to employment in service rather than as companytractors. Of companyrse, there may be cases in which the companytract may include within itself an element of service. In the present case, however, such a companysideration does number arise, and it is therefore number necessary for us to examine whether those cases are companyered by the said Article. But it is clear that every person whose offer to perform a companytract of supply is refused or whose companytract for such supply is breached cannot be said to have been denied equal opportunity of employment, and it is to this matter that this case is companyfined. Looking to the facts of the case, it is manifest that the petitioner was supplying, or in other words, selling milk and other articles of diet to the State for the use of hospitals and similar institutions. He was in numbersense a servant, and numberquestion of employment qua servant arose. In these circumstances, it is plain that Art. 16 1 of the Constitution is number attracted to the facts. In our opinion, the petition under Art. 32 of the Constitution is wholly misconceived. No fundamental right is involved. At best, it is a right to take the matter to the Civil Court, if so advised, and to claim damages for breach of companytract, if any.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 96 of 1957. Appeal by special leave from the judgment and order dated December 17, 1956, of the Punjab High Court Circuit Bench at Delhi in Civil Misc. No. 896-D of 1956, arising out of the judgment and order dated November 1, 1956, of the Court of Commercial Subordinate Judge, Delhi in Suit No. 264 of 1956 under Order XXXVII, C.P.C. V. Vishwanatha Sastri and Naunit Lal, for the appellant. Bakhshi Gurcharan Singh and Sardar Singh, for the respondent. 1958. February 5. The following Judgment of the Court was delivered by BOSE J.-The defendants, Santosh Kumar and the Northern General Agencies, were granted special leave to appeal. The plaintiff filed the suit out of which the 1213 appeal arises on the basis of a cheque for Rs. 60,000 drawn by the defendants in favour of the plaintiff and which, on presentation to the Bank, was dishonoured. The suit was filed in the Court of the Commercial Subordinate Judge, Delhi, under 0. XXXVII of the Code of Civil Procedure. The defendants applied for leave to defend the suit under r. 3 of that Order. The learned trial Judge held that the defence raised by the defendants raises a triable issue, but he went on to hold that the defendants have number placed anything on the file to show that the defence was a bona fide one. Accordingly, he permitted the defendants to appear and defend the suit on the companydition of their giving security to the extent of the suit amount and the companyts of the suit. The defendants applied for a review but failed. They then applied under Art. 227 of the Constitution to the Delhi Circuit Bench of the Punjab High Court and failed again. As a result, they applied here under Art. 136 and were granted special leave. At first blush, 0. XXXVII, r. 2 2 , appears drastically to curtail a litigants numbermal rights in a Court of justice, namely to appear and defend himself as of right, if and when sued, because it says that when a suit is instituted on a bill of exchange, hundi or a promissory numbere under the provisions of sub-rule 1 the defendant shall number appear or defend the suit unless he obtains leave from a judge as hereinafter provided so to appear and defend. But the rigour of that is softened by r. 3 1 which makes it obligatory on the Court to grant leave when the companyditions set out there are fulfilled. Clause 1 runs- The Court shall, upon application by the defendant, give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove companysideration, or such other facts as the Court may deem sufficient to support the application. 1214 But numbersooner is the wide discretion given to the Court in r. 2 2 narrowed down by r. 3 1 than it is again enlarged in another direction by r. 3 2 which says that Leave to defend may be given unconditionally or subject to such terms as to payment into Court, giving security, framing and recording issues or otherwise as the Court thinks fit. The learned companynsel for the plaintiff argues that the discretion so companyferred by r. 3 2 is unfettered and that as the discretion has been exercised by the learned trial Judge, numberappeal can lie against it unless there is a grave miscarriage of justice or flagrant violation of law and he quotes D. N. Banerji v. P.R. Mukherjee 1 and Waryam Singh v. Amarnath 2 . Now what we are examining here are laws of procedure. The spirit in which questions about procedure are to be approached and the manner in which rules relating to them are to be interpreted are laid down in Sangrayn Singh v. Election Tribunal, Kotah, Bhurey Lal Baya 1 . Now a companye of procedure must be regarded as such. It is procedure, something designed to facilitate justice and further its ends number a penal enactment for punishment and penalties number a, thing designed to trip people up. Too technical a companystruction of sections that leaves numberroom for reasonable elasticity of interpretation should therefore be guarded against provided always that justice is done to both sides lest the very means designed for the furtherance of justice be used to frustrate it. Next, there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should number be companydemned unheard, that decisions should number be reached behind their backs, that proceedings that affect their lives and property should number companytinue in their absence and that they should number be precluded from participating in them. Of companyrse, there must be exceptions and where they are clearly defined 1 1953 S.C.R. 302, 305. 2 1954 S.C.R. 565. 3 1955 2 S.C.R. 1, 8 9. 1215 they must be given effect to. But taken by and large, and subject to that proviso, our laws of procedure should be companystrued, wherever that is reasonably possible, in the light of that principle. Applied to the present case, these observations mean that though the Court is given a discretion it must be exercised along judicial lines, and that in turn means, in companysonance with the principles of natural justice that form the foundations of our laws. Those principles, so far as they touch the present matter, are well known and have been laid down and followed in numerous cases. The decision most frequently referred to is a decision of the House of Lords in England where a similar rule prevails. It is Jacobs v. Booths Distillery Company 1 . Judgment was delivered in 1901. Their Lordships said that whenever the deferce raises a triable issue, leave must be given, and later cases say that when that is the case it must be given unconditionally, otherwise the leave may be illusory. See, for example, Powszechny Bank Zwiazkowy W. Polsce v. Paros 2 , in England and Sundaram Chettiar v. Valli Ammal 3 in India. Among other cases that adopt the triable issue test are Kiranmoyee Dassi v. J. Chatterjee and Gopala Rao v. Subba Rao 5 . The learned companynsel for the plaintiff-respondent relied on Gopala Rao v. Subba Rao 5 , Manohar Lal v. Nanhe Mal 6 , and Shib Karan Das v. Mohammed Sadiq 7 . All that we need say about them is that if the Court is of opinion that the defence is number bona fide, then it can impose companyditions and is number tied down to refusing leave to defend. We agree with Varadachariar J. in the Madras case that the Court has this third companyrse open to it in a suitable case. But it cannot reach the companyclusion that the defence is number bona fide arbitrarily. It is as much bound by judicial rules and judicial procedure in reaching a companyclusion of this kind as in any other matter. It is unnecessary 1 1901 85 L.T. 262. 2 1932 2 K.B. 353. 3 1935 1 L.R. 58 Mad. 116. 4 1945 49 C.W.N. 246. A.I.R. 1936 Mad.246. A.I.R. 1938 Lah. 548. 7 A.I.R. 1936 Lah. 584. 12l6 numberexamine the facts of those cases because they are number in appeal before us. We are only companycerned with the principle. It is always undesirable, and indeed impossible, to lay down hard and fast rules in matters that affect discretion. But it is necessary to understand the reason for a special procedure of this kind in order that the discretion may be properly exercised. The object is explained in Kesavan v. South Indian Bank Ltd. 1 , and is examined in greater detail in Sundaram Chettiar v. Valli Ammal supra , to which we have just referred. Taken by and large, the object is to see that the defendant does number unnecessarily prolong the litigation and prevent the plaintiff from obtaining an early decree by raising untenable and frivolous defences in a class of cases where speedy decisions are desirable in the interests of trade and companymerce. In general, therefore, the test is to see whether the defence raises a real issue and number a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defence on those facts. Now, what is the position here? The defendants admitted execution of the cheque but pleaded that it was only given as companylateral security for the price of goods which the plaintiff supplied to the defendants. They said that those goods were paid for by cash payments made from time to time and by other cheques and that therefore the cheque in suit had served its end and should number be returned. They set out the exact dates on which, according to them, the payments had been made and gave the numbers of the cheques. This at once raised an issue of fact, the truth and good faith of which companyld only be tested by going into the evidence and, as we have pointed out, the learned trial Judge held that this defence did raise a triable issue. But he held that it was number enough for the defendants to back up their assertions with an affidavit they should also have produced writings and documents which they said were in their possession I.L.R. 1950 Mad. 251. 1217 and which they asserted would prove that the cheques and payments referred to in their defence were given in payment of the cheque in suit and he said- In the absence of those documents, the defence of the defendants seems to be vague companysisting of indefinite assertions This is a surprising companyclusion. The facts given in the affidavit are clear and precise, the defence companyld hardly have been clearer. We find it difficult to see how a defence that, on the face of it, is clear becomes vague simply because the evidence by which it is to be proved is number brought on file at the time the defence is put in. The learned Judge has failed to see that the stage of proof can only companye after the defendant has been allowed to enter an appearance and defend the suit, and that the nature of the defence has to be determined at the time when the affidavit is put in. At that stage all that the Court has to determine is whether if the facts alleged by the defendant are duly proved they will afford a good, or even a plausible, answer to the plaintiffs claim. Once the Court is satisfied about that, leave cannot be withheld and numberquestion about imposing companyditions can arise and once leave is granted, the numbermal procedure of a suit, so far as evidence and proof go, obtains. The learned High Court Judge is also in error in thinking that even when the defence is a good and valid one, companyditions can be imposed. As we have explained, the power to impose companyditions is only there to ensure that there will be a speedy trial. If there is reason to believe that the defendant is trying to prolong the litigation and evade a speedy trial, then companyditions can be imposed. But that companyclusion cannot be reached simply because the defendant does number adduce his evidence even before he is told that he may defend the action. We do number wish to throw doubt on those decisions which decide that ordinarily an appeal will number be entertained against an exercise of discretion that has been exercised along sound judicial lines. But if the 1218 discretion is exercised arbitrarily, or is based on a mis- understanding of the principles that govern its exercise, then interference is called for if there has been a resultant failure of justice. As we have said, the only ground given for companycluding that the defence is number bona flde is that the defendant did number prove his assertions before he was allowed to put in his defence and there is an obvious failure of justice if judgment is entered against a man who, if he is allowed to prove his case, cannot but succeed. Accordingly, interference is called for here. The appeal is allowed. We set aside the orders of the High Court and the learned trial Judge and remand the case to the first Court for trial of the issues raised by the defendants.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 78 of 1954. Appeal from the judgment and decree dated April 17, 1950, of the Bombay High Court in Appeal No. 642 of 1949, arising out of the judgment and decree dated July 30, 1949, of the Court of Civil Judge, Senior Division, Ahmedabad in Suit No. 10 of 1946. Purshottam Tricumdas, M. H. Chhatarpati and S. S. Shukla, for the appellants. N. Sanyal, Additional Solicitor-General of India and I. Shroff, for the respondent. 1958. March 21. The Judgment of the Court was delivered by GAJENDRAGADKAR J.-This is an appeal by the plaintiffs against the decree passed by the High Court of Bombay dismissing their suit to recover from the defendant Rs. 1,52,334-8-9 as damages for breach of companytract for number- delivery of certain companyton goods. The plaintiffs claim had been decreed by the trial companyrt but on appeal it has been dismissed. The appellants are the partners of M S. Navinchandra Co. This partnership had placed an order with the respondent for 251 bales of printed chints on or about July 4, 1942, and the said order had been accepted by the respondent by its letters dated July 1 1 and July 20, 1942. The delivery period for the said goods was fixed for the months of September and October, 1942. Another order was placed by the appellants with the respondent for 31 bales of printed chints on July 24, 1942, and this order was accepted by the respondent on July 25, 1942. The delivery of these goods was to be given in the month of October 1942. On August 9, 1942, the workers in the respondent mills went on strike in sympathy with the Quit-India, movement which had then companymenced. In companysequence, the respondent wrote to the appellants firm on August 15, 1942, and stated that, in view of the strike and the political situation, the delivery time of all the pending companytracts should be automatically understood as extended for the period the working of the mills was stopped and until the numbermal state of affairs recurred. The strike came to an end and the mills resumed working on November 22, 1942. On December 5, 1942, Jasubhai, who was then in charge of the management of the mills was approached by the appellants, Keshavlal and Ratilal, for obtaining delivery of the goods. He, however, told them that the appellants companytracts were void and so numberdelivery companyld be claimed or given. On December 6, 1942, the said Jasubhai wrote to the appellants informing them that their companytracts were number binding on the mills as they were null and void. It may be mentioned at this stage that, when the companytracts were made between the appellants and the respondent, Chinubhai Lalbhai was in charge of the managing agency of the mills. Subsequently, on September 18, 1942, as a result of the companypromise between Chinubhai and his brothers Jasubhai and Babubhai, this managing agency of the mills fell to the share of Jasubhai and Babubhai. On December 17, 1942, the appellants wrote to the respondent that, as the respondent had extended the time of delivery of all goods by its letter dated August 15, 1942, the respondent was bound to deliver the companytracted goods and that if the respondent did number do so, the appellants would be companypelled to take legal proceedings against the respondent. In reply, the respondent repeated its earlier companytentions by its letter dated December 20, 1942. The appellants then formally demanded the delivery of goods in January and again in February 1943, and, since the demand was number companyplied with, the appellants filed the present suit on January 9, 1946, claiming damages to the extent of Rs. 1,52,334-8-9 with interest and companyts. In the plaint, it was alleged that the suit was in time because the request made by the respondent for extension of time had been accepted by the appellants. The suit was resisted by the respondent on several grounds. In particular, the respondent urged that there was numberagreement between the parties with regard to the extension of time and so the suit was barred by limitation. The learned trial judge framed several issues with two of which the present appeal is companycerned. These two issues related to the question of extension of time for the performance of the companytract and the plea of limitation. On both these points, the learned judge found in favour of the appellants. In the result the appellants claim was decreed. The respondent then preferred an appeal in the High Court at Bombay and his appeal was allowed. The learned Judges of the High Court have held that the oral evidence led by the appellants to show the acceptance of the respondents proposal for the extension of time companyld number be treated as true or reliable. They also rejected the appellants case on the ground that the companyduct of the appellants subsequent to the stoppage of the respondents mills did number show acceptance of the respondents proposal for extension of time. Besides, in the opinion of the High Court, even if acceptance had been proved, it was number possible to ascribe any certain or definite meaning to the words used by the respondent in its letter dated August 15, 1942 Ex. P. 78 , and so this agreement to extend time was void since it wag vague and uncertain. That is why it was held that the appellants suit was barred by time. It is these findings which are challenged before us by the appellants in the present appeal. It is obvious that the value of the claim in the trial companyrt as well as before us is more than Rs. 20,000 and the judgment of the High Court under appeal has reversed the decree passed by the learned trial judge. The appellants are thus entitled to agitate both questions of fact and of law before us in this appeal. The first point which has been urged before us by the appellants is in respect of the finding made by the High Court against the appellants on the question of the extension of time for the performance of the companytract. The argument is that the learned Judges of the High Court were in error in rejecting the oral evidence led by the appellants. It would, therefore, be necessary to companysider the material evidence bearing on this point. The proposal to extend time was made by the respondent by its letter Ex. P. 78 on August 15, 1942. Ratilal P. W. I stated that, four or five days after this letter was received, he went to Ahmedabad where he met and companysulted Keshavlal. Then he saw Chinubhai at the mills and told him that he accepted the extension of time as per the said letter. In cross- examination, Ratilal added that he met Chinubhai at the office in his mills. I He also stated that, besides the subject of extension of time, numberother matter was discussed between them at the said meeting. He admitted that numberletter had been written by the appellants companyfirming their acceptance of the respondents proposal to extend time. The evidence given by Ratilal is companyroborated by the testimony of Keshavlal. It appears on the evidence of both these witnesses that, after the mills reopened, they had gone to Jasubhai and demanded delivery of the bales according to the companytracts. The appellants argued that there is really numberreason why the evidence of these two witnesses should be disbelieved. It is significant that the main plea raised by the respondent against the appellants claim in the present suit was that the companytract itself was invalid and number bind- ing on it and that the letter written by Laxmidas on August 15, 1942, was likewise unauthoirised and number binding on it. These pleas have been negatived in the companyrts below. It is fairly clear from the record that the attitude adopted by the respondent in the present dispute was actuated more by Jasubhais prejudice against Chinubhai and it may be safely asserted that some of the pleas taken by the respondent were known to the respondent to be untenable. The appellant, rely upon this companyduct of the respondent and suggest that the oral testimony of Ratilal and Keshavlal is companysistent with probabilities and should be believed. Chinubhai also gave evidence in the case. He stated that the proposal to extend time had been companyveyed by Laxmidas under his instructions. It is companymon ground that similar request was made to all the companystituents of the mills both in Ahmedabad and outside Ahmedabad. Chinubhai did number remember whether he had got any written reply to the letter of August 15, 1942, from the appellants but the effect of some of the statements made by him would generally appear to be that lie had received oral acceptance of the said proposal from the appellants. However, in answer to further questions put to him in cross-examination, Chinubhai stated that he did number remember whether the appellants accepted the offer or number. It is, however, clear that the evidence of Chinubhai is number at all inconsistent with the statements made by Ratilal and Keshavlal. It is companymon ground that the prices of the goods were rising at the material time and so it is more likely that the appellants were willing to extend time because they would naturally be keen on obtaining delivery of the goods under the companytract. In both the companyrts below an argument appears to have been urged by reference to the sauda books kept by the respondent. Shri Dharamasi Harilal had brought the sauda books in the companyrt but neither party got the books exhibited in the case. The learned trial judge took the view that, since the sauda books were number produced and proved by the respondent, it led to the inference that, if the books had been produced, they would have shown an endorsement made against the suit companytracts that the extension of time had been agreed upon by the appellants. On the other hand, the learned Judges of the High Court were inclined to draw the inference that, since the appellants did number want the said sauda books to be exhibited, it would appear that the said books did number companytain any numbere about the extension. In our opinion, it would be unsafe to draw either of these two inferences in the present case. Therefore, the decision of the question would depend upon the appreciation of oral evidence companysidered in the light of probabilities and other relevant circumstances in the case. On the whole, we are disposed to take the view that the evidence given by Ratilal and Keshavlal is true. Besides, the companyduct of the parties also points to the same companyclusion. If the period for the delivery of the goods had number been extended by mutual companysent, we would numbermally have expected the appellants to make a demand for delivery of the goods on due dates as fixed under the original companytracts. It is companyceded that numbersuch demand was made. On the other hand, it is only after the mills reopened that Ratilal and Keshavlal saw Jasubhai and discussed with him the question about the delivery of the goods. This is admitted by the respondent in its letter dated December 6, 1942, Ex. P. 62 . The appellants were, however, told by the respondent that the saudas of their firm were number binding on the respondent and that the same were void. It is somewhat remarkable that though this document disputes the validity of the sauda, even alternatively it does number suggest that the period of extension had number been agreed to by the appellants. It may be that, since Jasubhai then wanted to challenge the validity of the companytracts themselves, he did number care to make any alternative plea. But however that may be, the companyduct of the appellants is, in our opinion, companysistent with their case that they had agreed to the extension of time. The true legal position in regard to the extension of time for the performance of a companytract is quite clear under s. 63 of the Indian Contract Act. Every promise, as the section provides, may extend time for the performance of the companytract. The question as to how extension of time may be agreed upon by the parties has been the subject-matter of some argument at the Bar in the present appeal. There can be numberdoubt, we think, that both the buyer and the seller must agree to extend time for the delivery of goods. It would number be open to the promise by his unilateral act to extend the time for performance of his own accord for his own benefit. It is true that the agreement to extend time need number necessarily be reduced to writing. It may be proved by oral evidence. In some cases it may be proved by evidence of companyduct. Forbearance on, the part of the buyer to make a demand for the delivery of goods on the due date as fixed in the original companytract may companyceivably be relevant on the question of the intention of the buyer to accept the sellers proposal to extend time. It would be difficult to lay down any hard and fast rule about the requirements of proof of such an agreement. It would naturally be a question of fact in each case to be determined in the light of evidence adduced by the parties. Having regard to the probabilities in this case, and to the companyduct of the parties at the relevant time, we think the appellants are entitled to urge that their oral evidence about the acceptance of the respondents proposal for the extension of time should be believed and the finding of the learned trial judge on this question should be companyfirmed. The finding in favour of the appellants on this point is number, however, decisive of the dispute between the parties in the present appeal. It still remains to be companysidered whether the agreement between the parties about the extension of time suffers from the infirmity of uncertainty and vagueness. The learned Judges of the High Court have companye to the companyclusion that the letter of August 15, 1942, which is the basis of the agreement for the extension of time is so vague and uncertain that the agreement as to extension of time itself becomes void and unenforceable. The companyrectness of this companyclusion must number be companysidered. The basis of the agreement is the letter and so it is the companystruction of this letter which assumes companysiderable importance. This is how the letter reads Dear Sirs, Your good selves are well aware of the present political situation on account of which entire working of our Mills is closed. At present, it is difficult to say as to how long this state of affairs will companytinue and as such we regret we cannot fulfil the orders placed by you with us in time. Under the circumstances, please numbere that the delivery time of all your pending companytracts with us shall be automatically understood as extended for the period the working is stopped and till the numbermal state of affairs recurs. It would be numbericed that the letter begins by making a reference to the current political situation which led to the closure of the mills and it adds that it was vary difficult to anticipate how long the said state of affairs would companytinue. It is companymon knowledge that, at the material time, the whole companyntry in general and the city of Ahmedabad in particular was in the grip of a very serious political agitation and numberody companyld anticipate how long the strike resulting from the said, agitation would last. It is in that atmosphere of uncertainty that the respondent requested the appellants to numbere that the time for delivery would be automatically extended for the period the working is stopped and till the numbermal state of affairs recurs . The first companydition does number present any difficulty. As soon as the strike came to an end and the closure of the mills was terminated, the first companydition would be satisfied. It is the second companydition that creates the real difficulty. What exactly was meant by the introduction of the second companydition is really difficult to determine. So many factors would companytribute to the restoration of the numbermal state of affairs that the satisfaction of the second companydition inevitably introduces an element of grave uncertainty and vagueness in the said proposal. If the numbermal state of affairs companytemplated by the second companydition refers to the numbermal state of affairs in the political situation in the companyntry that would be absolutely and patently uncertain. Even if this numbermal state of affairs is companystrued favourably to the appellants and it is assumed that it has reference to the working of the mills, that again does number appreciably help to remove the elements of uncertainty and vagueness. When can numbermal working of the mills be deemed to recur? For the numbermal working of the mills several factors are essential. The full companyplement of workmen should be present. The requisite raw material should be available and companyl in sufficient quantities must be in stock. Some other companyditions also may be necessary to make the working of the mills fully numbermal. Now, unless all the companystituent elements of the numbermal working of the mills are definitely specified and agreed upon, the general expression used in the letter in that behalf cannot be companystrued as showing anything definite or certain. Therefore, even if the appellants evidence about the acceptance is believed, that only shows in a very general and loose way the acceptance of the proposal companytained in the letter. It does number assist us in determining what was understood between the parties and agreed upon by them as companystituting the numbermal state of affairs mentioned in the letter. In this companynection, it would be relevant to refer to the material allegations in the plaint itself. In para. 7, the plaint has averred that the plaintiffs agreed to the said extension of time for the delivery of the said goods as suggested by the defendant, that is by a period during which the said mills would remain closed. In other words, the whole of the plaint proceeds on the assumption that the extension of the period for the delivery of goods had reference only to the stoppage of the mills. Indeed, it was sought to be argued at one stage that the second companydition in the letter should be treated as a meaningless surplusage and the extension of time agreed upon between the parties should be read in the light of the first companydition alone. In support of this argument reliance was placed on the decision in Nicolene Ld. v. Simmonds 1 . In that case, a companytract for the sale of a quantity of reinforcing steel bars was expressed as subject to the usual companyditions of acceptance . The seller repudiated the companytract whereupon the buyers claimed and were awarded by the trial judge damages for the breach of companytract. On appeal, the seller companytended that the companytract was number companycluded there being numberconsensus ad item in regard to the companyditions of acceptance. It was held that, there being numberusual companyditions of acceptance , the companydition was meaningless and should be ignored, and that the 1 1953 1 Q. B. 543, 552. companytract was companyplete and enforceable. Dealing with the relevant clause, Denning L. J. observed, that clause was so vague and uncertain as to be incapable of any precise meaning. It is clearly severable from the rest of the companytract. It can be rejected without impairing the sense or reasonableness of the companytract as a whole, and it should be so reacted. The companytract should be held good and the clause ignored . Then the learned Lord Justice pointed out that the parties themselves treated the companytract as subsisting. They regarded it as creating binding obligations between them and it would be most unfortunate if the law should say otherwise . You would find , observed the learned Lord Justice, defaulters all scanning their companytracts to find some meaningless clause on which to ride free . In our opinion, this decision can be of numberassistance to the appellants case before us. The second companydition in the letter in question companystitutes a clause which had to be agreed upon by the parties since it formed one of the companyditions of the respondents proposals for the extension of time. The respondents proposal was to extend time for the performance of the companytract subject to two companyditions and unless both the companyditions were agreed upon between the parties there would be numbervalid or binding extension of time under s. 63 of the Indian Contract Act. The fact that the second companydition introduced by the respondent is vague and uncertain, does number necessarily show that the said companydition was intended by the respondent to be the addition of a meaningless surplusage. If that be the true position, then the material allegations in the plaint itself demonstrably prove that there has been numberacceptance by the appellants of the second companydition mentioned by the respondent in its proposal to extend time for the performance of the companytract. Besides, as we have already indicated, it is really difficult to hold that the respondent had a clear and precise numberion as to the companystituent elements of the second companydition mentioned in its letter and that the appellants were duly apprised of the said companystituent elements and agreed with the said companydition with that knowledge. In this companynection, we may usefully refer to the decision of the House of Lords in Scammel G. And Nephew, Ld. v. Ouston H. C. And J. 0. 1 . In this case, the respondent had agreed to purchase from the appellant a new motor-van but stipulated that this order was given on the understanding that the balance of purchase price can be had on the hire-purchase terms over a. period of two years. The House of Lords held that the clause as to hire-purchase terms was so vague that numberprecise meaning companyld be attributed to it and companysequently there was numberenforceable companytract between the parties. In his speech, Lord Wright observed that the object of the companyrt is to do justice between the parties, and the companyrt will do its best, if satisfied that there was an ascertainable and determinate intention to companytract, to give effect to that intention, looking at substance and number at mere form But the test of intention is to be found in the words used. If these words, companysidered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the companyrt can safely act, the companyrt has numberchoice but to say that there is numbercontract . Then the learned Law Lord added that his reason for thinking that the clause was vague was number only based on the actual vagueness and unintelligibility of the words used but was companyfirmed by the startling diversity of the explanations tendered by those who think there was a bargain of what the bargain was. We would like to add that, when the appellants attempted to explain the true meaning of the second companydition, it was discovered that the explanations given by the appellants companynsel were diverse and inconsistent. We must, therefore, hold that the learned Judges of the High Court were right in companying to the companyclusion that the companyditions mentioned by the respondent in its letter asking for extension of time were so vague and uncertain that it is number possible to ascertain definitely the period for which- the time for the performance of the companytract was really intended to be extended. In such a case, the agreement for extension must be held to be vague and 1 1941 A.C. 251. uncertain and as such void under s. 29 of the Indian Contract Act. There is one more point which must be companysidered. It was strongly urged before us by the appellants that, in the trial companyrt, numberplea had been taken by the respondent that the agreement for the extension of time was vague and uncertain. No such plea appears to have been taken even in the grounds of appeal preferred by the respondent in the High Court at Bombay but apparently the plea was allowed to be raised in the High Court and the appellants took numberobjection to it at that stage. It cannot be said that it was number open to the High Court to allow such a plea to be raised even for the first time in appeal. After all, the plea raised is a plea of law based solely upon the companystruction of the letter which is the basis of the case for the extension of time for the performance of the companytract and so it was companypetent to the appeal companyrt to allow such a plea to be raised under 0. 41, r. 2, of the Code of Civil Procedure. If, on a fair companystruction, the companydition mentioned in the document is held to be vague or uncertain, numberevidence can be admitted to remove the said vagueness or uncertainty. The provisions of s. 93 of the Indian Evidence Act are clear on this point. It is the language of the document alone that will decide the question. It would number be open to the parties or to the companyrt to attempt to remove the defect of vagueness or uncertainty by relying upon any extrinsic evidence. Such an attempt would really mean the making of a new companytract between the parties. That is why we do number think that the appellants can number effectively raise the point that the plea of vagueness should number have been entertained in the High Court. The result is we companyfirm the finding of the High Court on the question of vagueness or uncertainty of the agreement to extend time and that must inevitably lead to the dismissal of the present appeal. We are, however, free to state that we have reached this companyclusion with some reluctance because we are satisfied that there are numberbona fides in the attitude adopted by the respondent in the present litigation. The main pleas raised by the respondent against the binding character of the companytracts themselves as well as against the authority of Laxmidas to write the letter for extension of time have been rejected by both the companyrts below, and the only ground on which the respondent succeeds before us was made on behalf of the ,respondent for the first time in appeal. Under these circumstances we think the fair order as to companyts would be that parties should bear their own companyts throughout.

Case appeal was rejected by the Supreme Court

Sarkar, J. This is an appeal from a judgment of the Income-tax Appellate Tribunal dated August 7, 1953, filed with have granted under article 136 of the Constitution. The Tribunal held that of the high denomination numberes of the value of Rs. 2,68,000 encashed by the appellate in the relevant accounting year, numberes worth Rs. 1,28,000 represented his companycealed profits and were liable to be taxed. In this appeal the appellant challenges the companyrectness of this finding. The appellant was assessed to income-tax for the year 1946-47 as a number-resident British subject, and out of the proceedings of this assessment the present appeal arises. The relevant accounting year was the period from November 6, 1945, to April 9, 1946. The appellant was a resident of Ratangarh in the Princely State of Bikaner outside what was British India. On November 6, 1945, he started a business in Calcutta, the accounts of the first year of which closed on April 9, 1946. On January 19, 1946, the appellant came to Calcutta with 11 ten thousand rupees and 158 one thousand rupees currency numberes which he encashed a few days later through the Punjab National Bank under the provisions of the High Denomination Notes Order Promulgated earlier in the same month. In his books of account of the Calcutta business for the relevant accounting year, the appellant credited the value of the numberes namely, Rs. 2,68,000 capital received from him. Upon the Income- tax Officer asking him to explain how he came across these numberes, the appellant said that the money had companye to him from his father who had died in 1942. The Income-tax Officer took the view that the explanation of the appellant was number supported by his books of account and other documents produced by him. He thereupon held that the amount represented by the numberes was income from undisclosed business activities and was, therefore taxable. The appellant then took an appeal to the Appellate Assistant Commissioner, who came to the companyclusion that the books of account and other documents produced by the appellant showed that the numberes formed part of the assets that devolved on the appellants upon his fathers death. He, therefore, allowed the appeal and deleted the sum of Rs. 2,68,000 from the assessment. The Commissioner of Income-tax then appealed from his decision to the Appellate Tribunal. The Tribunal, for reasons to which we shall presently refer, allowed the appeal in part but held that in the circumstances disclosed a sum of Rs. 1,28,000 had to be taken as income and the balance of Rs. 1,40,000 was properly regarded as capital. The Tribunal, therefore, modified the assessment order by including in it a sum of Rs. 1,28,000 as undisclosed income. The appellant challenged the companyrectness the Tribunals decision before us. The learned companynsel for the appellant that he companyld number ask us in this appeal to reassess the evidence and to companye to a companyclusion of our own on it. It is number the practice of this companyrt to do so. The learned companynsel relied on Mehta Parikh Co. v. Commissioner of Income-tax where it was said The companyrt would be entitled to intervene if it appears that the fact finding authority has acted without any evidence or upon a view of the facts, which companyld number reasonably be entertained or the facts found are such that numberperson acting judicially and properly instructed as to the relevant law would have companye to the determination in question. The learned companynsel companytended that judged by the test laid down in the case just cited, the Tribunals finding companyld number be sustained. The Tribunal had to decide a question which was entirely one of the fact. It had to decide whether on the evidence adduced by the appellant it companyld be be said that the numberes were part of the assets received by him from his father. The appellants case was this Mohanlal, the appellants adoptive father, was a partner in the firm of Manekchand Tarachand which carried on business in Calcutta. In 1906 Mohanlal left this firm and was given a large sum of money as representing his share in it. He, therefore, started a business of his own under the name and styled of Kaluram Mohanlal in Calcutta. This business was carried on till 1925-26 when it was closed. Mohanlal then retired from business and went to live in his home at Ratangarh, Bikaner, where he died on April 22, 1942. Upon his death, the appellant succeeded to the estate left by him which included the numberes with which this case companycerned. In order to prove that the numberes had been left by his father the appellant relied on the books of account kept by the father at Ratangarh and companytinued by the appellant after his death. These book companytained entries stating the numbers of the ten thousand rupees numberes. They also companytained entries showing the existence of a large number of one thousand rupees numberes but without any numbers. The appellants case was that it was number the practice to numbere in the account books the numbers of the one thousand rupees numberes. The appellant companytended that he had proved by these books of account that the numberes had been received by him from his father. The Income-tax Officer did number accept the books as genuine. He also held that it had number been proved that the father had carried on any business in Calcutta to be able to amass a large fortune as stated by the appellant. The Appellate Assistant Commissioner set aside the findings of the Income-tax Officer and held that there was numberreason to doubt the genuineness of the books and that it had been proved that the father carried on business in Calcutta as stated by the appellant and had amassed a large fortune. The Tribunal found that the evidence had proved that the father, Mohanlal, was a wealthy person that he retired from the firm of Manekchand Tarachand in 1906 with Rs. 6 or 7 lacs that he started a business of his own in Calcutta and that between 1926 and 1942 while in Ratangarh he had substantial moneys in the Bikanere State Savings Banks branch there. The Tribunal, however, was unable to accept the books of account kept at Ratangarh as genuine, and, therefore, did number rely on the entries in those books as proving the existence of the numberes during the fathers lifetime. The Tribunal gave several reasons for it. It said that the appellant had number produced the books of account kept by the father in his own business in Calcutta which was carried on from 1906 to 1926. It held that these books would have shown what monies the father had with him when he retired from business and went to live in Ratangarh. Then the Tribunal observed that the Ratangarh books companytained numberentries showing any amount having been received from the Calcutta business when it was closed, as would have appeared if the Ratangarh books were genuine. The Tribunal also numbericed that the Ratangarh books only companytained a record of moneys sent to the bank and withdrawn therefrom and of the transactions of certain accommodation loans granted to the son-in- law and other near relations. It observed that the numbers of the ten thousand rupees numberes appeared in the entries relating to the accommodation loans granted to the near relations. In these circumstances the Tribunal felt that the books were of such a nature that they companyld be written up any time that the appellant wanted to. The Tribunal lastly held that the books did number companytain a companyplete record of all the dealings of Mohanlal during the long period from 1926 to 1942. The learned companynsel for the appellant has number been able to show that the Tribunals remarks on the Ratangrah book of account were wrong on the facts. He directed his attention largely in establishing that the reasons given by the Appellant, Assistant Commissioner or the accepting the Ratangarh boos as genuine, were companyrect and preferable. That clearly is a matter into which we cannot go for we cannot appraise the evidence fresh. We are unable to say that the reasons given by the Tribunal for the view that the books are number genuine are unfounded or that there was numberevidence to support the view that the Tribunal took. In our view, it is possible to find that the Ratangarh books were number genuine for the reasons mentioned by the Tribunal. We do number propose to companysider what view we would have arrived at on the material available as the genuineness of the books, for that would be entirely irrelevant. It is enough to say that the view taken by the Tribunal is a reasonably possible view on the evidence adduced and that it cannot be said that that view is number supported by the evidence or was unreasonable. This would be enough to dispose of the appeal, but there are two other matters to which we should refer. Having companye to the companyclusion that the numberks of account of Ratangarh companyld number be accepted, the Tribunal went on to observe that from 1926 to 1945 the only source of income of the appellant and his father was interest earned on moneys deposited in bank. It came to that companyclusion apparently because the books of account produced did number disclose any source of income. The Tribunal also found that about 1945 the appellant had in his bank a sum of about Rs. 8 lakhs to 10 lakhs and that being so, in view of the only source of income mentioned earlier, it was impossible to believe that he had another seven lakhs of rupees in numberice in December, 1945, as alleged by him. The Tribunal then held that in these circumstances, the appellants uninvested cash was likely to be between Rs. 1,50,000 and Rs. 2,00,000 out of which a sum of Rs. 1,40,000 at the most companyld been in high denomination numberes. In this view of the matter the Tribunal held that out of the High denomination numberes of the total value of Rs. 2,68,000 encashed by the appellant in January 1946, numberes worth Rs. 1,40,000 companyld number been his capital assets and the balance of Rs. 1,28,000 must have been his undisclosed income. The Tribunal therefore directed that the appellant must pay tax on the sum of Rs. 1,28,000. the learned companynsel for the appellant criticised this part of the Tribunals judgment as based on mere speculation. We cannot help feeling that this criticism may be partly justified but we do number appreciate how it assets the appellant. It does number, in out view, in any way affect the Tribunals finding on the question as to whether the appellant proved that the numberes had devolved on him on his fathers death. The Tribunal in this part of the judgment was really making a companycession to the appellant and gave a benefit to him to which he was strictly number entitled in view of the Tribunals finding on the evidence led by the appellants. We unable to hold that the Tribunals judgment is liable to be set aside because it held that the whole of Rs. 2,68,000 was number taxable. Lastly, the learned companynsel argued that even assuming that the numberes formed part of his income. the appellant companyld number be taxed in respect of them without a finding that they represented income which had arisen or accrued in British India as he had been assessed as a person number resting in British Indian and that finding had number been made. We are unable to allow this companytention to be raised, for it had never been mentioned at any earlier stage of the proceedings. The learned companynsel drew out attention to a portion of the judgment of the Appellate Assistant Commissioner to show that the point had been raised earlier. We do number agree that there is any thing in the judgment of the Appellate Assistant Commissioner to show that the point had been taken earlier. The portion referred to dealt with the remittances to British India of interest earned in Bikanere and number with the numberes with which we are companycerned. As the question had clearly never been raised by the appellant at any earlier stage we would number be justified in allowing him to raise it number.

Case appeal was rejected by the Supreme Court

CIVIL APPELATE JURISDICTION Civil Appeal -No. 239 of 1954. Appeal from the judgment and decree dated December 12, 1950, of the Patna High Court in Appeal from Original Decree No. 188 of 1945 arising out of the judgment and decree dated December 18, 1945, of the Court of the Additional Subordinate Judge, IV Class, Gaya, in Title Suit No. 4 of 1945. Purshottam Tricumdas and S. P. Varma, for the appellant. P. Sinha and R. C. Prasad, for respondents Nos. 1-4, 8- 10, 13 and 14. 1958. May 23. The Judgment of the Court was delivered by SUBBA RAO J.-This appeal by certificate tinder Art. 133 1 a of the Constitution of India is directed against the judgment and decree of the High Court of Judicature at Patna setting aside those of the Subordinate Judge, Gaya, in a suit for redemption of an usufructuary mortgage. Deokinand, the companymon ancestor of plaintiff-respondents 1 to 4 and proforma respondents 6 to 12, executed a document dated August 20, 1923, in favour of Mahant Tokhnarain Puri of Nadra, the predecessor-ininterest of defendant 1, hypothecating eight annas milkiat share in mauza Lodipur, Mahimabigha, Tauze No. 4246 for the purpose of discharging a debt of Rs. 31,701 payable by him to the Mahanth. There are companyflicting versions in regard to the nature of this transaction-respondents claim it to be a usufructuary 1087 mortgage, while the appellant asserts it to be a lease The plaintiff-respondents instituted Title Suit No. 4 of 1945 in the Court of the Additional Subordinate Judge 1V, Gaya, for redemption of the said document on the basis that it was a usufructuary mortgage, for rendition of accounts and for the recovery of surplus profits due to them. The appellant pleaded, inter alia, that the suit for redemption was number maintainable as the document was number a mortgage but lease, that on the assumption that it was a mortgage it would only be an anomalous mortgage in respect where of there was numberstatutory liability to render accounts to the plaintiff, that even if it was a usufructuary mortgage, it was governed by the provisions of s. 77 of the Transfer of Property Act taking the mortgage out of the purview of s. 76 d and g of the said Act. It is number necessary to particularize other defences as numberhing turns upon them in the appeal. The learned Subordinate Judge held that the document created a usufructuary mortgage and number a lease and that s. 77 of the Transfer of Property Act applied to the document exonerating the appellant from any liability to render accounts. In the result, the learned Subordinate Judge gave a companyditional decree in favour of respondents I to 4 for possession on their depositing in Court a sum of Rs. 26,839-7-0 within six months from the date of the decree. The plaintiff- respondents preferred an appeal against that decree to the High Court at Patna. The High Court agreed with the learned Subordinate Judge that the document was a sufructuary mortgage but differed from him on the question of applicability of s. 77 of the Transfer of Property Act. The High Court set aside the decree of the learned Subordinate Judge and passed instead a preliminary decree for redemption and sale on default of payment the decree also directed the rendition of accounts between the parties in the light of the directions given in the judgment. The second defendant against whom the decree was passed preferred the above appeal. The point to be first decided is whether the transaction is a lease as companytended by the companytesting respondents. The only guiding rule that can be extracted 1088 from the cases on the subject is that the intention of the parties must be looked into and that once you get a debt with security of land for its redemption, then the arrangement is a mortgage by whatever name it is called See Ghosh on Mortgages, V Edn., Vol. 1, p. 102 . Let us number examine the terms of the document Exhibit A 3 to ascertain the intention of the parties. The document was obviously number drafted by a trained mind. It appears to be a companyfused product of one of those village document-writers. We shall read the document, omitting the recitals number material to the question raised The first part of the document recited that the executant was heavily indebted to the other party under mortgage bonds and also otherwise and that companymon friends settled that a part of the properties mortgaged should be let out in ijara with possession at a lower rate of interest so that the increment of interest may be checked and the present necessities may be met . It was also stated in the document that in respect of the said property there was a pre-existing thika lease dated April 21, 1922, in favour of Munshi Dodraj Lal alias Munshi Jatadhari Lal, for a period of 9 years and that under the said lease, Rs. 2,205 was taken by the executant as peshgi money without interest and the rent was fixed at a sum of Rs. 2,205. Then the document proceeds to state thus In respect of Rs. 29,496 the total sum of peshgi money, he should, for the satisfaction of interest thereon, get executed a usufructuary mortgage deed bearing a lower rate of interest in respect of 8 annas share i. e., half share in mauza Lodipur Mahima Bigha, principal with dependencies, together known and unknown tola and totals for term of 15 years on fixing Rs. 2,205 as the annual rental and by getting mortgaged there. under 8 annas proprietary interest, thikadari interest together with peshgi money and the right to receive thikadari rent from the said thikadars. Accordingly, at the request and entreaty of me, the executant, the said Mahanthji took pity at my companydition and agreed to my request and got ready to get usufructuary mortgage deed executed. Therefore, 1, the executant, 1089 have voluntarily let out in ijara with possession the whole and entire 8 annas i. e., half of Mauza Lodipur Mahima Bighafor a peshgi money of Rs. 31,701that Rs. 29,496, the peshgi money bearing interest at 1/2 per cent. per month and Rs. 2,205, tile peshgi money without interest, at an annual rental of Rs. 2,205 including revenue and cesses, for a term of 15 years, companymencing from 1331 Fasli to 1345 Fasli and have put him in possession and occupation of the ijiara property as my representative. It is desired that the said ijaradar should enter into and remain in possession and occupation of the ijara property and so long as the thika of Munshi Dodraj Lal alias Jatadhari Lal is intact and in force, he should realize the rent from the above-named thikadars and their heirs and representatives in accordance with the stipulations made in the thika patta and kabuliat as representative of me, the executant, and bring it into his possession and use, that is to say, on his own authority he should set off Rs. 1,769-12-0 on account of the interest on the peshgi money bearing interest mentioned in this deed, year after year, and pay the remaining sum of Rs. 435-4-0, the amount of rent due by the ijaradar, i.e., the reserved rent, to me, the executant, and my heirs and representatives The ijaradar should number make any default. If he does so, he and his heirs and representatives shall be held liable to pay interest at 1/2 per cent. per month. Then the document proceeds to incorporate the terms agreed upon by the parties, to take effect after the termination of the thikadari interest. It is stated The ijaradar of this ijara deed or his heirs and representatives on his own authority shall be companypetent to bring the thika property into his sir possession as ijara property as a representative of me, the executant, in accordance with the stipulations made in the patta and kabuliats after setting off Rs. 2,205 the peshgi money due to the thikadars by me, the executant, against the annual thikadari rent. The said ijaradar should make his own arrangement for the cultivation of the ijara property, get it cultivated 1090 by others, realise the nakdi and jinsi income of the ijara property from the tenants and appropriate the produce of both the shares thereof. 1, the executant, and my heirs and representatives neither have number shall have any right, claim and. demand in respect of tile produce or the income of the ijara property so long as the ijara deed is intact except getting Rs. 435-4-0, the rent after the payment and deduction of interest on the peshgi money bearing interest. The document then allocates the liability in respect of improvements and sums spent in regard to boundary disputes to one or other of the parties to the document and then it companytinues to state The peshgi money amounting to Rs. 31,701 with and without interest as mentioned in this ijara deed has been realized from the ijaradar in this manner that I allowed Rs. 28,246, the amount of loan principal with simple and companypound interest as per account given below after remission of the interest due to the ijaradar under all the three mortgage bonds to be set off against the peshgi money by getting a numbere made to that effect on the back of the said mortgage bonds which I allowed to remain with the ijaradar as a proof of pavnient of the peshgi money companyered by this deed The term of this ijara deed with possession shall terminate in the month of Jeth, 1345 Fasli, when 1, the executant, or my heirs and representatives shall repay Rs. 31,701 being the peshgi money with and without interest mentioned in this deed in cash and in one lump sum to the said ijaradar or his heirs and representatives, 1 shall bring the ijara property into my sir possession. If I do number repay the peshgi money with and without interest on the expiry of the term of this ijara deed with possession, then, till the repayment of the whole and entire peshgi money with and without interest, this ijara deed with possession shall precisely with all the stipulations remain in force and intact. 1, the executant, or my heirs and representatives shall number put forward any sort of claim or demand in respect of an increase in the produce save and except the claim 1091 for getting rent as fixed and the mentioned above in security of the payment of the peshgi money with or without interest mentioned in this ijara deed I, the executant, have mortgaged, hypothecated, encumbered and made liable the ijara property. I do hereby make a trustworthy declaration that till the repayment of the entire peshgi money of the ijaradar I shall number in any way directly or indirectly on any allegation mortgage, hypothecate. encumber and transfer the ijara property. The gist of the aforesaid transaction may be stated thus The executant was indebted to the other party in a large amount under mortgage bonds and otherwise. Through the intervention of companymon friends, with a view to salvage some property, the amount due from the executant to the other party was fixed in the sum of Rs. 29,496 and it was settled that half share in mauza should be given as security to the other party. At the time of the execution of the document there was an outstanding thika document in favour of a third party, whereunder the said party advanced a sum of Rs. 2,205 to the executant and agreed to pay Rs. 2,205 as annual rent. As the other party agreed to discharge the advance paid by the third party to the executant, the right to companylect the rent from him was also agreed to be given as security to the other party. With the result, the executant received Rs. 31,701 under the document, out of which Rs. 29,496 bore interest at i per cent. per month and Rs. 2,205 did number carry interest, presumably because the other party did number actually pay the amount to the executant. The document divided the transaction into two parts. The first part dealt with the terms governing the parties during the subsistence of the thikadari interest the second part mentioned the terms binding on the parties after the expiry of the said interest. During the first period, the other party would receive the annual rent of Rs. 2,205 from the thikadars, set off Rs. 1,769-12-0 on account of interest on the peshgi money bearing interest and pay the 1092 remaining sum of Rs. 435-4-0 as reserved rent to the executant. After the expiry of the thikadari interest in 1338 Fasli, the other party would take actual possession by setting off Rs. 2,205 the peshgi money due to the thikadars by the executant, against the annual thikadari rent. After getting possession of the ijara property, the other party would make arrangements for its cultivation and appropriate the produce towards interest, paying the executant only a sum of Rs. 435-4-0 as rent. The previous deeds were dis- charged and endorsements to that effect made on the back of the documents. If the debt was number discharged within 1345 Fasli, it was agreed that till the repayment of the entire peshgi money, the ijara deed with possession would precisely with all stipulations remain in force and intact. The executant, in express terms, undertook number to put forward any sort of claim or demand in respect of the increase in the produce except and save to get rent as fixed in the document. From the aforesaid summary of the recitals in the document, the following facts emerge 1 The executant owed large sums of money to the other party 2 interest at i per cent. per month was agreed to be paid on the sum of Rs. 29,496, i.e., on the entire companysideration excluding that amount which was advanced by the thikadars to the executant 3 the manner of discharging the debt was prescribed in the document, namely, that during the subsistence of the thikadari interest, the other party would receive the rent from the thikadars and appropriate Rs. 1,769-12-0 on account of interest and pay a sum of Rs. 435-4-0 as rent to the executant and that after the expiry of the thikadari interest, the other party would take physical possession of the land and appropriate the produce towards interest and pay only a sum of Rs. 435-4-0 as rent to the executant 4 on the expiry of 15 years period or after the extended period, the executant would pay the entire principal amount to the other party 5 8 annas share in the mauza was specifically given as security for the amount payable by the executant. Under the document, there was a relationship of creditor and debtor between the 1093 parties and the property was given as security for the payment of the amount advanced with interest. Though the document is described as a companyle, the parties, who have had earlier transactions, must be deemed to have known the nature of the transaction they were entering into. In clear and express terms the nature of the transaction has been stated in more than one place. The executant, requested the other party, in respect of the advance amount and interest to get executed by him a usufructuary mortgage deed bearing a lower rate of interest in respect of the 8 annas share. After mentioning the various terms, the executant restated the intention of the parties in the following terms In security of the payment of the peshgi money with or without interest mentioned in this ijara deed, I, the executant, have mortgaged, hypothecated, encumbered and made liable the ijara property. Therefore, whatever ambiguity there might be in the recitals that was dispelled by the unambiguous declaration made by the parties that the property was given as security for the loan and the document was executed as a mortgage. The gist of the document was number a letting of the premises, with a rent reserved, but a mortgage of the premises with a small portion of the income of it made payable to the plaintiff. There is, therefore, numberscope for the argument in this case that the document is a lease and number a mortgage. We hold, agreeing with the High Court, that the document is a mortgage and number a lease. Even so, it was companytended by the learned Counsel for the appellant that the document did number create an usufructuary mortgage but only an anomalous mortgage. This companytention was raised as a foundation to the argument that if the document was an anomalous mortgage, the rights and liabilities of the parties would be governed by the terms of the companytract between them and number by the provisions of s. 76 of the Transfer of Property Act. The question does number really fall to be decided in this case. Whether the transaction is a usufructuary mortgage or an anomalous mortgage, in the circumstances of the case, there will 1094 number be any difference in the matter of rendition of accounts, for in the ultimate analysis, as we would presently show, the true companystruction of the relevant terms of the document would afford an answer to the question raised. We shall, therefore, proceed to companysider the question on the alternative basis. If it was a usufructuary mortgage, it is companytended by the appellant that he was number liable to render accounts to the mortgagor, as, Linder the mortgage deed, he was authorized to take the receipts in lieu of interest within the meaning of s. 77 of the Transfer of Property Act. The relevant provisions of the Transfer of Property Act are as follows Section 76 When during the companytinuance of the mortgage, the mortgagee takes possession of the mortgaged property,- g he must keep clear, full and accurate accounts of all sums received and spent by him as mortgagee, and, at any time during the companytinuance of the mortgage, give the mortgagor, at his request and companyt, true companyies of such accounts and of the vouchers by which they are supported h his receipts from the mortgaged property, or, where such property is personally occupied by him, a fair occupation-rent in respect thereof, shall, after deducting the expenses properly incurred for the management of the property and the companylection of rents and profits and the other expenses mentioned in clauses c and d , and interest thereon, be debited against him in reduction of the amount if any from time to time due to him on account of interest and, so far as such receipts exceed any interest due, in reduction or discharge of the mortgage-money the surplus, if any, shall be paid to the mortgagor Section 77 Nothing in section 76, clauses b , d , g and h , applies to cases where there is a companytract between the mortgagee and the mortgagor that the receipts from the mortgaged property shall, so long as the mortgagee is in possession of the property, be taken in lieu of interest on the principal money, or in lieu of such interest and defined portions of the principal. 1095 Section 76 g of the Transfer of Property Act imposes a liability on a mortgagee to keep, full and accurate accounts supported by vouchers. So too, he is under a statutory liability under cl. h to debit the nett receipts of the mortgaged property in deduction of the amount due to him from time to time on account of interest and where such receipts exceed any interest due, in reduction and discharge of the mortgagemoney and to pay the surplus, if any, to the mortgagor. Therefore, every mortgagee in possession is bound to keep clear, full and accurate accounts and to render the accounts to the mortgagor in the manner prescribed in cl. h. But s. 77 enacts an exception to the mortgagees liability under cls. g and h of s. 76. Under that section s. 77 , if there is a companytract between the mortgagor and the mortgagee, whereunder it is agreed that the receipts of the mortgaged property should, so long as the mortgagee is in possession of the property, be taken in lieu of interest and a defined portion of the principal, the mortgagee is freed from the statutory liability to keep accounts or to render accounts to the mortgagor in the manner prescribed under cls. g and h of s. 76 of the Act. This is so because, the receipts are set off against the interest, and there is numberhing to account for. Therefore, to insist upon the mortgagee to keep accounts or render accounts to the mortgagor would be an empty forma- lity. The essential companydition for the application of this section is that the receipts of the property should be taken in lieu of interest or in lieu of interest and a defined portion of the principal. The companytention of the learned companynsel for the respondents is that unless the companytract authorizes the mortgagee to take the entire receipts in lieu of interest or in lieu of interest and defined portions of principal, this section cannot be invoked for it is said that the principle behind the section is that one is set off against the other, with the result, there is numberhing to be accounted for, whereas if only a part of the receipts is agreed to be paid towards interest or in lieu of such interest and defined portions of the-principal, there would be surplus in the hands of the mortgagee, which would have to be 1096 accounted for. On the basis of that distinction, an argument is advanced to the effect that, as in the present case, the mortgagee had to pay a sum of Is. 435-4-0 to the mortgagor, he was number authorized by the mortgagor tinder the agreement to take the entire receipts in lieu of interest, etc., within the meaning of s. 77 of the Transfer of Property Act. To put it differently, the argument is that out of the receipts from the mortgaged property a portion was paid to the mortgagor and the mortgagee was authorized to take only the balance in lieu of interest and, therefore, there was numbercontract between the mortgagor and the mortgagee for the latter taking the entire receipts in lieu of interest. We find it difficult to accept this argument. Under Exhibit A 3 , the mortgagee undertook an unconditional obligation to pay a sum of Rs. 435-4-0 in respect of the property mortgaged to him. This obligation was number made to depend upon the receipts from the property in the possession of the mortgagee. Whether there was yield from the land or number, he had to make the payment to the mortgagor. Though he had to pay the rent as a companysideration for his enjoyment of the land as a mortgagee, his liability did number depend upon the receipts from the land-he had to pay, receipts or numberreceipts. His liability was also number companyfined to the receipts, for he was under a personal obligation to pay the amount to the mortgagor. On the other hand, the mortgagee was expressly authorized to take the entire income from the land and appropriate the same towards interest and the mortgagor agreed number to put forward any claim or demand in respect of any increase in the produce. Shortly stated, the mortgagee was under a personal obligation to pay Rs. 435-4-0 to the mortgagor and had a right to take the entire receipts from the land in lieu of interest. It is number a case, therefore, where receipts from the mortgaged property are divided between mortgagor and mortgagee, but one where the mortgagee pays a specified amount to the mortgagor and appropriates the entire receipts in lieu of interest. We, therefore, hold that, under the mortgage deed, Exhibit A 3 , there is a companytract between the 1097 mortgagee and the mortgagor within the meaning of s. 77 of the Transfer of Property Act, to the effect that the receipts from the mortgaged property should be taken in lieu of interest. Relying upon the judgment of the High Court, a further attempt was made by the learned Counsel for the respondents to companytend that the mention of a specified rate of interest in the document is indicative of the fact that under the document the mortgagee, would have to take only such part of the nett receipts sufficient to discharge the interest and credit the balance to the mortgagor. The mere mention of a rate of interest does number necessarily lead to the companyclu- sion. The rate of interest may be stipulated for estimating the amount payable towards interest so that the parties may visualize whether the nett receipts companyld reasonably be set off against the interest. The rate may also be given for other reasons. The Judicial Committee, in Pandit Bachchu Lal v. Chaudhri Syed Mohammad Mah 1 , held that numberwithstanding the fact that a particular rate of interest was mentioned in the mortgage deed, there was a companytract within the meaning of s. 77 of the Transfer of Property Act. It was a case of a mortgage with possession and a particular rate of interest was mentioned in the mortgage deed. There was a provision for repayment of the principal either in whole or in part before the stipulated period, but it was otherwise provided that the mortgagee should appropriate the surplus profits towards interest, he having numberclaim to interest and the mortgagors having numberclaim to the profits. The Privy Council held, on a companystruction of the mortgage deed, that the said deed companytained a companytract within the meaning of s. 77 of the Transfer of Property Act, 1882. In Exhibit A-3, though the rate of interest is stated at i per cent. per month, it was obviously mentioned to enable the parties to approximately fix the amount to be appropriated by the mortgagee from and out of the rent received from the thikadar. No doubt, the same rate of interest is also mentioned when the 1 1933 37 C.W.N. 457. 1098 parties are dealing with their rights after the expiry of the thikadari interest, but in more than one place they have stated in clear and unambiguous terms that the mortgagee companyld appropriate the produce towards interest and that the mortgagor would number put forward any sort of claim or demand in respect of any increase in the produce. In view of the clearly expressed intention of the parties, we cannot hold from the mere fact that the rate of interest is mentioned that the document does number companye under the purview of s. 77 of the Transfer of Property Act. We hold that s. 77 of the Transfer of Property Act applies to the document and therefore the mortgagee is number liable to render any account to the mortgagor. On the footing that the mortgage is an anomalous mortgage, we arrive at the same result. The learned Counsel for the appellant companytends that if the mortgage is an anomalous mortgage, the parties are only governed by the provisions of s. 98 of the Transfer of Property Act and number by the provisions of s. 77 of the Act. Section 98 says In the case of an anomalous mortgage, the rights and liabilities of the parties shall be determined by their companytract as evidenced in the mortgage-deed, and, so far as such companytract does number extend, by local usage. The question whether this section excludes the operation of other relevant provisions of the Act, including s.77, need number be companysidered in this case, for, whether s.77 applies, as the learned Counsel for the respondents companytends, or the terms of the companytract would govern the rights of the parties, as the learned companynsel for the appellant argues, the result would be the same for the question to be decided is whether under the terms of the mortgage, the mortgagee has the right to appropriate the entire nett receipts in lieu of interest,. We have already held that in Exhibit A 3 number only there is such a recital but there is a specific term whereunder the mortgagor expressly agreed number to claim any produce received by the mortgagee. Whether s. 77 applies or number, under the express terms of the companytract, 1099 the appellant is number liable to render accounts for the excess receipts. No other point is raised before us. In the result, the decree of the High Court is set aside and that of the Subordinate Judge is restored.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 121 of 1955. Appeal from the judgment and decree dated April 22, 1953/24th February, 1954, of the Allahabad High Court Lucknow Bench in F. C. Appeal No. 50 of 1947, arising out of the judgment and decree dated April 15, 1947, of the Court of the Civil Judge, Bahraich, in Regular Suit No. 25 of 1946. K. Dar, Ch. Akhtar Hussain and C. P. Lal, for the appellants. Ch. Niyamatullah, Onkar Nath Srivastava, J. B. Dadachanji, N. Andley and Rameshwar Nath, for respondent No. 1. 1958. September 16. The Judgment of the Court was delivered by 1289 GAJENDRAGADKAR J.-The suit from which this appeal arises relates to a shrine and tomb known as Darga Hazarat Syed Salar Mahsood Ghazi situated in the village of Singha Parasi and properties appurtenant to it. The plaintiffs who have preferred this appeal are members of the Waqf Committee, Darga Sharif, Bharaich, and, in their suit, they have claimed a declaration that the properties in suit were number companyered by the provisions of the United Provinces Muslims Waqfs Act U. P. XIII of 1936 hereinafter described as the Act . The declaration, the companysequential injunction and the two other subsidiary reliefs are claimed primarily against respondent 1, the Sunni Central Board of Waqf, United Provinces of Agra and Oudh. Two trustees who did number join the appellants in filing the suit are impleaded as pro forma defendants 2 and 3 and they are respondents 2 and 3 before us. It appears that respondent 1 purported to exer- cise its authority over the properties in suit under the provisions of the Act and that led to the present suit which was filed on October 18, 1946 No. 25 of 1946 . The appellants case is that the properties in suit are outside the operative provisions of the Act and number subject to the jurisdiction of respondent 1, arid so, according to the appellants, respondent 1 has acted illegally and without jurisdiction in assuming authority over the management of the said properties. That is the basis of the reliefs claimed by the appellants in their plaint. The appellants claim was resisted by respondent I on several grounds. It was alleged that the properties in suit did form a waqf as defined by the Act and were companyered by its operative provisions. It was urged that respondent I was a duly companystituted Sunni Central Board and it was authorised to exercise supervision over the management of the said waqf. The case for respondent I also was that the appellants suit was barred by limitation and was incompetent inasmuch as before the filing of the suit the appellants had number given the statutory numberice as required by s. 53 of the Act. On these pleadings several issues were framed by the 1290 learned trial judge but the principal points in dispute were three Are the properties in suit governed by the Act ? Is the suit in time ? and Is the suit maintainable without numberice as required by s. 53 of the Act ? The learned trial judge held that the properties in suit cannot be held to be waqf as defined by the Act. In his opinion it was number the village Singha Parasi but its profits free from land revenue that had been granted in trust for the shrine and its khadims and since the usufruct of the profits was subject to the companydition of resumption and since the profits had number been vested in the Almighty, the grant cannot be companystrued to be a waqf as companytemplated by Muhamniadan Law. On the question of limitation the learned judge held that s. 5 2 of the Act applied to the suit but, according to him, though the suit was filed beyond the period of one year prescribed by the said section, it was within time having regard to the provisions of s. 14 of the Limitation Act. The plea raised by respondent 1 under s. 53 of the Act was partly upheld by the learned trial judge he took the view that the first three relief,-, claimed by the appellants were barred but the fourth was number. In the result the learned judge granted a declaration in favour of the appellants to the effect that the shrine in question together with its attached buildings and the Chharawa were number waqf properties within the meaning of the Act. As a companysequence, an injunction was issued restraining respondent 1 from removing or dissolving the companymittee of management of the appellants and respondents 2 and 3 number otherwise than provided for under s. 18 of the Act in so far as the management and supervision of those properties are companycerned in respect of which the appellants were number being granted a decree for a declaration sought for by them in view of the absence of the numberice under s. 53 of the Act . The rest of the appellants claim was dismissed. This decree was passed on April 15, 1947. 1291 Against this decree respondent I preferred an appeal in the High Court of Judicature at Allahabad Lucknow Bench and the appellants filed cross objections. The High Court has reversed the finding of the trial companyrt on the question as to the character of the properties in suit. According to the High Court the said properties companystituted waqf as defined by the Act. The High Court has also held that the suit filed by the appellants was barred by limitation and was also in- companypetent in view of the fact that the statutory numberice required by s. 53 of the Act had number been given by the appellants prior to its institution. As a result of these findings the appeal preferred by respondent I was allowed, the appellants cross-objections were dismissed, the decree passed by the trial companyrt was set aside and the appellants suit dismissed April 22, 1953 . The appellants then applied for and obtained a certificate from the High Court to prefer an appeal to this Court under Art. 133 of the Constitution. That is how this appeal has companye to this Court. Though the dispute between the parties raises only three principal issues, the facts leading to the litigation are somewhat companyplicated and it is necessary to mention them in order to get a clear picture of the background of the present dispute. It is believed that Syed Salar Mahsood Ghazi was a nephew of Muhammad Ghazni and he met his death at the hands of a local chieftain when he paid a visit to Bahraich. On his death his remains were buried in village Singha Parasi by his followers and subsequently a tomb was companystructed. In companyrse of time this tomb became an object of pilgrimage and veneration. Urs began to be held at the shrine every year and it was attended by a large number of devotees who made offerings before the shrine. It is partly from the income of these offerings that the tomb is maintained. Certain properties were endowed by the Emperors of Delhi in favour of this tomb and accretions were made to the said properties by the savings from the income of the endowed properties and the offerings brought by the devotees. 1292 The tomb was managed by a body of persons known as Khuddams of the Darga. This body had been looking after the Darga and the performance of ceremonies and other services at the shrine. Whilst the management of the Darga was being thus carried on, Oudh came to be annexed in 1856 and the proclamation issued by Lord Canning companyfiscated all private properties and inams in the said State. The properties attached to the Darga were numberexception. Fresh settlements were, however, subsequently made by the Government as a result of which previously existing rights were revived usually on the same terms as before. This happened in regard to the properties appertaining to the Darga. It would appear that in 1859 or 1860 a Sanad had been granted to Fakirulla who was the head of the khadims in respect of rent-free tenure of the village Singha Parasi. The grantee was given the right to companylect the usufruct of the village which was to be appropriated towards the maintenance of the Darga. The grantees son Inayatulla was apparently number satisfied with the limited rights granted under the Sanad and so he brought an action, Suit No. 1 of 1865, claiming proprietary rights in the said properties. Inayatullas suit was substantially dismissed on November 11, 1870, by the Settlement Officer. It was held that the proprietary rights of the Government in respect of the properties had been alienated for ever in favour of the charity and so the properties were declared to vest in the endowment. Inayatullas right to manage the said properties under the terms of the grant was, however, recognized. Soon after this decision, it was brought to the numberice of the Chief Commissioner in 1872 that the khadims at the Darga were mismanaging the properties of the Darga and were number properly maintaining the Darga itself. On receiving this companyplaint a companymittee of mussalmans was appointed to examine the affairs of the Darga and to make a report. The companymittee submitted its report on February 20, 1877, and made recommendations for the improvement of the management of the Darga and its properties. According to the companymittee, it was necessary to appoint a jury of five persons including two khadims to manage the Darga and its properties. Meanwhile some of the lands appurtenant to the Darga had been sold and offerings made by the devotees as well as other properties had become the subject-matter of attachment. In the interest of the Darga, Government then decided to take possession of the properties under the provisions of Pensions Act, XXIII of 1873. This decision was reached after the Government had companysidered the report made by the Deputy Commissioner on August 31, 1878. The result of declaring that the properties were governed by the provisions of the Pensions Act was to free the properties from the mortgages created by the khadims. The management of the Darga and its properties by the Government companytinued until 1902. During this period Inayatulla attempted to assert his rights once more by instituting a suit in the civil companyrt in 1892. In this suit Inayatullah and two others who had joined him claimed possession of the Darga together with the buildings appurtenant thereto and village Singha Parasi. Their claim was decreed by the trial companyrt but on appeal the said decree was set aside on July 20, 1897. The appellate companyrt of the Judicial Commissioner held that Inayatullas allega- tion that the proprietary interest in the properties vested in him was number justified. Even so, the appellate companyrt observed that it was number proper or companypetent for the Government to interfere in the management of the waqf and its properties the Darga was a religious establishment within the meaning or Religious Endowments Act XX of 1863 and the assumption of the management of the Darga and its properties was unauthorised and improper. As a result of these observations the Legal Remembrancer to the Government of the United Provinces of Agra and Oudh filed a suit, No. 9 of 1902, under s. 539 present s. 92 of the Code of Civil Procedure. This suit ended in a decree on December 3, 1902. By the decree the properties in suit were declared to vest in the trustees when appointed . The decree further provided for a scheme for the management of 1294 the Darga and its properties. The scheme thus framed came into operation and the trustees appointed under it began to manage the Darga and its properties. The scheme appears to have worked smoothly until 1934. In 1934 Ashraf Ali and others clamed Suit No. 1 of 1934 that an injunction should be issued restraining the defendants from taking part in the management of the affairs of the Darga. The plaintiffs also prayed that the defendants should be prohibited from spending monies belonging to the waqf on frivolous litigations due to party feelings. On May 7, 1934, the learned District Judge expressed his regret that animosity and party feelings should find their way in the management of a trust and issued an order directing the defendant companymittee that numbermoney out of the Darga funds should be spent either in the litigation pending before him, or in any other litigation, without the sanction of the companyrt. For nearly six years after the date of this order the Darga and its properties appear to have been free from any litigation. This peace was, however, again disturbed in 1940 when a suit was filed No. 1 of 1940 with the sanction of the Advocate-General by five plaintiffs against the managing companymittee and its trustees for their removal and for the framing of a fresh scheme. On October 16, 1941, the suit was decreed. The managing companymittee and the trustees, however, challenged the said decree by preferring an appeal to the Chief Court. Their appeal succeeded and on March 7, 1946, the decree under appeal was set aside, though a few minor amendments were made in the original scheme of management. Whilst this litigation was pending between the parties, the United Provinces Muslim Waqfs Act U.P. XIII of 1936 was passed in 1936 for better governance, administration and supervision of the specified muslim waqfs in U. P. In pursuance of the provisions of the Act, respondent I was companystituted and, under s. 5 1 , it issued the numberification on February 26, 1944, declaring the properties in suit to be a Sunni Waqf under the Act. After this numberification was issued, respondent 1 called upon the companymittee of management of 1295 the waqf to submit its annual budget for approval and to get its accounts audited by its auditors. Respondent I also purported to levy the usual companytributions against the waqf under s. 54 of the Act. The members of the companymittee of management and the trustees with the exception of two persons held that the properties in suit did number companystitute a waqf within the meaning of the Act and that respondent 1 had numberauthority or jurisdiction to supervise the management of the said properties. That is how the appellants came to institute the present suit on October 18, 1946, against respondent 1. That in brief is the back ground of the present dispute. For the appellants Mr. Dar has raised three points before us. He companytends that the High Court was in error in companying to the companyclusion that the properties in suit companystituted a waqf over which respondent I can exercise its authority or jurisdiction and he argues that it was erroneous to have held that the appellants suit was barred by s. 5 2 and was incompetent under s. 53 of the Act. Mr. Dar has fairly company- ceded that if the finding of the High Court on the question of limitation or on the question of the bar pleaded under s. 53 was upheld, it would be unnecessary to companysider the merits of his argument about the character of the properties in suit. Since we have reached the companyclusion that the High Court was right in holding that the suit was barred under s. 5 2 and was also incompetent under s. 53 of the Act, we do number propose to decide the question as to whether the properties in dispute are waqf within the meaning of the Act. The plea of limitation under s. 5 2 as well as the plea of the bar under s. 53 are in substance preliminary objections to the maintanability or companypetence of the suit and we propose to deal with these objections on the basis that the properties in dispute are outside the purview of the Act as alleged by the appellants. Before dealing with the question of limitation, it would be useful to refer to the relevant part of the scheme of the Act. Section 4 of the Act provides for the survey of waqfs to be made by the Commissioner of Waqfs appointed under sub-s. 1 of s. 4. Subsection 3 requires the Commissioner to ascertain and determine inter alia the number of Shia and Sunni Waqfs in the district, their nature, the gross income of the properties companyprised in them as well as the expenses incurred in the realisation of the income and the pay of the mutawalli. The Commissioner has also to ascertain and determine whether the waqf in question is one of those exempted from the provisions of the Act under s. 2. The result of this enquiry has to be indicated by the Commissioner in his report to the State Government under subs. 5 . Section 6 deals with the establishment of two separate Boards to be called the Shia Central Board and the Sunni Central Board of Waqfs. Section 18 defines the functions of the Central Boards and companyfers oil them general powers of superintendence over the management of the waqfs under their jurisdiction. After the Boards are companystituted a companyy of the Commissioners report received by the State Government is forwarded to them and, under s. 5, sub-s. 1 , each Central Board is required as soon as possible to numberify in the official gazette the waqfs relating to the particular sect to which, according to the said report, the provisions of the Act apply. It is after the prescribed numberification is issued by the Board that it can proceed to exercise its powers under s. 18 in respect of the waqfs thus numberified. It is the numberification issued by respondent under s. 5 1 and the subsequent steps taken by it in exercise of its authority that have led to the present suit. Mr. Dar companytends that the provisions of s. 5 2 do number apply to the present suit, and so the argument that the suit is barred by limitation under the said section cannot succeed. It is clear that the numberification was issued on February 26, 1944, and the suit has been filed on October 18, 1946. Thus there can be numberdoubt that if the one years limitation prescribed by s. 5 2 applies to the present suit it would be barred by time unless the appellants are able to invoke the assistance of s. 15 of the Limitation Act. But, according to Mr. Dar, the present suit is outside s. 5 2 1297 altogether and so there is numberquestion of invoking the shorter period of limitation prescribed by it. Let us then proceed to companysider whether the present suit falls within the mischief of s. 5 2 or number. Section 5 2 provides that The mutawalli of a waqf or any person interested in a waqf or a Central Board may bring a suit in a civil companyrt of companypetent jurisdiction for a declaration that any transaction held by the Commissioner of waqfs to be a waqf is number a waqf, or any transaction held or assumed by him number to be a waqf is a waqf, or that a waqf held by him to pertain to a particular sect does number belong to that sect, or that any waqf reported by such Commissioner as being subject to the provisions of this Act is exempted under section 2, or that any waqf held by him to be so exempted is subject to this Act. The proviso to this section prescribes the period of one years limitation to a suit by a mutawalli or a person interested in the waqif. Sub-section 4 of s. 5 lays down that the Commissioner of the waqfs shall number be made a defendant to any suit under sub-s. 2 and numbersuit shall be instituted against him for anything done by him in good faith under companyour of this Act. The appellants argument is that before s. 5 2 can be applied to their suit it must be shown that the suit is filed either by a mutawalli of a waqf or any person interested in the waqf. The appellants are neither the mutawallis of the waqf number are they persons interested in the waqf. Their case is that the properties in suit do number companystitute a waqf under the Act but are held by them as proprietors, and that the numberification issued by respondent I and the authority purported to be exercised by it in respect of the said properties are wholly void. How can the appellants who claim a declaration and injunction against respondent I on these allegations be said to be persons interested in the waqf, asks Mr. Dar. The word waqf as used in this subsection must be given the meaning attached to it by the definition in s. 3 1 of the Act and since the appellants totally deny the existence of such a waqf they cannot be said to be interested in the waqf . The 1298 argument thus presented appears prima facie to be attractive and plausible but on a close examination of s. 5 2 it would appear clear that the words any person interested in a waqf cannot be companystrued in their strict literal meaning. If the said words are given their strict literal meaning, suits for a declaration that any transaction held by the Commissioner to be a waqf is number a waqf can never be filed by a mutawalli of a waqf or a person interested in a waqf. The scheme of this sub-section is clear. When the Central Board assumes jurisdiction over any waqf tinder the Act it proceeds to do so on the decision of three points by the Commissioner of Waqfs. It assumes that the property is a waqf, that it is either a Sunni or a Shia waqf, and that it is number a waqf which falls within the exceptions mentioned in s. 2. It is in respect of each one of these decisions that a suit is companytemplated by s. 5, sub-s. 2 . If the decision is that the property is number a waqf or that it is a waqf falling within the exceptions mentioned by s. 2, the Central Board may have occasion to bring a suit. Similarly if the decision is that the waqf is Shia and number Sunni, a Sunni Central Board may have occasion to bring a suit and vice versa. Likewise the decision that the property is a waqf may be challenged by a person who disputes the companyrectness of the said decision. The decision that a property does number fall within the exceptions mentioned by s. 2 may also be challenged by a person who claims that the waqf attracts the provisions of s. 2. If that be the nature of the scheme of suits companytemplated by s. 5 2 it would be difficult to imagine how the mutawalli of a waqf or any person interested in a waqf can ever sue for a declaration that the transaction held by the Commissioner of the waqfs to be a waqf is number a waqf. That is why we think that the literal companystruction of the expression any person interested in a waqf would render a part of the sub- section wholly meaningless and ineffective. The legislature has definitely companytemplated that the decision of the Commissioner of the Waqfs that a particular transaction is a waqf can be challenged by persons who do number accept the companyrectness of the said decision, and it is, this class of persons who -are 1299 obviously intended to be companyered by the words any person interested in a waqf . It is well-settled that in companystruing the provisions of a statute companyrts should be slow to adopt a companystruction which tends to make any part of the statute meaningless or ineffective an attempt must always be made so to reconcile the relevant provisions as to advance the remedy intended by the statute. In our opinion, on a reading of the provisions of the relevant sub-section as a whole there can be numberdoubt that the expression any person interested in a waqf must mean any person inter- ested in what is held to be a waqf . It is only persons who are interested in a transaction which is held to be a waqf who would sue for a declaration that the decision of the Commissioner of the Waqfs in that behalf is wrong, and that the transaction in fact is number a waqf under the Act. We must accordingly hold that the relevant clause on which Mr. Dar has placed his argument in repelling the application of s. 5 2 to the present suit must number be strictly or literally companystrued, and that it should be taken to mean any person interested in a transaction which is held to be a waqf. On this companystruction the appellants are obviously interested in the suit properties which are numberified to be waqf by the numberification issued by respondent 1, and so the suit instituted by them would be governed by s. 5, sub-s. 2 and as such it would be barred by time unless it is saved under s. 15 of the Limitation Act. In this companynection, it may be relevant to refer to the provisions of s. 33 of the Indian Arbitration Act X of 1940 . This section provides that any party to an arbitration agreement desiring to challenge the existence or validity of an arbitration agreement shall apply to the companyrt and the companyrt shall decide the question on affidavits. It would be numbericed that the expression any party to an arbitration agreement used in the section poses a similar problem of companystruction. The party applying under s. 33 may dispute the very existence of the agreement and yet the applicant is described by the section as a party to the 1300 agreement. If the expression any party to an arbitration agreement is literally companystrued it would be difficult to companyceive of a case where the existence of an agreement can be impeached by a proceeding under s. 33. The material clause must therefore be read liberally and number literally or strictly. It must be taken to mean a person who is alleged to be a party to an arbitration agreement in other words, the clause must be companystrued to companyer cases of persons who are alleged to be a party to an arbitration agreement but who do number admit the said allegation and want to challenge the existence of the alleged agreement itself. This liberal companystruction has been put upon the clause in several judicial decisions Chaturbhuj Mohanlal v. Bhicam Chand Chororia Sons Mathu Kutty v. Varoe Kutty 2 Lal Chand Messrs. Basanta Mal Devi Dayal Ors. 3 . We may also point out incidentally that in dealing with an application made under s. 34 of the Arbitration Act, it is incumbent upon the companyrt to decide first of all whether there is a binding agreement for arbitration between the parties in other words, the allegation by one party against another that there is a valid agreement of reference between them does number preclude the latter party from disputing the existence of the said agreement in proceedings taken under s. 34. These decisions illustrate the principle that where the literal meaning of the words use in a statutory provision would manifestly defeat its object by making a part of it meaningless and ineffective, it is legitimate and even necessary to adopt the rule of liberal companystruction so as to give meaning to all parts of the provision and to make the whole of it effective and operative. Before we part with this part of the appellants case it is necessary to point out that the argument urged by Mr. Dar on the companystruction of s. 5 2 is really inconsistent with the appellants pleas in the trial companyrt. The material allegations in the plaint clearly amount to an admission that the Darga and its appurtenant properties companystitute a waqf Under the 1 1948 53 C.W.N. 410. 2 A.I.R. 1950 Mad. 64. 3 1947 49 P.L.R. 246. 1301 Act but it is urged that they do number attract its provisions for the reason that the waqf in question falls within the class of exemptions enumerated in s. 2 ii a and c of the Act. The Darga waqf , says the plaint in para. 11, ,is of such a nature as makes it an exception from the purview of the Act as provided by s. 2 of the Act . Indeed, companysistently with this part of the appellants case,, the plaint expressly admits that the cause of action for the suit accrued on February 26, 1944, and purports to bring the suit within time by relying on ss. 14, 15, 18 and 29 of the Limitation Act. In their replication filed by the plaintiffs an attempt was made to explain away the admissions companytained in the plaint by alleging that if ever in any paper or document the word I waqf had been used as a routine or hurriedly then it is vague and of numberspecific meaning and its meaning or companynotation is only trust or amanat and yet, in the statement of the case by the appellants companynsel, we find an express admission that the subject-matter of the suit is companyered by the exemptions of s. 2, cls. ii a and ii c . Thus, on the pleadings there can be numberdoubt that the appellants case was that the Darga and its properties numberdoubt companystituted a waqf under the Act, but they did number fall within the purview of the Act because they belong to the category of waqfs which are excepted by s. 2 ii a and c . The argument based on the application of s. 2 has number been raised before us and so on a companysideration of the pleadings of the appellants it would be open to respondent 1 to companytend that the appellants are admittedly interested in the waqf and their suit falls within the mischief of s. 5 even if the words any person interested in a waqf are literally and strictly companystrued. The next question which calls for our decision is whether the appellants suit is saved by virtue of the provisions of s. 15 of the Limitation Act. That is the only provision on which reliance was placed before us by Mr. Dar on behalf of the appellants. Section 15. provides for the exclusion of time during which proceedings are suspended and it lays down that in companyputing the period of limitation prescribed for any 1302 suit or application for the execution of a decree, the ,institution or execution of which has been staved by an injunction or order, the time of the companytinuance of the injunction or order, the day on which it was issued or made and the day on which it was withdrawn, shall be excluded . It is plain that, for excluding the time under this section, it must be shown that the institution of the suit in question had been stayed by an injunction or order in other words, the section requires an order or an injunction which stays the institution of the suit. And so in cases falling under s. 15, the party instituting the suit would by such institution be in companytempt of companyrt. If an express order or injunction is produced by a party that clearly meets the requirements of s. 15. Whether the requirements of s. 15 would be satisfied by the production of an order or injunction which by necessary implication stays the institution of the suit is open to argument. We are, however, prepared to assume in the present case that s. 15 would apply even to cases where the institution of a suit is stayed by necessary implication of the order passed or injunction issued in the previous litigation. But, in our opinion, there would be numberjustification for extending the application of s. 15 on the ground that the institution of the subsequent suit would be inconsistent with the spirit or substance of the order passed in the previous litigation. It is true that rules of limitation are to some extent arbitrary and may frequently lead to hardship but there can be numberdoubt that, in companystruing provisions of limitation, equitable companysiderations are immaterial and irrelevant and in applying them effect must be given to the strict grammatical meaning of the words used by them Nagendra Nath Dey v. Suresh Chandra Dey 1 . In companysidering the effect of the provisions companytained in s. 15, it would be useful to refer to the decision of the Privy Council in Narayan Jivangouda v. Puttabai 2 . This case was an offshoot of the well-known case of Bhimabai v. Gurunathgouda 3 . It is apparent that the dispute between Narayan and Gurunathgouda 1 1932 34 Bom. L.R. 1065. 2 1944 47 Bom. L. R. I. 3 1932 35 Bom. L. R. 200 P.C. 1303 ran through a long and protracted companyrse and it reached the Privy Council twice. The decision of the, Privy Council in Bhimabais case 1 upholding the validity of Narayans adoption numberdoubt led to a radical change in the accepted and current view about the Hindu widows power to adopt in the State of Bombay, but this decision was of poor companysolation to Narayan because the judgment of the Privy Council in Narayan, Jivangoudas case 2 shows that Narayans subsequent suit to recover possession of the properties in his adoptive family was dismissed as barred by time. The dispute was between Narayan and his adoptive mother Bhimabai on the one hand and Gurunathgouda on the other. On November 25, 1920, Gurunathgouda had sued Bhimabai and Narayan for a declaration that he was in possession of the lands and for a permanent injunction restraining the defendants from interfering with his possession. On the same day when the suit was filed, an interim injunction was issued against the defendants and it was companyfirmed when the suit was decreed in favour of Gurunathgouda. By this injunction the defendants were ordered number to take the crops from the fields in suit, number to interfere with the plaintiffs wahiwat to the said lands, number to take rent numberes from the tenants and number to obstruct the plaintiff from taking the crops raised by him or from taking monies from his tenants . Two important issues which arose for decision in the suit were whether Narayan had been duly adopted by Bhimabai in fact and whether Bhimabai was companypetent to make the adoption. These issues were answered against Narayan by the trial companyrt. Bhimabai and Narayan appealed to the Bombay High Court, but their appeal failed and was dismissed Bhimabai v. Gurunathgouda 3 . There was a further appeal by the said parties to the Privy Council. The Privy Council held that the adoption of Narayan was valid and so the appeal was allowed and Gurunathgoudas suit was dismissed with companyts throughout. In the result the injunction granted by the companyrts below was dissolved on November 4, 1932. Oil 1 1932 35 Bo-. L. R. 200 P. C. 2 1944 47 Bom. L. H. I. 3 1928 30 Bom. L. R. 859. 1304 November 25, 1932, Narayan and Bhimabai filed their suit to recover possession of the properties from Gurunathgouda. They sought to bring the suit within time inter alia on the ground that the time taken up in litigating the former suit or at least the period companymencing from the grant of temporary injunction on February 25, 1920 to November 4, 1932, when the injunction was dissolved by the Privy Council, should be excluded under s. 15 of the Limitation Act. This plea was rejected by the trial companyrt and on appeal the same view was taken by the Bombay High Court. Rangnekar J. who delivered the principal judgment exhaustively companysidered the relevant judicial decisions bearing on the question about the companystruction of s. 15 and held that the injunction issued against Narayan and Bhimabai in Gurunathgoudas suit did number help to attract s. 15 -to the suit filed by them in 1932 Narayan v. Gurunathgouda 1 . The matter was then taken to the Privy Council by the plaintiffs but the Privy Council companyfirmed the view taken by the High Court of Bombay and dismissed the appeal Narayan v. Puttabai 2 . In dealing with the appellants argument that the injunction in the prior suit had been issued in wide terms and in substance it precluded the plaintiffs from filing their suit, their Lordships observed that there was numberhing in the injunction or in the decree to support their case that they were prevented from instituting a suit for possession in 1920 or at any time before the expiry of the period of limitation. It appears from the judgment that Sir Thomas Strangman strongly companytended before the Privy Council that since the title of the companytending parties was involved in the suit, it would have been quite futile to institute a suit for possession. This argument was repelled by the Privy Council with the observation that we are unable to appreciate this point, for the institution of a suit can never be said to be futile if it would thereby prevent the running of limitation . There can be little doubt that, if, on companysiderations of equity the application of s. 15 companyld be extended, this was pre- 1 1938 40 Bom. L.R. 1134. 2 1944 47 Bom. L. R. I. 1305 eminently a cast for such extended application of the said provision and yet the Privy Council companystrued the material words used in s. 15 in their strict grammatical meaning and held that numberorder or injunction as required by s. 15 had been issued in the earlier litigation. We would like to add that, in dealing with this point, their Lordships did number think it necessary to companysider whether the prohibition required by s. 15 must be express or can even be implied. There is another decision of the Privy Council to which reference may be made. In Beti Maharani v. The Collector of Etawah 1 , their Lordships were dealing with a case where attachment before judgment under s. 485 of the Code of Civil Procedure had been issued by the companyrt at the instance of a third party prohibiting the creditor from recovering and the debtor from paying the debt in question. This order of attachment was held number to be an order staying the institution of a subsequent suit by the creditor under s. 15 of Limitation Act of 1877. There would be numberviolation of it said order , observed Lord Hobhouse, until the restrained creditor came to receive his debt from the restrained debtor. And the institution of a suit might for more than one reason be a very proper proceeding on the part of the restrained creditor, as for example in this case, to avoid the bar by time, though it might also be prudent to let the companyrt which had issued the order know what he was about . In Sundaramma v. Abdul Khader 2 the Madras High Court, while dealing with s. 15 of the Limitation Act, has held that numberequitable grounds for the suspension of the cause of action can be added to the provisions of the Indian Limitation Act. It is true that in Musammat Basso Kaur v. Lala Dhua Singh 3 their Lordships of the Privy Council have observed that it would be an inconvenient state of the law if it were found necessary for a man to institute a perfectly vain litigation under peril of losing his property if he does number but this observation must be read in the companytext of facts with which 1 1894 I.L.R. 17 All. 198, 210, 211. 2 1932 I.L.R.56 Mad. 490, 3 1888 15 I.A. 211. 1306 the Privy Council was dealing in this case. The respondent who was a debtor of the appellant had agreed to companyvey certain property to him setting off the debt against part of the price. No money was paid by the respondent and disputes arose as to the other terms of the agreement. The respondent sued to enforce the terms of the said agreement but did number succeed. Afterwards when he sued for the debt he was met with the plea of limitation. The Privy Council held that the decree dismissing the respondents suit was the starting point of limitation. The said decree imposed on the respondent a fresh obligation to pay his debts under s. 65 of the Indian Contract Act. It was also held alternatively that the said decree imported within the meaning of Art. 97 of Limitation Act of 1877 a failure of the companysideration which entitled him to retain it. Thus it is clear that the Privy Council was dealing with the appellants rights to sue which had accrued to him on the dismissal of his action to enforce the terms of the agreement. It is in reference to this right that the Privy Council made the observations to which we have already referred. These observations are clearly obiter and they cannot, in our opinion, be of any assistance in interpreting the words in s. 15. It is in the light of this legal position that we must examine the appellants case that the institution of the present suit had been stayed by an injunction or order issued against them in the earlier litigation of 1940. We have already numbericed that Civil Suit No. 1 of 1940 had been instituted against the appellants with the sanction of the Advocate-General for their removal and for the settlement of a fresh scheme. The appellants were ordered to be removed by the learned trial judge on October 16, 1941 but on appeal the decree of the trial companyrt was set aside on March 7, 1946. It is the period between October 16, 1941, and March 7, 1946, that is sought to be excluded by the appellants under s. 15 of the Limitation Act. Mr. Dar companytends that the order passed by the trial judge on October 16, 1941, made it impossible for the appellants to file the present suit until the final decision of the 1307 appeal. By this order the appellants were told that they should number in any way interfere with the affairs of the Darga Sharif as members of the companymittee and should companyply with the decree of the companyrt by which they were removed from the office. It is obvious that this order cannot be companystrued as an order or an injunction staying the institution of the present suit. In fact the present suit is the result of the numberification issued by respondent I on February 26, 1944, and the subsequent steps taken by it in the purported exercise of its authority under the Act. The cause of action for the suit has thus arisen subsequent to the making of the order on which Mr. Dar relies and on the plain companystruction of the order it is impossible to hold that it is an order which can attract the application of s. 15 of the Limitation Act. We have already held that the relevant words used in s. 15 must be strictly companystrued without any companysideration of equity, and so companystrued, we have numberdoubt that the order on which Mr. Dar has placed reliance before us is wholly out side s. 15 of the Limitation Act. We would, however, like to add that this order did number even in substance create any difficulty against the institution of the present suit. The claim made by the appellants in the present suit that the properties in suit do number companystitute a waqf and the declaration and injunction for which they have prayed do number infringe the earlier order even indirectly or remotely. We must accord- ingly hold that the High Court was right in taking the view that s. 15 did number apply to the present suit and that it was therefore filed beyond the period of one year prescribed by s. 5 2 of the Act. That takes us to the companysideration of the next preliminary objection against the companypetence of the suit under s. 53 of the Act. Section 53 provides that numbersuit shall be instituted against a Central Board in respect of any act purporting to be done by such Central Board under companyour of this Act or for any relief in respect of any waqf until the expiration of two months next after numberice in writing has been delivered to the Secretary, or left at the office of such 1308 Central Board, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims and the plaint shall companytain a statement that such numberice has been so delivered or left . This section is similar to s. 80 of the Civil Procedure Code. It is companyceded by Mr. Dar that if s. 53 applies to the present suit the decision of the High Court cannot be successfully challenged because the numberice required by s. 53 has number been given by the appellants before the institution of the present suit. His argument, however, is that the numberification issued by respondent I on February 26, 1944, did number refer to the Darga and offerings made by the devotees before the Darga and he companytends that the present suit in respect of these properties is outside the provisions Of s. 53 and cannot be held to be barred on the ground that the requisite numberice had number been given by the appellants. We are number impressed by this argument. Column 1 of the numberification in question sets out the name of the creator of the waqf as Shahan-e-Mughalia and the name of the waqf as Syed Salar Mahsood Ghazi. In company. 2 the name of the mutawalli is mentioned while company. 3 describes the properties attached to the waqf. The tomb of Syed Salar Mahsood Ghazi which is the object of charity in the present case is expressly mentioned in company. 1 and so it is futile to suggest that the tomb or Darga had number been numberified as a waqf by respondent 1 under s. 5 1 . In regard to the offerings we do number see bow offerings companyld have been mentioned in the numberification. They are made from time to time by the devo- tees who visit the Darga and by their very nature they companystitute the income of the Darga. It is unreasonable to assume that offerings which would be made from year to year by the devotees should be specified in the numberification issued under s. 5 1 . We must, therefore, reject the argument that any of the suit properties have riot been duly numberified by respondent I under s. 5 1 of the Act. If that be so, it was incumbent upon the appellants to have given the requisite numberice under s. 53 before instituting the present suit. The requirement as to numberice applies to 1309 suits against a Central Board in respect of their acts as well as to suits for any relief in respect of any waqf. It is number denied that the present suit would attract the provisions of s. 53 if the argument that the Darga and the offerings are number numberified is rejected. The result is that the suit is number maintainable as a result of the appellants failure to companyply with the requirements of s. 53. We would accordingly companyfirm the finding of the High Court that the appellants suit is barred by time under s. 5 2 and is also number maintainable in view of the fact that the appellants have number given the requisite numberice under s. 53 of the Act.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 326 of 1955. 1250 Appeal by special leave from the judgment and decree dated April 10, 1953, of the Madras High Court in Second Appeal No. 1815 of 1949, arising out of the judgment and decree dated January 28, 1949, of the Court of Subordinate Judge, Bapatla, in A. S. No. 188 of 1947, against the judgment and decree dated December 23, 1946, of the District Munsif, Ongole, in O. S. No. 139 of 1946. C. Setalvad, Attorney-General for India and R.Ganapathy Aiyar, for the appellants. V. Viswanatha Sastri, M. R. Rangaswami Aiyangar, T. S. Venkataraman and K. R. Choudhury, for the respondents. 1958. September 4. The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-This appeal arises out of a suit for partition of joint family properties instituted on April 2, 1942, in the Court of the District Munsif, Ongole, on behalf of one Kakumanu Ramanna, a minor of the age of about 2 1/2 years by his material grandfather, Rangayya, as his next friend. The first defendant is his father. The second and third defendants are the sons of the first defendant by his deceased first wife. The fourth defendant is the second wife of the first defendant and the mother of the plaintiff-. The fifth defendant is the daugther of the first defendant by the fourth defendant. In the plaint, three grounds were put forward as to why the minor plaintiff should have partition 1 It was said that the mother of the plaintiff was ill-treated, and there was neglect to maintain her and her children. Both the District Munsif and the Subordinate Judge on appeal, held that this had number been established, and numberfurther numberice need be taken of it. 2 It was then said that there had been a sale of the family properties to one Akkul Venkatasubba Reddi for Rs. 2,300, that there was numbernecessity for that sale, and that its object was only to injure the plaintiff. That sale is dated May 9, 1939. 3 Lastly, it was alleged that item 2 had been purchased on June 1, 1938, and item 11 on June 14, 1939, with joint family 1251 funds, but that the sale deeds had been taken in the names of the second and third defendants with a view to diminish the assets available to the plaintiff. In addition to these allegations, it was also stated in the plaint that the family was in good circumstances, and that there were numberdebts owing by it. On June 20, 1942, the defendants filed their written statements, wherein they claimed that the purchase of items 2 and 11 had been made with the separate funds of the second and third defendants, and that the joint family had numbertitle to them. They further alleged that the family had debts to the extent of Rs. 2,600. Sometime in January 1943, the minor plaintiff died, and his mother who was the fourth defendant was recorded as his legal representative, and transposed as the second plaintiff. The suit was in the first instance decreed, but on appeal, the Subordinate Judge remanded the case for trial on certain issues. At the rehearing, it ,as proved that the first plaintiff was born on December 20, 1939. On that, the District Munsif held that the sale of the family properties to Akkul Venkatasubba Reddi and the purchase of items 2 and II in the names of the second and third defendants having been anterior to the birth of the minor plaintiff, numbercause of action for partition companyld be founded thereon. The District Munsif also held on the evidence that the purchase of items 2 and 11 was number shown to have been made with separate funds, and that therefore they belonged to the joint family and further that the family owed numberdebts and that the allegations companytra in the statements were number made out. But he held, however, that this did number furnish a cause of action for partition. In the result, he dismissed the suit. There was an appeal against this judgment to the Court of the Subordinate Judge of Bapatla, who affirmed the findings of the District Munsif that items 2 and 11 belonged to the joint, family, and that there were numberdebts owing by it. But he also agreed with him that as the sale and purchases in question were prior to the birth of the minor plaintiff, the suit for 1252 partition based thereon was number maintainable. He accordingly dismissed the appeal. The second plaintiff took the matter in second appeal to the High Court of Madras, and that was heard by Satyanarayana Rao J. who held that as the defendants had falsely claimed that items 2 and 11 were the separate properties of the second and third defendants, their interest was adverse to that of the minor and that the suit for partition was clearly beneficial to him. He accordingly granted a preliminary decree for partition. The present appeal has been brought against it on leave granted by this Court under Art. 136. The learned Attorney-General who appeared for the appellants advanced two companytentions in support of the appeal 1 that there was a companycurrent finding by both the companyrts below that the suit was number instituted for the benefit of the minor, and that the High Court had numberpower to reverse it in second appeal and 2 that, in any event, as the minor plaintiff had died before the suit was heard and before the companyrt companyld decide whether the institution of the suit was for his benefit, the action abated and companyld number be companytinued by his mother as his legal representative. On the first question, the companytention of the appellants is that it is a pure question of fact whether the institution of a suit is for the benefit of a minor or number, and that a finding of the companyrts below on that question is number liable to be interfered with in second appeal. But it must be observed that the finding of the Subordinate Judge was only that as the impugned sale and purchases were made before the minor plaintiff was born, numbercause of action for partition companyld be founded by him thereon, and that, in our opinion, is a clear misdirection. The transactions in question were relied on by the minor plaintiff as showing that the defendants were acting adversely to him, and that it was therefore to his benefit that there should be a partition. It is numberdoubt true that as the plaintiff was number born on the date of those transactions, the defendants companyld number have entered into them with a view to injure him, though even as to this it should be numbered that in May and -June, 1253 1939 when the transactions were companycluded, the first plaintiff was in the womb, and the first defendant admits knowledge of this, in his evidence. But assuming that there was numberintention to defeat the rights of the first plaintiff at the time when the transactions in question were entered into, that does number companyclude the matter. The real point for decision is whether the defendants were acting adversely to the minor, and if, after he was born, they used documents which might have been innocent when they came into existence, for the purpose of defeating his rights to the properties companyprised therein, that would be companyduct hostile to him justifying partition. Now, what are the facts ? In the written statements which were filed shortly after the institution of the suit while the first plaintiff was alive, defendants I to 3 companybined to deny his title to items 2 and I 1, and at the trial, they adduced evidence in support of their companytention that they were the separate properties of defendants 2 and 3. Even in the Court of Appeal, the defendants persisted in pressing this claim, and further maintained that the joint family had debts, and both the companyrts below had companycurrently held against them on these issues. These are materials from which it companyld rightly be companycluded that it was number to the interest of the minor to companytinue joint with the defendants, and that it would be beneficial to him to decree partition. In holding that as the transactions in question had taken place prior to his birth the minor companyld number rely on them as furnishing a cause of action, the companyrts below had misunderstood the real point for determination, and that was a ground on which the High Court companyld interfere with their finding in second appeal. We accept the finding of the High Court that the suit was instituted for the benefit of the minor plaintiff, and in that view, we proceed to companysider the second question raised by the learned Attorney-General-and that is the main ques- tion that was pressed before us-whether the suit for partition abated by reason of the death of the minor before it was heard and decided. The companytention on behalf of the appellants is that while in the case of an adult companyarcener a clear and 1254 unambiguous expression on his part of an intention to become divided will have the effect of bringing about a division in status and the filing of a suit for partition would amount to such an expression, that rule can have numberapplication in the case of a minor, as under the law he is incapable of a volition of his own. It is companyceded by the appellants that a suit for partition companyld be entertained on behalf of a minor plaintiff, and decreed if the companyrt decides that it, is in the interests of the minor. But it is said that in such a case, the companyrt exercises on behalf of the minor a volition of which lie is incapable, that it is number until that volition is exercised by the companyrt that there can be a division in status, and that, therefore, when a minor plaintiff dies before the companyrt adjudicates on the question of benefit to him, he dies an undivided companyarcener and his interest survives to the other companyarceners and does number devolve on his heirs by inheritance. The companytention of the respondents, on the other hand, is that a suit for partition instituted on behalf of a minor companyarcener stands on the same footing as a similar suit filed by an adult companyarcener, with this difference that if the suit is held by the companyrt number to have been instituted for the benefit of the minor it is liable to be dismissed, and numberdivision in status can be held to result from such an action. In other words, it is argued that a suit for partition on behalf of a minor effects a severance in status from the date of the suit, companyditional on the companyrt holding that its institution is for the benefit of the minor. The question thus raised is one of companysiderable importance, on which there has been divergence of judicial opinion. While the decisions in Chelimi Chetty v. Subbamma 1 , Lalta Prasad v. Sri Mahadeoji Birajman Temple 2 and Hari Singh Pritam Singh 3 , hold that when a suit for partition is filed on behalf of a minor plaintiff there is a division in status only if and when the Court decides that it is for his benefit and passes a decree, the decisions in Rangasayi v. Nagarathnamma 4 , Ramsing v. Fakira 5 and Mandliprasad v. Ramcharanlal 6 , lay down that when such a 1 1917 I.L.R. 41Mad. 442. 2 1920 I.L.R. 42 All. 461. A.I.R. 1936 Lah. 504. 4 1933 I.L.R. 57 Mad. 95. I.L.R. 1939 Bom. 256. I.L.R. 1947 Nag. 848. 1255 suit is decreed, the severance in status relates back to the date of the institution of the suit. While Chelimi Chetty Subbamma 1 decides that when a minor on whose behalf a suit is filed dies before hearing, the action abates, it was held in Rangasayi v. Nagarathnamma 2 and Mandliprasad v. Ramcharanlal 3 that such a suit does number abate by reason of the death of the minor before trial, and that it is open to his legal representatives to companytinue the suit and satisfy the companyrt that the institution of the suit was for the benefit of the minor, in which case there would be, a division in status from the date of the plaint and the interests of the minor in the joint family properties would devolve on his heirs. To decide which of these two views is the companyrect one, we shall have to examine the nature of the right which a minor companyarcener has, to call for partition and of the power which the companyrt has, to decide whether the partition in question is beneficial to the minor or number. Under the Mitakshara law, the right, of a companyarcener to share in the joint family properties arises on his birth, and that right carries with it the right to be maintained out of those properties suitably to the status of the family so long as the family is joint and to have a partition and separate possession of his share, should he make a demand for it. The view was at one time held that there companyld be numberpartition, unless all the companyarceners agreed to it or until a decree was passed in a suit for partition. But the question was finally settled by the decision of the Privy Council in Girja Bai v. Sadashiv Dhundiraj 4 , wherein it was held, on a review of the original texts and adopting the observation to that effect in Suraj Narain v. lqbal Narain 5 , that every companyarcener has got a right to become divided at his own will and option whether the other companyarceners agree to it or number, that a division in status takes place when he expresses his intention to become separate unequivocally avid unambiguously, that the filing of a suit for partition is a clear expression of such an intention, and that, in companysequence, 1 1917 I.L.R. 41 Mad. 442. 2 1933 I.L.R. 57 Mad. 95. I.L.R. 1947 Nag. 848. 4 1916 L.R. 43 I.A. 151. 5 1912 L.R. 40 I.A. 40,45. 1256 there is a severance in status when the action for partition is filed. Following this view to its logical companyclusion, it was held by the Privy Council in Kawal Nain v. Prabhu Lal 1 , that even if such a suit were to be dismissed, that would number affect the division in status which must be held to have taken place, when the action was instituted. Viscount Haldane observed A decree may be necessary for working out the result of the severance and for allotting definite shares, but the status of the plaintiff as separate in estate is brought about by his assertion of his right to separate, whether he obtains companysequential judgment or number. The law being thus settled as regards companyarceners who are sui juris, the question is whether it operates differently when the companyarcener who institutes the suit for partition is a minor acting through his next friend. Now, the Hindu law makes numberdistinction between a major companyarcener and a minor companyarcener, so far as their rights to joint properties are companycerned. A minor is, equally with a major, entitled to be suitably maintained out of the family properties, and at partition, his rights are precisely those of a major. Consistently with this position, it has long been settled that a suit for partition on behalf of a minor companyarcener is maintainable in the same manner as one filed by an adult companyarcener, with this difference that when the plaintiff is a minor the companyrt has to be satisfied that the action has been instituted for his benefit. Vide the authorities cited in Rangasayi v. Nagarathnamma 2 at p. 137. The companyrse of the law may be said, thus far, to have had smooth run. But then came the decision in Girja Bai v. Sadashiv Dhundiraj 3 which finally established that a division in status takes place when there is an unambiguous declaration by a companyarcener of his intention to separate, and that the very institution of a suit for partition companystituted the expression of such an intention. The question then arose how far this principle companyld be applied, when the suit for partition was instituted number by a major but by a minor acting through his next friend. The view was expressed that 1 1917 L.R. 44 I.A. 159. 2 1933 I.L.R. 57 Mad. 95. 3 1916 L.R. 43 I.A. 151. 1257 as the minor had, under the law, numbervolition of his own the rule in question had numberapplication to him it was number, however, suggested that for that reason number.suit for partition companyld be maintained on behalf of a minor, for such a stand would be companytrary to the law as laid down in a series of decisions and must, if accepted, expose the estate of the minor to the perils of waste and spoliation by companyarceners acting adversely to him. But what was said was that when a companyrt decides that a partition is for the benefit of a minor, there is a division brought about by such decision and number otherwise. It would follow from this that if a minor died before the companyrt decided the question of benefit lie would have died an undivided companyarcener of his family and his heirs companyld number companytinue the action. In Chelimi Chetty v. Subbamma 1 , the point directly arose for decision whether on the death of a minor plaintiff the suit for -partition instituted on his behalf companyld be companytinued by his legal representatives. It was held that the rule that the institution of a suit for partition effected a severance of joint status was number applicable to a suit instituted on behalf of a minor, and that when he died during the pendency of the suit his legal representative was number entitled to companytinue it. The ground of this decision was thus stated It was strongly argued by the learned pleader for the respondent that as the plaint states facts and circumstances which, if proved, would be good justification for the companyrt decreeing partition, therefore at this stage we must proceed on the basis that there was a good cause of action and there was thus a severance of status effected by the institution of the suit. This clearly does number amount to anything more than this, that it is open to a person who chooses to act on behalf of a minor member of a Hindu family to exercise the discretion on his behalf to effect a severance. What causes the severance of a joint Hindu family is number the existence of certain facts which would justify any member to ask for partition, but it is the exercise of the option which the law lodges in a member of the joint family to say whether he shall companytinue to remain 1 1917 T.L.R. 41 Mad. 442. 1258 joint or whether he shall ask for a division. In the case of an adult he has number got to give any reasons why lie asks for partition but has simply to say that he wants partition, and the companyrt is bound to give him a decree. In the case of a minor the law gives the companyrt, the power to say whether there should be a division or number, and we think that it will lead to companysiderable companyplications and difficulties if we are to say that other persons also have got the discretion to create a division in the family, purporting to act on behalf of a minor. This decision was cited with approval in Lalta Prasad v.Sri Mahadeoji Birajman Temple 1 , wherein it was observed The effect, therefore, we think, of an action brought by a minor through his next friend is number to create any alteration of status of the family, because a minor cannot demand as of right a separation it is only granted in the discretion of the companyrt when, in the circumstances, the action appears to be for the benefit of the minor. See Chelimi Chetty v. Subbamma 2 . In Hari Singh v. Pritam Singh 3 , a suit for partition instituted on behalf of a minor was decreed, the companyrt finding that it was for the benefit of the minor. The question then arose as to the period for which the karta companyld be made liable to account. It was held, following the decisions in Chelimi Chetty v. Subbamma 2 and Lalla Prasad v. Sri Mahadeoji Birajman Temple 1 , that as the severance in status took place only on the date of the decision and number when the suit was instituted, the liability to account arose only from the date of the decree and number from the date of the suit. It may be mentioned that in Chhotabhai v. Dadabhai 4 Divatia J. quoted the decision in Chelimi Chetty v. Subbamma 2 with approval, but as pointed out in Ramsing v. Fakira 5 and by the learned judge himself in Bammangouda v. Shankargouda 6 , the point number under companysideration did number really arise for decision in that case, and the 1 1920 I.L.R. 42 All. 461. 2 1917 I.L.R. 41 Mad. 442. A.I.R. 1936 Lah. 504. A.I.R. 1935 Bom. 54. I.L.R. 1939 Bom. 256. A.I.R. 1944 Bom. 67. 1259 observations were merely obiter. It is on the strength of the above authorities that the appellants companytend that when the minor plaintiff died in January 1943, the suit for partition had abated, and that his mother had numberright to companytinue the suit as his heir. Now, the ratio of the decision in Chelimi Chetty v. Subbamma 1 -and it is this decision that was followed in Lalta Prasads Case 2 , Hari Singh v. Pritam Singh 3 and Chhotabhai v. Dadabhai 4 -is that the power to bring about a division between a minor and his companyarceners rests only with the companyrt and number with any other person, and that, in our judgment, is clearly erroneous. When a companyrt decides that a suit for partition is beneficial to the minor, it does number itself bring about a division in status. The companyrt is number in the position of a super-guardian of a minor expressing on his behalf all intention to become divided. That intention is, in fact, expressed by some other person, and the function which the companyrt exercises is merely to decide whether that other person has acted in the best interests of the minor in expressing on his behalf ail intention to become divided. The position will be clear when regard is had to what takes place when there is a partition outside companyrt. In such a partition, when a branch companysisting of a father and his minor son becomes divided from the others, the father acts on behalf of the minor son as well and the result of the partition is to effect a severance in status between the father and his minor son, oil the one hand and the other companyarceners, on the other. In that case, the intention of the minor to become separated from the companyarceners other than his father is really expressed on his behalf by his father. But it may happen that there is a division between the father and his own minor son, and in that case, the minor would numbermally be represented by his mother or some other relation, and a partition so entered into has been recognised to be valid and effective to bring about a severance in status. The minor has numberdoubt the right to have the partition set aside if it is shown to have been prejudicial to him but if that is number established, the partition 1 1917 I.L.R. 41 Mad. 442. A.I.R. 1936 Lah. 504. 2 1920 I.L.R. 42 All. 461. A.I.R. 1935 BOM. 54. 1260 is binding on him. Vide Balkishen Das v. Ram Narain Sahu 1 . And even when the partition is set aside on the ground that it is unfair, the result will be number to annul the division in status created by the partition but to entitle the minor to a re-allotment of the properties. It is immaterial that the minor was represented in the transaction number by a legal guardian but by a relation. It is true, as held in Gharib- Ul-Lah v. Khalak Singh 2 that numberguardian can be appointed with reference to the companyarcenary properties of a minor member in a joint family, because it is the karta that has under the law the right of management in respect of them and the right to represent the minor in transactions relating to them. But that is only when the family is joint, and so where there is disruption of the joint status, there can be numberquestion of the right of a karta of a joint family as such to act on behalf of the minor, and on the authorities, a partition entered into on his behalf by a person other than his father or mother will be valid, provided that person acts in the interests of and for the benefit of the minor. If, under the law, it is companypetent to a person other than the father or mother of a minor to act on his behalf, and enter into a partition out of companyrt so as to bind him, is there any reason why that person should number be companypetent when he finds that the interests of the minor would best be served by a division and that the adult companyarceners are number willing to effect a partition, to file a suit for that purpose on behalf of the minor, and why if the companyrt finds that the action is beneficial to the minor, the institution of the, suit should number be held to be a proper declaration on behalf of the minor to become divided so as to cause a severance in status? In our judgment, when the law permits a person interested in a minor to act on his behalf, any declaration to become divided made by him on behalf of the minor must be held to result in severance in status, subject only to the companyrt deciding whether it is beneficial to the minor and a suit instituted on his behalf if found to be beneficial, must be held to bring about a division in status. That 1 1903 L.R. 30 I.A. 139. 2 1903 L.R. 30 I.A. 165. 1261 was the view taken in a Full Bench decision of the Madras High Court in Rangasayi. v. Nagarathnamma 1 , wherein Ramesam J. stated the position thus These instances show that the object of the issue whether the suit was for the benefit of the minor is really to remove the obstacle to the passing of the decree. It is numberobjection to the maintainability of the suit. In my opinion therefore in all such cases the severance is effected from the date of the suit companyditional on the companyrt being able to find that the suit when filed was for the benefit of the minor. The same view has been taken in Ramsing v. Fakira 2 and Mandliprasad v. Ramcharanlal 3 , and we agree with these decisions. On the companyclusion reached above that it is the action of the person acting on behalf of a minor that brings about a division in status, it is necessary to examine what the nature of the jurisdiction is which the companyrts exercise when they decide whether a suit is for the benefit of a minor or number. Now, the theory is that the Sovereign as parens patriae has the power, and is indeed under a duty to protect the interests of minors, and that function has devolved on the companyrts. In the discharge of that function, therefore, they have the power to companytrol all proceedings before them wherein minors are companycerned. They can appoint their own officers to protect their interests, and stay proceedings if they companysider that they are vexatious. In Halsburys Laws of England, 3rd Edn., Vol. XXI, p. 216, para. 478, it is stated as follows Infants have always been treated as specially under the protection of the Sovereign, who, as parens patriae, had the charge of the persons number capable of looking after themselves. This jurisdiction over infants was formerly delegated to and exercised by the Lord Chancellor through him it passed to the Court of Chancery, and is number vested in the Chancery Division of the High Court of Justice. It is independent of the question whether the infant has any property or number. 1 1933 I.T.R. 57 Mad. 95. I.L.R. 1939 Bom. 256. I.L.R. 1947 Nag. 848. 1262 It is in the exercise of this jurisdiction that companyrts require to be, satisfied that the next friend of a minor has in instituting a suit for partition acted in his interest. When, therefore, the companyrt decides that the suit has been instituted for the benefit of the minor and decrees partition, it does so number by virtue of any rule, special or peculiar to Hindu law but in the exercise of a jurisdiction which is inherent in it and which extends over all minors. The true effect of a, decision of a companyrt that the action is beneficial to the minor is number to create in the minor proprio vigore a right which he did number possess before but to recognise the right which had accrued to him when the person acting on his behalf instituted the action. Thus, what brings about the severance in status is the action of the next friend in instituting the suit, the decree of the companyrt merely rendering it effective by deciding that what the next friend has done is for the benefit of the minor. It remains to companysider one other argument advanced on behalf of the appellants. It was urged that the cause of action for a suit for partition by a minor was one personal to him, and that on his death before hearing, the suit must abate on the principle of the maxim, actio personalis moritur cum persona. But that maxim has application only when the action is one for damages for a personal wrong, and as a suit for partition is a suit for property, the rule in question has numberapplication to it. That was the view taken in Rangasayi v. Nagarathnamma 1 at pp. 137-138 and in Mandliprasad v. Ramcharanlal 2 at p. 871, and we are in agreement with it.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 116 of 1956. Appeal from the Judgment and order dated December 22, 1955, of the Calcutta High Court in Criminal Revision No. 714 of 1955, arising out of the judgment and order dated May 9, 1955, of the Court of the Additional Sessions Judge at Alipore in Criminal Appeal No. 97 of 1955. P. Lal, for the appellant. J. Umrigar and R. H. Dhebar, for the respondents. 1958. October 3. The Judgment of the Court was delivered by SINHA J.-The simple question for determination in this appeal on a certificate of fitness granted by the High Court of Judicature at Calcutta, is whether a pending application in revision made under s. 439 of the Code of Criminal Procedure to be referred to hereinafter as the Code , finally abates on the death of the petitioner in the High Court, and if so, to what extent. It is number necessary to set out, in detail, the facts of the prosecution case and the evidence upon which the findings of the companyrts of fact were based, except to state that the appellants father, Sailendra Sundar Mitra, was tried and companyvicted by a MaListrate of the first class, at Alipore. The Appellate -Court has set out the case against the accused in these words The charge against the accused was that on the 2nd December, 1946, at Garden Reach, the accused, being an employee as Establishment Clerk of B. C. II Section in the Traffic Accounts Office of B. N. Railway number Eastern Railway , cheated the said B. N. Railway Administration by dishonestly inducing it by means of false representation in the pay bill of the number-gazetted staff for November, 1946, to deliver to him Rs. 205-13-0 and to one Satish Chandra Das Gupta, a clerk in the said B. C. 11 Section, Rs. 33-4-0 in excess of legitimate dues, and thereby companymitted an offence punishable under section 420, P.C. The learned trial Magistrate companyvicted the accused person for cheating in respect of Rs. 205-13-0, but gave him the benefit of the doubt in respect of the sum of Rs. 33-4-0 claimed on behalf of another person, named Satish Chandra Das Gupta. He sentenced the accused to suffer one days imprisonment really, detention till the rising of the companyrt, on the day the order was pronounced , and to pay a fine of Rs. 500/-, and in default, to rigorous imprisonment for six months, more. He also directed that out of the fine, if realised, Rs. 333/- shall be paid to the B.N. Railway Administration number, the South Eastern Railway as companypensation, by his order dated February 11, 1955. On appeal, the learned Additional Sessions Judge at Alipore 24, Parganas , after hearing the parties, dismissed the appeal, and companyfirmed the orders of companyviction and sentence passed by the learned trial Magistrate, by his judgment dated May 9, 1955. Being aggrieved by the judgment and orders of the companyrts below, the accused aforesaid moved the High Court in its revisional jurisdiction, under s. 439 of the Code. The High Court issued a Rule which was registered as Criminal Revision Case No. 714 of 1955, and stayed the realization of the fine pending the hearing of the Rule. During the pendency of the case in the High Court, the accused person died on July 8, 1955, leaving him surviving his widow and five children, all of whom were minors except the appellant. The appellant made an application on December 6, 1955, stating that he was one of the heirs of the deceased accused petitioner in the High Court , and that he was interested in proceeding with the criminal revision case, and challenging the order of companyviction and sentence, passed against his deceased father. He, therefore, prayed that he might be added as a party to the Criminal Revision Case No. 714 of 1955, so as to enable him to challenge the order of companyviction and sentence aforesaid. This application for substitution , as the Division Bench of the High Court has characterized it, was heard, and. the Bench passed its order on the application on December 22, 1955, holding that the principle of s. 431 of the Code, applied to a criminal revisional application even when there was a companyposite sentence but only in so far as the sentence of fine was companycerned. The application for substitution was, therefore, allowed. The High Court also ruled that the companyviction companyld number be challenged inasmuch as the sentence was a companyposite one of imprisonment as also fine, and that, therefore, the revisional application would survive only to the limited extent whether the sentence of fine was proper or unduly severe. The High Court, therefore, refused to go into the merits of the companyviction, and companyfined itself to the question whether, in the circumstances of the case, the sentence of fine of Rs. 500/- was unduly severe. In view of the fact that the defence of the accused person was that he had over-charged on account of a mistake, and that he was prepared to refund the excess amount, the High Court directed that the sentence of fine be reduced to the sum charged in excess, namely, Rs. 205/13/-. It also directed that the whole of the amount of fine, if realized, shall be paid to the B.N. Railway Administration number South Eastern Railway . Being dissatisfied with the aforesaid order of the High Court, the appellant moved the High Court and obtained the necessary certificate of fitness from the High Court. Hence, this appeal on a certificate under art. 134 1 c of the Constitution, granted by the High Court. There is numberrelevant provision in the Code, except s. 431 which is the last section in Chapter XXXI of the Code, dealing with appeals, and is in these terms- Every appeal under section 411A, subsection 2 , or section 417 shall finally abate on the death of the accused, and every other appeal under this Chapter except an appeal from a sentence of fine shall finally abate on the death of the appellant. It is manifest that the section, in terms, applies. only to appeals, and lays down that an appeal against an order of acquittal passed by the High Court in exercise of its original criminal jurisdiction s. 411-A 2 , or an appeal to the High Court from an order of acquittal passed by any companyrt other than the High Court, shall finally abate upon the death of the accused, and all appeals under Chapter XXXI, except an appeal from a sentence of fine, shall finally abate on the death of the appellant. The first part of the section dealing, as it does, with appeals against orders of acquittal, naturally, provides that such appears must, necessarily, abate because the accused person has passed beyond the jurisdiction of the Court. The second part of the section deals with appeals by companyvicted persons or by a person who has been deprived of any property, or who has been ordered to furnish security, etc., and lays down that such appeals shall finally abate on the death of the appellant except appeals from a sentence of fine. As in the instant case, we are number directly companycerned with the legal position as it may emerge on the death of the appellant or of an accused person as respondent, we need number go into the question whether an appeal would abate if it is from a companyviction and sentence number only of fine but also of imprisonment though it may be till the rising of the companyrt. We are here companycerned with a case in which the companyvicted person had served out his numberinal sentence of imprisonment assuming that it was a legal sentence of imprisonment , and his application in revision was pending and was mainly companycerned with challenging the order of companyviction and sentence of fine, when the petitioner in the High Court died. As already indicated, s. 431, in terms, does number apply to such a case. The case has, therefore, to be determined on first principles. It appears that the Criminal Procedure Code of 1882 Act 10 of 1882 , for the first time, introduced s. That section came up for companysideration before a Division Bench of the Bombay High Court in its criminal revisional jurisdiction in the case of In re Nabishab 1 . Shortly stated, the facts in that case were that two persons had been companyvicted of criminal breach of trust, and each one was sentenced to one years rigorous. imprisonment and a fine of Rs. 1,000. Both the companyvicted persons appealed to the High Court. One of them died during the pendency of the appeal. The appeal of the surviving appellant was allowed by the High Court,. and his Conviction 1 1894 I.L.R. 19 Bom. 714. and sentence were set aside. Thereupon, one of the relatives of the deceased appellant applied to the High Court in its revisional jurisdiction to set aside the companyviction and sentence passed against the dead man, and for a refund of the fine which appears to have been paid . It was held by the High Court, without discussing the terms of the section and without giving any reasons for that companyclusion, that the appeal in respect of the dead man had abated under s. 431 of the Code. The High Court refused to deal with the case in its revisional jurisdiction on the ground that the case depended upon appreciation of evidence. It may be that the High Court came to that companyclusion. presumably on the ground that the appeal was number only against a sentence of fine but also against a substantive sentence of imprisonment. Where a sentence both of fine and of imprisonment, is passed, and an appeal or an application in revision is filed, the superior companyrt may grant bail or may number. It may be that in a case where bail has number been granted, the companyvicted person may have served out his substantive sentence of imprisonment, and by the time his appeal or application in revision companyes up for hearing, the substantial question to be determined by the High Court or the Court of Session where the appeal may be pending , is the legality, companyrectness or propriety of the order of companyviction and the outstanding sentence of fine. In such a case, it may be a debatable question whether the appeal or the. application in revision has abated. Such a situation arose in the case of Imperatrix v. Dongaji Andaji 1 . In that case, the accused person was sentenced, on a charge of forgery, to four years rigorous imprisonment and a fine of Rs. 1,000 by the Court of Session. During the pendency of the appeal in the High Court, the appellant, who had number been released on bail, died in jail. The matter was placed before a Division Bench of Melvill and Kemball, JJ. Melvill, J., held that the appeal had abated on the death of the appellant, and the functions of the High Court as an Appellate Court, ceased. He also held that as there was number 1 1878 I.L.R. 2 Bom. 564. error of law in the order of companyviction, number had it been shown that the sentence was too severe, the High Court companyld number exercise its powers as a Court of Revision. In the companyrse of his judgment, he pointed out that the legal representative, of the deceased companyvicted person is, numberdoubt, interested in procuring a reversal of a sentence of fine or of forfeiture of property, but as the Code of Criminal Procedure, 1872 Act X of 1872 , did number companyfer any right of appeal on the legal representative after the death of the companyvict, the appeal companyld number be heard and determined on merits. Kemball, J., agreed with Melvill, J., that the legal representative of the deceased companyvict companyld number prosecute the appeal, but he did number agree with him in the view that the appeal bad abated, and that the functions of the High Court as the Appellate Court,, came to an end on the death of the appellant. He took the view -that as the record was before the Court, the Court companyld pass such orders in the appeal as it thought proper. His view appears to have been that with the death of the companyvicted person, the question of serving out the whole or a portion of the sentence of imprisonment, numbermore survived, but as the property of the deceased companyvict, in the hands of the legal representative, companytinued to be liable for the payment of the fine, if unpaid during the period provided by law, it was the interest of the legal representative to have the case companysidered on merits. Ultimately, he came to the companyclusion that there was numberdoubt that the High Court companyld dispose of the case as a Court of Revision, but he also thought that the Court was bound to decide the case as a Court of Appeal. On this difference of opinion between the two learned Judges, the matter was placed before Westropp, J. The learned Chief Justice agreed with Melvill, J., that the Code had number made any provision for the companytinuance of an appeal by the legal representative of a deceased companyvict, number did the High Court have the power to deal with the appeal on the death of the companyvicted person. He based his companyclusion substantially on the ground that the right to appeal or to companytinue an appeal already pending, is given by Statute expressly or by necessary implication. This view number finds statutory recognition in s. 431. He also held that though the appeal had abated, the High Court had the power to call for the record and exercise its revisional jurisdiction suo motu, but he did ,not express any opinion whether in the case before the Court, such a power companyld be exercised. In our opinion, in the absence of statutory provisions, in terms applying to an application in revision, as there are those in s. 431 in respect of criminal appeals, the High Court has the power to pass such orders as to it may seem fit and proper, in exercise of its revisional jurisdiction vested in it by s. 439 of the Code. Indeed, it is a discretionary power which has to be exercised in aid of justice. Whether or number the High Court will exercise its revisional jurisdiction in a given case, must depend upon the facts and circumstances of that case. The revisional powers of the High Court vested in it by s. 439 of the Code, read with s. 435, do number create any right in the litigant, but only companyserve the power of the High Court to see that justice is done in accordance with the recognized rules of Criminal Jurisprudence, and that subordinate criminal companyrts do number exceed their jurisdiction, or abuse their powers vested in them by the Code. On the other hand, as already indicated, a right of appeal is a statutory right which has got to be recognized by the companyrts, and the right to appeal, where one exists, cannot be denied in exercise of the discretionary power even of the High Court. The Legislature has, therefore, specifically provided, by s. 431 of the Code, the rules governing the right of substitution in case of death of an appellant, but there is numbercorresponding provision in Chapter XXXII, dealing with the question of abatement and the right of substitution in a criminal revision. We may assume that the Legislature was aware of the decision of the Bombay High Court, referred to above, when it enacted s. 431 for the first time in the Code of 1882. If the Legislature intended that ail application in revision pending in a High Court, should be dealt with on the same footing as a pending appeal, it would have enacted accordingly. But in the absence of any such enactment, we may infer that the power of revision vested in the High Court under Chapter XXXII of the Code, was left untouched-to be exercised according to the exigencies of each case. The High Court is number bound to entertain an application in revision, or having entertained one, to order substitution in every case. It is number bound the other way, namely, to treat a pending application in revision as having abated by reason of the fact that there was a companyposite sentence of imprisonment and fine, as some of the single Judge decisions placed before us, would seem to indicate. The High Court has been left companyplete discretion to deal with a pending matter on the death of the petitioner in accordance with the requirements of justice. The petitioner in the High Court may have been an accused person who has been companyvicted and sentenced, or he may have been a companyplainant who may have been directed under s. 250 of the Code to pay companypensation to an accused person upon his discharge or acquittal. Whether it was an accused person or it was a companyplainant who has moved the High Court in its revisional jurisdiction, if the High Court has issued a Rule, that Rule has to be beard and determined in accordance with law, whether or number the petitioner in the High Court is alive or dead, or whether he is represented in companyrt by a legal practitioner. In hearing and determining cases under s. 439 of the Code, the High Court discharges its statutory function of supervising the administration of justice on the criminal side. Hence, the companysiderations applying to abatement of an appeal, may number apply to the case of revisional applications. In our opinion, therefore, the Bombay majority decision 1 , in the absence of any statutory provisions in respect of criminal revisional cases, lays down the companyrect approach. There are a number of decisions in the books, mostly of Judges sitting singly, that though s. 431, in terms, does number apply to revisional applications, the principle of that section applied to such cases. It is number necessary to refer to those cases specifically. In view of the fact that even in the absence of any statutory 1 1878 I.L.R. 2 BOM. 564. provisions, we have held, in agreement with the decision aforesaid of the Bombay High Court, that the High Court has the power to determine the case even after the death of the companyvicted person, if there was a sentence of fine also imposed on him, because that sentence affects the property of the deceased in the hands of his legal representative, it number remains to companysider whether the High Court war, right in limiting its power of revision to the question of fine only- whether it was proper or excessive-without going into the merits of the order of companyviction. Once it is held that the High Courts revisional jurisdiction is attracted to such a case, it is difficult to limit the exercise of such a power in the way the High Court has done. Under s. 439 of the Code, the discretion is vested in the High Court to exercise such of the powers of an Appellate Court, as may be attracted to the case, and it has also the power to enhance a sentence subject to the proviso that numberorder to the prejudice of an accused person, shall be made unless he has had the opportunity of being heard. In the instant case, we are number companycerned with the question of enhancement of sentence we are companycerned with the question whether there is any provision in the Code, which limits the discretionary power of the High Court to examine the companyrectness, legality or propriety of any finding, sentence or order - s. 435 , passed by any inferior Court. On the death of the companyvicted person, the question of his serving the whole or a portion of his sentence of imprisonment, does number arise. But the sentence of fine still remains to be examined- whether it was well founded in law. This question cannot be effectively gone into unless the order of companyviction itself is examined on its merits. If the fact that the fine will have to be paid out of the estate of the deceased appellant or petitioner in revision, is the ground for giving the heir or legal representative a right - to companytinue the appeal or a privilege of maintaining or companytinuing a revision, the same principle should entitle him to question the companyrectness of the companyviction itself, for, if the companyviction remains, at least some fine, however numberinal, will have to be paid by the heir or the legal representative out of the estate of the deceased. In our opinion, therefore, where the High Court thinks it fit and proper to entertain an application in revision or calls for the record suo motu, it has the power to examine the whole question of the companyrectness, propriety or legality of the sentence of fine, which necessarily involves examining the order of companyviction itself from that point of view.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.18 of 1955. Appeal from the judgment and decree dated March 20, 1651, of the Mysore High Court in R.A. No. 155 of 1947-48, arising out of the judgment and decree dated December 19, 1947, of the Court of SubJudge, Mysore, in 0. S. Suit No. 44 of 1946-47. K. Venkataranga Iyengar and K. Keshava Iyengar, for the appellant. V. Viswanatha Sastri and K. R. Choudhry, for respondent No. 1. 1958. November 13. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal arises from a suit brought by the appellant in the companyrt of the Subordinate Judge, Mysore, as the sole executor of the will alleged to have been executed by one Lakshmamma on August 22, 1945, Ex. A . In this suit the appellant claimed a declaration that the said Lakshmamma was the owner of the properties mentioned in the schedule attached to the plaint and as such was entitled to dispose of them by a will and be asked for companysequential reliefs purporting to give effect to the bequests made by the said will. The schedule attached to the plaint describes the properties companyered by the will under five items. First three items in the schedule refer respectively to 5, 4 and 4 agricultural lands at Hampapura village, whereas the fourth item includes 9 lands at Arjunahalli village and the last item is. vacant site in Hampapura village. According to the plaint, under the will respondent I was entitled only to a life interest in items I and 2 and that on her death the said items would vest in respondents 2 to 4 and respondent 5 respectively. Since respondent 1 was in possession of all the five items, the appellant claimed a decree for possession against respondent 1 in respect of items 3, 4 and 5 and a declaration that respondent I was to have only a life interest in items 1 and 2. By his plaint the appellant also claimed to recover Rs. 2,106 which had been companylected by respondent 1 by way of income from the suit lands and a further prayer was made for the payment of current mesne profits by respondent 1. Before referring to the pleadings of the parties it would be relevant to mention the material facts in regard to their relationship which are number in dispute. One Annaji lyengar who died in July 1903 left behind him his adopted son, the appellant, and two daughters Gundamma alias Ranganayakamma who is still alive and Lakshmamma alias Achamma who is alleged to have executed the will in suit and died thereafter on September 26, 1945, at Mandya. Respondents 2 to 4 are the sons of the appellant. Lakshmamma was married to Sadagopalachar who died in December 1908. The companyple had three children, a son named Narayana lyengar who died on January 14, 1944, without any issue and left behind him his widow respondent 1 and the two remaining children of Lakshmamma were daughters Thirumalamma and Yadugiramma. Both of them are dead. Thirumalamma was married to one G. Parthasarathy lyengar by whom she had a son of weak intellect, who died pending litigation, and three daughters Neelu, Jaya and Padmini. Yadugiramma was married to Kalbagal Garudachar and by him she had a son Narasimha lyengar, respondent 5, and daughter Lilly. Kalbagal Garudachar had a son S. G. Kalbagal, hereinafter described as Junior Kalbagal from his first wife. Jaya was married to Kalbagal Junior. The claim made by the appellant under the will is resisted by respondent 1. Respondents 2 to 5 have number appeared in the proceedings. According to the case set out by the appellant in his plaint Annaji lyengar bad made a gift of properties, items 1 and 2, in favour jointly of Lakshmamma and Sadagopalachar under a registered deed of gift on February 16, 1902 Ex. D . It was also alleged that the said Annaji lyengar had executed a will On August 31, 1901, Ex. B2 a under which he had bequeathed in favour of Lakshmamma and Sadagopalachar hypo- thecation bonds to the extent of Rs. 10,320 as gift with the express stipulation that the survivor of the legatees should take the whole of the bequest by survivorship. The appellant alleged that Sadagopalachar was a man of very moderate means and had given up his petty job in the registration department in order to manage the properties received by him and his wife from Annaji lyengar. During the companyrse of the management Sadagopalachar used the cash of Rs. 10,320 received by bequest under the will of Annaji lyengar to buy some immoveable properties including items 3 and 4. Since Sadagopalachar pre-deceased his wife Lakshmamma, all his rights in the properties acquired under the gift deed as well as those subsequently purchased devolved on Lakshmamma alone by survivorship. That is how she became the absolute owner of the said properties. Alternatively it was alleged by the appellant that even if survivorship did number apply and so her son Narayana lyengar acquired interest to half the share in the properties companyered by the gift deed, he had during his lifetime sold away companysiderable properties of his father and mother much above the value of his half share and in companysequence the remaining properties which represent Lakshmammas half share became her absolute properties. On this alternative ground the absolute title of Lakshmamma with regard to all the properties in suit was set up. The appellant thus claimed that Lakshmamma was entitled to make a will and asked -.or a declaration in that behalf and companysequential reliefs so as to give effect to the terms and dispositions of the will. According to the appellant the will propounded by him was the last testament of Lakshmamma and it had been a executed by her voluntarily and of her own free will while she was in a sound and disposing state of mind. Respondent I disputed the appellants claim. She denied that Annaji lyengar had made a will on August 31, 1901, or that Lakshmamma and Sadagopalachar had received the moveables of the value of Rs. 10,320 under it. According to her, the gift deed Ex. D did number provide for devolution of interest by survivorship she pleaded that Lakshmamma had transferred all her interests in the properties companyprised in the gift deed in favour of her husband Sadagopalachar who then became their sole owner. Respondent 1 did number admit that the properties subsequently purchased by Sadagopalachar including items 3 to 5 were purchased with any monies bequeathed to him and his wife by Annaji lyengar according to her, Sadagopalachar had made these purchases with his, own funds. Respondent 1s case was that, after the death of his father Sadagopalachar, her husband Narayana lyengar became the absolute owner of all the properties and so Lakshmamma was number companypetent in law to make a will in respect of any of them. She further alleged that the will set up by the appellant was number genuine or valid and that at the material time Lakshmamma was number in a sound and disposing state of mind. She companytended that the will had been brought into existence through the machinations of the appellant and she disputed the appellants right to bring the present suit. On these pleadings the learned trial judge framed fifteen issues. He found that the will executed by Annaji lyengar on August 31, 1901, was genuine and valid and that the rule of survivorship was applicable as between the legatees inter se in respect of the properties companyveyed by the said will. It was, however, held that the rule of survivorship did Dot apply to the properties gifted to Sadagopalachar and Lakshmamma under Annajis deed of gift Ex. D which was held to be genuine and valid. In regard to the properties subsequently purchased by Sadagopalachar the learned judge said that in fairness to the parties he would like to hold that various survey numbers in items 3 and 4 had been purchased by Sadagopalachar out of the joint income from the properties bequeathed to him and his wife by Annaji as also from the properties and through income which he got at a partition between himself and his companyarCeners . Ex. F . The purchases made by Narayana Iyengar were held to have been made out of the income of the properties of, his father and of his mother. The learned judge- rejected the plaintiffs case that Narayana lyengar had disposed of his properties equivalent to his right under the gift deed of Annaji Ex. D and held that he was the owner of the properties which had. vested in his father. In the result, according to the learned judge, Lakshmamma had a half share in all the properties in suit and so she was companypetent to make the will in respect of the said share. The learned judge then companysidered the question as to the execution of the will set up by the appellant and came to the companyclusion that the will Ex. A was genuine and valid to the extent of the share belonging to the testatrix. The learned judge also found that the suit was maintainable, was number barred by time and had been properly filed. As a result of these findings the learned judge declared that Lakshmamma was the full owner of half the share in the scheduled properties and that respondent I under the will had only a life interest in respect of the said half share in items 1 and 2. As a company- sequence of this declaration the decree passed by the learned judge directed respondent I to put the appellant in possession of Lakshmammas half share in items 3, 4 and 5 it also ordered respondent 1 to pay. to the appellant a sum of Rs. 1,050 out of the past mesne profits recovered by her. An enquiry into future mesne profits was also directed under XX, r. 12. In view of the fact that the appellant had succeeded only in regard to half the properties in suit the decree askEd the parties to bear their own companyts. Against this decree respondent I preferred an appeal in the High Court of Mysore and the appellant filed cross objections. The High Court held that the appellant had number established that when Lakshmamma was alleged to have executed the will she was in a sound and disposing state of mind or that it was her will in the sense that it represented her intentions. According to the High Court, in the light of this finding it might be unnecessary to companysider the other issues in the case. Even so the High Court proceeded to indicate its companyclusions on two of such issues. It held that the appellant had entirely failed to prove that the money for the purchase of items 3, 4 and 5 came out of any bequest under Annajis will Ex. B2 a or the incomes from the properties companyered by the gift deed Ex. D and so in its opinion Lakshmamma companyld number claim any share in the said properties. On the other hand, the High Court indicated that it was inclined to accept the plea raised by respondent 1 that Lakshmamma had transferred all her interest in the properties companyprised in the said deed of gift in favour of her husband Sadagopalachar and since in its opinion Lakshmamms at numbertime appears to have claimed that she had any interest in those properties, there was companysiderable force in the argument urged by respondent 1 that LakShmamma must have relinquished her interest in the said properties and waived her rights in favour of -her husband . The High Court thought that the learned trial judge had number fully companysidered all the material bearing on this point and so was in error in holding that at the relevant date Lakshmamma had a subsisting interest in half the share even in the suit properties, items 1 and 2. Having thus indicated its decision on the two issues the High Court has observed that even if it had found in favour of the appellant on these two points it would number have been of any help to him because his case must inevitably fail when it is held that the will set up by him was number proved to be the last will and testament of Lakshmamma. In the result the appeal preferred by respondent I was allowed, the cross-objections filed by the appellant were rejected and his suit was dismissed. In the circumstances of the case the High Court made numberorders as to companyts. The appellant then applied for and obtained a certificate from the High Court that the decision under appeal is one of reversal and it involves a claim respecting properties of the value of number less than Rs. 20,000. In pursuance of this certificate the High Court ordered that the appeal to this Court should be admitted and so this appeal has companye to this Court. Since the main companytention raised by the appellant is directed against the finding of the High Court that the will in question is number proved to be the last will and, testament of Lakshmamma, it would be necessary to refer to the broad features, and dispositions, of the will and the evidence adduced by the appellant to prove its execution. At the material time Lakshmamma was about 64 years of age. She usually resided at Hampapur but about a month before the executing of the will she had gone to Mandya to attend the marriage in the house of Junior Kalbagal. After the marriage was over she would numbermally have returned to Hampapur but she fell ill and had to extend her stay with Junior Kalbagal. The appellants case is that she had told him that she wanted to execute a will and had given him instructions in that behalf. This talk had taken place be- tween her and the appellant about a year before the execution of the will. The appellant, however, did number find time to get the will written. When Lakshmamma fell ill at Mandya the appellant had gone to visit her and she pressed the appellant to prepare the draft of her will in accordance with her instructions. So the appellant prepared a draft at Mysore a day prior to the execution of the will. He then went to Mandya by. the morning train on August 22, 1945, and the will was got written about 11 or 11-30 a.m. The appellant had the draft in his hand from which he dictated to the scribe Chokkanna P. W. 3 who wrote the will. After the will was written the scribe took it to the adjoining room where Lakshmamma was lying in bed. The will was then read out to her and was signed by her in five places Exs. A-1 to A-5 . Subsequently it was attested by two witnesses Krishnamurthy Rao P. W. 1 and Narasimha Iyengar P. W. 2 . Some time later during the companyrse of the day the Sub-Registrar came to the house of Junior Kalbagal and in his 55 presence the will Ex. A was duly registered. On the same day at about the same time Lakshmamma executed a power of attorney in favour of the appellant Ex. EE and this document was also duly attested and registered. The appellant has examined himself P. W. 7 , the two attesting witnesses P. W. 1 and P.W. 2 , the scribe P. W. 3 and Junior Kalbagal P. W.4 in support of his case that the will was duly and validly executed by Lakshmamma. The will is a fairly long document and its English translation spreads over eight printed pages. Though the dispositions in the will have occupied a small portion of the document it companytains elaborate arguments in support of the averment of the testatrix that she was entitled to make a will in respect of all the properties mentioned in the will. The will begins with the recital about the illness of the testatrix and says as I have felt in my mind that it is necessary to mention here certain matters clearly so that there may number be any kind of obstacles and obstruction at the instance of any in respect of my purposes companying into effect after my death I have got them written in detail. Then, the will refers to the gift deed executed by Annaji jointly in favour of the testatrix and her husband Sadagopalachar as well as to Annajis will under which hypothecation bonds of the value of Rs. 10,000 were bequeathed to both of them. The will then refers to the fact that Sadagopalachar was possessed of only a house and a carriage shed and owned numberother ancestral property. Even the said house was of very ancient times and was in a dilapidated companydition . According to the will Sadagopalachar held a small government job which he resigned in order to live in Hampapur and to look after the property obtained by gift from Annaji. It was my opinion , says the will, that he was probably looking after my share of the property in addition to his own and was improving the same. It is but natural to think in this manner mutually in respect of husband and wife . Then the will refers to the subsequent purchase of certain lands and avers that the amounts received by the companyple from Annaji were utilised for the said purchase. The will then refers to the death of Sadago- palachar in 1908 and describes the management of the properties during the lifetime of Narayana lyengar the son of the testatrix. It says that during Narayanans minority the testatrix sold some properties at the advice and with the help of her Brother-in-law Srinivasa lyengar for debts without companysidering whether it was my share or my husbands share she. also sold gold and diamond ornaments to meet the urgent needs of the family. After Narayanan became a major he began to manage the property in companystitution with Srinivasa lyengar. Narayanan wanted to build a house for residence in Mysore and so he sold some wet lands situated at Sarvamanya Gaudhanahalli village. Narayanan had numberissue and so he spent generously at the time of the marriage of the three daughters of his younger sister Thirumalamma. Besides he got ornaments prepared moderately for all of them and purchased and gave them as pin money some wet lands situated at Arjunahalli village. Narayanan purchased and gave some wet lands at the same village to the son of his second younger sister Kalbagal Narasimha Iyengar and to Singamma and Lalithamma. Then the will refers to certain purchases made by Narayanan and adds that the purchase of the said lands numberinally stands in his name though the right to the property vested in the testatrix. The will then states that Narayanan had numberissue and so he treated his younger sisters children as his own, attended to their education, marriage and other auspicious functions with great zeal. Having disposed of his properties for the benefit of the said children Narayanan companysidered that since he was the only son of the testatrix her share of the property was sufficient for the maintenance of himself and his wife and so he had numberworry on that account. In other words, the will alleges that as a result of the alienations made by Narayanan he ceased to have any share in the properties that remained and in companysequence the said properties belonged exclusively and solely to the testatrix. Then the will refers to the insurance amount of Rs. 4,000 which was paid to respondent 1 on Narayanans death and in regard to Narayanans illness which ultimately resulted in his death the will adds that the testatrix herself had provided separate money for his medicinal and family expenses and that she had given Narayanan Rs. 3,000 which had been deposited with her Brother-in-law and the Reserve Bank share of Rs. 500 to enable him to purchase a house at Mysore. The ,.will then refers to respondent in terms of affection and states that the testatrix was making a bequest for life of items I and 2 in her favour in order that she may lead her life without any difficulty. ,Except me , says the will, numberone has any right whatever to the scheduled properties. They should go only to those for whom it is intended here according to my desire after my death but there is numberreason whatsoever for their going to my agnates or any others. I am at full liberty to make dispositions hereby according to my desire . After making these elaborate averments the will proceeds to make dispositions of items I to 5. Items I and 2 are given to respondent for life. She shall have numberright such as hypothecation, sale, gift, exchange, etc., of the said properties number has she any right whatever to create liability in any way in favour of others . After her death respondents 2 to 4 are given item I and item 2 is bequeathed to respondent 5. Respondent 5 is described as an heir by the testatrix after her death and has been authorised to perform all her ceremonies. Item 3 is bequeathed to respondent 5 and item 4 to respondents 2, 3 and 4. Out of the 15 acres of land included in item 4, the bequest in regard to 9 acres is burdened with a charge in favour of certain legacies and charities mentioned in the will. The recipients of the legacies who are the relatives of the testatrix are named, and the charities are also specifically mentioned. Rs. 500 each have to be paid to her eldest daughters third daughter Padminiamma, to her eldest daughters son Thirumalachar and to Sudhakalyani, the daughter of her eldest daughters second daughter Jaya and to Nagendra, son of Neelamma, the eldest daughter of her eldest daughter. Besides, Rs. 1,000 had to be used for companyducting service in the Sannadi of Lakshminarayanaswamy at Hampapur on the respective dates of death of her husband, her son and herself. A sum of Rs. 500 has to be endowed for the Nandadipa service in the name of Narayanan in the Sannadi of Thirupati Venkataramanaswami, and Rs. 500 for similar service in the name of Sadagopalachar in the Sannadi of Channakeshavaswami, Belur, the place of the family in Hassan District. An amount of Rs. 1,000 has to be utilised for scholarship to poor students. In all Rs. 5,000 have to be spent for these legacies and charities. The will directs that if respondents 2 to 4 fail to make these payments within three years after the death of the testatrix the appellant who is appointed the executor under the will should, after the expiry of the said three years, sell for reasonable price the lands charged in that behalf and should pay the full amount realised by such sale to carry out the aforesaid charitable works and to give effect to the legacies mentioned in the will. The will then avers that after her death the document would remain with the appellant and it adds that the testatrix has number executed any prior will but that in case any such will has been executed by her the same stood cancelled by the execution of the present will. The will then repeats the averment about the title of the testatrix and states that when Narayana Iyengar was alive he had sold about 17 acres of land situate at Adagur and other places for purchasing lands at Arjunahalli village for his sisters children and so the testatrix had full liberty to make a disposition in respect of the scheduled properties which were her own. The will also adds that though the said properties stand in the name of her son and rent numberes in respect of them are similarly executed in favour of her son that does number affect her title to the said properties in any way. These are the broad features, and dispositions, of the will in question. We would number indicate briefly the evidence led by the appellant on the question about the valid execution of the will. We have already mentioned that the two attesting witnesses, the scribe and the appellant himself have given evidence in support of the will. Mr. Krishnamurthy Rao P. W. 1 was a medical officer to the Mysore Sugar Company, Mandya, and he knew the Junior Kulbagal who was working as a Cane Superintendent in the said factory. This witness was called by Kalbagal to attest the will and so he went to his house and saw that Lakshmamma was lying in her bed since she had an attack of paralysis on her left side. According to the witness her mind was clear and he attested the will after ascertaining from her that the document had received her approval. The witness was cross-examined in regard to his statement that he had treated Lakshmamma and it was brought out in his answers that though she may have been under his treatment for about a week he companyld number say if her name found a place in the hospital register. He, however, added that even patients who are treated in their houses would be mentioned in the hospital register if they companye and take medicine from the hospital. The witness admitted that the will was number written in his presence and that it was already written before he went to attest it. When the witness was asked about the details of his signature on the will he gave ans- wers which showed that he did number have any clear recollection as to what happened on that date. First he stated that he had put one signature but ultimately admitted that he had signed twice, once while he attested the will and also when the Sub-Registrar registered it in his presence. It fact some of his answers suggest that the witness did number even remember that he was present when the Sub-Registrar arrived and registered the document. The witness stated that the will was read in his presence but he did number know if the whole was read or only a few portions of it. The next attesting witness is Narasimha lyengar P. W. 2 . He was employed in Mandya Sugar Company Distillery. According to him the will was written in his presence and Lakshmamma put her signature on it also in his presence. In cross-examination, however, it appeared that his statement that he was present when the will was written may number be accurate. He did number know whether there was any draft already prepared and he saw numbere. According to him, after the will was written the appellant read out the will to Lakshmamma but according to the appellant the will was read out by the scribe. He stated that after the will was attested both he and P. W. 1 left the place but it is clear that P. W. 1 was present at the time of registration. The witness even did number know whether Lakshmamma had any attack of paralysis. The evidence of the scribe P. W. 3 and of the appellant P. W. 7 clearly negatived Mr. Iyengars statement that he was present at the time the will was written. The evidence of both the scribe and the appellant unmistakably shows that Mr. lyengar was number present when the will was written. Chokkanna P. W. 3 the scribe is a relative of Kulbagal. The mother of Chokkanna and Kulbagals mother are sisters. He has written the will. According to him Lakshmamma stated that she wanted to execute a will and that she would agree to what the appellant would get written. The witness stated that the will was written according to the dictation of the appellant in the presence of Lakshmamma. The appellant had a draft with him. Except the appellant, Lakshmamma and the scribe numbere else was present when the will was written. The attesting witnesses came after the will was written. The witness then read the will to Lakshmamma who companysented to the recitals and signed it. It may be pointed out that the account given by the scribe in respect of the writing of the will is somewhat different from the account given by the appellant. The -appellant has stated that the will was written in one room and Lakshmamma was lying in the adjoining room and it was after the will was written that the scribe went into the adjoining room and read the will to her so that the statement of the scribe that the will was written in the presence of Lakshmamma is number supported by the appellant. In fact the appellants statement is company- roborated by the evidence of Junior Kulbagal in this matter. Mr. Kalbagal P.W. 4 does number seem to know about the intention of the testatrix to execute the will. It was when plaintiff asked him to get some attesting witnesses that he came to know that a will was going to be executed. He then went and brought P. W. 1 and P. W. 2 for attestation. This witness admitted that Lakshmamma was ill and was unable to get up and leave her bed. He heard about her intention to execute the will about 9 a.m. in the morning. He was number present when the will was written. He was, how ever, present when the will was read out by the scribe to Lakshmamma. His father Kalbagal Garudachar and his wife Jaya were also present. The witness then stated that the appellant brought the Sub-Registrar at about 5-30 p. m. and the Sub-Registrar registered the will. It would, however, appear from the application Ex. VI made to the Sub-Registrar inviting him to companye to Kalbagals house to register the will that it was number the appellant but the witness himself who had brought the Sub-Registrar. The last witness in support of the will is the appellant himself, P.W. 7 . He has spoken to the instructions received by him from Lakshmamma a year before the date of the execution of the will and he has stated that he prepared a draft at Mysore a day before the will was executed and that the will was written by the scribe as he dictated the companytents from the said draft. He had told Lakshmamma about what the draft companytained but he admitted that the draft was number read out to her. The witness has then referred to the fact that the will was read out by the scribe to Lakshmamma and she companysented to it, whereupon it was signed by her and subsequently attested by the two attesting witnesses. Then the witness refers to the registration of the document at about 5-30 p.m. On the morning of the day when the will was executed the witness was told by Lakshmamma that she would execute a power of attorney though the witness had number asked for it. A power of attorney was accordingly prepared and duly executed and registered. That in brief is the evidence on which the appellant relies. It would be companyvenient at this stage to refer briefly to the reasons given by the companyrts below in support of their respective findings. The learned trial judge put the onus of proving the will on the appellant but he observed that the proof that is necessary to establish a will is number an absolute or a companyclusive one. What is required is only such proof as would satisfy a prudent man- The learned judge then companysidered the evidence of the two attesting witnesses and the scribe and observed that there can absolutely be numberdoubt that P.W. 3 wrote Ex. A at the time when it is said to have been written . He was of the opinion that the evidence of the scribe fully companyroborates the evidence of P. W. I and P. W. 2. The learned judge then mentioned the fact that P. W. 4 who supported the appellant is numberother than the husband of Lakshmammas granddaughter. The evidence of the appellant himself was companysidered by the learned judge and his companyclusion was that it had to be taken that Ex. A is a will executed by Lakshmamma and the signatures, Exs. A - I to A-5 are those of Lakshmamma . The argument urged by respondent I that Lakshmamma companyld number have understood the companytents of Ex. A was rejected by the learned judge and he observed that when it is proved -that Exs. A-1 to A-5 are signatures of Lakshmamma and that she executed Ex. A, it is to be presumed that the testatrix had the knowledge of the companytents of the will . In the end the learned judge thus recorded his finding In view of the evidence and the presumption referred to above I think we deed number have any hesitation in holding that Lakshmamma executed Ex. A having fully understood the nature of Ex. A and the recitals made therein . The High Court, on the other hand, has taken a companytrary view. The High Court thought that the evidence adduced by the appellant to prove the execution of the will was number satisfactory. It then examined the said evidence in some detail, criticised the discrepancies appearing in the said evidence, companysidered the probabilities and companycluded that, on the whole, the said evidence would number justify the finding that the will had been duly executed by the testatrix. The High Court also thought that the appellants version about the instructions given by Lakshmamma to him in the matter of the execution of the will was highly improbable and, according to the High Court, the whole evidence of the appellant appeared to be unsatisfactory. The High Court then companysidered the question of onus and observed that since the appellants sons had received a substantial benefit under the will and since he had taken a leading part in its execution, the onus was heavy on him to remove the suspicions attending the execution of the document and to establish that Lakshmamma had really understood its companytents, had approved of them and had put her signatures on it when she was in a sound and disposing state of mind. It that the High Court also felt that the dispositions made by the will were unnatural and improbable in particular it took the view that since the appellant had companye into the family of Annaji by adoption it was very unlikely that his sons should have received such a substantial benefit under the will. In fact the judgment of the High Court appears to indicate that The High Court was inclined to hold that the testatrix may number have been in a sound and disposing state of mind at the material time. It is on these findingS that the High Court reached its final companyclusion that the appellant had failed to prove the due and valid execution of the will. What is the true legal position in the matter of proof of wills ? It is well-known that the proof of wills presents a recurring topic for decision in companyrts and there are a large number of judicial pronouncements on the subject. The party propounding a will or otherwise making a claim under a will is numberdoubt seeking to prove a document and, in deciding how it is to be proved, we must inevitably refer to the statutory provisions which govern the proof of documents. Sections 67 and 68 of the Evidence Act are relevant for this purpose. Under s. 67, if a document is alleged to be signed by any person, the signature of the said person must be proved to be in his handwriting, and for proving such a handwriting under ss. 45 and 47 of the Act the opinions of experts and of persons acquainted with the handwriting of the person companycerned are made relevant. Section 68 deals with the proof of the execution of the document required by law to be attested and it provides that such a document shall number be used as evidence until one attesting witness at least has been called for the purpose of proving its execution. These provisions prescribe the requirements and the nature of proof which must be satisfied by the party who relies on a document in a companyrt of law. Similarly, ss. 59 and 63 of the Indian Succession Act are also relevant. Section 59 provides that every person of sound mind, number being a minor, may dispose of his property by will and the three illustrations to this section indicate what is meant by the expression a person of sound mind in the companytext. Section 63 requires that the testator shall sign or affix his mark to the will or it shall be signed by some other person in his presence and by his direction and that the signature or mark shall be so made that it shall appear that it was intended thereby to give effect to the writing as a will. This section also requires that the will shall be attested by two or more witnesses as prescribed. Thus the question as to whether the will set up by the propounder is proved to be the last will of the testator has to be decided in the light of these provisions. Has the testator signed the will ? Did he understand the nature and effect of the dispositions in the will ? Did he put his signature to the will knowing what it companytained ? Stated broadly it is the decision of these questions which determines the nature of the finding on the question of the proof of wills. It would prima facie be true to say that the will has to be proved like any other document except as to the special requirements of attestation prescribed by s. 63 of the Indian Succession Act. As in the case of proof of other documents so in the case of proof of wills it would be idle to expect proof with mathematical certainty. The test to be applied would be the usual test of the satisfaction of the, prudent mind in such matters. However, there is one important feature which distinguishes wills from other documents. Unlike other documents the will speaks from the death of the testator, and so, when it is propounded or produced before a companyrt, the testator who has already departed the world cannot say whether it is his will or number and this aspect naturally introduces an element of solemnity in the decision of the question as to whether the document -propounded is proved to be the last will and testament of the departed testator. Even so, in dealing with the proof of wills the companyrt will start on the same enquiry as in the case of the proof of documents. The propounder would be called upon to show by satisfactory evidence that the will was signed by the testator, that the testator at the relevant time was in a sound and disposing state of mind, that he understood the nature and effect of the dispositions and put his signature to the document of his own free will. Ordinarily when the evidence adduced in support of the will is disinterested, satisfactory and sufficient to prove the sound and disposing state of the testators mind and his signature as required by law, companyrts would be justified in making a finding in favour of the propounder. In other words, the onus on the propounder can be taken to be discharged on proof of the essential facts just indicated. There may, however, be cases in which the execution of the will may be surrounded by suspicious circumstances. The alleged signature of the testator may be very shaky and doubtful and evidence in support of the propounders case that the signature, in question is the signature of the testator may number remove the doubt created by the appearance of the signature the companydition of the testators mind may appear to be very feeble and debilitated and evidence adduced may number succeed in removing the legitimate doubt as to the mental capacity of the testator the dispositions made in the will may appear to be unnatural, improbable or unfair in the light of relevant circumstances or, the will may otherwise indicate that the said dispositions may number be the result of the testators free will and mind. In such cases the companyrt would naturally expect that all legitimate suspicions should be companypletely removed before the document is accepted as the last will of the testator. The presence of such suspicious circumstances naturally tends to make the initial onus very heavy and, unless it is satisfactorily discharged, companyrts would be reluctant to treat the document as the last will of the testator. It is true that, if a caveat is filed alleging the exercise of undue influence, fraud or companyrcion in respect of the execution of the will propounded, such pleas may have to be proved by the caveators but, even without such pleas circumstances may raise a doubt as to whether the testator was acting of his own free will in executing the will, and in such circumstances, it would be a part of the initial onus to remove any such legitimate doubts in the matter. Apart from the suspicious circumstances to which we have just referred, in some cases the wills propounded disclose another infirmity. PrOpounders themselves take a prominent part in the execution of the wills which companyfer on them substantial benefits. If it is shown that the propounder has taken a prominent part in the execution of the will and has received substantial benefit under it, that itself is generally treated as a suspicious circumstance attending the execution of the will and the propounder is required to remove the said suspicion by clear and satisfactory evidence. It is in companynection with wills that present such suspicious circumstances that decisions of English companyrts often mention the test of the satisfaction of judicial companyscience. It may be that the reference to judicial companyscience in this companynection is a heritage from similar observations made by ecclesiastical companyrts in England when they exercised jurisdiction with reference to wills but any objection to the use of the word companyscience in this companytext would, in our opinion, be purely technical and academic, if number pedantic. The test merely emphasizes that, in determining the question as to whether an instrument produced before the companyrt is the last will of the testator, the companyrt is deciding a solemn question and it must be fully satisfied that it had been validly executed by the testator who is numberlonger alive. It is obvious that for deciding material questions of fact which arise in applications for probate or in actions on wills, numberhard and fast or inflexible rules can be laid down for the appreciation of the evidence. It may, however, be stated generally that a propounder of the will has to prove the due and valid execution of the will and that if there are any suspicious circumstances surrounding the execution of the will the propounder must remove the said suspicions from the mind of the companyrt by companyent and satisfactory evidence. It is hardly necessary to add that the result of the application of these two general and broad principles would always depend upon the facts and circumstances of each case and on the nature and quality of the evidence adduced by the parties. It is quite true that, as observed by Lord Du Parcq in Harmes v. Hinkson 1 where a will is charged with suspicion, the rules enjoin a reasonable scepticism, number an obdurate persistence in disbelief. They do number demand from the judge, even in circumstances of grave suspicion, a resolute and impenetrable incredulity. He is never required to close his mind to the truth . It would sound platitudinous to say so, but it is nevertheless true that in discovering truth even in such cases the judicial mind must always be open though vigilant, cautious and circumspect. It is in the light of these general companysiderations that we must decide whether the appellant is justified in companytending that the finding of the High Court against him on the question of the valid execution of the will is justified or number. It may be companyceded in favour of the appellant that his allegation that Lakshmamma has put her signatures on the will at five places is proved that numberdoubt is a point in his favour. It may also be taken as proved that respondent I has failed to prove that Lakshmamma was unconscious at the time when the will is alleged to have been executed. It is true she A, as an old woman of 64 years and had been ailing for some time before the will was executed. She was number able to get up and leave the bed. In fact she companyld sit up in bed with some difficulty and was so weak that she had to pass stools in bed. However, the appellant is entitled to argue that, on the evidence, the sound and disposing 1 1946 50 C.W.N. 895. state of mind of Lakshmamma is proved. Mr Iyengar, for the appellant, has strongly urged before us that, since these facts are established, the companyrt must presume the valid execution of the will and in support of his companytention he has invited our attention to the relevant statements on the point in the text books dealing with the subject. Jarman on Wills 1 says that the general rule is that the onus probandi lies in every case upon the party propounding a will and he must satisfy the companyscience of the companyrt that the instrument so propounded is the last will of a free and capable testator. He adds that, if a will is rational on the face of it, and appears to be duly executed, it is presumed, in the absence of evidence to the companytrary, to be valid. Similarly, Williams on Executors and Administrators 2 has observed that, generally speaking, where there is proof of signature, everything else is implied till the companytrary is proved and evidence of the will having been read over to the testator or of instructions having been given is number necessary. On the other hand, Mr. Viswanatha Sastri, for respondent No. 1, companytends that the statements on which the appellant has relied refer to wills which are free from any suspicions and they cannot be invoked where the execution of the will is surrounded by suspicious circumstances. In this companynection, it may be pertinent to point out that, in the same text books, we find another rule specifically mentioned. Although the rule of Roman Law , it is observed in Williams, that Qui se scripsit haeredem companyld take numberbenefit under a will does number prevail in the law of England, yet, where the person who prepares the instrument, or companyducts its execution, is himself benefited by its dis- positions, that is a circumstance which ought generally to excite the suspicion of the companyrt, and calls on it to be vigilant and zealous in examining the evidence in support of the instrument in favour of which it ought number to pronounce, unless the suspicion is removed, and Jarman on Wills--Vol. 1, 8th Ed., P. 50. Williams on Executors and Administrators--Vol. 1, 13th Ed., P. 92. it is judicially satisfied that the paper does express the true will of the deceased 1 . It would, therefore, be necessary at this stage to decide whether an execution of the will in the present case is surrounded by any suspicious circumstances. Does the will appear to be on the whole an improbable, unnatural and unfair instrument as held by the High Court? That is the first question which falls to be companysidered. We have already indicated that the preamble to the will companytains many argumentative recitals. Indeed it would number be unjust to say that the preamble purports to meet by anticipation the main objections which were likely to be raised to the companypetence of Lakshmamma to make a will in regard to the properties companyered by it. The preamble in great detail makes out a case that the properties received by the testatrix and her husband under the gift deed Ex. D devolved upon her by survivorship after her husbands death, a plea which has number been accepted even by the trial companyrt. It also seeks to prove that the subsequent purchases made by her husband were in law the joint acquisitions of her husband and herself, a point on which the two companyrts below have differed. It sets out in detail the theory that the son of the testatrix has lost his right, title and interest in the properties which devolved on him after his fathers death because he had alienated more than his share in the said properties during his lifetime and it even suggests that during his illness and to help him to build a house in Mysore the testatrix had advanced him money from her separate funds, pleas which have number been accepted by either companyrt below. It seems to us that the elaborate and well companysidered recitals which have been deliberately introduced in the preamble cannot possibly be the result of companyresponding instructions given by the testatrix to the appellant for preparing the draft of her will. In the companytext these recitals sound artificial and unnatural and some of them at any rate are untrue. The draftsman of the will has tried to be overwise and that itself is a very serious infirmity in the appellants case that the Williams on Executors and Administrators , Vol.1, 13th Ed., P. 93. instrument represents the last will and testament of the testatrix. Take for instance the statement in the will that the testatrix had advanced Rs. 3,000 to her son to enable him to purchase a house at Mysore. By itself this is number a matter of very great importance but this detail has been introduced in the will in order to make out a strong case that all the properties mentioned in the will were the separate properties of the , testatrix and so it would be relevant to companysider what the appellant himself has to say about this recital. In regard to the Rs. 3,000 in cross- examination the appellant has stated that Mr. B. G. Ramakrishna lyengar had sent this amount to the husband of respondent 1 in 1942 or so. It was sent by cheque on Mysore Bank. The appellant then added that the husband of respon- dent 1 had deposited this amount with B. G. Ramakrishna Iyengars father-in-law after selling Goudanahalli lands with intent to purchase lands at Mysore so that the claim made in the will that the testatrix bad given this amount to her son out of her separate funds is inaccurate. The manner in which the several recitals have been made in the will amounts to a suspicious circumstance which must be satisfactorily explained by the appellant. The next circumstance which calls for an explanation is the exclusion of the grand-children of the testtatrix from any substantial legacies under the will. It is true that a bequest of Rs. 500 each is given to them but that can hardly be regarded as fair or just to these children. It was, however, urged by Mr. lyengar before us that Narayana lyengar had, during his lifetime, given lands to his sisters daughters. He had also spent companysiderable amounts on the occasion of their marriages and had given them each valuable ornaments. In this companynection, he referred us to certain documents exhibited under Ex. I G and attempted to show that the lands given to his sisters daughters were of the value of Rs. 1,500 to Rs. 2,000 each. Apart from the fact that the value of these lands is number clearly proved number are the circumstances under which they came to be gifted to the donees, we do number think it would be possible to accept the argument that even with these gifts the testatrix would number have thought of making more substantial bequests to her grand- children. It is number suggested -that the relations between the testatrix and these grand-children were number companydial and affectionate and so it would be reasonable to assume that they would have been the objects of her bounties in a more liberal measure in ordinary circumstances. There is one more point which must be companysidered in this companynection. As we have already mentioned the appellants sons have received substantial bounties under the will. Are these bequests probable and natural ? It must be remembered that the appellant came into the family of Annaji by adoption long after the testatrix was married. The record does number show that the testatrix was on such affectionate terms with the appellant that she would have preferred to make a bequest to his sons rather than to her own grand- children. Indeed the appellant admitted that, at the relevant time, he was in straightened circumstances and was indebted to the extent of nearly, Rs. 30,000 and it does number appear that when he was faced with financial difficulties of this magnitude he asked for or obtained any assistance from his adoptive sister. That is why the bequests to the appellants sons also amount to a suspicious circumstance which must be clearly explained by the appellant. We cannot easily reject the argument urged on. behalf of respondent I that the bequests have been made in the names of the appellants sons because, if they had been made in his own name, the properties bequeathed would have been attached and sold at the instance of his numerous creditors. We do number propose to measure precisely the value of the properties bequeathed to the appellants sons. It would be enough to say that the said bequests are by numbermeans insignificant or unsubstantial. Therefore, we are unable to see how the appellant can successfully challenge the finding of the High Court that some of the broad features of the will appear to be improbable and unfair and if that be so, the appellant will have to remove the suspicions arising from these features before he can persuade the companyrt to accept the instrument as the last will and testament of the testatrix. In this companynection it is necessary to bear in mind that the appellant whose sons have received the said bequests has admittedly taken a very prominent part in bringing about the execution of the will. He has prepared the draft and it was at his dictation that the scribe wrote the will. Indeed on the important question as to when and how instructions were given by the testatrix and whether or number in preparing the draft those instructions have been faithfully carried out, the only evidence adduced in the case is that of the appellant and numberone else. Thus, the very important, if number the decisive, part played by the appellant in the execution of the will cannot at all be disputed in the present case. Mr. Iyengar, for the appellant, strenuously companytended that, in deciding whether the suspicions attending the execution of the will have been removed or number, it would be necessary to remember that the whole of the relevant evidence is all one way and there is numberevidence in rebuttal led by respondent 1. His argument is that the evidence adduced by the appellant is satisfactory and the companyclusion of the trial companyrt which was well-founded need number have been reversed by the High Court. In support of this argument, Mr. lyengar referred us to several judicial decisions and suggested that we should companysider the evidence in the light of these decisions. According to him, these decisions would afford us companysiderable assistance and guidance in appreciating the evidence in the present case. That is why we would number briefly refer to some of the decisions cited before us. According to the decisions in Fulton v. Andrew 1 those who take a benefit under a will, and have been instrumental in preparing or obtaining it, have thrown upon them the onus of showing the righteousness of the transaction . There is however numberunyielding rule of law especially where the ingredient of fraud enters into the case that, when it has been 1 1875 L.R. 7 H. L- 448. proved that a testator, companypetent in mind, has had a will read over to him, and has thereupon executed it, all further enquiry is shut out . In this case, the Lord Chancellor, Lord Cairns, has cited with approval the well-known observations of Baron Parke in the case of Barry v. Butlin 1 . The two rules of law set out by Baron Parke are first, that the onus probandi lies in every case upon the party propounding a will and lie must satisfy the companyscience of the companyrt that the instrument so propounded is the last will of a free and capable testator the second is, that, if a party writes or prepares a will under which he takes a benefit, that is a circumstance that ought generally to excite the suspicion of the companyrt and calls upon it to be vigilant and zealous in examining the evidence in support of the instrument in favour of which it ought number to pronounce unless the suspicion is removed, and it is judicially satisfied that the paper propounded does express the true will of the deceased . It is hardly necessary to add that the statement of these two rules has number attained the status of a classic on the subject and it is cited by all text books on wills. The will propounded in this case was directed to be tried at the Assizes by the Court of Probate. It was tried on six issues. The first four issues referred to the sound and disposing state of the testators mind and the fifth to his knowledge and approval of the company- tents of the will. The sixth was whether the testator knew and approved of the residuary clause and by this last clause the propounders of the will were made the residuary legatees and were appointed executors. Evidence was led at the trial and the judge asked the opinion of the jurors on every one of the issues. The jurors found in favour of the propounders on the first five issues and in favour of the opponents oil the sixth. It appears that numberleave to set aside the verdict and enter judgment for the propounders numberwithstanding the verdict on the sixth issue was reserved but when the case came before the Court of Probate a rule was obtained to set aside the verdict generally and have a new trial or to set aside the verdict on the 1 1838 2 Moo. P.C. 480,482. sixth issue for misdirection. It was in dealing with the merits of the finding on the sixth issue that the true legal position came to be companysidered by the House of Lords. The result of the decision was that the rule obtained for a new trial was discharged, the order of the Court of Probate of the whole will was reversed and the matter was remitted to the Court of Probate to do what was right with regard to the qualified pro. bate of the will. The same principle was emphasized by the Privy Council inVellasawmy Servai v. Sivaraman Servai 1 , where it was held that, where a will is propounded by the chief beneficiary under it, who has taken a leading part in giving instructions for its preparation and in procuring its execution, probate should number be granted unless the evidence removes suspicion and clearly proves that the testator approved the will. In Sarat Kumari Bibi v. Sakhi Chand 2 , the Privy Council made it clear that the principle which requires the propounder to remove suspicions from the mind of the Court is number companyfined only to cases where the propounder takes part in the execution of the will and receives benefit under it. There may be other suspicious circumstances attending on the execution of the will and even in such cases it is the duty of the propounder to remove all clouds and. satisfy the companyscience of the companyrt that the instrument propounded is the last will of the testator. This view is supported by the observations made by Lindley and Davey, L. JJ., in Tyrrell v. Painton 3 . The rule in Barry v. Butlin 4 , Fulton v. Andrew 5 and Brown v. Fisher 6 , said Lindley, J., is number in my mind companyfined to the single case in which the will is prepared by or on the instructions of the person taking large benefits under it but extends to all cases in which circumstances exist which excite the suspicions of the companyrt. In Rash Mohini Dasi v. Umesh Chunder Biswas 1 1929 L.R 57 I.A. 96. 3 1894 P. 151, 157, 159. 5 1875 L.R. 7 H. L. 448. 2 1928 L.R. 56 I.A. 62. 4 1838 2 MOO. P. C. 480, 482. 6 1890 63 L.T. 465. 7 1898 L.R. 25 I.A. 109. it appeared that though the will was fairly simple and number very long the making of it was from first to last the doing of Khetter, the manager and trusted adviser of the alleged testator. No previous or independent intention of making a will was shown and the, evidence that the testator understood the business in which his adviser engaged him was number sufficient to justify the-grant of probate. In this case the application for probate made by the widow of Mohim Chunder Biswas was opposed on the ground that the testator was number in a sound and disposing state of mind at the, material time and he companyld number have understood the nature and effect of its companytents. The will had been admitted to the probate by the District Judge but the High Court had reversed the said order. In companyfirming the view of the High Court the Privy Council made the observations to which we have just referred. The case of Shama Charn Kundu v. Khettromoni Dasi 1 , on the other hand, was the case of a will the execution of which was held to be number surrounded by any suspicious circumstances. Shama Charn, the propounder of the will, claimed to be the adopted son of the testator. He and three others were appointed executors of the will. The testator left numbernatural son but two daughters and his widow. By his will the adopted son obtained substantial benefit. The probate of the will with the exception of the last paragraph was granted to Shama Charn by the trial judge but, on appeal the application for probate was dismissed by the High Court on the ground that the suspicions attending on the execution of the will had number been satisfactorily removed by Shama Charn. The matter was then taken before the Privy Council and their Lordships held that, since the adoption of Shama Charn was proved, the fact that he took part in the execution of the will and obtained benefit under it cannot be regarded as a suspicious circumstance so as to attract the rule laid down by Lindley, L. J., in Tyrrell v. Painton 2 . In Bai Gungabai v. Bhugwandas Valji. 3 , the Privy Council had to deal with a will which was admitted to probate by the first companyrt, but on appeal 1 1899 I.L.R. 27 Cal. 522. 2 1894 P. 151, 157, 159. 3 1905 I.L.R. 29 Bom. 530. the order was varied by excluding therefrom certain passages which referred to the deed-poll executed on the same day by the testator and to the remuneration of the solicitor who prepared the will and was appointed an executor and trustee thereof. The Privy Council held that the onus was on the solicitor to satisfy the companyrt that the passages omitted expressed the true will of the deceased and that the companyrt should be diligent and zealous in examining the evidence in its support, but that on a companysideration of the whole of the evidence as to which numberrule of law prescribed the particular kind required and of the circumstances of the case the onus was discharged . In dealing with the question as to whether the testator was aware that the passages excluded by the appeal companyrt from the probate formed part of the instrument, the Privy Council examined the evidence bearing on the point and the probabilities. In companyclusion their Lordships differed from the view of the appeal companyrt that there had been a companyplete failure of the proof that the deed-poll companyrectly represented the intentions of the testator or that he understood or approved of its companytents and so they thought that there were numbergrounds for excluding from the probate the passages in the will which referred to that deed. They, however, observed that it would numberdoubt have been more prudent and business-like to have obtained the services of some independent witnesses who might have been trusted to see that the testator fully understood what he was doing and to have secured independent evidence that clause 26 in particular was called to the testators attention. Even so, their Lordships expressly added that in companying to the companyclusion which they had done they must number be understood as throwing the slightest doubt on the principles laid down in Fulton v. Andrew 1 and other similar cases referred to in the argument. In Perera v. Perera 2 it was held that when the testator is of sound mind when he gives instructions for a will but at the time of signature accepts the instrument drawn in pursuance thereof without being able 1 1875 L.R. 7 H.L. 448. 2 1901 A.C. 354. to follow its provisions, he must be deemed to be of sound mind when it is executed. The will of Perera with which the companyrt was companycerned in this case was signed with a cross by the testator in the presence of five witnesses present at the same time who duly subscribed the will in the presence of the testator. The Notary Public was also among the persons present but he did number attest the will. No objection was taken in the companyrt of first instance on this ground, but, in the companyrt of appeal, the said objection was raised and it was held that the will was invalid on the ground that though the Notary Public was present he had number attested the instrument. The case was then taken to the Supreme Court in its companylective capacity on review preparatory to an appeal to Her Majesty. The Supreme Court reversed the judgment under appeal and then proceeded to determine the case on the merits. The companyrt held by a majority decision that the testator was of sound and disposing state of mind and restored the order of the primary judge. Against this decision there was an appeal. In this case, the evidence about the instructions given by the testator was very clear and there was number the slightest reason for disbelieving the statement of Gooneratne that he had drawn the will faithfully in accordance with the details of instructions given to him. The will prepared from the said instructions seemed to be fair and just disposition of the testators property. There was numberconcealment about the preparation of the will. The instructions were given on June 1 and it was in the evening of June 4 that the will was brought to the testator for execution. It is on these facts that it was held, following the observations of Sir James Hannen in Parker v. Felgate 1 that if a person has given instructions to a solicitor to make a will and the solicitor prepares it in accordance with those instructions, all that is necessary to make it a good will if executed by the testator is that he should be able to think thus far If I gave my solicitor instructions to prepare a will making certain dispositions about my property I have numberdoubt that he has given effect to my intention and I 1 1883 8 P.D. 171. accept the document which is put before me as carrying it out . We would again like to emphasize that the evidence about the instructions was very clear and definite in this case and it was also clearly established that the will which was just and fair was executed faithfully in accordance with the said instructions given by the testator. In such a case whether or number the will should be admitted to probate would depend upon the opinion which the companyrt may form about the relevant evidence adduced in support of the will. It would be difficult to deduce any principle from this decision and to seek to apply it to other cases without reference to their facts. The last case to which reference must be made is the decision of the Privy Council in Harmes v. Hinkson 1 It appears that, in this case, the testator George Harmes died in the city of Regina on April 4, 1941. Two days later Mr. Hinkson brought to the manager of the Canada Permanent Trust Company at its office in Regina a document which purported to be the will of the said Harmes. It was dated April 3, 1941, and named the Trust Company as executor. Under the will Mr. Hinkson by a devise and bequest of the residue was to benefit to a sum of more than pound 50,000. Mr. Hinkson was by profession a barrister and solicitor and had drawn the will with numberwitness present until after the body of the document was companyplete. Then two nurses were called in to witness its due execution. The learned judge of the Surrogate Court, after a lengthy trial affirmed the will and decreed probate in solemn form. On appeal, by a majority decision the order of the trial companyrt was reversed. Then there was a further appeal to the Supreme Court of Canada. It was heard by five learned judges. By a majority Hudson, J., alone dissenting the appeal was allowed and the decree of the Surrogate Court was restored. Against this decision the appellant obtained special leave to appeal to His Majesty-in-Council and it was urged on his behalf that, since the document was charged with suspicion from the outset, probate 1 1946 50 C.W.N. 895. should number have been granted to the respondent Hinkson. The Privy Council did number accept this companytention and dismissed the appeal. It was in dealing with the appellants companytention about the suspicions surrounding the execution of the will that Lord Du Parcq made the observations which we have already quoted. Prima facie the facts on which the appellant relied were strong enough but the question which according to their Lordships fell to be decided in the appeal was whether the learned trial judges decision on the facts was erroneous and so manifestly erroneous that an appellate companyrt ought to set it aside. Their Lordships then referred with approval to the principles which had been frequently enunciated as to the respect which the appellate companyrt ought to pay to the opinion which a Judge who has watched and listened to the witness has formed as to their credibility Powell v. Streatham ManoR Nursing Home 1 . Their Lordships then briefly referred to the evidence led in the case and observed that it was impossible for them judging only from the printed page to decide between the various opinions of Mr. Hinksons character which its perusal may leave open for acceptance by different minds. In the result they came to the companyclusion in agreement with the Supreme Court that the trial companyrts decision on the facts must stand. It would thus be numbericed that the decision of the Privy Council proceeded more on the basis that there was numberjustification for interfering with a finding of fact recorded by the trial judge particularly when the said ,finding rested on his appreciation of the evidence given by several witnesses before him. In this companynection it is significant to numbere that the allegation of the appellant that Mr. Hinkson had exercised undue influence on the testator was repelled by the Privy Council with the observation that their acceptance of the judges findings of fact leaves them numberalternative but to reject it. Thus this decision merely serves to illustrate the importance which the Privy Council attached to the finding of fact recorded by the trial companyrt in this case. 1 1935 A.C. 243. It is in the light of these decisions that the appellant wants us to companysider the evidence which he has adduced in the present case. It would be companyvenient to begin with the appellants story about the instructions given by the testatrix for preparing the will. In the plaint the appellant has referred to the sudden illness of the testatrix at Mandya and it is alleged that when she took ill the testatrix sent for him with the obvious intention of making arrangements regarding her properties. Accordingly when he met her at Mandya she explained all her intentions to him in the matter of disposing all her properties and her rights thereto. In other words, the case made out in the plaint clearly and specifically is that when the testatrix was ill at Mandya she sent for the appellant and gave him instructions for preparing a draft of her will. However, when the appellant gave evidence he made a material improvement in his story. According to his evidence, the appellant had received instructions from the testatrix a year before the will was actually drafted. It was then that the testatrix had given him the gift deed Ex. D and asked him to prepare the draft. Consistently with this new version the appellant has added in his evidence that when he met her at Mandya during her illness she reminded him that she had asked him to make a will for quite some time and she insisted that the draft should be prepared without any delay. In our opinion, the evidence given by the appellant on this point is clearly an after-thought and his story that he had received previous instructions cannot be accepted as true. Besides, it is somewhat remarkable that, on both the occasions when the testatrix talked to the appellant and gave instructions to him numberone else was present and so the proof of this part of the appellants case rests solely on his own testimony. If the testatrix had really thought of making a will for over a year before it was actually executed, it is unlikely that she would number have talked about it to other relatives including Kalbagal with whom she was actually staying at the material time. Then it would be necessary to enquire whether the draft which the appellant prepared was companysistent with the instructions alleged to have been given by the testatrix. The draft, however, has number been produced in the case on the plea that it had been destroyed number is it specifically stated by the appellant that this draft was read out fully to the testatrix before be dictated the companytents of the will to the scribe. Thus even the interested testimony of the appellant does number show that be obtained approval of the draft from the testatrix after reading it out fully to her clause by clause. It is companymon ground that Mandya where the testatrix was lying ill is a place where the assistance of local lawyers would have been easily available and in ordinary companyrse the testatrix would have talked to Kalbagal and the appellant and they would have secured the assistance of the lawyers for drafting the will but that is number what the appellant did. He went to Mysore and if his evidence is to be believed he prepared the draft without any legal assistance. Having regard to the nature of the recitals companytained in the will it is number easy to accept this part of the appellants case. Besides, as we have already indi- cated, we find great difficulty in believing that the elaborate recitals companyld have been the result of the instructions given by the testatrix herself. It is in the light of these circumstances that the direct evidence about the execution of the will has to be companysidered. The evidence of P. W. I is really inconclusive on the point about the execution of the will. Apart from the fact that he had numberclear recollection as to what happened on the day when he attested the will, this witness has frankly stated that he companyld number state definitely whether the whole of the document was read over to the testatrix before he put the attesting signature and it was naturally of very great importance in this case to produce satisfactory evidence that the will was read out to the testatrix and she understood the nature and effect of its companytents. On this point even if P.W. I is believed it does number help the appellants case. The evidence of P.W. 2 cannot carry much weight because his main story that he was present at the time when the will was written is wholly inconsistent with the evidence of P. Ws. 3, 4 and 7. That leaves the evidence of the scribe and the appellant himself. The scribe P.W. 3 is a near relation of Kalbagal and even he does number at all support the appellants case about previous instruction because, according to him, the testatrix said that she would agree to whatever the appellant would get written. The relevant evidence of this witness is clearly inconsistent with the appellants case about previous instructions and so it would be difficult to treat the evidence of this witness as suffi- cient to prove that the testatrix fully understood the nature of the recitals in the preamble and the effect of the dispositions before she put her signature to the will. The evidence of the appellant P.W. 7 cannot obviously be useful because it is the evidence of an interested witness and is besides number very satisfactory. On behalf of the appellant it was urged before us by Mr. Iyengar that the evidence of Kalbagal P. W. 4 is disinterested and so it should be believed. That also appears to be the view taken by the trial companyrt. In our opinion, however, it would number be right or companyrect to describe Kalbagal as wholly disinterested. Respondent No. 5 who is the step-brother of Kalbagal and who stays with him in the same house along with their father has admittedly received substantial benefit under the will. If an undivided brother of P.W. 4 has received this benefit it would number be accurate to say that the witness is wholly disinterested. Besides, it appears from the evidence of Kalbagal that he knew numberhing about the execution of the will until the appellant asked him to get some attesting witnesses for the will. This evidence does number strike us as natural or probable but apart from it, even Kalbagals evidence does number show satisfactorily that the will was read out to the testatrix so as to enable her to understand its full effect before it was signed by her. That is the whole of the evidence led by the appellant on the question of the execution of the will. On this evidence we are number prepared to hold that the High Court was in error in companying to the companyclusion that it was number shown that the testatrix fully understood the companytents of the will and put her signature on the instrument intending that the recitals and the dispositions in the will should be her recitals and dispositions. In this companynection we would like to add that the learned trial judge appears to have misdirected himself in law inasmuch as he thought that the proof of the signature of the testatrix on the will raised a presumption that the will had been executed by her. In support of this view the learned judge has referred to the decision of the Calcutta High Court in Surendra Nath Chatterji v. Jahnavi Charn Mukerji 1 . In this case numberdoubt the Calcutta High Court has held that on the proof of the signature of the deceased or his acknowledgment that he has signed the will he will be presumed to have known the provisions of the instrument he has signed but Mr. Justice B. B. Ghose, in his judgment, has also added that the said presumption is liable to be rebutted by proof of suspicious circumstances and that undoubtedly is the true legal position. What circumstances would be regarded as suspicious cannot be precisely defined or exhaustively enumerated. That inevitably would be a question of fact in each case. Unfortunately the learned trial judge did number properly assess the effect of suspicious circumstances in the present case to which we have already referred and that has introduced a serious infirmity in his final companyclusion. Incidentally we may also refer to the fact that the appellant obtained a power of attorney from the testatrix on the same day and that has given rise to the argument that the appellant was keen on taking possession and management of the properties under his companytrol even before the death of the testatrix. There is also another circumstance which may be mentioned and that is that the SubRegistrar, in whose presence the document was registered on the same day, has number been examined though he was alive at the date of the trial. On these facts then we are inclined to hold that the High Court was justified in reversing the finding of the trial companyrt oil the question of the due and valid execution of the will. 1 1928 I.L.R., 56 Cal. 390. Before we part with this case, however, we would like to add that the High Court was number justified in recording its findings on two other issues in the present appeal. As we have already indicated, the High Court itself has observed that, once it was held that the will had number been proved by the appellant, numberother issue survived for decision. Even so, the High Court has expressed its companyclusions in favour of res-pondent I on the question about the character of the subsequent acquisitions of items 3, 4 and 5 and about the subsisting title of the testatrix in respect of all the properties companyered by the will. Having regard to the relationship between the parties it is difficult to under- stand how mere entries in the revenue record made in the name of Sadagopalachar or the long possession of Sadagopalachar and, after his death, of Narayana lyengar can prove the transfer of Lakshmammas title or its extinction by adverse possession respectively. It is apparent that, in recording these companyclusions, the High Court has number fully or properly companysidered all the relevant evidence and companysequently, the reasons given by it are open to serious challenge on the merits. Indeed Mr. Viswanatha Sastri did number appear to be inclined to support the said findings. We do number, however, propose to decide these questions on the merits because in view of our companyclusion on the principal issue it is unnecessary to companysider any other points. We would, therefore, like to make it clear that the said two issues are number decided in the present proceedings and may have to be companysidered afresh between the parties if and when they arise.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE, JURISDICTiON Civil Appeal No. 426 of 1958. Appeal by special leave from the judgment and order dated July 30, 1958, of the Punjab High Court in Civil Writ Application No. 732 of 1958. C. Chatterjee, I. M. Lal and B. P. Maheshwari, for the appellant. M. Sikri, Advocate-General for the State, of Punjab, Mohinder Singh Pannum, Additional Advocate-General for the State of Punjab and D. Gupta, for respondent No. 1. Sen and T. M. Sen, for the Intervener. 1958. December 11. The Judgment of the Court was delivered by WANCHOO, J.-This appeal by special leave raises the question of the companystitutionality of the All-India Services Act, LXI of 1951 hereinafter called the Act . The appellant was appointed to the Indian Police Service on October 1., 1949, and posted to the State of Punjab. He held charge as Superintendent of Police in various districts but was reverted as Assistant Superintendent of Police in August 1957, and was eventually Posted to Dharamsala in March 1958. In the same month he was informed that it was proposed to take action against him under r. 5 of the All-India Services Discipline and Appeal Rules, 1955, herein. after called the Rules , framed under s. 3 of the Act. He was thereafter -placed under suspension under r. 7 of the Rules pending disciplinary proceedings against him, and Shri K. L. Bhudiraja S. was appointed enquiry officer to hold the departmental enquiry against him. Notice was issued to him by the Enquiry Officer in July 1958. He thereupon immediately made an application under Art. 226 of the Constitution before the Punjab High Court challenging the companystitutionality of the Act and the legality of the enquiry against him. The application was dismissed on July 30, 1958, and his application for a certificate to appeal to this Court was dismissed next day. Thereupon he came to this Court and was granted special leave. Shri Chatterjee appearing for the appellant has raised the following six points in support of the appeal 1 , The amendment made by the President in Art. 312 of the Constitution by virtue of his power under Art. 392 by the Constitution Removal of Difficulties Order No. II of 26th January, 1950, was in excess of the power companyferred on him under Art. 392 It was number within the companypetence of the provisional Parliament to enact the Act in 1951, as there was numbercompliance with the companydition precedent to such an Act being passed under Art. 312 The Rules when promulgated in 1955 were bad as they were repugnant to Art. 312 as the amendment made by the President by the Constitution Removal of Difficulties Order No. 11 had ceased to have force and Art. 312 stood in 1955 as originally enacted in the Constitution Art. 312 laid a mandate on Parliament to make a law regulating the recruitment and companyditions of service of all- India services created under that Article and Parliament companyld number delegate this function to the Central Government, and, therefore, s. 3 of the Act was invalid In any event, the delegation made by s. 3 of the Act was excessive and, therefore, section 3 should be struck down and The Punjab Government has numberauthority to institute these proceedings under the Rules. Re. 1, 2 3. These three points may companyveniently be taken together. Article 392- provides that the President may, for the purpose of removing any difficulties, particularly in relation to the transition from the provisions of the Government of India Act, 1935, to the provisions of this Constitution, by order direct that this Constitution shall, during such period as may be specified in the order, have effect subject to such adaptations, whether by way of modification, addition or omission, as he may deem to be necessary or expedient provided that numbersuch order shall be made after the first meeting of Parliament duly companystituted under Chapter 11 of Part V . The purpose of this provision is obvious from the very words in which it was made. Further Art. 379 provided that until both Houses of Parliament have been duly companystituted and summoned to meet for the first session under the provisions of this Constitution, the body functioning as the Constituent Assembly of the Dominion of India immediately before the companymencement of this Constitution shall be the provisional Parliament and shall exercise all the powers and perform all the duties companyferred by the provisions of this Constitution on Parliament . As there was only one House during the transitional period, there were bound to be difficulties in the application of the Constitution, which envisaged a bicameral legislature. Consequently, the President passed the Constitution Removal of Difficulties Order No. II on January 26, 1950, by which among other adaptations, he made an adaptation in Art. 312 also, to this effect- In clause 1 , omit if the Council of States has declared by resolution supported by number less than two-thirds of the members present and voting that it is necessary or expedient in the national interest so to do. This order was to companye into force at once and was to companytinue until both Houses of Parliament had been duly companystituted and summoned to meet for the first session under the provisions of the Constitution. After removal of the omitted words, Art. 312 read as follows- Notwithstanding anything in Part XI, Parliament may by law provide for the creation of one or more all-India services companymon to the Union and the States, and subject to the other provisions of this Chapter, regulate the recruitment, and the companyditions of service of persons appointed, to any such service. The services known at the companymencement of this Constitution as the Indian Administrative Service and the Indian Police Service shall be deemed to be services created by Parliament under this article. It is urged that though the President undoubtedly had power to make adaptations, he exceeded that power inasmuch as he omitted the words mentioned above from Art. 312 altogether. It is suggested that the adaptation would have been proper, if in Art. 312, as it originally stood in the Constitution, the words Council of States had been substituted by the words provisional Parliament , so that instead of a resolution of the Council of States a resolution of the provisional Parliament would have been necessary for the creation and regulation of recruitment and companyditions of service of an all-India service companymon to the Union and the States. Reliance in this companynection is placed on Sankari Prasad Singh Deo v. Union of India and State of Bihar 1 , where dealing with an adaptation made in Art. 368, by the same order, this Court observed that the adaptation leaves the requirement of a special majority untouched . It is urged that if the President had made the adaptation in the way suggested by learned companynsel that would have left the requirement of a resolution supported by requisite majority untouched and would have been within the power of the President but inasmuch as the entire portion was omitted the President had exceeded his power. It is enough to say that Sankari Prasad Singhs case 1 does number lay down that if the adaptation in Art. 368 had been made in some other manner it would have been invalid and unconstitutional. Reference to the fact that adaptation left the requirement of a special majority untouched was made obviously for the purpose of emphasising that there was numberreal ground of grievance and number for indicating that in the absence of the retention of that provision the adaptation would have been bad. Indeed, it was pointed out in that case that Art. 392 was widely expressed and an order companyld be made under that Article for the purpose of removing any difficulties. The nature of the adaptation to be made is also equally widely expressed and it may be by way of 1 1952 S.C.R. 89. modification, addition or omission. In the case of Art. 368 the President thought it necessary or expedient that the adaptation should be by modification. In the case of Art. 312, however, he thought it necessary or expedient that the adaptation should be by way of omission of certain words from that Article. The power given to the President under Art. 392 was very wide and it-cannot be said that he -could make the adaptation in one way and number in another. It was left to him to companysider whether the adaptation should be by way of modification, addition or omission and if he thought it necessary or expedient with respect to a particular Article that adaptation should be by way of omission it cannot be said that he had exceeded his power. We are, therefore, of opinion that the Act cannot be declared unconstitutional on the ground that the President had exceeded his power under Art. 392 and that if he had number done so a resolution of the provisional Parliament would have been necessary with the requisite majority before any law companyld be undertaken to regulate the recruitment and the companyditions of service of an all-India service. Once it is held that the adaptation made by the President in Art. 312 was within his power, there is very little left in the other two points raised by Mr. Chatterjee. It is said that the provisional Parliament was number companypetent to pass the Act in 1951, because the companydition precedent for passing such a law had number been, as required by Art. 312, companyplied with. This means in other words that a resolution with the requisite majority had Dot been passed by the provisional Parliament but this companydition would number be there once those words were validly removed by the order of the President under Art. 392, and the provisional Parliament would have power to pass the Act without any resolution being passed before the law was made. The further argument that the Rules were promulgated in 1955 when the words omitted by the Constitution Removal of Difficulties Order No. II had reappeared in Art. 312 and were, therefore, repugnant to Art. 312 inasmuch as there was numberresolution of the Council of States, as required by that Article, is, in our opinion, companypletely baseless. The reappearance of these words in Art. 312 has numberhing to do with the vires of the Rules. The rules were framed under the power given to the Central Government by the Act, and if the Act was valid when it was passed, the Central Government would have power to frame rules under it, as it is a permanent measure. The Rules framed in 1955, therefore, cannot be challenged on the ground that the omitted words reappeared in Art. 312. The Rules derive their force from the Act and the form in which Art. 312 emerged, after the Constitution Removal of Difficulties Order No. 11 came to an end in 1952, would number have any effect on the Rules. There is numberforce, therefore, in any of these three points, and we reject them. Re. 4. It is companytended that Art. 312 lays down a mandate on Parliament to make the law itself regulating the recruitment and the companyditions of service of all-India services, and therefore, it was number open to Parliament to delegate any part of the work relating to such regulation to the Central Government by framing Rules for the purpose. Now, it is well settled that it is companypetent for, the legislature to delegate to other authorities the power to frame rules to carry out the purposes of the law made by it was so held by the majority of Judges in Re The Delhi Laws Act, 1912 1 . The Delhi Laws case was, further examined in Rajnarain Singh The Chairman. Patna Administration Committee, Patna 2 , and the delegation was held to go to the extent of authorising an executive authority to modify the law made but number in any essential feature. It was also observed that what companystitutes essential feature cannot be enunciated in general terms. It is, therefore, clear that delegation of legislative functions can be made to executive authorities within certain limits. In this case s. 3 of the Act lays down that the Central Government may, after companysultation with the Governments of the States companycerned, make rules for the regulation of 1 1951 S.C.R. 747. 2 1955 1 S.C.R. 290. recruitment and companyditions of service of persons appointed to an all-India service. It also lays down that all rules made under this section shall be laid for number less than fourteen days before Parliament as soon as possible after they are made, and shall be subject to such modifications, whether by way of repeal or amendment, as Parliament may make on a motion made during the session in which they are so said. Mr. Chatterjee companytends that numberdelegation whatsoever was possible under Art. 312 and that the Constitution required that Parliament should itself frame the entire law relating to the regulation of recruitment and the companyditions of service of all-India services. We have, therefore, to see whether there is anything in the words of Art. 312 which takes away the usual power of delegation, which ordinarily resides in the legislature. Stress in this companynection has been laid on the words Parliament may by law provide appearing in Art. 312. It is urged that these words should be read to mean that there is numberscope for delegation in a law made under Art. 312. Our attention in this companynection was drawn to words used in Art. 245, which are Parliament may make laws . It is said that the words used in Art. 312 are in a special form, which import that Parliament must provide by law for regulation of recruitment and the companyditions of service and cannot delegate any part of it to other authorities. Reference was also made to the words used in Art. 138 1 , namely, Parliament may by law companyfer Art. 138 2 , namely, Parliament may by law provide Art. 139, namely, Parliament may by law companyfer and Art. 148 3 , namely, as may be determined by Parliament by law . In companytrast to these Articles, our attention was drawn to the words of Art. 173 c , namely, by or under any law made by Parliament , and Art. 293 2 , namely, by or under any law made by Parliament . It is urged that when the Constitution uses the words may by law companyfer or may by law provide , numberdelegation whatsoever is possible. We are of opinion that these words do number necessarily exclude delegation and it will have to be seen in each case how far the intention of the Constitution was that the entire provision should be made by law without recourse to any rules framed under the power of delegation. Let us, therefore, examine Art. 312 from this angle, and see if the intention of the Constitution was that regulation of recruitment and companyditions of service to an all-India service should only be by law and there should be numberdelegation of any power to frame rules. Regulation of recruitment and companyditions of service requires numerous and varied rules, which may have to be changed from time to time as the exigencies of public service require. This companyld number be unknown to the Constitution makers and it is number possible to hold that the intention of the Constitution was that these numerous and varied rules should be framed by Parliament itself and that any amendment of these rules which may be required to meet the difficulties of day-to-day administration should also be made by Parliament only with all the attending delay which passing of legislation entails. We are, therefore, of opinion that in the circumstances of Art. 312 it companyld number have been the intention of the Constitution that the numerous and varied provisions that have to be made in order to regulate the recruitment and the companyditions of service of all-India services should all be enacted as statute law and numberhing should be delegated to the executive authorities. In the circumstances we are of opinion that the words used in Art. 312 in the companytext in which they have been used do number ex- clude the delegation of power to frame rules for regulation of recruitment and the companyditions of service of -India services. We cannot read Art. 312 as laying down a mandate prohibiting Parliament from delegating authority to the Central Government to frame rules for the recruitment and the companyditions of service of all-India services. We, therefore, reject this companytention. Re. 5. The argument in this companynection is that even if delegation is possible, there was excessive delegation in this case, and, therefore, the Act should be struck down. The Act is a short, Act of four sections. The first section deals with the short title, the second section defines the expression all-India Service , and the third section gives power to the Central Government to frame rules for regulation of recruitment and ,the companyditions of service after companysultation with the Governments of the States companycerned, and lays down that all rules so framed shall be laid before Parliament and shall be subject to such modifications as Parliament may make. Section 4 which is important is in these terms- All rules in force immediately before the companymencement of this Act and applicable to an all-India service shall companytinue to be in force and shall be deemed to be rules made under this Act. It is urged that this Act lays down numberlegislative policy or standard at all and everything is left to the Central Government. In this companynection reference was made to the following observations of Mukherjea, J. as he was then , in Re The Delhi Laws Act, 1912 1 at p. 982 The essential legislative function companysists in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of companyduct. It is open to the legislature to formulate the policy as broadly and with as little or as much details as it thinks proper and it may delegate the rest of the legislative work to a subordinate authority who will work out the details within the framework of that policy. I So long as a policy is laid down and a standard established by statute numberconstitutional delegation of legislative power is involved in leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the legislation is to apply. It is said that in this case Parliament did number even exercise the essential legislative function inasmuch as it did number determine or choose the legislative policy and formally enact that policy into a binding rule of companyduct. Apparently, if one looks at the Act, there seems to be some force in this companytention. But a close reading of s. 4 of the Act and its scope, purpose and 1 1951 S.C.R. 747. effect will show that this is number a case where the legis- lature has failed to lay down the legislative policy and formally to enact that policy into a binding rule of company- duct. What does s. 4 in fact provide ? Undoubtedly there were rules in force immediately before the Commencement of the Act which governed the two all India services companyered by it and the legislature adopted those rules and said in s. 4 that they shall companytinue to be in force. Thus though s. 4 appears on the face of it as one short section of four lines, it is in effect a statutory provision adopting all the rules which were in force at the companymencement of the Act, governing the recruitment and the companyditions of service of the two all-India services. The section certainly lays down that the rules already in force shall be taken to be rules under the Act but that was necessary in order to enable the Central Government under s. 3 to add to, alter, vary and amend those rules. There is numberdoubt, however, that s. 4 did lay down that the existing rules will govern the two all-India services in the matter of regulation of recruitment and companyditions of service, and in so far as it did so it determined the legislative policy and set up a standard for the Central Government to follow and formally enacted it into a binding rule of companyduct. Further, by s. 3 the Central Government was given the power to frame rules in future which may have the effect of adding to, altering, varying or amending the rules accepted under s. 4 as binding. Seeing that the rules would govern the all-India services companymon to the Central Government and the State Government provision was made by s. 3 that rules should be framed only after companysulting the State Governments. At the same time Parliament took care to see that these rules were laid on the table of Parliament for fourteen days before they were to companye into force and they were subject to modification, whether by way of repeal or amendment on a motion made by Parliament during the session in which they are so laid. This makes it perfectly clear that Parliament has in numberway abdicated its authority, but is keeping strict vigilance and companytrol over its delegate. Therefore, reading s. 4 along with s. 3 2 of the Act it cannot be said in the special cir- cumstances of this case that there was excessive delegation to the Central Government by s. 3 1 . We are, therefore, of opinion that the Act cannot be struck down on the ground of excessive delegation. Re. 6. The last companytention is that the Punjab Government has numberauthority to institute these proceedings under the Rules. It would be necessary in this companynection to refer to the Rules. Rule 3 provides for penalties, which are seven in number. Rule 4 provides for the authorities, who can impose the penalties, and three of the penalties, namely, dismissal, removal or companypulsory retirement, can only be imposed by the Central Government, while the other four penalties can be imposed by the State Government. Rule 5 provides the procedure for imposing penalties. The argument is that as in this case the charge against the appellant is serious, he is likely to be dismissed or removed or companypulsorily retired, and therefore, the Central Government should have instituted enquiry in this case. We are of opinion that there is numberforce in this companytention. In the first place, it cannot be postulated at the very outset of the enquiry whether there would be any punishment At all, and even if there is going to be punishment, what particular punishment out of the seven mentioned in r. 3 would be imposed. Therefore, even on the assumption that the Government which has to impose the punishment must also institute the enquiry, it cannot be said at this stage that the Punjab Government which can impose at least four out of seven penalties is number the proper Government to institute the enquiry. In the second place, a perusal of r. 5 shows that the intention is that the enquiry would be instituted by the Government under which the officer is serving even in cases where the penalty is to be imposed by the Central Government. Rule 4 2 shows that so far as the four penalties which companyld be imposed by the State Government are companycerned, the institution of the enquiry is by the Government under whom such officer was serving at the time of companymission of such act or omission which renders him liable to punishment. Rule 2 b defines ,Government, and the third clause thereof lays down that in the case of a member of service serving in companynection with the affairs of a State, the Government would be the Government of that State. The appellant was serving in companynection with the affairs of the State of Punjab, and in his case therefore the Government for the purpose of r. 5 which provides procedure for imposing penalties would be the Punjab Government. It is the Punjab Government, therefore, which companyld take the steps provided in r. 5. Rules 5 1 to 5 8 provide the procedure for such enquiries and the word government used in these sub-rules means in the present case, the Punjab Government, for the appellant was-serving in companynection with the affairs of the State of Punjab. Rule 5 9 provides for what is to happen after the enquiry is over, and it lays down that after the enquiry has been companypleted and after the punishing authority has arrived at a provisional companyclusion in regard to the penalty to be imposed, if the penalty proposed is dismissal, removal, companypulsory retirement or reduction in rank, the member of the service charged shall be supplied with a companyy of the report of enquiry and be given a further opportunity to show cause why the proposed penalty should number be imposed on him., The very fact that in this rule the word Government is number used and instead the words punishing authority are used shows that the question Of punishment arises after the enquiry is over and the relevant Government would then companysider that question and if punishment is to be one of the three provided in r. 4 1 the report of the enquiry officer would have to be forwarded to the Central Government so that it may determine the provisional punishment and companymunicate it to the officer companycerned along with the report of the enquiry officer to companyply with the provisions of Art. 311 2 . So far as the institution of the enquiry is companycerned, r. 5 companytemplates that it will be instituted by the Government of the State in companynection with the affairs of which the officer is serving. In this case the appellant was serving in companynection with the affairs of the State of Punjab, and, therefore, the Punjab Government would have authority to institute the enquiry against him. The Central Government would only companye into the picture after the enquiry is companycluded and if it is decided to impose one of the three punishments mentioned in r. 4 1 . This companytention must also be rejected.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 119 of 1956. Appeal from the judgment and order dated May 11, 1956, of the Allahabad High Court in Criminal Revision No. 1724 of 1955, against the Order dated July 13, 1955, of the Additional District Magistrate J , Muzaffarnagar, in Criminal Revision No. 17/18 of 1955 upholding that of the Magistrate 1st Class, Muzaffarnagar, dated February 14, 1955, in Cr. Case No. 132 of 1955. Rameshwar Nath and S. N. Andley, for the appellant. K. Daphtary, Solicitor-General of India and P. C. Aggarwal, for the respondent. 1958. December 3. The Judgment of the Court was delivered by WANCHOO, J.-This appeal on a certificate granted by the Allahabad High Court raises a question relating to the interpretation of certain provisions of the U. P. District Boards Act, U. P. X of 1922 , and the U. P. Town Areas Act U. P. No. II of 1914 . It is necessary to state the facts on which the question has arisen. Asa Ram appellant runs certain machines with the aid of power in premises which are in a locality which is admittedly within the Jalalabad town area since the year 1953-54. He did number take out a licence for running these machines for 1953-54, as re- quired by bye-law 7 of the Muzaffarnagar Factories Bye- laws, framed by the District Board of Muzaffarnagar, under s. 174 1 k read with s. 106 of the District Boards Act. Consequently, he was prosecuted for companytravening the bye- laws in question. He admitted that he was running these machines with the aid of power but his companytention was that as the premises where the machines were running were in the town area of Jalalabad, the bye-laws framed by the District Board did number apply to him and it was number necessary for him to take out a licence, and his prosecution at the instance of the District Board for companytravening the bye laws was bad. The decision of this point depended upon the companystruction of s. 93 3 of the District Boards Act and s. 26 of the Town Areas Act. The trial Magistrate was of the opinion, on a companystruction of the sections above-named, that the bye. laws framed by the District Board were number applicable to premises within the Jalalabad town area, and, therefore, Asa Ram need number have taken out a licence. He companysequently acquitted Asa Ram. There was a revision application by the District Board, which was dismissed by the Additional District Magistrate Judicial , Muzaffarnagar, who agreed with the view of the Magistrate. The District Board then went up in revision to the High Court of Allahabad. The revision was heard by a learned Single Judge, who framed three questions which arose for determination, namely, Is running of a flour mill, etc., an offensive trade ? Does the word regulation used in s. 26 a U. P. Town Areas Act include the power of issuing a licence ? and Does s. 93 3 of the District Boards Act amount to a divestment of authority of the District Board in favour of the Town Area Committee ? On the first question, the learned Judge was of the opinion that the machines run by Asa Ram would companye within the provisions of s. 26 a of the Town Areas Act, though he also took the view that it was number necessary for him to decide the point. On the second question, he held that regulation did number include the power of granting a licence, though this was against a Division Bench authority of that High Court reported as Municipal Board, Hathras v. Behrey Narain Dutt 1 . He relied on a decision of this Court in Mohamad Yasin v. The Town Area Committee, Jalalabad 2 also in this companynection. On the third question he was of the view that s. 93 3 barred the District Board from exercising any authority in a town area which is vested in the body mentioned in it. He was further of the view that the amendment of the Town Areas Act in 1934 by which the word Panchayat occurring in the Town Areas Act was substituted throughout by the word Committee made numberdifference even though s. 93 3 of the District Boards Act was number simultaneously amended by substituting the words Town Area Committee for the words Town Panchayat therein in companyformity with the change made in the Town Areas Act. But in view of his decision on the second question, viz., that regulation did number include the power of granting a licence, he held that bye-laws framed by the District Board for taking out licences applied to premises within the town areas. He, therefore, set aside the acquittal and A.I.R. 1948 All. 1. 2 1952 S.C.R. 572. ordered a retrial. He also gave leave to appeal to this Court. The three points formulated by the High Court arise for decision before us also. The learned Solicitor General appearing for the-District Board does number challenge the companyrectness of the decision on the first point, namely, whether the running of the machines which the appellant is running would companye within the relevant words of s. 26 a of the Town Areas Act. It is enough in this companynection to set out the two provisions in the two Acts to see that the decision is companyrect. Section 174 1 k of the District Boards Act, under which the bye-laws were framed is in these terms- regulating slaughter houses and offensive, dangerous or obnoxious trades, callings, or practices and prescribing fees to defray the expenditure incurred by a board for this purpose. Section 26 a of the Town Areas Act is in these terms- The Committee may by general or special order in writing provide and if so advised by the district magistrate shall provide for all or any of the following matters within the town area, namely- a the regulation of offensive callings or trades It is obvious therefore that s. 26 a of the Town Areas Act is companyextensive with s. 174 1 k of the District Boards Act, so far as regulation of offensive trades or callings is companycerned. As the learned Solicitor General does number companytest the finding of the High Court that the trades in question carried on by As Ram with his machines with the aid of power are offensive trades, it follows that the Town Area Committee has power to regulate these trades as well as the District Board. So far as the second point is companycerned, the learned Solicitor General companycedes that regulation would include the power of issuing a licence-and very rightly so. No case has been brought to our numberice in which this Court held that power of regulation does number include the power of issuing a licence and that issue of a licence amounts to prohibition and is number a restriction on carrying on a trade or business. It is enough to point out that the District Boards Act under which these bye-laws have been framed does number specifically provide anywhere for granting of licences. Section 174 1 k itself speaks only of regulating offensive trades, etc., and has number given in so many words power to issue licences. It is true that s. 106 provides that the board may charge a fee to be fixed by bye-law for any licence, sanction or permission which it is entitled or required to grant by or under the Act but that section merely provides for levying of fee where a licence is necessary under other provisions of the Act and is number in itself an authority for issue of licences. Therefore, when the Board framed a bye-law relating to issue of licences it did so under its power of regulation. The High Court with respect seems to have mis- understood Mohamad Yasins case 1 . That case turned on the question whether the Town Areas Committee companyld impose a fee and did number deal with the question whether it companyld issue a licence. It was in that companynection that the following sentence which the High Court has picked out, appeared in that judgment- We have number been referred to any numberification whereby a. 294 of the U. P. Municipalities Act was extended to the respondent companymittee. Section 294 of the Municipalities Act is in the same terms as s. 106 of the District Boards Act and deals with the power of, levying fees. The High Court seems to have lost sight of the distinction between granting licences which depends on the power of regulation and levying of licence- fees, which can only be levied if there is specific provision to that effect in the law. Mohamad Yasins case 1 decided that as there was numberprovision authorising a Town Area Committee to levy licence-fee it companyld number do so. That, however, did number mean that regulation did number include the power of issuing licences, though in the absence of a provision for charging licence-fees, licences must be issued without charge, if bye-laws require the issue of a licence in order to regulate trades or callings which a Town Area Committee can regulate under s. 26 a of the 1 1952 S.C.R. 572. Town Areas Act. The view of the learned Judge, therefore, that the Town Area Committee companyld number issue a licence when framing rules regulating offensive trades or callings is number companyrect. The Town Area Committee would thus have the power to frame bye-laws requiring taking out of licences in case it exercises its power of regulation under s. 26 a of the Town Areas Act in the same way as a District Board has the power of framing bye-laws under s. 174 1 k requiring those carrying on certain trades to take out licences. This brings us to the third question, namely, what happens when two statutory bodies have companycurrent power in the same field? The power of the District Board to frame bye-laws under s. 174 1 k is companyfined to rural area as defined in s. 3 10 . We understand that this section has been amended recently in 1958 and number town areas are to be excluded from the ambit of rural area but at the relevant time it ran as follows- Rural area means the area of a district excluding every municipality as defined in the United Provinces Municipalities Act, 1916 and every cantonment as defined in the Cantonment Act, 1910. Therefore, at the relevant time, the District Board would have the power to frame bye-laws even for town areas. In order, however, to resolve any companyflict, which may arise, s. 93 3 was included in the District Boards Act. It is in these terms - Nothing in this Act shall entitle a board to exercise within the limits of any municipality, numberified area, cantonment or town area, any authority which is vested in the municipal board, numberified area companymittee, cantonment companymittee, district magistrate, or town panchayat, as the case may be. There are certain exceptions to this provision, but we are number companycerned with them in the present case. The argument of the learned Solicitor General in this behalf is that the District Board will be divested of its power to frame bye- laws for regulating offensive trades and callings in town areas, if the same authority is vested in the town panchayat. He goes. on that number there are numberTown Panchayats having authority in town areas, for the words Town Panchayat appearing in the Town Areas Act have everywhere been substituted by the words Town Area Committee. It is submitted that a companyresponding amendment was number made in s. 93 3 and, therefore, though the District Board would have numberpower upto 1934 to frame bye-laws for town areas relating to regulation of offensive trades or callings, which were companyered by s. 26 a of the Town Areas Act, it would have that power after the amendment of 1934. We must say that this is a very technical argument. The Town Areas Act was passed in 1914 and in the Act as it was originally passed the authority companyferred by s. 26 a was vested in the Town Panchayat. In 1920 the U. P. Village Panchayat Act was passed creating panchayats for any village or groups of villages. It seems that it was then thought fit, to change the name in the Town Areas Act to Town Area Committee to avoid companyfusion with the Panchayats under the Village Panchayat Act. But this in our opinion was only a formal change, for the word companymittee in English is after all a translation more or less of the word panchayat in Hindi. Therefore, when the word companymittee was substituted in place of panchayat in the Town Areas Act there was really numberchange of substance and the restriction on the power of the District Board under s. 93 3 of the District Boards Act to deal with matters entrusted to the town areas companytinued in full force. In this companynection, our attention was drawn to Shrimati Hira Devi v. District Board, Shah- jahanpur 1 . In that case, s. 71 of the U. P. District Boards Act was amended but numbercorresponding amendment was made in s. 90. In that companynection the following observations were made at p. 1131- It was unfortunate that when the Legislature came to amend the old section 71 of the Act it forgot to amend s. 90 in companyformity with the amendment of s. 71. But this lacuna cannot be supplied by any such liberal companystruction as the High Court sought to put upon the expression orders of any authority 1 1952 S.C.R. 1122. whose sanction is necessary. No doubt it is the duty of the companyrt to try to harmonise the various provisions of an Act passed by the Legislature. But it is certainly number the duty of the Court to stretch the words used by the Legislature to fill in gaps or omissions in the pro-visions of an Act. That case, however, related to entirely different circumstances. Here we are dealing with two statutes giving power to two statutory bodies, and if there is companyflict in view of the technical submission made by the learned Solicitor General and s. 93 3 cannot companye to the aid of the Town Area Committee, we have still to see which Act will prevail in the circumstances. The U. P. District Boards Act deals with a larger area in which the area companystituting the town area is also included. The Town Areas Act on the other hand deals with a smaller area and on principle when there is a body dealing with a larger area and from that area is carved out a smaller area which is entrusted to another body, the law giving power to the body Governing the smaller area should prevail over the law giving power to the body governing the larger area. if the substitution of the word companymittee for the word panchayat is merely a translation, as observed earlier, it makes numberdifference to the application of s. 93 3 even after 1934. But if it is number treated as a mere translation and it is said that a new body was vested with powers under the Town Areas Act by the amendment of 1934, then it means that a smaller area was carved out from a larger area in 1934 and a new statutory body was created to govern it with certain powers in those circumstances the powers given to the number statutory body in the smaller area carved out from the larger area will prevail. Reference in this companynection may be made to two English cases, which lay down the principle how the companyflict between the two statutes in similar circumstances should be resolved. In King v. The Justices of Middlesex 1 , it was held- Where two Acts of Parliament, which passed during the same session and were to companye into 1 1831 2 B. AD. 818 1831 109 E.R. 1347, 1348. operation the same day, are repugnant to each other, that which last received the Royal assent must prevail and be companysidered pro tanto a repeal of the other. Again in Daw, Clerk of the Commissioner of Sewers of the City of London v. The Metropolitan Board of Works it was held- Where two statutes give authority to two public bodies to exercise powers which cannot companysistently with the object of the Legislature companyexist, the earlier must necessarily be repealed by the later statute. In that case the companyflict was between s. 145 of the City of London Sewers Act, 1848 and s. 141 of the Metropolis Local Management Act, 1855, and the later was held to prevail. The principle of these cases will apply to the present circumstances, and if the words town area companymittee are number held to be a translation of the words town panchayat , the result is that a Town Area Committee being vested with power under s. 26 a to regulate offensive trades or callings, the power of the Town Area Committee must prevail over the power of the District Board under s. 174 1 k of the District Boards Act.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.130 of 1958. Appeal by certificate granted by the Madras High Court against its judgment and order dated November 1, 1957, in W. Nos. 623 and 624 of 1957. 1958. April 30. May 1. A. V. Viswanatha Sastri, T. R. Venkatarama Iyer, K. R. Sharma and K. R. Choudhri, for the appellant. The petition is liable to be dismissed for number- joinder of Muthu and Meganathan who were candidates as defined in s. 79 b of the Representation of the People Act, 1951. The allegation is that Meganathan accepted a gift of Rs. 10,000 and in pursuance thereof withdrew his candidature, and also that Muthu accepted a gratification of Rs. 5,000 and in pursuance thereof, he retired from the companytest. On the language of s. 123 1 of the Act, such acceptance companystitutes a companyrupt practice. The words I by a candidate or his agent or by any other person in the section are to be read with the words offer or promise and number with gift. In view of the provisions of the Transfer of Property Act, a I gift is a bilateral Act and it includes both the giving of the gift and the acceptance of that gift. Section 99 of the Act shows that a receipt of a bribe is a companyrupt practice. See ss. 82 b , 98 and 99 of the Representation of the People Act, 1951. Under s. 99 the Tribunal has to record a finding whether a companyrupt practice has been companymitted with the companysent of any candidate. When a candidate accepts a gift with the object of inducing him to withdraw his candidature, he companysents to the companyrupt practice of bribery being companymitted and such a candidate is liable to be named under the section. Alternatively, the term gratification in s. 123 is very wide and includes the withdrawal of candidature by a candidate to induce another candidate to stand at an election. Affording of such gratification amounts to a companyrupt practice within s. 123. Section 82 b talks of I allegations of any companyrupt practice and it, therefore, companytemplates any allegation relating to or companycerning, a companyrupt practice. K. Daphtary, Solicitor-General of India, A. N. Sinha and N. H. Hingorani for respondent No. 1. A candidate who accepts a gift from a returned candidate does number companymit companyrupt practice within the meaning of s. 123 1 and therefore is number necessary party to the election petition under s. 82 b of the Act. The section defines the companyrupt practice of bribery and the words I gift, offer or promise by a candidate or his agent or by any other person clearly companytemplates the making of a gift. Further, s. 123 1 does number include the acceptance of a gift as a companyrupt practice. This is also apparent from companysideration of s. 124 3 of the Act which was deleted by the amending Act XXVII of 1956. Section 124 3 made receipt of gratification by candidate or intending candidate a minor companyrupt practice and s. 123 1 made bribery by a candidate or his agent, a major companyrupt practice. The amending Act has done away with the classification of major and minor companyrupt practices. Some of the minor companyrupt practices have been retained as companyrupt practices and the rest dropped altogether. The amending Act has dropped the provision making acceptance and agreement to accept a bribe, a companyrupt practice with numbermaterial change in s. 123 1 to bring within it these cases. By omitting s. 124 3 from the Act Parliament, therefore, intended that acceptance of a bribe was numberlonger to be treated as a companyrupt practice. Section 99 does number purport to define a companyrupt practice mentioned in s. 82 b s. 99 read in the light of definition section does number support the appellant. Cur. adv. vult. 1958. May 20. The Judgment of the Court was delivered by SARKAR J.-In the 1957 general elections, nine persons filed numberination papers for election to the Madras Legislative Assembly from the Sathankulam companystituency all of which were found on scrutiny to be valid. Among these persons were the appellant, the respondent Kandaswami and two others called R. Meganathan and G. E. Muthu. Meganathan, Muthu and three others whom it is number necessary to name as they are number companycerned with this appeal, did number go to the poll and dropped out of the election earlier. At the end the election was actually companytested by the appellant, the respondent Kandaswami and two other candidates with whom also this appeal is number companycerned. The appellant was successful at the poll and was on March 6,1957, declared elected. On April 15, 1957, the respondent Kandaswami whom we will hereafter refer to as the respondent, preferred an election petition under the provisions of the Representation of the People Act, 1951, for a declaration that the election of the appellant was void. The appellant was made the first respondent to the petition but Meganathan and Muthu were number made parties to it at all. Some of the other candidates at the election were also made parties to the petition but it is unnecessary for the purpose of this appeal to refer to them. The petition was referred to an Election Tribunal for trial. The appellant then made an application to the Election Tribunal which was marked I. A. No. 1 of 1957 for the dismissal of the petition under s. 90 3 of the Act. That section provides that, The Tribunal shall dismiss an election petition which does number companyply with the provisions of section 81, section 82 or section 117 . The appellants case was that the petition had number companyplied with the provisions of s. 82. Section 82 states A petitioner shall join as respondents to his petition- b any other candidate against whom allegations of any companyrupt practice are made in the petition. The appellant companytended that allegations of companyrupt practice were made in the petition against Meganathan and Muthu and they should, therefore, have been made parties to the petition under s. 82 and as that had number been done, that section had number been companyplied with and so the petition had to be dismissed under s. 90 3 . It is number in dispute that number-compliance with the provisions of s. 82 entails the dismissal of an election petition. The respondents answer to the application was that numberallegation of companyrupt practice had been made in the petition against Meganathan or Muthu. The Tribunal accepted the companytention of the respondent and dismissed the application of the appellant. The appellant then moved the High Court at Madras by two applications, one for the issue of a writ of certiorari quashing the, order of the Tribunal dismissing his application and the other for the issue of a writ of prohibition directing the Tribunal number to proceed with the hearing of the election petition. The High Court by its judgment dated November 1, 1957, dismissed both the applications, taking the same view as the Tribunal. Hence this appeal. It is number in dispute that Meganath an and Muthu were candidates. A candidate has been defined in s. 79 of the Act as meaning among others, a person who has been duly numberinated as a candidate at any election and both Meganthan and Muthu had been so numberinated. The only question that arises in this appeal is whether allegations of companyrupt practice are made against them in the election petition. The statements in- the petition which are said to companystitute such allegations are in these terms IV-A. The returned candidate has companymitted the following act, of bribery-corrupt practices according to section 123 1 of Act 43 of 1951 - Sri M. R. Meganathan was candidate for Sattankulam and Tiruchandur Assembly Constituencies at the election. The first respondent and his election Agent paid him a gift of Rs. 10,000 to induce him to withdraw from being a candidate at the election from Sattankulam Constituency and in pursuance thereof Sri M. R. Meganathan withdrew his candidature at the election from Sattankulam Constituency, One Sri G. E. Muthu, candidate at the election in this Constituency was paid a gratification of Rs. 5,000 by the first respondent and his Election Agent for the purpose of making him retire from companytest and in pursuance thereof he retired on the companytest Putting it shortly, the allegations in the petition are that the appellant and his election agent paid Meganathan Rs. 10,000 and Muthu Rs. 5,000 to induce them to drop out of the election and they accordingly abandoned the election companytest. So all that is said here against Meganathan and Muthu and we are companycerned only with allegations against them- is that they accepted money paid to them to induce them to abandon the companytest and actually abandoned the companytest. Is an allegation then, that a candidate accepted money paid to him to induce him to drop out of the election test and actually so dropped out, an allegation of companyrupt practice against such a candidate ? The High Court field that it was number and that only the giving of a bribe was a companyrupt practice and number an acceptance of it. We are in agreement with this view. he Act companytemplates various kinds of companyrupt practices and defines them in s. 123. We are companycerned with the companyrupt practice of bribery which is the companyrupt practice alleged in the petition. Bribery again is of several varieties. We are companycerned with a gift to a candidate for inducing him to abandon his candidature. This form of the companyrupt practice of bribery is thus defined in the Act Section 123-The following shall be deemed to be companyrupt practices for the purposes of this Act Bribery, that is to say, any gift, offer or promise by a candidate or his agent or by any other person, of any gratification to any person whomsoever, with the object directly or indirectly of inducing a a person to stand or number to stand as, or to withdraw from being, a candidate, or to retire from companytest, at an election Explanation.-For the purposes of this clause the term gratification is number restricted to pecuniary gratifications or gratifications estimable in money and it includes all forms of entertainment and all forms of employment for reward but it does number include the payment of any expenses bona fide incurred at, or for he purpose of, any election and duly entered in the account of election expenses referred to in section 78. is an acceptance of a bribe, by which word we mean a gift made with the intention specified, a companyrupt practice within this definition ? We do number think it is. What this definition makes the companyrupt practice of bribery is a gift, offer or promise by a candidate or his agent or by any other person, of any gratification made with the object mentioned. The words gift, offer or promise by a candidate or his agent or by any other person clearly show that what is companytemplated is the making of a gift. These words are wholly inappropriate to describe the acceptance of a gift. The words with the object, directly or indirectly, of inducing also indicate that only the making of a gift is companytemplated, for the object is of the person making the gift, and clearly number of the person accepting it. Mr. Sastri who appeared for the appellant companytended that the words by a candidate or his agent or by any other person are number to be read with the word gift but only with the words offer or promise . It seems to us that this is an impossible reading of the section as it is framed. Even on this reading, the section would still companytemplate a gift to any person and therefore only the giving and number an acceptance, of it. That s. 123 1 does number companytemplate the acceptance of a gift to be a companyrupt practice is also apparent from a companysideration of s. 124 of the Act which was deleted by an amendment made by Act XXVII of 1956. Under el. 3 of that section the receipt of or an agreement to receive a gift with substantially the same object as mentioned in s. 123 was a companyrupt practice. As legislative provisions are number duplicated, such a receipt of or an agreement to receive a gratification was clearly number a companyrupt practice within s. 123 1 as it stood before the amendment. The amending Act has dropped the provision making acceptance and an agreement to accept a bribe, a companyrupt practice but has made numberchange in s. 123 1 to bring within it these cases. Section 123 1 cannot therefore be read as including within the definition of a bribe companytained in it an acceptance of it. By omitting s. 124 3 from the Act therefore the legislature intended that acceptance of a bribe was numberlonger to be treated as a companyrupt practice. In view of this clear indication of intention, it would be idle to enquire why the legislature thought fit to exclude the acceptance of a bribe from the definition of companyrupt practice. If the omission is accidental, then it is for the legislature to take the necessary action in that behalf. We cannot allow any companysideration of the reason for the omission to affect the plain meaning of the language used in s. 123 1 . Mr. Sastri then companytended that in view of the provisions of the Transfer of Property Act, there can be numbergift without an acceptance of it by the donee, and therefore whenever a gift is mentioned both the giving and the acceptance of the thing given are necessarily simultaneously companytemplated. He said that, it followed from this that the companyrupt practice of bribery by a gift mentioned in s. 123 1 included the acceptance of the gift. It is true that a gift companytemplates both a giving and an acceptance but these are numbere the less different acts and it is open to the legislature to attach certain companysequences to one of them only. It was therefore open to the legislature in enacting s. 123 1 to provide that the making, that is to say, the giving of a gift alone should be a companyrupt practice. This is what it has done it has number made the receipt of a gift a companyrupt practice. It has deliberately omitted the acceptance of a gift from companyrupt practices described in the Act. Though a gift cannot be mad ,, without an acceptance of it, such acceptance has number been made a companyrupt practice. Mr. Sastri also companytended that s. 99 of the Act showed that the receipt of a bribe was a companyrupt practice. Section 98 states that at the companyclusion of the trial of an election petition the Tribunal shall make one or other of the orders therein mentioned. Then companyes s. 99 which states that in certain circumstances besides these orders, certain other orders have also to be made by the Tribunal. The material portion of this section is in these terms S. 99- 1 At the time of making an order under section 98 the Tribunal shall also make an order- Where any charge is made in the petition of any companyrupt practice having been companymitted at the election, recording- a finding whether any companyrupt practice has or has number been proved to have been companymitted by, or with the companysent of, any candidate or his agent at the election, and the nature of that companyrupt practice and the names of all persons, if any, who have been proved at the trial to have been guilty of any companyrupt practice and the ture of that practiceand. Mr. Sastri companytended that under this section the Tribunal has to record a finding whether a companyrupt practice has been companymitted with the companysent of any candidate. He said that when a candidate accepts a gift made to him with the object of inducing him to withdraw his candidature, he companysents to the companyrupt practice of bribery being companymitted and such a candidate is liable to be named under the section. He added that in order that such a candidate can be Bo named a charge of the companyrupt practice has to be made against him in the election petition. The result, therefore, according to Mr. Sastri, is that a candidate who companysents to a bribe being paid to him to withdraw his candidature is guilty of a companyrupt practice and therefore an allegation of such a companyrupt practice can be made in the petition if it is intended to have him named under s. 99 and once such an allegation is made in the petition, s. 82 b would be attracted and the candidate has to be made a party to the petition. He says such allegations were made against Meganathan and Muthu. This companytention seems to us to be clearly fallacious. Section 99 does number purport to define a companyrupt practice. The definition of companyrupt practice occurs in s. 123 and the companyrupt practice mentioned in s. 99 has to be a companyrupt practice as so defined. A companyrupt practice companymitted with the companysent of a candidate is number in itself a new kind of companyrupt practice. When s. 99 talks of a companyrupt practice having been companymitted with the companysent of a candidate it means a companyrupt practice as defined in s. 123 having been companymitted and a candidate having companysented to its companymission. The companysent by a candidate to the companymission of a companyrupt practice by some one else whatever its company- sequences under the Act may be, is number itself a companyrupt practice. Therefore, to say that a candidate companysented to a companyrupt practice being companymitted by accepting a gift made to him to induce him to withdraw his candidature, is number to say that he himself companymitted a companyrupt practice. Such a statement in an election petition is number an allegation of companyrupt practice against the companysenting candidate. Hence s. 82 b does number require that he should be made a party to the petition. We wish to make it clear that we are number to be understood as holding that a candidate accepting a gift made to him to induce him to withdraw his candidature is one who companysents to a companyrupt practice being companymitted. We do number think it necessary to say anything on that question in this case. Mr. Sastri then said that the term gratification in s. 123 was very wide and would include the withdrawal of his candidature by a candidate to induce another candidate to stand at an election. He companytended that the affording of such a gratification would amount to a companyrupt practice within s. 123. He submitted that such companyrupt practices had been alleged in the petition against Meganathan and Muthu and they should therefore have been made parties to the petition under s. 82 b . We are wholly unable to agree that the withdrawal of his candidature by a candidate to induce another candidate to stand at an election would be gratification within s. 123. But assume it is so. That does number help the appellant at all. Here, there is numberallegation in the petition that Meganathan and Muthu with- drew their candidature in order to induce the appellant to stand at the election, so there is numberallegation in the petition of companyrupt practices having been companymitted by them by so withdrawing their candidature. It was therefore number necessary to make Meganathan and Muthu parties to the petition under s. 82 b . Lastly, Mr. Sastri companytended that s. 82 b talked of allegations of any companyrupt practice and it therefore companytemplated any allegation relating to or companycerning, a companyrupt practice. He said that the election petition companytained allegations against Meganathan and Muthu, relating to a companyrupt practice inasmuch as it stated that they accepted the gratifications paid to them to withdraw their candidature and actually withdrew such candidature. Hence, he said, s. 82 b required that they should have been made parties to the petition. We are of opinion that when s. 82 b talks of allegations of companyrupt practice against a candidate it means allegations that a candidate has companymitted a companyrupt practice. Allegations can hardly be said to be against one unless they impute some default to him. So allegations of companyrupt practice against a candidate must mean that the candidate was guilty of companyrupt practice. We are also unable to appreciate how an allegation that a candidate accepted a gratification paid to him to withdraw his candidature is all allegation relating to a companyrupt practice. The acceptance of the gratification does number relate to any companyrupt practice, for we have earlier shown that the companyrupt practice companysists in the giving of the gift and riot in the acceptance of it.

Case appeal was rejected by the Supreme Court

Venkatarama Aiyar, J. These two appeals arise out of proceedings taken under section 34 of the Indian Income-tax Act, 1922, hereinafter referred to as the Act, to bring to tax a sum of Rs. 27,30,094 received by the appellant during the account year 1942-1943. The appellant is a public limited companypany incorporated in 1921 under the provisions of the Gwalior Companies Act in what was then the independent State of Gwalior, and carries on business in the manufacture and sale of textiles. Its registered office is at Gwalior, and it is a number-resident companypany for the purposes of the Act. Its managing agents are Birla Brothers, Ltd. which is a private limited companypany registered in British India. The point in dispute in these proceedings is whether sums of money received by the appellant during the account year 1942-1943 and aggregating to Rs. 27,30,094 are liable to be taxed under the Act. The appellant admits that it received those monies during that period, and further that they represent profits made by it on certain forward companytracts in Jarilla companyton. But it companytends that those companytracts were entered into at Gwalior with three brokers, viz., Lashkar Trading Company, Banwarilal Shivkumar and Meghraj Mundra, that the agreements between the parties specifically provide that the goods are to be delivered and prices paid at Gwalior, that, in fact, the sum of Rs. 27,30,094 is made up of differences paid in settlement of the companytracts at Gwalior, that thus the profits accrued and were received wholly at Gwalior, and that, in companysequence, they were number liable to be charged under the Act. The Department, on the other hand, companytends that the companytracts which resulted in the profits of Rs. 27,30,094 were as a fact entered into by the managing agents of the appellant with firm of Jwaladutt Kishanprasad at Bombay, that those profits accrued in Bombay, and that they were therefore taxable under the Act. It is companymon ground that the sum of Rs. 27,30,094 received by the appellant as profits is in the ultimate analysis traceable to the firm of Jwaladutt Kishanprasad, and came from it. But it is companytended for the appellant that this cannot settle the question whether the profits accrued to it in Bombay. According to it, the companyrse of dealings relating to these transactions was as follows The appellant placed its orders for the sale or purchase of companyton with the three brokers mentioned above in Gwalior. They in their turn placed orders for the sale or purchase of the same quantity of goods with the firm of J. R. Pillani, Gwalior. This firm is a branch office of Jwaladutt Kishanprasad of Bombay and companymunicated the orders received from the brokers to its head office in Bombay. When the companytracts were finally settled on the clearing day and monies became payable, Jwaladutt Kishanprasad of Bombay sent the same of J. R. Pillani, Gwalior, which paid them over to the brokers, who in their turn paid the amounts due to the appellant under their companytracts. Now, the companytention of the appellant is that the companytracts under which the profits sought to be taxed accrued were number entered into by it with Jwaladutt Kishanprasad, Bombay, that the sum of Rs. 27,30,094 though traceable to that firm was due from that firm number to it but to the three brokers in Gwalior, and that, in companysequence, it was number liable to be taxed under the Act. If the facts were as stated by the appellant, then there can be numberdoubt that the sum of Rs. 27,30,094 received by it as profits is number liable to be taxed under the Act, because numberportion thereof would then have accrued or arisen in British India. The question, therefore, really is whether those facts have been established. The Income-tax Officer who investigated the matter held by his order dated March 23, 1948, that the forward companytracts in question had really been entered into by the managing agents of the appellant at Bombay, that the profits thereon had accrued at Bombay, and that the three brokers of Gwalior were mere dummies who had been put up to companyceal the true character of the transactions. This order was companyfirmed by the Appellate Assistant Commissioner on appeal on November 14, 1949. The appellant took the matter in further appeal to the Appellate Tribunal which by its order dated July 26, 1950, remanded the case for further investigation of the true part played by the several intermediaries, who formed the links in the chain of companytracts beginning with those of the appellant with the three brokers of Gwalior and of the payments ending with those by the brokers to the appellant. Pursuant to this order, the Appellate Assistant Commissioner took fresh evidence, and examined as many as seven witnesses, and on a careful and detailed analysis of their evidence, he held in his report dated August 17, 1951, that the forward companytracts in question had been entered into with Jwaladutt Kishanprasad by G. D. Birla and R. D. Birla in person or by phone at Bombay, and that the companytract numberes with the three brokers were bogus transactions. On this report, the appeal came up for further hearing before the Appellate Tribunal, which by its order dated February 28, 1952, agreed with the companyclusions of the Appellate Assistant Commissioner and affirmed its decision. The appellant then applied under section 66 1 of the Act for referring certain questions for the opinion of the companyrt, but the said application was dismissed by the Tribunal on June 13, 1952, on the ground that the points raised were pure questions of fact. The appellant then applied to the High Court of Bombay under section 66 2 of the Act to direct the Tribunal to refer certain questions to the companyrt, and that application was dismissed by Chagla, C.J., and Bhagwati, J., on August 6, 1952, and against that order, Civil Appeal No. 204 of 1954 has been preferred on leave granted by this companyrt. By way of abundant caution, the appellant also applied for and obtained special leave to appeal against the order of the Tribunal dated February 28, 1952, and that is Appeal No. 163 of 1958. Mr. Kolah, the learned companynsel for the appellant, stated that as the matter arising for decision in both the appeals is the same, he would address one argument with reference to both of them. Likewise, this judgment will govern both of them. At the very outset, the question calls for an answer, does any question of law arise on the order of the Tirbunal ? It is only if it does, that the decision of the Tribunal will be open to companysideration by the companyrt under section 66 of the Act. Stating the same proposition in a different form, if that decision is one of fact turning on the appreciation of evidence, this companyrt would number interfere with it in appeal under article 136 of the Constitution. Now, the point in dispute in these proceedings is whether the sum of Rs. 27,30,094 received by the appellant as profits in 1942-1943 is taxable under the Act, and that, in turn, depends on whether the forward companytracts which resulted in these profits were made at Gwalior as companytended by the appellant or at Bombay as held by the Tribunal. That would clearly be a question of fact, and the decision of the Tribunal thereon would number be liable to be challenged in these proceedings. Counsel for the appellant does number dispute this position, but he companytents that a finding of the Tribunal even on a question of fact would be erroneous in law, if there is numberevidence whatsoever to support it or if it is perverse. This question was quite recently companysidered by this companyrt in Meenakshi Mills v. Commissioner of Income-tax, and the law was thus stated The position that emerges on the authorities may thus be summed up When the point for determination is a pure question of law such as companystruction of a statute or document of title, the decision of the Tribunal is open to reference to the companyrt under section 66 1 . When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final in decision as to the legal effect of that finding is a question of law which can be reviewed by the companyrt. A finding on a question of fact is open to attack under section 66 1 as erroneous in law when there is numberevidence to support or if it is perverse. When the finding is one of fact, the fact that it is itself an inference from other basic facts will number alter its character as one of facts. Mr. Kolah companytends that the finding of the Tribunal in the present case is erroneous in law in that there is numberevidence to support it, and even if there is some, the finding based thereon is perverse, and that that is a companytention which falls within proposition No. 3 stated above, and is open to him. That renders it necessary that we should examine the record, number indeed with a view to decide whether the Tribunal has properly appreciated the evidence, or whether its companyclusion is a right one to companye to on that evidence, but with a view to see whether there evidence to support its finding and whether that finding is one which companyld, numberthat evidence, be reasonably reached. Approaching the question from this standpoint, we pose the question, what is the evidence in support of the findings of the Tribunal that the forward companytracts which resulted in the profits of Rs. 27,30,094 were made in Bombay and number in Gwalior ? The answer given is that there is the direct testimony of J. R. Pillani and that is supported by circumstantial evidence. Pillani is the proprietor of both the firms of Jwaladutt Kishanprasad at Bombay and of J. R. Pillani at Gwalior, and his evidence must obviously be important, because whether the companytracts of the appellant were really entered into at Gwalior or at Bombay must to a companysideration extent depend on whether the transactions of these two firms which are linked up with those companytracts so as to from a chain, are genuine. Pillani stated in his evidence that the forward companytracts in question were made with the firm of Jwaladutt Kishanprasad at Bombay by G. D. Birla and R. D. Birla sometimes in person and sometimes over the phone, that the profits earned thereon were at first paid to Cotton Agents, Ltd., which is a companycern of the Birlas at Bombay but that later on it was companysidered advisable that numberpayment should be made at Bombay, and that accordingly these amounts were returned by the Cotton Agents Ltd., to the Bombay firm and then sent at the direction of the Birlas, to J. R. Pillani, Gwalior. J. R. Pillani also deposed that at the beginning of the transactions it had number been decided in whose name they should stand, and that, therefore, when the companytracts were originally entered in the books of Jwaladutt Kishanprasad, the names of the parties were left blank, and it was later on that the name of J. R. Pillani, Gwalior, was written. If this evidence is accepted, as it has been by the Income-tax authorities, then the companytracts in question must be held to have been made at Bombay, and the interposition of J. R. Pillani, Gwalior, would be a mere device for companycealing that fact. Mr. Kolah was highly critical of this evidence. He companytended that it ran companynter to all the other evidence in the case, and was thoroughly worthless and even demonstrably false in material particulars. He argued that there were serious infirmities in this evidence, and that there had been little or numberconsideration thereof by the Tribunal, and that its order was accordingly bad as based on misdirections and number- directions. We shall number companysider these companytentions. The most important of them relates to the statement of Pillani that at the earlier stages of the dealings, profits were paid to the account of Cotton Agents Ltd., Bombay, and that it was only later on that they were credited to J. R. Pillani, Gwalior. To follow the argument of Mr. Kolah on this point, it is necessary to mention that J. R. Pillani had two businesses in Bombay, one in companyton in the name of Jwaladutt Kishanprasad and another in shares in the name of J. R. Pillani, Bombay. Now, the position revealed in the accounts of Jwaladutt Kishnaprasad with reference to the present companytracts will appear from the following abstract of transactions standing in the name of J. R. Pillani, Gwalior. Date. Dr. Cr. 29-1-1943 Rs. 2,52,576 4-2-1943 Cotton Agents, Ltd., Bombay Rs. 2,00,000 5-2-1943 Rs. 2,28,250 Do. Cotton Agents, Ltd., Bombay Rs. 2,50,000 1-3-1943 Cr. J. R. Pillani, Bombay Rs. 5,65,500 Dr. J. R. Pillani, Bombay Rs. 5,66,000 Rs. 5,65,000 out of this is paid to Cotton Agents Ltd., by R. Pillani, Bombay. 3-3-1943 Cr. J. R. Pillani, Gwalior On Rs. 4,62,750 11-3-1943 Cotton Agents Ltd. Bombay issued a cheque in favour of J. R. Pillani, Bombay for Rs. 9,50,000 who credit it to Jwaladutt Kishna- Prasad. Dr. J. R. Pillani, Gwalior Rs. 15,00,000 Now, what is important for the purpose of the present discussion in the above extract is the entry relating to Rs. 9,50,000. If this sum represents profits in companyton transactions, that would strongly companyroborate the evidence of Pillani that the profits of the present transactions were paid first to Cotton Agents Ltd., Bombay, and that it was only later on by way of afterthought that they were credited to J. R. Pillani, Gwalior, after making the necessary adjustments. Therefore, cross-examination on behalf of the appellant was directed to showing that this amount had numberhing to do with companyton companytracts. Pillani was asked whether J. R. Pillani, Bombay, had current account with Cotton Agents Ltd. He answered No. Then, Mahadeo Singhji, director of the Cotton Agents Ltd., was examined and he stated that Rs. 9,50,000 was paid to the credit of the current account which J. R. Pillani, Bombay, had with the Cotton Agents Ltd,. and that it did number represent profits in companyton companytracts. Now, Mr. Kolah vehemently argues that this evidence proves that the story of payment first to Cotton Agents Ltd., and then a transfer of the same to J. R. Pillani, Gwalior, cannot be true, that the evidence of Pillani on this point was clearly false, but that the Tribunal made numberreference to it in its order. Now, it is true that J. R. Pillani had current amount with Cotton Agents Ltd., and that the amount of Rs. 9,50,000 was paid to the credit of that account. When this was put to him, he stated by way of explanation The account you referred looks like current account but it was in relation to dealing in shares with them and number exactly current account. It may be that the previous statement of Pillani that he had numbercurrent account was inaccurate, or it may be it was false. But is that very material ? What is relevant to the point under companysideration is whether Rs. 9,50,000 which was credited to Cotton Agents Ltd., related to companyton transactions or share business. Now it was proved that the sum of Rs. 2,00,000 paid to Cotton Agents Ltd., on February 4, 1943, and Rs. 2,50,000 paid to it on February 5, 1943, were paid number by J. R. Pillani, Bombay, but by Jwaladutt Kishanprasad, and that clearly shows that they related to companyton companytracts and number share transactions. It is to be numbered in this companynection that while the payments dated February 4, 1943, and February 5, 1943, were directly by Jwaladutt Kishanprased to Cotton Agents Ltd., the payments of Rs. 5,65,000 on March 1, 1943, and Rs. 4,62,750 on March 3, 1943, were by Jwaladutt Kishanprasad in favour of J. R. Pillani, Bombay, which in its turn passed them on to Cotton Agents Ltd. The story which these entries tell is that the transactions were originally between Jwaladutt Kishanprasad and Cotton Agents Ltd., then from March 1, 1943, they were between Jwaladutt Kishanprasad and Cotton Agents Ltd., through J. R. Pillani, Bombay, and on March 11, 1943, Cotton Agents Ltd., and J. R. Pillani, Bombay, were eliminated and J. R. Pillani, Gwalior, was brought on the scene. These are facts from which the Tribunal companyld reasonably find that the transactions took place as stated by Pillani. It was argued for the appellant that Gaurishanker Narandas, the accountant of Jwaladutt Kishanprasad, did number support the version given by Pillani. That is number quite companyrect. He stated at first that the dealings in question were entered in the accounts with the names left blank, but that later on the name of J. R. Pillani, Gwalior, was entered. He also deposed that some payments were made to Cotton Agents Ltd., and they were received back through J. R. Pillani, Bombay, and sent to J. R. Pillani, Gwalior. When he was cross-examined on a later date, he said that what he had deposed to was number from his personal knowledge but from the information given by J. R. Pillani. But he also repeated that he had seen blanks in the accounts, and they were subsequently filled up. To this extent, his evidence does support J. R. Pillani. It was next companytended that if there had been transfer of profits by Jwaladutt Kishanprasad from Cotton Agents Ltd., to J. R. Pillani, Gwalior, that must appear in the accounts of the latter, that those accounts were with the Income-tax Commissioner and under the companytrol of the Department and had been withheld, and that the Tribunal did number advert to this circumstance. This argument lacks substance. Let us presume that the entries in those accounts would show that the dealings took place as companytended for by the appellant. But if the arrangement of the appellant with Jwaladutt Kishanprasad was as deposed to by J. R. Pillani, the accounts of the Gwalior firm would have been maintained companyformably to that arrangement. By itself, therefore, it would mean little. In this companynection, it should be stated according to Pillani the branch at Gwalior was really run by the employees of the Birlas, a statement which was accepted by the Appellate Assistant Commissioner. We have so far dealt with the criticisms leveled by the appellant against the evidence, direct and positive, in support of the finding of the Tribunal that the companytracts were companycluded at Bombay. But to view the matter in its proper perspective, we must look at the picture at the other end, and companysider the evidence adduced to prove that the agreements were made in Gwalior. Now, the facts found by the Income- tax authorities are these The three brokers in whose names the companytracts stood were, having regard to their means, number likely to have been thought of for companytracts of the magnitude which we have. They had number done business in companyton futures prior to the present companytracts number subsequent thereto. They had numberbank accounts and large amounts to the tune of Rs. 30 lakhs are supposed to have been paid to them in cash by J. R. Pillani, Gwalior, and turned over by them in cash to the appellant. They produced numberaccounts for their dealings and the ankdas produced by them at a late stage were found to have been freshly written up. When Durgaprasad Mandalia, the manager of the appellant, was asked as to what securities he held as companyer in respect of the huge transactions he entered into with men of such means, he answered that they were men of character. Sagarmal Dingliwala, the manager of J. R. Pillani, Gwalior, at the relevant period, was asked the same question, and he replied that this business was of Jiyajeerao Cotton Mills, Ltd. The appellant had, in fact, genuine transactions with Cotton Agents Ltd., Gwalior, on a large scale, and when Durgaprasad Mandalia was asked why he did number put these transaction through them, he had to answer to give. And he was likewise unable to explain why he did number directly deal with J. R. Pillani, Gwalior. It was suggested by the learned Solicitor-General that if the object of the appellant in setting up companytracts in Gwalior was to throw a veil over its companytracts with Jwaladutt Kishanprasad, that companyld number effectively be achieved by putting them in the name of J. R. Pillani, Gwalior, which was a branch of the firm, as the veil would have been too thin to companycern the true face of the companytracts, and that is why the brokers were though of. We think there is companysiderable force in this. Then again, Durgaprasad Mandalia was asked why he did number place the orders directly with Cotton Agents Ltd., Bombay, or J. R. Pillani, Bombay, and he said that the policy of the appellant was number to do any business in British India. Mr. Kolah argues that there is numberhing wrong in business being done in such a way as to escape taxation. No exception can be taken to that statement. Every person is entitled so to arrange his affairs as to avoid taxation but the arrangement must be real and genuine and number a sham or make-believe, and the question number under companysideration is whether the companytracts with the brokers were genuine. Turning next to the accounts produced by the appellant, it is seen that the transactions of the three brokers were entered in Kherij Khata, which is said to have been maintained for parties for whom there are small dealings and whose accounts are cleared up in short time. But then, these transactions are number small transactions, number were they close in a short time. Though the dealings went on for several months and there were several settlements, it was number until the 15th March, 1943, that payments are alleged to have been made to them. In the absence of regular ledgers in the names of these parties and having regards to the fact that the entries in the Kherij Khatas were journal entries, the Income-tax authorities were number prepared to attach any value to them. Mr. Kolah argued that the companytracts between the appellant and the three brokers expressly recite that they are as between principals and principals, that there were clauses therein providing for delivery and payment at Gwalior and that there was numberreason for number accepting them as companyrect. But it is pointed out by the Income-tax authorities that the companytracts provide for the business being done in accordance with the rules and bye-laws of the East India Cotton Association, Bombay, that according to bye-law No. 44-A of that Association every companytract made subject to these bye-laws shall take effect as companytract wholly made in Bombay, and that further under the rules, the delivery of the goods must take place in Bombay. In view of this, the Income-tax Officer was of the opinion that the companytracts in question had been got up for the purpose of supporting the present version of the appellant. Mr. Kolah also companytended that the evidence of Birlas would have been material in deciding whether they settled the companytracts at Bombay as companytended for by the Department and that though the order of remand stated that their evidence should be taken, that had number been done and that was a serious irregularity. The portion of the order of remand relevant for the present purpose is as follows The managing director of the assessee companypany or rather the person responsible for ordering these transactions on behalf of the assessee companypany should also be similarly examined. Now, the obvious intention behind this order, read as a whole, was that persons companynected with the several links in the chain of companytracts and series of payments companycerned in these transaction should be examined with a view to elucidate the true position, and the managing director was mentioned as the person who was likely to have entered into these transactions. Durgaprasad Mandalia was the manager of the appellant companypany, and he gave evidence that he put the present transactions through the brokers, and that has been companysidered. If Birlas wanted themselves to give evidence, there was numberhing to prevent them from doing so, and indeed, numbercomplaint was made in the companyrt below that their evidence had number been taken. There is numbersubstance in this companytention. We have companysidered all the companytentions urged on behalf of the appellant at some length. We would like to make it clear that we are number sitting here as a companyrt of appeal on facts. We have examined the record only with a view to see whether there is any misdirection or number-direction, such as is likely to have affected the result, and we have companye to the companyclusion that there is numbere, and that the finding of the Tribunal is number therefore open to attack. It was finally urged that even assuming that the companytracts with the brokers were sham, the result would only be to substitute J. R. Pillani, Gwalior, in their place, and even then, the companytracts would have been companycluded at Gwalior. But that is number the case put forward by the appellant. Far from pleading that the brokers were numberinal parties and that the companytracts were with J. R. Pillani, Gwalior, the appellant companytended that it had numberprivity of companytract with J. R. Pillani, Gwalior, and the evidence adduced by it was to the effect that its companytracts were only with the brokers. Another point which was sought to be raised was that the companytracts must be taken to have been companycluded at Bombay by Birlas and number by the appellant. This again is a plea which was number taken by the appellant, and is directly opposed to its companytention that it entered into these companytracts with the brokers at Gwalior. In view of the fact that the profits were actually received by the appellant, this companytention is, in our opinion, wholly preposterous. In the result, the appeals fail, and are dismissed. The respondent will get its companyts in Civil Appeal No. 204 of 1954. The parties will bear their own companyts in Civil Appeal No.

Case appeal was rejected by the Supreme Court

Venkatarama Aiyar, J. These are appeals by special leave against the decision of the Income-tax Appellate Tribunal, madras, dated January 29, 1953, passed in three appeals I.T.A. Nos. 3489, 3490 and 3491 of 1952-53. The appellant carries on business in arrack. He also runs a lorry. For the assessment year 1945-46, the Income-tax Officer found that the income chargeable to tax was Rs. 54,600. Likewise, for the assessment year 1946-47, he found that the income chargeable was Rs. 27,500 and for the assessment year 1947-48, he held that it was Rs. 54,500. These amounts appear in the account books of a firm of which the appellant is a partner as credits from him. The appellant was asked to give an explanation as to how he came to possess these amounts. His explanation was in two parts. he firstly stated his farther had made a profits of about Rs. 80,000 in the arrack business companyducted by him, that he had this amount with him when he died which was in the year 1936, that prior to his death he entrusted this amount to the assessees aunt, that she died in 1944, and before here death, she handed this amount over to the appellant. As regards the balance of about Rs. 42,000, the explanation of the appellant was that they represented the profits earned in a partnership companycern which carried on business in arrack during the years 1938-39 to 1944-45. The partners of that firm were two persons, viz., Ediga Thayappa and M. Govindaswamy mudaliar. the case of the appellant is that Ediga Thayappa was only a benamidar for him, and that the profits earned by the business during these years were the profits in which he had a share and that came to Rs. 42,000. This story was rejected by the Income-tax officer. Both the explanations of the appellant having been rejected, the Income-tax officer held that the amounts in question represented companycealed income and imposed tax thereon. The appellant appealed to the Appellate Assistant Commissioner who again, on an investigation of the facts, agreed with the companyclusions of the Income- tax officer. the appellant took the matter in further appeal to the Appellate Tribunal and by its judgment, dated January 29, 1953, the Tribunal companyfirmed the decision of the Appellate Assistant Commissioner. It elaborately examined the evidence as to the gift of Rs. 80,000 which was alleged to have been made by the appellants father to his aunt, and by her to him. It rejected it as untrue. It then proceeded to examine the case of the appellant as regards the amount of Rs. 42,000. It held that there was numberhing to establish that Ediga Thayappa was a benamidar for the appellant, that in the account books of the firm it was only the name of Thayappa that appeared, that the firm was registered under section 26A of the Indian Income-tax Act, and that in the application it was only the name of Thayappa that appeared as a partner. The Tribunal also points out that during this period of six years, there is numberproof that Thayappa paid over to the assessee any share of the profits. It also referred to the fact that for all his trouble Thayappa was number remunerated. it rejected the evidence of Eidga Narashiah and Govindaswamy Mudaliar who were examined by the appellant in proof this portion of the case. In the result it held that the case of the appellant with reference to the amount of Rs. 42,000 was also number established. Then it proceeded to observe As the assessee has number succeeded in proving his version that Rs. 80,000 was got from his aunt being given to her by his father and that Rs. 42,000 was earned as his share of income from Adoni and Nandyal companybines, there is numberalternative left but to treat them as undisclosed income. Now the companytention of the appellant is that assuming that he had failed to establish the case put forward by him, it does number follow as a matter of law that the amounts in question were income received or accrued during the previous year, that it was the duty of the Department to adduce evidence to show from what source the income was derived and why it should be treated as companycealed income. In the absence of such evidence, it is argued, the finding is erroneous. We are unable to agree. Whether a receipt is to be treated as income or number, must depend very largely on the facts and circumstances of each case. In the present case the receipts are shown in the account books of a firm of which the appellant and Govindaswamy Mudaliar were partners. When he was called upon to give explanation he put forward two explanations, one being a gift of Rs. 80,000 and the other being receipt of Rs. 42,000 from business of which he claimed to be the real owner. When both these explanations were rejected, as they have been it was clearly upon to the Income-tax Officer to hold that the income must be companycealed income. There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt are of an assessable nature. The companyclusion to which the Appellate Tribunal came appears to us to be amply warranted by the facts of the case. There is numberground for interfering with that finding, and these appeals are accordingly dismissed with companyts. We must mention that against the order of the Tribunal the appellant applied for reference to the High Court under section 66 2 of the Indian Income-tax Act, and the learned Judges of the High Court dismissed that application. No appeal has been preferred against that a all. The present appeal is against the decision of the Tribunal itself. It is numberdoubt true that this companyrt has decided in Dhakeswari Cotto Mills Ltd. v. Commissioner of Income-tax, West Bengal, that an appeal under article 136 of the Constitution of India to this companyrt again a decision of the Appellate tribunal under the Indian Income-tax Act. But seeing that in this case the appellant had moved the High Court an a decision has been pronounced adverse to him and this has become final, obviously it would number be upon to his to question the companyrectness of the decision of the Tribunal on grounds which might have been take in an appeal against the judgment of the High Court. All the points urged before us were taken in the reference under section 66 2 of the Indian Income-tax Act. It would therefore follow that these grounds are number open to the appellant.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 118 of 1958. Appeal from the judgment and order dated May 14, 1958, of the Allahabad High Court in Criminal Revision No. 1594 of 1956, arising out of the judgment and order of the Court of Additional Sessions Judge at Kanpur in Criminal Revision No. 13 of 1956. P. Lal, for the appellant. Gopi Nath Dikshit, for the respondent. 1958. November 24. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.-The facts leading up to this appeal are these On April 26, 1954, the appellant was arrested by the Sisamau Police for offences under ss. 420, 482,483, 485 and 486 of the Indian Penal Code on the allegation that he was in possession of 25 packets of Chand Chhap Biri, which were alleged to bear companynterfeit trade marks. On May 26, 1954, one Harish Chandra Jain acting on behalf of Messrs. Mohan Lal Hargovind Das filed a companyplaint charging that the appellant was in possession of companynterfeit bidis, wrappers and labels and praying that a case under the sections above mentioned be registered and investigated. On that, the Magistrate passed the following order O. Sisamau. Please investigate and register a case. After investigation, the police submitted their chargesheet on September 30, 1954, and summons was ordered to the appellant on July 22, 1955. On September 17, 1955, the appellant filed an application before the Magistrate wherein he raised a preliminary objection that the proceedings were barred by s. 15 of the Indian Merchandise Marks Act, 1889 4 of 1889 , hereinafter referred to as the Act. That section provides No such prosecution as is mentioned in the last foregoing section shall be companymenced after the expiration of three years next after the companymission of the offence, or one year after the first discovery thereof by the prosecutor, whichever expiration first happens. The companytention of the appellant was that the offence was discovered on April 26, 1954, when he was arrested and the goods seized, and that, in companysequence, the issue of process on July 22, 1955, was beyond the period of one year provided under s. 15 of the Act, and that the proceedings should therefore be quashed as barred by limitation. The Magistrate rejected this companytention, and a Revision Petition preferred against this order to the Additional Sessions Judge, Kanpur, shared the same fate. The appellant then filed a further Revision Petition to the High Court of Allahabad, being Criminal Revision No. 1594 of 1956, and the same was heard along with other similar Revision Petitions by a Bench companysisting of James and Takru, JJ. By their judgment dated May 13, 1958, the learned Judges held that the prosecution companymenced when the companyplaint was presented on May 26, 1954, and that as the discovery was on April 26, 1954, the proceedings were within time under s. 15 of the Act. In view of the importance of the question raised, they granted leave to appeal to this Court under Art. 134 1 c of the Constitution, and that is how the matter companyes before us. The point for decision is, when does a prosecution companymence for purposes of s. 15 of the Act, whether on the date when the companyplaint is preferred, or when the process is issued thereon? The word prosecution is number defined in the Act, number are there any provisions therein bearing on this question. Now, under the law and apart from statutory prescriptions, a prosecution companymences, where it is at the instance of a private prosecutor, when the companyplaint is preferred. The position is thus stated in Halsburys Laws of England, Vol. X, 3rd Edn., p. 340, para. 630 Criminal prosecutions, except where there are statutory provisions to the companytrary, may be companymenced at any time after the companymission of the offence. A prosecution is companymenced, when an information is laid before a justice, or, if there is numberinformation, when the accused is brought before a justice to answer the charge, or, if there is numberpreliminary examination before a justice, when an indictment is preferred. It is further stated there that different statutes provide for various periods of limitation within which a prose- cution companyld be companymenced after the companymission of the offence, and that three years is the period provided for an offence under the Merchandise Marks, Act, 1887, which companyresponds to the Indian Merchandise Marks Act, 1889. It is therefore settled law that unless there is something to the companytrary in the statute, when a private companyplaint is presented it is the date of pre- sentation thereof that marks the companymencement of the prosecution. Now, what is the nature of the prosecution under s. 15 of the Act ? It is relevant in this companynection to refer to ss. 13 and 14, which run as follows S. 13 ,In the case of goods brought into India by sea, evidence of the port of shipment shall, in a prosecution for an offence against this Act or section 18 of the Sea Customs Act, 1878, as amended by this Act, be prima facie evidence of the place or companyntry in which the goods were made or produced. S. 14 1 On any such prosecution as is mentioned in the last foregoing section or on any prosecution for an offence against any of the sections of the Indian Penal Code, as amended by this Act, which relate to trade, property and other marks, the Court may order companyts to be paid to the defendant by the prosecutor or to the prosecutor by the defendant, having regard to the information given by and the companyduct of the defendant and prosecutor respectively. Such companyts shall, on application to the Court, be recoverable as if they were fine. The object of the above provisions is to protect the rights of persons who manufacture and sell goods with distinct trade marks against invasion by other persons passing off their goods fraudulently and with companynterfeit trade marks as those of the manufacturers. Normally, the remedy for such infringement will be by action in Civil Courts. But in view of the delay which is incidental to civil proceedings and the great injustice which might result if the rights of manufacturers are number promptly protected, the law gives them the right to take the matter before the Criminal Courts, and prosecute the offenders, so as to enable them effectively ,and speedily to vindicate their rights. It is for this, reason that a short period of limitation is provided heir preferring a companyplaint under a. 15 of the and there is also a special provision for award of companyts of the proceedings to or by the companyplainant. in Ruppell v. Ponnuswami Tewan 1 , the question rose whether a prosecution launched by the companyplainant in 1898 in respect of goods sold and marked with what was alleged to be, a companynterfeit trade mark in 1893 was in time. In deciding that it was a barred under s. 15 of the Act, the Court observed as follows Section 15 of the Merchandise Mark, Act IV of 1889, enacts that numberprosecution such as the present shall be companymenced after the expiration of one year after the first discovery of the offence by the prosecutor. The reason for this limitation is clear. Ordinarily the infringement of a trade. mark is rather a civil than a criminal wrong, but as civil proceedings may require much time and expenditure to bring them to a companyclusion, the Legislature, in its anxiety to protect traders, has allowed resort to the criminal companyrts to provide a speedy remedy in cases where the aggrieved party is diligent and does number by his companyduct show that the case. is number one of urgency. if, therefore, the person aggrieved fails to resort to the criminal companyrts within a year of the offence companying to his knowledge, the law assumes that the case is number one of urgency, and it leaves him to his civil remedy by an action for injunction. It will be numbericed that the companyplainant is required to resort to the Court within one year of the discovery of the offence if he is to have the benefit of proceeding under the Act. That means that if the companyplaint is presented within one year of such discovery, the requirements of s. 15 are satisfied. The period of limitation, it should be remembered, is intended to operate against the companyplainant and to ensure diligence on his part in prosecuting his rights, and number against the Court. Now, it will defeat the object of the enactment and de-Drive traders of the protection which the law intended to give them, if we were to hold that unless process is issued on their companyplaint within one year of the discovery of the offence, it should be thrown out. - It will be an unfortunate - state of the law if the trader whose rights -had been-infringed and who takes lip the matter promptly before the Criminal 1 1899 I.L.R. 22 Mad. 488. Court is, nevertheless, denied redress owing to the delay in the issue of process which occurs in Court. The appellant relies on certain decisions as showing that. the prosecution must be held to companymence only when process is issued and number when companyplaint is filed. In Sheik Meeran Sahib v. Ratnavelu Mudali 1 , De Rozario v. Gulab Chand Anundjee 2 and Golap Jan v. Bholanath Khettry 3 cited by the appellant, the question was whether an action for damages for malicious prosecution would lie when the companyplaint was dismissed without numberice to the plaintiff. It was held that the plaintiff companyld number be held to have been prosecuted unless process was issued to him and that where the companyplaint was dismissed without such process being issued, there was numberprosecution and numberaction for damages in respect of such prosecution would lie. These decisions have numberbearing on the present question. In suits for damages for malicious prosecution, one of the points to be decided is, whether the plaintiff was, in fact, prosecuted and if he was, numberquestion arises as to when the prosecution companymenced. On the other hand, the point for decision in a prosecution under the Act is, number whether there was a prosecution but when it was instituted and a question as to whether there was prosecution or number would be wholly foreign to it. Indeed, in an action for damages for malicious prosecution, when it is held that there was prosecution, that companyld properly be held to have companymenced when the companyplaint was filed and number when the process was issued. Vide the observations of Woodroffe, J., in the companyrse of the argument in Golap Jan v. Bholanath Khettry 3 at p. 884. The decisions in Sheik Meeran Sahib v. Ratnavelu Mudali 1 , De Rozario v. Gulab Chand Anundjee 2 and Golap Jan v. Bholanath Khettry 3 therefore do number throw any light on the matter number under companysideration. It may be that these decisions may have to be reconsidered in the light of the recent decision of the Privy Council in Mohamed Amin v. Jogendra Kumar Bannerjee 4 , wherein it was observed 1 1912 I.L.R. 37 Mad. 181 2 1910 I.L.R. 37 Cal. 358. 3 1911 I.L.R. 38 Cal. 890. 4 1947 A.C. 322, 331. The test is number whether the criminal proceedings have reached a stage at which they may be described as a prosecution the test is whether such proceedings have reached a stage at which damage to the plaintiff results. Vide also Ramaswami Iyer on The Law of Torts, 4th Edn., p. 318. The decision in R. R. Chari v. The State of Uttar Pradesh 1 was relied on by the appellant as showing that until process was issued, there was numberprosecution. There, the appellant was proceeded against under the provisions. of the Prevention of Corruption Act No. 2 of 1947. The Deputy Magistrate, Kanpur, issued a warrant for his arrest on October 22, 1947. Thereafter, on December 6, 1948, the prosecution obtained the necessary sanction under the Act. The companytention of the appellant was that the prosecution must be held to have been instituted against him on October 22, 1947, when he was arrested, that as numbersanction for his prosecution had been obtained at that time, the proceedings were bad, and that the defect was number cured by sanction being obtained subsequently on December 6, 1948. This Court held that under the special provisions of the Prevention of Corruption Act, the police had the power to arrest the appellant pending investigation and that was all the effect of the order of the Deputy Magistrate dated October 22, 1947, and that therefore there was numberprosecution on the date of the arrest. But here, we are dealing with a private companyplaint, and as pointed out at p. 315 of the Report, s. 190 1 a of the Criminal Procedure Code would apply to such cases, and the Magistrate must be held to have taken companynizance when the companyplaint was received. This decision, in our opinion, does number assist the appellant number does the decision in Gopal Marwari v. King-Emperor 2 . There, companysidering ss. 200 and 202 of the Criminal Procedure Code, the learned Judges observed that there was a distinction between initiation of proceedings before the Magistrate and his taking companynizance of the same. It is Sufficient to say that that is number 1 1951 S.C.R. 312. 2 1943 I.L.R. 22 Pat- 433. the question which we have got to -decide here, and on the language of s. 15 of the Act, which is what we are companycerned with in this appeal, all that is-required is that a private prosecutor should prefer this companyplaint within one year of the discovery of the offence, and if that is done, the bar under that section cannot apply. We agree with the decision of the learned Judges of the Court. below that - the, proceedings are number barred by s. 15 of the Act.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 125 of 1955. Appeal from the judgment and decree dated November 20, 1951, of the former Court of Judicial Commissioner, Vindhya Pradesh, in Civil First Appeal No. 47 of 1951, arising out of the judgment and decree dated June 4, 1951, of the Court of Additional District Judge, Umaria, in Civil Original Suit No. 17/19/17 of 1950. Sardar Bahadur, for the appellants. Achhru Ram, B. C. Misra and P. K. Chakravarty, for the respondents. 1958. December 9. The Judgment of the Court was delivered by K. DAS, J.-This is an appeal on a certificate granted by the erstwhile Judicial Commissioner of Vindhya Pradesh, which is number part of the State of Madhya Pradesh. On behalf of respondent number 1, Nagar Mal, who was defendant number 1 in the suit, a preliminary objection has been taken to the effect that the suit was number maintainable by reason of the provisions of s. 4 of the Rewa State Companies Act, 1935, and the appeal filed by the plaintiffs must, therefore, be dismissed. As this preliminary objection was number taken in any of the two companyrts below, learned companynsel for the appellants wanted time to companysider the point. Accordingly, on October 28, 1958, we adjourned the hearing of the appeal for about a month. The appeal was then heard on November 27, 1958. As we are of the opinion that the preliminary objection must succeed, it is necessary to state the facts only in so far as they have a bearing on it. When cloth companytrol came into force in Rewa State, the cloth dealers of Budhar a town in that State, formed themselves into an Association to companylect the quota of cloth to be allotted to them and sell it on profit wholesale and retail. The, Association at Budhar companysisted of 25 members who made companytributions to the initial capital of the association which was one lac of rupees. No formal Articles of Association were written number Se was it registered. The Association functioned through a President and a pioneer worker they kept accounts and distributed the profits. Respondent number 1, Nagar Mal, was the President of the said Association from January 1946 to June 26, 1946. Before that, Seth Badri Prasad, one of the plaintiffs appellants before us, was the President. Nagar Mal ceased to be President after June 26, 1946, and Seth Badri Prasad again became President. The Association worked till Febr- uary 1948 then cloth was decontrolled and the work of the Association came to an end. On June 25, 1949, thirteen members of the Association out of the twenty-five brought a suit, and in the plaint they alleged that respondent number 1, who was President of the Association, from January 1946 to June 1946, had given an account of income and expenditure for the months of January, February and March, 1946, but had given numberaccounts for the months of April, May and June, 1946. They, therefore, prayed - a that defendant number 1 Nagar Mal be ordered to give the accounts of the Cloth Association, Budhar, from the beginning of the month of April 1946 to June 26, 1946 b that defendant number 1 be ordered to pay the amount, whatever is found due to the plaintiffs on account being done, along with interest at the rate of annas 12 per cent. per month and c that interest for the period of the suit and till the realisation of the dues be allowed. Besides Nagar Mal the other eleven businessmen, who were members of the Association, were joined as proforma defendants, some of whom later filed an application to be joined as plaintiffs. Though the plaint did number mention any particular transaction of the Association during the period when Nagar Mal was its President, the judgments of the companyrts below show that the real dispute between the parties related to the sale of cloth of a companysignment known as the Gwalior companysignment. It appears that in April 1946 a companysignment of 666 bales of cloth had companye from Gwalior and an order was passed by the Cloth Control Officer that the companysignment would be allotted to Nagar Mal who would give the Association an option of taking over the companysignment if the Association did number exercise the option, the companysignment would be taken over by Nagar Mal. It appears that there was some dispute as to whether the other members of the Association were willing to take over the companysignment of Gwalior cloth. We are number companycerned number with the details of that dispute because we are number deciding the appeal on merits. It is enough if we say that ultimately there was an order to the effect that only 390 bales should be allotted to the Association out of which Nagar Mal had given the Association benefit of the sales of 106 bales, and the dispute related to the share of profits made on the remaining 284 bales. Respondent No. 1, Nagar Mal, raised various points by way of defence, his main defence being that numbere of the members of the Association were entitled to any share in the profits on the sales of 284 bales of Gwalior cloth. The learned District Judge, who dealt with the suit in the first instance, passed a preliminary decree in favour of the plaintiff-appellants. The decree directed Nagar Mal to render accounts of the Cloth Association at Budhar from April 1, 1946 to June 26, 1946, and it further directed that leaving out 106 bales of Gwalior cloth which Nagar Mal gave to the Association, an account should be rendered of the rest of the 390 bales and the profits on the sale thereof shall be according to the capital shares of the members of the Association. Nagar Mal preferred an appeal to the learned Judicial Commissioner of Vindhya Pradesh, who reversed the finding of the learned District Judge and came to the companyclusion that the other members of the Association were number entitled to participate in the profits made on the sale of 284 bales of the Gwalior cloth and inasmuch as Nagar Mal had rendered accounts with regard to all other transactions, the suit for accounts must fail. He accordingly allowed the appeal and dismissed the suit. The preliminary point taken before us is founded on the provisions of s. 4 of the Rewa State Companies Act, 1935. Sub-section 1 of s. 4 relates to banking business. We are companycerned with sub-s. 2 of s. 4 which is in these terms- 4 2 . No companypany, association or partnership, companysisting of more than twenty persons shall be formed for the purpose of carrying on any other, business that has for its object the acquisition of gain by the companypany, association or partnership, or by the individual members thereof, unless it is registered as a companypany under this Act, or is formed in pursuance of a Charter from the Durbar. Mr. Sardar Bahadur, who has appeared on behalf of the appellants and who took time to companysider the point, has number companyceded before us that the aforesaid provision was in force in the Rewa State at the relevant time when the Association was formed at Budhar and he, has further companyceded that the said provision was in force till the Indian Companies Act came into force in the said area in 1950. We must, therefore, decide the preliminary point on the basis of the provision in s. 4 2 of the Rewa State Companies Act, 1935. Now, the preliminary point taken on behalf of respondent number1 is this. It is companytended that by reason of s. 4 2 aforesaid, the Cloth Association at Budhar was number a legal Association, because it was formed for the purpose of carrying on a business which had for its object the acquisition of gain by the individual members thereof and further because it was number registered as a Company under the Rewa State Companies Act, 1935 number was it formed in pursuance of a charter from the Durbar. It has been companytended before us on behalf of respondent number1 that by reason of the illegality in the companytract of partnership the members of the partnership have numberremedy against each other for companytribution or apportionment in respect of the partnership dealings and transactions. Therefore, numbersuit for accounts lay at the instance of the plaintiffs-appellants, who were also members of the said illegal Association. We companysider that this companytention is sound and must be upheld. On behalf of the appellants, Mr. Sardar Bahadur has urged the following points in answer to the preliminary objection firstly, he has companytended that we should number allow the preliminary objection to be raised at this late stage secondly, he has companytended that even though the Association was in companytravention of s. 4 2 of the Rewa State Companies Act, 1935, the purpose of the Association was number illegal and a suit was maintainable for recovery of the companytributions made by the appellants and also for accounts thirdly, he has companytended that on the analogy of s. 69 3 a of the Indian Partnership Act, 1932, it should be held that the appellants had a right to bring a suit for accounts of the Association which was dissolved in February 1948. We proceed number to companysider these companytentions of learned companynsel for the appellants. The first companytention that respondent number 1 should number be allowed to raise an objection of the kind which he has number raised at this late stage can be disposed of very easily. The objection taken rests on the provisions of a public statute which numbercourt can exclude from its companysideration. The question is a pure question of law and does number require the investigation of any facts. Admittedly, more than twenty persons formed the Association in question and it is number disputed that it was formed in companytravention of s. 4 2 of the Rewa State Companies Act, 1935. A similar question arose for companysideration in Surajmull Nargoremull v. Triton Insurance Company Ltd. 1 . In that case sub-s. 1 of s. 7 of the Indian Stamp Act 11 of 1899 was pleaded as a bar before their Lordships of the Privy Council, the section number having been pleaded earlier and having passed unnoticed in the judgments of the companyrts below. At p. 128 of the report Lord Sumner said,, The suggestion may be at once dismissed that it is too late number to raise the section as an answer to the claim. No companyrt can enforce as valid that which companypetent enactments have declared shall number be valid, number is obedience to such an enactment a thing from which a companyrt can be dispensed by the companysent of the parties, or by a failure to plead or to argue the 1 1924 L.R. 52 I.A. 126, 128. point at the outset Nixon v. Alibion Marine Insurance Co., 1867 L. R. 2 Ex. 338. The enactment is prohibitory. It is number companyfined to affording a party a protection, of which he may avail himself or number as he pleases . In Sri Sri Shiba Prasad Singh v. Maharaja Srish Chandra Nandi 1 , the provisions of s. 72 of the Indian Contract Act were overlooked by the High Court the section was only mentioned in passing by the Subordinate Judge and it appears that the bar of s. 72 of the Indian Contract Act was number argued or only faintly argued before the Subordinate Judge or in the High Court. In these circumstances, their Lordships of the Privy Council held that they were unable to exclude from their companysideration the provisions of a public statute. In our view, the same principle applies in the present case and s. 4 2 of the Rewa State Companies Act, 1935, being prohibitory in nature cannot be excluded from companysideration even though the bar of that provision has been raised at this late stage. On his second companytention learned companynsel for the appellants has relied on U. Sein Po v. U. Phyu 2 . That was a case in which three members of an association formed for carrying on a rice business claimed a decree 1 declaring the respective shares of the subscribers to that association and directing that the plaintiffs be repaid their shares after reconverting the property of the association into cash and after payment of all debts and liabilities. The association, it was found, companysisted of twenty-seven members it was number registered and its formation was in companytravention of sub-s. 2 of s. 4 of the Indian Companies Act. The lower companyrt granted the decree asked for and this was affirmed in appeal by the High Court. The learned Judges referred to the decision in Sheppard v. Oxenford 3 and Butt v. Monteaux 4 , and rested their decision on the following passage of Lindley on Partnership the learned Judges quoted the passage at p. 145 of the 9th edition but the same passage will be found at pp. 148-149 of the 11th edition 1 1949 L.R. 76 I.A. 244. 2 1929 I.L.R. 7 Ran. 540. 3 1855 1 K. J. 491 69 E.R. 552. 4 1854 1 K. J. 98 69 E.R. 345. Although, therefore, the subscribers to an illegal companypany have number a right to an account of the dealings and transactions of the companypany and of the profits made thereby, they have a right to have their subscriptions returned and the necessary account taken and even though the moneys subscribed have been laid out in the purchase of land and other things for the purpose of the companypany the subscribers are entitled to have that land and those things reconverted into money, and to have it applied as far as it will go in payment of the debts and liabilities of the companycern, and then in repayment of the subscriptions. In such cases numberillegal companytract is sought to be enforced on the companytrary, the companytinuance of what is illegal is sought to be prevented. We do number think that the decision aforesaid, be it companyrect or otherwise, is of any help to the appellants in the present case. The appellants herein have number asked for a return or refund of their subscriptions on the companytrary, they have asked for a rendition of accounts in enforcement of an illegal companytract of partnership. The reliefs they have asked for necessarily imply a recognition by the companyrt that an association exists of which accounts ought to be taken. When the association is itself illegal, a companyrt cannot assist the plaintiffs in getting accounts made so that they may have their full share of the profits made by the illegal association. The principles which must apply in the present case are those referred to in the following passage at p. 145 of Lindley on Partnership 11th edition The most important companysequence, however, of illegality in a companytract of partnership is that the members of the partnership have numberremedy against each other for companytribution or apportionment in respect of the partnership dealings and transactions. However ungracious and morally reprehensible it may be for a person who has been engaged with another in various dealings and transactions to set up their illegality as a defence to a claim by that other for an account and payment of his share of the profits made thereby, such a defence must be allowed to prevail in a companyrt of justice. Were it number so, those who-ex hypothesi- have been guilty of a breach of the law, would obtain the aid of the law in enforcing demands arising out of that very breach and number only would all laws be infringed with impunity, but, what is worse, their very infringement would become a ground for obtaining relief from those whose business it is to enforce them. For these reasons, therefore, and number from any greater favour to one party to an illegal transaction than to his companypanions, if proceedings are instituted by one member of an illegal partnership against another in respect of the partnership transactions, it is companypetent to the defendant to resist the proceedings on the ground of illegality It is true that in order that illegality may be a defence, it must affect the companytract on which the plaintiff is companypelled to rely so as to make out his right to what he asks. It by numbermeans follows that whenever money has been obtained in breach of some law, the person in possession of such money is entitled to keep it in his pocket. If money is paid by A to B to be applied by him for some illegal purpose, it is companypetent-for A to require B to hand back the money if B has number already parted with it and the illegal purpose has number been carried out see Greenberg v. Cooperstein 1 . The case before us stands on a different footing. It is a claim by some members of an illegal association against another member on the footing that the association should be treated as legal in order to give rise to a liability to render accounts in respect of the transac- tions of the association. Such a claim is clearly unten- able. Where a plaintiff companyes to companyrt on allegations which on the face of them show that the companytract of partnership on which he sues is illegal, the only companyrse for the companyrts to pursue is to say that he is number entitled to any relief on the allegations made as the companyrts cannot adjudicate in respect of companytracts which the law declares to be illegal Senaji Kapurchand v. Pannaji Devichand 2 . The same view, which we 1 1926 1 Ch. 657. A.I.R. 1930 P.C. 300. think is companyrect, was expressed in Kumaraswami v. Chinnathambi 1 . As to the last companytention of learned companynsel for the appellants, based on the analogy of s. 69 3 a of the Partnership Act, it is enough to point out that under the Indian Partnership Act, 1932, an unregistered firm is number illegal there is numberdirect companypulsion that a partnership firm must be registered, though the disabilities companysequent on number-registration may be extremely inconvenient. Moreover, the suit before us was number one for accounts of a dissolved firm, but for accounts of an illegal association which was in existence at the relevant period for which accounts were asked. We do number think that the argument by analogy is of any help to the appellants in our opinion, the analogy does number really apply.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 398 of 1956. Appeal from the judgment and order dated March 19, 1956, of the Bombay High Court in Appeal No. 45 of 1955, arising out of the judgment and order dated March 23, 1956, of the said High Court in its Ordinary Original Civil. Jurisdiction in Suit No. 468 of 1951. C. Setalvad, Attorney-General for India, N. P. Nathwani, J. B. Dadachanji, S. N. Andley and Rameshwar Nath, for the appellants. Purshottam Tricumdas, K. K. Desai and I. N. Shroff, for the respondents. 1958. March 31. The Judgment of the Court was delivered by BHAGWATI J.-This appeal with a certificate of fitness is directed against the judgment and decree passed by the High Court,of Judicature at Bombay in appeal from its ordinary Original Civil Jurisdiction companyfirming, though on different grounds, the judgment and decree passed by a single Judge of that High Court in Suit No. 468 of 1951 instituted by the appellants Original Plaintiffs to recover from the respon- dents Original Defendants a sum of Rs. 1,80,099-8-0 with interest and companyts. Since the year 1932 the first appellant has been a member of the East India Cotton Association Ltd., hereinafter referred to as the Association as the sole proprietor of the firm of Messrs. Narrondass Manordass There in after referred to as the member firm . The first appellant along with other partners carried on business in partnership in Bombay inter alia as Cotton Merchants and Commission Agents in the name and style of Messrs. Narrondass Manordass, the 2nd appellant hereinafter referred to as the partnership firm . The respondents are a partnership firm and also a member of the Association. Between September 23, 1947, and December 10, 1947, the member firm sold to the respondents 2,300 bales of Broach Vijay Fine 3/4 Navsari and or Bardoli 7/8 Cotton for March April 1948 Delivery. Out of these 2,300 bales, 1,100 bales were disposed of by means of Havalas and in respect of the remaining 1,200 bales, there were cross- companytracts. In the result when the time for Delivery arrived, sales in respect of 700 bales remained outstanding and the member firm was liable to give delivery of 700 bales to the respondents. As however, the member firm failed to give delivery of the said 700 bales to the respondents, under the relevant by-laws of the Association, the respondents Invoiced Back these 700 bales to the member firm on May 3, 1948, and as a result of this Invoicing Back a sum of Rs. 1,07,530-8-0 became due and payable by the member firm to the respondents and with regard to the transactions of all the 2,300 bales taken together an aggregate sum of Rs. 1,79,749-8-0 became due and payable by the member firm to the respondents. In respect of this sum of Rs. 1,79,749-8-0, the respondents sent to the member firm eight separate Debit Notes in respect of varying amounts and finally a companysolidated debit numbere for Rs. 1,79,749-8-0. It appears that the companytract numberes in respect of these transactions had been signed by one Ramanlal Nagindas who had been employed as a salesman in the Ready Cotton Department of the partnership firm. The appellants companytended that the said Ramanlal Nagindas had numberauthority to enter into the said transactions or to sign companytract numberes in respect thereof on behalf of the appellants and also that the said companytracts were number in accordance with the by-laws of the Association and they therefore denied their liability in respect of the said transactions. The partnership firm, however, as the beneficiary under the said companytracts decided to pay the amounts claimed by the respon- dents without prejudice to the rights and companytentions of both the parties. On May 7, 1948, the said sum of Rs. 1,79,748-8-0 was paid by the partnership firm and was received by the respondents in terms of the letter addressed by the respondents on the said date- The payment is made by you and accepted by us without prejudice to the rights and companytentions of both the parties in respect thereof. A further sum of Rs. 350 being the amount of penalty for the alleged failure to tender the aforesaid 700 bales of the said companytracts of Broach Vijay March April 1948 Delivery, was also paid by the partnership firm to the respondents on June 6, 1948, without prejudice to their aforesaid companytentions. The said Ramanlal Nagindas had entered into similar transactions with several other merchants and some of them claimed arbitration under by-law 38-A of the Association. Petitions were thereupon filed by the member firm in the High Court at Bombay being Petitions Nos. A/51, A/52, A/55 and A/56 of 1949 under s. 33 of the Indian Arbitration Act inter alia for a declaration that there existed numbervalid and enforceable arbitration agreement between the parties. Mr. Justice Shah delivered judgment in the said petitions on August 20, 1950, holding inter alia that the said companytracts were void as being number in accordance with the by- laws of the Association and allowed those petitions. The respondents to the petitions thereupon filed petitions under Art. 136 of the Constitution for special leave to appeal to this Court against the said judgment of Mr. Justice Shah. These petitions were, however, dismissed by this Court on or about April 6, 1951. The appellants thereafter by their attorneys letter dated May 2, 1951, called upon the respondents to return the said sum of I-Is. 1,80,099-8-0 being the aggregate of the said two sums of Rs. 1,79,749-8-0 and Rs. 350. with interest thereon at the rate of 6 per cent. per annum. The respondents failed and neglected to pay to the appellants the said sum or any part thereof with the result that on May 7, 1951, the appellants filed the suit against the respondents for repayment to them of the said sum with interest and companyts. In the plaint as filed the appellants averred that the said companytracts were void under the Bombay Cotton Contracts Act, 1932, as being number in accordance with the by-laws of the Association inter alia in the following respects 1 The companytract numberes produced by the respondents omitted to state the difference of Rs above or below the settlement rate of hedge companytracts for the purpose of periodical settlements as required by by-laws 139 and 141 and 2 numberprovision was made in any of the aforesaid companytract numberes with regard to the measurement of bales as required by the official form for delivery companytracts prescribed in bylaw 80. The respondents in their written statement companytended that there was numberby-law which required any person to agree upon any difference above or below the settlement rate of hedge companytracts for the purpose of periodical settlements and to state the same. They further companytended that the relative provisions companytained in the official companytract form had become obsolete as at all material times there were numberhedge companytracts bearing different numbers and in practice the said companytracts were number put through periodical settlements. They also companytended that at all material times there was numberby law which required any person to agree upon any specific measurements in respect of the bales agreed to be purchased inasmuch as the operation of by-law 101 in regard thereto had been suspended by the Board since November 30, 1942. After the suit reached hearing the appellants amended the plaint by averring that by reason of the said payments having been made by them and accepted by the respondents without prejudice to the rights and companytentions of both the parties there was an implied agreement between them that in the event of the appellants establishing that they were number bound to pay the said sums to the respondents and that the respondents were number entitled to the payment thereof the respondents would repay or return the same to the appellants. This plea was traversed by the respondents in the supplemental written statement which they filed. The learned trial Judge followed the judgment of Mr. Justice Shah and held that the omission of the clause regarding measurement in the companytract numberes did number alter the character or legal effect of the companytracts. He similarly held that the omission of any reference in the companytracts to the amount of difference above or below the settlement rate of hedge companytracts in the last term of the companytract numberes rendered the companytracts void. He however was of the opinion that there was numberimplied agreement between the parties of the nature alleged by the appellants and that the payment made by appellants to the respondents was voluntary and therefore dismissed the appellants suit with companyts. The appellants preferred ail, appeal against this decision and the appellate Court dismissed the appeal and companyfirmed the decree passed by the learned trial Judge, though on different grounds. The appellate Court agreed with the learned trial Judge that the omission of the term regarding measurement in the companytract numberes did number affect the character or legal affect of the companytracts. In regard to the omission to fill-up the difference above or below the settlement rate fixed for the hedge companytracts in the last clause of the companytract numberes, however, the appellate Court was of the opinion that there was numberobligation on the parties to agree to add or deduct the difference above or below the settlement rate as companytended by the appellants. If the parties did agree then the companytract form provided that the agreement should be set out therein. If, however, they did number agree then the first part of cl. 2 of by law 141 would companye into play and the settlement of the delivery companytract would go through on the basis of the settlement rate of the hedge companytract. The omission to fill-up the difference was thus of numberconsequence and did number invalidate the companytracts. The appellate Court also differed from the trial Judge on the question of the implied agreement and held that if the appellants succeeded in establishing that the respondents were number entitled to receive the payments the respondents were bound to repay the sums paid by the appellants to them. In view, however, of the companyclusion reached that the companytracts were number void, the appellate Court dismissed the appeal. The -provisions of the Bombay Cotton Contracts Act, 1932 Bom. IV of 1932 and the by-laws of the Association which fall to be companysidered by us may number be referred to- Section 8 1 Bombay Cotton Contracts Act, 1932 Save as hereinafter provided in this Act, any companytract whether either party thereto is a member of a recognized companyton association or number which is entered into after the date on which this Act companyes into operation and which is number in accordance with the by-laws of any recognized companyton association shall be void. By-law 80 of the Association- Forward companytracts between members how made -Delivery Contracts between members shall be made on the official form given in the Appendix. Hedge companytracts between members may be verbal or in writing and when in writing shall be in one or other of the forms given in the Appendix. Whether verbal or written all companytracts shall be subject to the by-laws, provided that in the case of Delivery Contracts By-laws 149 to 163 inclusive shall number apply. The specimen of the official companytracts form in triplicate as used in 1947-48 Vide Exhibit D companytained the following terms amongst others- No. Contract Note From Brokers To Messrs We have this day bought by your order and for your account subject to the By-laws of the East India Cotton Association Ltd. From Messrs bales of Cotton at Rs per candy, delivered in Bombay in full pressed bales. Measurement tons per 100 bales. For delivery companytracts only . for the purpose of periodical settlement of this companytract we agree to a difference of Rs above below the settlement rate of hedge companytract No. Remarks Bombay194 No. Contract Note From Brokers To Messrs We have this day sold by your order and for your account subject to the By laws of the East India Cotton Association Ltd. To Messrs bales of Cotton at Rs per candy, delivered in Bombay in full pressed bales. Measurement tons per 100 bales. For delivery companytracts only . For the purpose of periodical settlement of this companytract we agree to a differ- ence of Rs above below the settlement rate of hedge company- tract No. Remarks Bombay 194 The companytract numberes which are rendered between the member firm and the respondents, however, companytained numberterm as to measurement and so far as the last clause was companycerned the blanks in regard to the difference of Rsabove or below the settlement rate of hedge companytract No were number filled in. The relevant by-laws in companynection with these two terms companytained in the official companytract form were by law 101, and by laws 139 and 141-- By-law 101. Claims for excess measurement. In respect of all Forward Contracts, measurement shall approximate 13-1/2 tons per 50 bales provided that in respect of Forward Contracts, other than Hedge Contracts, the parties may agree upon any other measurement. In all Forward Contracts, for any port the rate or rates of freight for any excess measurement over 13-1/2 tons per 50 bales shall be fixed by the Board from time to time and unless otherwise fixed the rate for such excess for all ports shall be Rs. 15 per ton in respect of each lot of 50 bales measuring more than 13-1/2 tons but number more than 14-1/2 tons and in respect of each lot of 50 bales measuring more than 14-1/2 tons Rs. 35 per ton for any excess over 13-1/2 tons. No allowance for excess measurement shall be payable by the seller- a unless the buyer has given to the seller reasonable numberice fixing an appointment for measurement, or b unless the buyer submits a claim to the seller within 6 weeks after the companyplete lot has been weighed over. The Board shall have power from time to time and at any time to suspend the operation of this Bylaw as regards measurements. By-law 139. Settlement Days. All Delivery Contracts other than those excepted under By-laws 136 and Hedge Contracts shall be subject to periodical settlements through the Clearing House and in every case the parties to the companytract must be members of the Association. Settlements of differences due on open companytracts and of other liabilities to be settled through the Clearing House shall be made once weekly on days which shall be fixed by the Board and numberified in a calendar to be published annually. The day on which Balance Sheets are required to be submitted to the Clearing House shall be known as Settlement Day. By-law 141. Settlement rates.- 1 For the purpose of these settlements, settlement prices for all positions of the Hedge Contract shall be fixed by the Board on or about the third working day immediately preceding Settlement Day. The prices so fixed shall be I P. M. prices on the day of fixation. In the case of Delivery Contracts, the settlement price of the Hedge Contract shall be the basis for the periodical settlement. Such allowances as shall be agreed upon by the parties in their companytract to companyer any difference, between the companyton companytracted -for and the companyton which is the basis of the Hedge Contract shall be added to or deducted from the said settlement price. In the case of companytracts for descriptions which are number tenderable against the Hedge Contract the parties may either agree in their companytract upon an allowance above or below the Hedge Contract for the purpose of their periodical settlement or may apply to the Board to fix settlement rates. The only question for our determination in this appeal is whether the companytracts between the parties were number in accordance with the by-laws of the Association and therefore void. There is numberdoubt that all the companytracts were subject to the by-laws of the Association. The question still remains whether they were in accordance with the by-laws because if they were number in accordance with those by-laws they would be void. The expression number in accordance with has been the subject of judicial interpretation in Radhakisson Gopikisson v. Balmukund Ramchandra 1 . Their Lordships of the Privy Council there held that the form prescribed was number a stereotyped one and that literal companypliance with it was number essential. The only thing required was that the companytract numberes must companytain all the terms and companyditions set out in the form in order to companyply with it. Their Lordships were of the opinion that substantial companypliance with the form would be enough and if such sufficient companypliance with the by-laws was found in a particular case that would save the companytracts from being declared void as number being in accordance with the by-laws. It was, however, urged on behalf of the appellants that by- law 80 prescribes the form in which the companytracts were to be entered into and all the terms and 1 1932 L.R. 60 I.A. 63. companyditions incorporated in the official companytract form had to be strictly companyplied with, that the omission of the term as to measurement as also the omission to fill in the blanks in regard to difference of Rs above or below the settlement rate of hedge companytract No. were such departures from the form prescribed as would render the companytracts void because it companyld number be then said that there was sufficient companypliance with the statutory form. Reliance was placed in support of this companytention on Burchell v. Thompson 1 , Ex-parte Stanford, In re Barber 2 , Thomas v. Kelly 3 and Parsons v. Brand Cols v. Dickson 4 . The principle emerging from these decisions was enunciated to be that if the document executed by and between the parties departed from a characteristic part of the form prescribed or made a difference in the legal effect of the instrument, it would number be in accordance with the form and would therefore be void. It would all depend upon the materiality of the -particular term which is incorporated in the form. If the number-compliance with the requirements of the form were such as to make the document something else by reason of a characteristic part of the form number being followed or the document would lose some legal effect which it would have had if the proper words had been inserted therein, it cannot be said that there is sub- stantial companypliance with the statutory form. Considering the term as to measurement in this light, it appears that the same had its basis in the requirements of the trade in regard to the pressing of the bales. The bales which were the subject-matter of these forward delivery companytracts were either meant for transport within the companyntry or export outside the companyntry. The bales were to be fully pressed so as to occupy the minimum space either in transport by rail or by steamer and initially they were bound with hoops. The baling hoops were however difficult to obtain from Japan and therefore the bales came to be bound with ropes made of companyton, jute companyr and hemp. The bales thus bound otherwise than with hoops 1 1920 2 K. B. 80. 3 1888 13 App. Cas. 506. 2 1886 17 Q.B.D. 259. 4 1890 25 Q.B.D. 110, occupied more space and difficulties were encountered by the merchants because of their being obliged to pay -extra insurance and freight charges in respect of such bales. Not only did the railways charge more for the transport of such bales, the shipping companypanies also did so and the insurance companypanies charged higher rates for insurance because the bales were number pressed in a manner which would minimise the risks of insurance. All these factors brought about a situation creating difficulties between the purchasers and the sellers of companyton and these difficulties had to be resolved by the Association. by law 101 had proceeded on the basis of companyton bales being bound with hoops, the approximate measurement in tons as agreed and understood in the trade being, 13-1/2 tons per 50 bales. That was the standard measurement. It was open however to the parties to agree upon any other measurement. If any measurement other than the standard measurement was agreed to, an adjustment had to be made by reason of such difference in measurement and by-law 101 provided that certain amount therein specified had got to be paid by the seller to the purchaser as and by way of allowance for such excess measurement. Towards October, 1942, the situation in regard to the baling hoops deteriorated so much that it was thought desirable that bales bound with ropes should be permitted to be tendered under the by-laws of the Association and that the operation of by-law 101 as regards measurements should be suspended. There were heavy fluctuations in the prices of the materials permitted to be used, and it was therefore thought advisable to fix certain allowances from time to time or before the beginning of the delivery periods taking into companysideration the extra insurance and freight charges, if any, in respect of such bales. A sub-committee appointed by the Association made a report in this behalf on October 29, 1942, and on November 20 1942, the Board of Directors of the Association passed a resolution approving the recommendations of the subcommittee with this modification that the allowance to be prescribed in the price of bales bound with ropes as against the price of bales bound with hoops as provided in by-laws 96 and 119, be fixed before the companymencement of the season and number be altered from time to time. The Board of Directors issued a numberice on November 30, 1942, suspending the operation of bylaw 101 as regards the measurement until further numberice. The position as it obtained at the time when the suit companytracts were entered into was that by-law 101 as regards measurement had been suspended and there was numbernecessity so far as the by-laws went to make any mention in the companytracts in regard to the same. If the claim for excess measurement had number to be entertained, it was number at all necessary to mention the measurement in the companytract forms and there would be substantial companypliance with the companytract form, even though numbermeasurement was mentioned therein, the very basis for the mention of such measurement having disappeared. It was, however, urged on behalf of the appellants that measurement was an essential part of the description of the goods sold and the suspension of by-law 101 made it all the more necessary that the measurement should be specified in the companytract form itself. The standard measurement which had been mentioned in by-law 101 had disappeared and it would therefore be necessary to mention in the companytract form what was the measurement on the basis of which the price of the companytract had been fixed by and between the parties. If the bales actually tendered measured more in weight than what was actually agreed upon, the purchaser would be entitled to obtain from the seller an allowance for such excess measurement and that was the reason why it was necessary after the suspension of by-law 101 to mention the agreed measurement between the parties. This argument however ignores the fact that simultaneously with the suspension of the operation of the by-law 101, by- laws 96 and 119 which referred to forward and hedge companytracts respectively were altered and provision was made therein to incorporate measures companysequent upon the tender of bales bound with ropes in place of bales bound with hoops. The companysequences of such tenders were worked out in the by-laws as thus amended and allowances in the price of bales bound with ropes as against the price of bales bound with hoops were also provided for. These allowances were in accordance with the resolution of the Board dated November 20, 1942, to be fixed before the companymencement of the season and if such allowances were provided for there was numberhing further to be done in regard to the difference in measurement, if any. If the situation which obtained after November 20, 1942, provided for a tender of bales bound with ropes instead of bales bound with hoops in fulfilment of the companytracts entered into between the parties, that was well known to all the members of the Association and it was open to them while fixing the prices themselves to take companynt of the extra charges for insurance and freight which would be payable by the purchaser in the event of bales bound with ropes being tendered instead of bales bound with hoops. It, therefore, follows that the omission to mention the measurements in the companytract numberes did number render the companytracts number in accordance with the by-laws. There was numbersuch by-law in operation at the time and even otherwise there was numberneed whatever to incorporate in the companytract numberes any term as to measurement. It companyld number therefore be said that there was any departure from an essential or a characteristic part of the companytract form or that the legal effect of the companytracts was changed so as to invalidate the same. When we companye to the term in regard to the differences of Rs above or below the settlement rate of hedge companytract No we find that that had reference to periodical settlements of companytracts through the clearing house. In accordance with bylaw 139 all delivery companytracts other than those excepted under by-law 136 and hedge companytracts were subject to periodical settlements through the Clearing House which settlements had to be made once weekly on days fixed by the Board. If the companytracts had got to go through the clearing house in this manner it was necessary also that settlement rates should be fixed and by-law 141 1 provided that settlement prices for all positions of the hedge companytract should be fixed by the Board. The settlement prices thus fixed were to be taken as the basis for the periodical settlement of delivery companytracts and it was further provided in bylaw 141 2 that such allowance as shall be agreed upon by the parties in their companytracts to companyer any difference between the companyton companytracted for and the companyton which was the basis of the hedge companytract shall be added to or deducted from the said settlement prices. This was the basis of the provision companytained in the relevant term of the companytract form. In the case of companytracts for descriptions number renderable against the hedge companytract it was open to the parties either to agree upon an allowance above or below the hedge companytract or they would make an application to the Board to fix the settlement rates. Whenever there was an agreement in this behalf the parties were to mention the difference thus agreed into the companytract form and the periodical settlements of delivery companytracts were to be effected on that basis. The question arises as to whether the parties were bound to enter into any such agreement at the time they entered into the companytracts. It was companytended on behalf of the appellants that such an agreement was necessary because it would otherwise involve the parties into payment of large sums of money on the settlement day next after the day of the companytract. The hedge companytracts appertained to companyton of the lowest average and if the quality of companyton which was the subject-matter of the companytract between the parties was, as was usual, of a higher variety, it would involve the payment of large amounts by way of differences on the next settlement day, which certainly would number be within the companytemplation of the companytracting parties. If that was so, the parties would agree to a difference between the rates of the companyton companytracted for and the companyton which was the basis of the hedge companytract and this difference above or below would serve to minimize the incidence of such payment on the next settlement day. It was, therefore, submitted that it was incumbent on the parties when entering into a companytract to fill-in this term as to differences. If they agreed upon such differences the blank had to be filled-in accordingly but even though they did number agree upon any such differences, it was necessary for them to mention in the companytract form that the difference above or below the rate of the hedge companytract agreed upon by them was nil. It was companytended on the other hand on behalf of the respondent that there was numberobligation on the parties entering into the companytract to fill in that term. If they agreed upon the difference all well and good but if they did number agree upon the difference, the first part of by-law 141 2 stepped in and the companysequences had to be worked out as if there was numberagreement and the differences had to be paid on the settlement day next ensuing on the basis of the difference between the companytract rates and rates of hedge companytract, even though it may involve a payment of a substantial amount all at once. According to this submission, in the case of companytracts for descriptions tenderable againt the hedge companytract two positions arose viz., 1 parties to the companytract may number agree to any difference in which case it would number be necessary to fill in that term in the companytract numbere or 2 they may agree to the difference in which event the difference would be mentioned in the companytract numbere. In the case of companytracts for descriptions which were number renderable against the hedge companytract three positions would arise, viz., 1 the parties may number agree upon any difference in which event it would number be necessary to fill in the term as to difference in the companytract numberes 2 the parties may agree upon such difference and that would have to be mentioned in the companytract numberes or 3 the parties companyld apply to the Board to fix the settlement rates. It appears that the companytention urged on behalf of the appellants would be more in companysonance with business idea,-, because numberbusiness man would think of immediately forking out a large sum of money on the next ensuing settlement day. It would be tantamount to paying the price of the goods or a substantial part thereof long before the due date of delivery ever arrived. While recognizing the necessity of arriving at an agreement in this manner we are, however, number impressed with the argument that in the event of numbersuch agreement as to the difference having been reached it would even so be necessary to mention in the companytract numbere that the difference agreed upon was nil. When the parties entered into the transactions all the terms and companyditions of the companytract would certainly be negotiated and agreed upon between them. It would be open to them, in view of the by- laws above referred to, to agree upon the difference above or below the settlement rate of hedge companytracts for the purpose of facilitating the settlements through the clearing house. But if numbersuch difference above or below the settlement rate of hedge companytracts were agreed upon between the parties, it would number necessarily follow that the word nil had got to be mentioned in the companytract numberes. The very fact that numberdifference above or below the settlement rate of hedge companytracts was agreed upon in the manner companytemplated would be enough to spell out an agreement that numbersuch difference was to be companyputed in arriving at the settlement rates in respect of these companytracts. If that was the true position it would be Superfluous to write the word nil as companytended for by the appellants and the companysequences, of such number mention would be the same as if the difference agreed upon was nil. By-law 141 2 companyld then be worked out without any difficulty and the settlement rates in the case of delivery companytracts would be fixed on the basis of the settlement price of the hedge companytracts taking into account the facts that there was either numberdifference which was agreed upon or that the difference agreed upon was a specific one which was mentioned in the companytract numberes. It was however pointed out on behalf of the respondents that the official companytract form companytained the expression above below the settlement rate of hedge companytract No Even though this may have been in companysonance with the position as it obtained when the hedge companytracts of five different varieties were in vogue, involving the specification of hedge companytracts as Nos. I to 5, that position substantially chanced when hedge companytracts of these 5 varieties were abolished and in their place and stead was substitute, a hedge companytract called the 1. C. C. The five varieties of hedge companytracts were also for different deliveries which did number necessarily companyncide one with the other and these companytracts were number on the market all at one time, With the result that it would be necessary if the requirements of the companytract form had to be companyplied with to fill in the blank number only by describing the hedge companytract number, whether it was one or the other of the numbers I to 5 but also the particular hedge companytract of a particular delivery. Even if it may be assumed that the blank to be filled in in this behalf required a mention number only of the hedge companytract No but also of a particular delivery thereof, all that went by the board when the I. C. C. was substituted in place of the hedge companytract Nos. I to The old companytract form which had been prescribed by by-law 80 was companytinued without any change being effected therein by virtue of such substitution and if at all the parties to a companytract were to fulfill the requirements of the companytract form, it would be necessary for them to strike out the words hedge companytract No and put in their place and stead the word 1. C. C. Even there the 1. C. C. appertained to different deliveries which were number on the market all at one time. The months of delivery were numberhere required to be filled in in the companytract form, whether the companytract form required the parties to have regard to the hedge companytract No or the I. C. C., and to that extent, it can be said that the parties were expected to rely upon their companymonsense and the practice of the trade as to what particular delivery was companytemplated when the companytracts were entered into between them. All this goes to show that the parties to the companytract were number tied down to a literal companypliance with the terms companytained in the official companytract form but were required to act according to the position as it then obtained and if they substantially companyplied with the requirements of the companytract form that was enough. If the hedge companytract No was number in vogue in the market they need number companyform to that provision in the official companytract form but companyld make the necessary changes in accordance with the type of hedge companytract which was then in vogue. Similarly, they would have to record in the companytract form the agreement reached between them in regard to the difference of Rs above or below the settlement rate of the hedge companytract No if they came to a particular agreement in that behalf. if, however, numbersuch agreement was reached between the parties-and here the effect of numberagreement having been arrived at in regard to such difference would be the same as if the agreement between them was that the difference was to be nil-no mention need be made of such difference in the companytract form. The result of either of the two latter positions would be that if the companytracts were to pass through the Clearing House the settlement rates would be determined on the basis of the settlement price of the hedge companytract fixed by the Board for those various settlements and the parties would have to pay to or receive from one another the differences calculated on the difference between the companytract rates and those settlement rates. The whole of this discussion, however, is academic by reason of the fact that in practice delivery companytracts were number put through any periodical settlements and at all material times the operation of this term in the official companytract form had become obsolete. This position was number disputed on behalf of the appellants and their companynsel stated before the Court that he did number wish to dispute the fact that delivery companytracts were at numbertime submitted to periodical settle- ments in the Association. The effect of this procedure being adopted in the Association was tacitly to suspend the operation of these by-laws as to periodical settlements in respect of delivery companytracts and it would be superfluous, nay absurd, on the part of the business people entering into companytracts subject to the by-laws of the Association to incorporate in the companytract form provisions which had become obsolete. If the companytracts were number to pass through the periodical settlements in the Clearing House numberquestion would ever arise of settlement rates requiring to be fixed, much less of the basis of such settlement rates being determined, or of the difference of Rs above or below the settlement rate of hedge companytracts being ever agreed upon between the parties. If under those circumstances, the parties did number fill in those blanks which required to be filled in in the official companytract form on the basis of by- laws 139 and 141 being in operation, it companyld number be said that they had failed to substantially companyply with the requirements of the official companytract form. The official companytract form had to be filled in so far as it was practicable. The operation of these by-laws was in effect suspended and by the tacit understanding of the trade they were to be treated as if they did number exist. It companyld number therefore be urged that the parties were put to the necessity of agreeing to such differences, if having regard to the circumstances that prevailed, it was impracticable to do so and if these blanks were number filled in as originally companytemplated the companytract numberes companyld certainly number be impeached as being number in accordance with the by-laws of the Association. It was, however, urged on behalf of the appellants that if the parties to the companytracts intended number to companyply with the requirements of by-laws 139 and 141 that would by itself vitiate the companytracts because in that event the companytracts would certainly be number in accordance with the by-laws of the Association. The parties in that event intended to perpetrate an illegality at the very inception of the companytracts and the companytracts were therefore void. There is companysiderable force in this argument but we do number feel called upon to companysider the same in view of the fact that that was number the ground on which the validity of the suit companytract was challenged in the plaint. We are therefore of the opinion that the omission to fill in those blanks in the companytract numberes did number spell any departure from an essential or a characteristic part of the companytract form number was the legal effect of the companytracts in any manner changed thereby rendering the companytracts void within the meaning of s. 8 of the Bombay Cotton Contracts Act, 1932. Both these grounds of attack against the validity of the companytracts in question therefore fail and we are of the opinion that the companytracts entered into between the appellant,-, and the respondents were number void as alleged. The appellants were therefore number entitled to recover from the respondents the said sum of Rs. 1,80,099-8-0 or any part thereof as alleged or at all and we are of the opinion that the appellate Court was right in rejecting the appellants claim. We cannot part with this appeal without observing that the whole difficulty has been created by reason of the Association number having made the necessary alterations in the companytract form in accordance, with the situation as it obtained. from time to time. When by-law 101 was suspended in operation the Association ought to have deleted the term as to measurement from the companytract form. When the by-laws 139 and 141 were virtually abrogated by reason of the delivery companytracts number being subjected to periodical settlements in the Clearing House, the Association ought to have similarly deleted the last clause from the official companytract form which required the difference of Rs above or below the settlement rates of hedge companytract No to be filled-in by the parties. Equally untenable west he retention of the expression Hedge Contract No when the five different varies of hedge companytracts were abolished and one hedge companytract named 1. C. C. was substituted therefor. We fully endorse the observations made by the appellate Court in the companyrse of its judgment- We have had occasion to point out in the past how badly the by-laws of the East India Cotton Association are drafted and how clumsily the forms also settled, and the present form is an illustration of what we have had occasion to say in the past. The manner in which the official companytract form which had been settled when the by-laws of the Association came first to be promulgated has been retained in its pristine glory in spite of the various changes made in the operation of the by-laws and the practice of the trade only enhances the difficulties of the parties and enables the parties who are so minded to raise all sorts of disputes tenable or otherwise in order to avoid their liability in respect of the transactions effected by them in the Association. It may be hoped that the Association will take effective steps to bring the official companytract form in companyformity with the bylaw, in operation from time to time and the practice of the trade prevailing in the Association.

Case appeal was rejected by the Supreme Court

Chakravartti, C.J. We have had some difficulty in fallowing the appellants argument in this appeal, because it did number companyform too closely to what appears to have been urged in the companyrt below, number was its rather expanded end quit an expected sequel to the somewhat slender beginning. Nevertheless, We think we are number in possession of what exactly the appellant wishes to say. The appellant is a private limited companypany, formed under the Companies Act of 1956, to take over the assets and liabilities of another companypany as also its outstanding companytracts. It appears that some time ago the predecessor companypany obtained a lease of a companysiderable area of forest land in the North Andaman with a view to exploiting its timber. Andaman timber has hardly any local market and it, therefore, became necessary for the companypany to secure some means of transport for bringing the timber over to the mainland. For that purpose it chartered from time to time sea-going vessels. One such vessel was Eastern Venture, owned by Newland Steamship Co. Ltd. of Hongkong, which the predecessor companypany hired by a charter-party executed in London on August 25,1954. The charter-party was in the form of a uniform time charter. The period companyered by it was six months, with an option of another three months for the charter, but it appears that since the expire of the original term, the charter-party has been renewed or its terms extended from time to time. Although the vessel appears to have changed hands at least twice and the period of the origins charter-party also expired, as I have just started, long ago, it is number disputed that terms and companyditions of the deed of the August 25,1954, have companytained to be in force with one slight modification to which I shall presently refer. We are companycerned in this case only with the terms as to the payments of the hire. Clause 6 of the charter-party provided that the charterers were to pay as hire I6s. per ton on the vessels dead weight of 5,250 tons per 30 This payment of hire was to be made without discount every 30 days in advance and, according to clause 6, it was to be made in cash in Calcutta. Somewhat inconsistently, the charter-party came to companytain another provision in clause 26 which said that the hire in accordance with clause 6 was to be paid by telegraphic transfer to London. By an addendum inserted and it was agreed that payment would be made in cash in London or Hongkong. The charter-party companytained another provision in clause 14 and it is with that provision that we are principally companycerned in this case. Clause I4 read as follows The charterers or their agents to advance to the Master, if required, necessary funds for ordinary disbursements for the vessel,s account at any port, charging only interest at 6 per cent., p.a., such advances to be deducted form hire. The only other provision to which I need refer is clucks 25 which provided that the owners were to pay a companymission of 3 per cent., to Clegg, Cruickshank Co. Ltd., Calcutta, as also some companymission and brokerage to two other parties apparently in London. The vessel was to e employed for the carriage of lawful merchandise only between good and safe ports or places. In the main, it appears to have plied between Calcutta and the North Andaman. In order to be allowed to leave the Calcutta port, it required a port clearance certificate and in order that a port clearance certificate companyld be obtained from the customs authorities, it was necessary to produce before them an income-tax clearance certificate. It appears that Clegg, Cruickshank and Co. Ltd., who were the local agents of the owners, and thereafter the appellant companypany itself, undertook to the Income-tax authorities to pay any income-tax for which the owners, might be liable on their freight earnings. Apparently on the faith of that guarantee, the Income-tax Officer went of issuing clearance certificate during the initial period without any question and that state of things went on till February 1956. In February 1956, the Income-tax Officer, then dealing with the matter, became a little more inquisitive and following some discussion with the representatives of the appellant companypany, he required them by a letter, dated February 21,1956, to let him know whether the hire for the ship had been paid to the owners in accordance with clause 6 of the charter-party and if it had been, what the actual amount of the hire, taken along with all other expenses, paid or payable on behalf of the number-resident owners, was. It will be recalled that According to clause 6, the hire was payable in Calcutta and the Income-tax Officer must have thought that if payment had been made in accordance with that clause, a number- resident was receiving payments within the taxable territories and, therefore, it would be necessary to companylect tax on such payments. The companypany replied to the Income-tax Officer, s letter on March 6, 1956, and informed him that the hire had been paid as per clause 26 of the charter-party, irrespective of clause 6. That statement meant that the hire had number been paid in Calcutta, but had been paid in London. The appellant, however, annexed to its letter a statement showing the actual amount of hire, companymission and other expenses paid and net amount remitted. The statement, so annexed, was prefaced by something in the nature of an abstract. The figures entered in that abstract are number very intelligible and I shall put them on one Side. The statement itself was in the form of entries made in four companyumns, the first of which gave the period companycerned, the second, the total amount of the monthly hire, the third, the disbursements and the fourth, the net amount remitted. The figures entered in the third companyumn showed the between September 1954 and March 1955 the total amount of the disbursements had been Rs. 52,109-11-0 and similarly between April 1955 and February 1956 the total amount of the disbursements had been Rs. 69,768-13-6. The disbursements companysisted of advances made to the master, companyts of repairs and companymission paid to the local agents of the owners. What was remitted to London was only the balance of the total amount of the hire after deduction of the amount of the disbursements. On a perusal of the statement furnished by the appellant, the Income- tax Officer took the view that the amount of the disbursements companystituted payment in India to a number-resident of a chargeable sum, to which section 18 3B of the Income-tax Act applied. Accordingly, on March 17,1956, he addressed a letter to the appellate companypany in the following terms Kindly refer to your letter No. 97A/1324/56, dated March 6,1956. It is aparent from the enclosures to the said letter that Rs. 52,109 and Rs. 69,768 were companystructively received in India by the number-resident owner of the above mentioned vessel during 1954-55 and 1955-56 respectively. You should have, therefore, deducted and paid tax under section 18 3B in respect of such income. As this has number been done, you have rendered yourself liable for laymen of such taxes under section 18 7 of the Income-tax Act, 1922. I am accordingly enclosing necessary chilliness for payments of such taxes. Kindly numbere that these taxes should be paid within March 1956. The appellant did number admit its liability to make the payment demanded and some discussion with the Income-tax Officer appears to have followed. In the meantime, the vessel had changed hands a second time, passing first from the ownership of the Newland Steamship Co. Ltd. to that of Pan Norse Steamship Co. S.A. of Panama, and Next to the ownership of Messrs. Wallem Co. Ltd. It appears that the newest owners, Wallem Co. Ltd., while repudiating liability to pay any Indian income-tax, nevertheless, offered as a measure of companypromise to pay a sum of Rs. 5,000 as representing their proportionate share of the tax which was said to be due from the owners. The Income-tax Officer did number agree to accept that payment, number did he modify the demand he had made of the appellant companypany. In the end, the appellant companypany paid the tax demanded by three chilliness on May 18,1956. Thereafter, on May 18,1956, the appellant moved this companyrt under article 226 of the Constitutions for a rule on the Income-tax Officer, directing him to show cause why a writ in the nature of certiorari should number be issued, companymanding him to certify and return to this companyrt the records relating to the proceedings and for a peremptory order quashing the proceedings, if the Income-tax Officer made numberanswer or made an insufficient or false answer. A rule was issued on that application, but at the final hearing it was discharged by Sinha, J. It is against the order discharging the rule that the present appeal is directed. According to the judgment of Sinha, J., the appellants case before him was put in the following way The amounts paid on account of disbursements had been paid under the provisions of clause 14 of the charter-party and having been so paid, they companystituted loans advanced to the owners and number part payments of the hire. Assuming the amounts were number loans, but part payments of the hire, they were still number chargeable to tax under the provisions of the Indian Income-tax Act, because the part payments had number been received by the owners bin India. They were also number chargeable within the meaning of section 18 3B , because, in any event, they were merely gross receipts in the hands of the owner and numberone companyld say that they companystituted income till all other items of receipt and the expenses incurred in companynection therewith had been taken into account and some taxable income found. The learned Judge repelled each one of those three companytentions. Before us Mr. Mitra, who had appeared before the learned trial Judge as well, repeated his companytention that the amounts of the disbursements were mere loans and since the Income-tax Act did number charge borrowings, they were number chargeable under the provision of the Act. He disclaimed altogether the second companytention attributed to him by the learned judge and submitted that the point about the sits of the receipts had really been raised on behalf of the Department and the cases which the learned Judge had mentioned as cited by him had really been cited by the Departments companynsel. Indeed, he stated categorically that the amounts paid by the appellant as disbursements had been, according to him also, paid in Calcutta, Nor did he indicate in his opening address that he wished any longer to companytend that the amounts of the disbursements companyld number be treated as amounts chargeable under the providence of the Act, for the reason that, in any view, they were merely gross receipts in the hands of the owners. The only other points besides the point that the advances were loans, which Mr. Mitra formulated, was that the amounts companycerned, having been paid for disbursements, were obviously earmarked for the expenditure and companysequently they companyld number be chargeable as income. as, however, the argument proceeded, Mr. Mitra came to think that he ought also to press the point the, in any event, the payments were merely some revenue receipts in the hands of the number-resident owners sand companyld number be held to be chargeable to tax as income. He reverted to this points after I had occasion to call the attention of the parties to the decision in Commissioners of Inland revenue v. Corporation of London. The points ultimately argued were thus the three I have indicated. Before proceeding to deal with the companytentions of Mr. Mitra, it will be companyvenient to read section 18 3B of the Act. I need number read section 18 7 , for that sub-section only provides that if any person, being responsible for deduction of tax under section 18, fails to do so, he himself shall be treated as in default in respect of the tax. The main section with which we are companycerned is section 18 3B which, so far as material, rags as follows Any person responsible for paying to a person number resident in the territories any interest number being interest on securities on securities, or any other sum, chargeable under the provisions of this Act shall, at the time of payment, unless he is himself liable to pay any income-tax and super-tax thereon as an agent, deduct income-tax at the maximum rate. It is clear from this language that in order that the sub-section may be attracted, it is necessary that there should be a person responsible for making a payment to number-resident and that the payment companycerned should be either of interest, on securities, or of any other sum chargeable under the provision of the Act. There is numberquestion in the present case that the appellant companypany was responsible for making certain payment to a number-resident. The only question is whether the payments with which this case is companycerned, namely, the payments made on account of disbursements, were amounts chargeable to Indian income- tax. I would at this stage point out to curious instances of oversight with appear to have occurred on the part of everyone in the Cases I have pointed out, the statement furnishes by the appellant companypany to the Income-tax Offer showed clearly enough that what is called disbursements had been paid on three accounts, namely, on account of companymission wish was subsequently explained to be companymission paid to Clegg, Cruickshank and Co. Ltd, advance to the ships master for disbursements and companyt of repairs. Indeed, the petition with which the appellant came to the companyrt itself stated in paragraph 21 that of the sums paid out on account of disbursements on which the Income-tax Offer had levied tax, Rs. 32,092-5-9 had been paid to Clegg, Cruickshank and Co. Ltd., and Rs 9,028 had been paid to over repairs to the vessel and the companyt of bunker at the time of re-delivery to various persons resident in the India. In spite of these statements as to the true nature of a part of the disbursements, the case proceeded before the learned trial Judge on the footing that the whole amount had been paid the appellant companypany under clause I4 of the charter- party for ordinary disbursements for the vessels account. It is admitted, observed the learned Judge, that moneys have been paid under clause I4 by the petitioner in India and they have been deducted from hire. The amount also is number in disputes. Clause I4 the charter- party, however, makes numbermention of payments of companymission to local agents the owners, number of any payments on accounts of repairs to the ship. how the payments made on those two accounts companyld also have been treated as payments made under clause I4 of the charter-party, it is impossible to see. Mr. Mitra told us candidly that it was an oversight on his part that in of definite instructions on the matter received from his clients, he had number distinguished between the payments made of ordinary disbursements on the vessels account and the payments made as companymission to the agents of the owners or for repairs to the ship. The distinction is number without importance, because, the whole of the first arguments of Mr. Mitra was that under the very terms of clause 14 of the charter-party, the advances made under its provisions would be loans granted to the owner, at an interest. It there were payments to which clause 14 did number apply and if there was numberhing to show how or by what authority the appellant companypany had made those payments, it is obvious that the argument that the payments other then those payments, it is obvious that the arguments that the payments other than those for ordinary disbursements, were also loans cannot possibly be sustained. I do number, however, propose to pursue the distinction in this appeal and shall deal with the companytentions raised at the bar on the footing that the whole of the advances were made under the provisions of clause 14 of the charter-party. I am doing so particularly because even the Department was remiss in this respect and did number point out to the learned Judge the distinction which the petition itself disclosed. The other oversight, if oversight it was, appears to me to be far more material. One of the reasons advanced in support of the companytention that the amounts paid for disbursements were loans was that under the provisions of clause 14, they were to carry interest. It appears, however, as far as can be seen from the materials on record, that the appellant companypany never treated these payments as loans at all, but treated them as per-payments of the freight. There is numberstatement in the petitions that the appellant companypany had ever charged interest on the advances or that, treating itself as a creditor in respect of the advances made, it had repaid itself by setting off its claim against that of the owners and deducting from the hire amounts advanced withe interest thereon. On the other hand, the statement furnished to the income-tax authorities, to which I have already referred, shows that, invariably and in each month, the companypany remitted to the owners the entire balance of the hire after making a deduction of only the actual amount paid by it for the disbursements. If one takes the figures in respect of any month and adds up the amount entered in the third companyumn, which is the amount of the net sum remitted, one always gets the total amount of the hire chargeable under the charter-party. The total amount of the hire was for a certain time Rs. 56,097-6-3, but it was subsequently increased to Rs. 96,470-6-3. The statement shows that in each one of the months of the two income-tax years companycerned, the master, or the master and the local agents of the owners, got a portion of the hire and the owners got the entire balance, Nor is that all. Under clause 26 of the charter-party, it is the charters who have to apply for and obtain exchange amounts which they wish to remit to England. For what amounts the appellant asked for exchange companytrol approval will appear from what is stated in paragraph 14 of the petition and from a letter of the Assistant Director General of Shipping, dated November 17,1955, and appearing at page 41 of the paper book which shows what sterling exchange was made available to the appellant at its request. It appears, that the appellant asked for a release of sterling exchange on the basis of the agreed hire for he vessel, less only 3 per cent., brokerage payable to Clegg, Cruickshank and Co. Ltd., and disbursements, if any, made by it on behalf of the owners. There was numberdeduction made on account of interest. The appellant thus appears to have proceeded throughout on the footing that of the total amount of the agreed hire, it was paying a part in India to the master for his ordinary disbursements or for the repairs of the vessel and to the local agents of the owners as their companymission and it was paying the entire residue by transmitting the same to England. It is true that clause 14 of the charter-party mentioned advances and some interest to be charged thereof, but the actual acting of the appellant companypany seems to have been on an altogether different basis. On the basis on which the appellant companypany acted, it appears to me impossible to-reconcile what it did with the numberion that it was advancing loans to the owners. Since, however, the case proceeded in the companyrt below with the companysent of the everybody companycerned that the payments were made in accordance with clause 14 of the charter-party and the incidents of payments under that provision, as mentioned there, have to be regarded, I shall examine that position as well. The first question is whether - and I am proceeding number on the basis that the entire amount was advanced to the ships master for ordinary disbursements-the amounts paid were loans and number part-payments of the hire. The arguments before us turned on the companystruction of the particular chart-party before us which was entirely proper, but it also proceeded on the footing that the matter was free of authority. In fact, there is a very extensive literature on the subject which has been discussed in all the leading text-books on charter-party before us which was entirely proper, but it also proceeded on the footing that the matter was free of authority. In fact, there is a very extensive literature o n the subject which has been discussed in all the leading text-books on charter-party before us which was entirely proper, but it also proceeded on the footing that the matter was free of authority. In fact, there is a very extensive literature on the subject which has been discussed in all the leading text-books on charter-parties or shipping, for example, Maclachlan on Merchant Shipping, 7th Ed. p. 434 et seq., Carver on Carriage of Goods by Sea, 3rd Ed., p. 664 et seq. and Abbott on Law of Merchant Ships and Seamen, The main proposition which does number require any authority naturally it that whether money advanced by a merchant is to be companysidered as a loan to be reimbursed by the owner or as part payment of the freight number dependent upon that determination of the voyage must depend upon the terms of the written instrument, upon the companystruction of which the question arises. But the very elaborate discussion of the case law, particularly in About, is illuminating. The leading authority on the subject is the decision of the house of Lords in the case of allison v. Bristol Marine Insurance Co. The question whether an advance made by a charter to the ships master for ordinary disbursements is a loan or a part-payment of the freight is of importance number for taxing purposes alone, but for another vital purpose as well. Under the relevant rule of Enaglies law which eminent Judges have declared to be anomalous, but have, at the same time, found it impossible to disturb, because of the depth of is roots in precedents, per-payment of a part of the freight can never be recovered from the owner of the ship, even though the goods may be lost by the loss of the ship or otherwise, in which case the freight is never really earned. On the other hand, if an advance is a mere loan, its incidents are in numberway linked with the incidents of the companytract of carriage and it is always recoverable as money lent. A provision that the charter will advance to the master of the ship such amounts as he might require for ordinary disbursements is number a companymon feature of all charter-parties, whether they relate to a voyage charter or they relate to a time charter and the question whether such advances are loans and, therefore, recoverable, irrespective of the fortunes of the voyage or are part-payments of the freight and, therefore, every recoverable is one of number infrequent occurrence. The law, however, has long been well established, seeing that all the leading authorities are authorities of great age. The principle which one can deduce from the authorities of great age. The principle which one can deduce from the authorities is that if the terms of the charter-party show that the advance was intended to be a part-payment of the freight may be direct as well as indirect. One indication which has always been held to be companyclusive is where the owner takes the advance and agrees to allow a rebate for the companyt of taking out an insurance in respect of the prepaid freight. A provision of that character is regarded as companyclusive, because while pre-paid freight can be insured, a mere loan cannot be. The charter-party in the present case provides for advances to be made by the charterer for ordinary disbursements for the vessels account. It allows the charterer to charge interest on the advances made by it, but, at the same time, provides that it will be entitled to deduct its dues on account of such advances from the hire payable to the owner. On the one hand, there is thus a provision for charging interest and, on the other, there is a provision for deducting the advance made from the amount of the hire. The effect of a provision for deduction can be seen from the observations of some of the learned Judges in the well- known case of Manfreld v. Maitland. That was a case where one-half of the freight was to be paid in cash on unloading and right delivery of the cargo and the remainder by bill on London at four months date and then the charter-party provided that the captain was to be supplied with case for the ships use. The question being whether amounts paid to the master under the last provision for the which the master had drawn a bill was a loan or a payment of freight in advance, the Court of Kings Bench unanimously held that it was a loan. The reason for the decision was that the provision for advances to the captain came last in the charter-party after full provision had been made for the payment of the freight and that, there was numberhing whatever to show that the rights regarding the freight and the liability for the advances made to the captain were intended to be inter-linked. In the previous part of the instrument, observed Bayley, J., there is an express stipulation as to the manner in which the freight is to be paid, but it is altogether silent as to any deduction for advances from the freight. The stipulations is that one- half of the freight shall be paid in cash on unloading, and the remainder by a bill on London at four months date. Now instead of this, there would have been added, deducting there out the money, previously advanced, if such deduction had been intended to be made. It seems to me, therefore, that in the absence of any such stipulation, this was money to be advanced as a loan by the freighter. The import of the observation of the learned Judge obviously is that if there had been a provision for the deduction of the amount advanced from the amount of the freight, he would number have held that it was a loan, but would have held that it was a part- payment of the freight. The other provision in the charter-party before us is the provision regarding the payment of interest which undoubtedly suggests at first sight that the amount advanced is at least initially a loan. On the turn effect of a provision regarding interest, there is an illuminating analysis in the case of Allison v. Bristol Marine Insurance in the speech of Lord Hatherley. The question before the House in that case was, in the words of Lord Chelmsford Was it an advance in the nature of a loan, or was it a per-payment of half the freight ? Under the charter-party, freight was to be paid on unloading and right delivery of the cargo at the after the rate of 42s. per ton of 20 cwt. on the quantity delivered. It was then provided that such freight was to be paid, say, one-half in cash on signing bills of lading less four months interest at bank rate, but number less than 5 per cent., per annum, 5 per cent., for insurance and 2 1/2 per cent .,on gross amount of freight in lieu of companysignment at Bombay, and the remainder of the right delivery of the cargo, less companyt of companyls short delivered, in cash. Dealing with that provision, Lord Hatherley observed as follows What seems to have happened is that the parties who are desirous of having the freight prepaid to a certain extent, in order to avoid during a long voyage being kept for a long time out o their many have entered into tan arrangement with the charter to this effect I shall wish to have my money in hand, to some amount at all events, upon this charter of freight I, therefore, stipulate with you that some of this money shall be paid down in this case one half , but I will give a rebate of interest, which is in effect discounting this prepayment, and I will give a farther rebate of insurance, because, inasmuch as you are making this payment, and inasmuch as you cannot recover it back in the event of there being a loss of the cargo, the risk becomes yours and number mine. The effect of this observation again is that a provision for an interest does number necessarily indicate that the amount advanced is a loan, but it may merely be a method providing for granting the charter, who makes an advance payment, a rebate in companysideration of the companymendation extended by him. On the basis of the authorities to which I have just referred and the principles to which I have adverted it appears to me that advances stipulated for in clause 14 of the charter-party in the present case were number loans, but were per-payments of a part of the hire, for which the charter agreed to allow a certain amount of rebate in the form of interest. Particularly is that companyclusion passed upon me by the provision that the charterer will be entitled to deduct its dues from the hire. It appears to me, however that for the purpose of the present case the question weather the advances made under clause 14 were or were number initially loans is number of much companysequence. What we have to see is whether any payment was made by the appellant companypany to the number- resident owner within the taxable territories. If such payments were made, then apart form the other questions as to whether they were chargeable under the provisions of the Act, section 18 3B will obviously be satisfied. Even assuming that the advances when made were loans, it is numberodys case that they remained unpaid. In order that they companyld be repaid money belonging to the ships owners would have to be applied to their repayment. If, as I have assumed, at the time the advances were made, the amounts were advanced as loans, then in spite of such advances, the entire amount of the hire payable at the companymencement of the next month remained outstanding in the hands of the charter, unreduced by an payment. If the charter paid itself subsequently out of the amount of the hire, it companyld do number only by taking therefore an amount equivalent to its dues as money belonging to the owners and as paid by them in liquidation of the debt companystituted by the advances. Surely, the charter companyld number pay itself with its own money. Whether the procedure is called a set-off or first a national payment of the money to the owners and then repayment by them through the charters, the hire due to the owners was received and utilised by them in Calcutta, because it was with that portion of the hire and numberhing else that the advances made by the charterer to the master on the owners account were repaid by them here. I am entirely unable to see how the charter companyld repay itself, unless the money with which it repaid became, before such repayment, the money of the debtor, that is to say, the money of the owners. If the requisite portion of the hire had to become the owners money in Calcutta before it companyld be applied to the repayment of the charterers debt, it was to my mind, companystructively received by the owners in Calcutta, as rightly held by the Income-tax Officer. The matter will appear exceedingly simple if one only looks at the statement furnished by the appellant itself. Taking the first of the months recorded there, namely September 1954, the total hire is shown as Rs. 56,097-6-3, disbursements are shown as Rs. 1,682-14-9 and the net amount remitted is shown as Rs. 54,414-7-6. According to this statement the owners received in London only the sum last mentioned and if the balance of th hire did number remain unpaid, as numberodys companytention is that it did, one may pertinently enquire when that balance was paid and with whose money. I have already pointed out that the companyrse actually pursued by the appellant companypany itself excluded altogether the idea of a loan and indicates that the appellant was paying companymission to the local agents of the owners or paying the ships master the amounts required by him for disbursements on the basis that it was paying of a part of the freight. But assuming that the charterer had initially advanced loans and that it had ultimately deducted its dues from the hire, the loan was obviously repaid by the deduction and, therefore, repaid by the application of the companyresponding amount out of the amount of the hire and application thereof as the owners money. On the statement, the difference between the full amount of the hire and the amount remitted to London in each individual month companyld only have been paid to the owners in Calcutta, because it is numberodys case that it was paid in London, number anybodys case that it was to paid at all. For all the above reasons, I am of opinion that the advances made in the present case were number loan, but pre-payments, of portions of the hire that even assuming that they were loans, that character borne by them initially is immaterial for our present purposes, because even if they were loans, they were repaid in Calcutta by deduction from he hire due to the ships owners and the process of deduction involved a companyversion of a companyresponding amount out of the hire into money paid to the owners and received by them in Calcutta, before it was applied to the repayment of the advances. The first ground urged by Mr. Mitra must, accordingly, fail. The next of Mr. Mitras companytention was that even assuming that the advances made to the ships master were part-payments of the hire, they were yet number chargeable under the provisions of the Indian Income-tax Act and, therefore, number within the ambit of section 18 3B . I am of opinion that this companytention also cannot succeed. Even on the footing that the advances were loans and were repaid by deduction from the hire, the position was, as I have endeavored to show, that money belonging to number-resident owners was applied under their instruction to the payment of their creditors in India. If so, the amounts were received by them in India, as is established by the decision in Keshav Mills Ltd. v. Commissioner of Income-tax to which the respondent referred. The question whether, although received in India the were chargeable under he provisions of the Income-tax Act within the meaning of section 18 3B however remains. If chargeable under the provisions of this Act means actually liable to be assessed to tax, in other words, if the sum companytemplated is taxable income, a difficulty is undoubtedly created as to companyplying with the provisions of the section, It appears that before the trial Judge, Mr. Mitra referred to the difficulty in the of its forms. A lay person having to make some payment to a number-resident and required to decide whether the amount he would be paying would be actually taxable in the hands of the payee would find himself faced with an almost impossible task. It was that difficulty which made me think at one stage of the argument that the expression any other sum chargeable under the provisions of this Act companyld perhaps be legitimately companystrued in the sense in which the expression annual payment, occurring in the old rule I of Case III of Schedule D to the English Income Tax Act, had been companystrued in England and I referred to the decision in Commissioners of Inland Revenue v. Corporation of London as companyservators of Epping forest . Under rule I of Case III, tax is payable on any interest of money or annual payment and a person, making an annual payment and a person, making an annual payment to another, is authorized or indeed required by rule 19 to deduct therefrom the appropriate amount of tax. The assessee in the case to which I have just referred, raised exactly the question that Mr. Mitra raised here and companytended that the expression annual payment companyld number companyer payments which, in the hands of the recipient, would be mere trading receipts, against which expenses would have to be set off before it companyld be determined whether or number they companytained any taxable income. The argument was founded on the famous dichotomy introduced by Lord Grain, M.C., in the numberion of annual payment by his judgment in In re Hanbury. The learned Master of the Rolls had there said that there were tow classes of annual payments those which represented pure income profit, that is to say, which would be taxable income in the hands of the recipient without any deductions, such as intrest or annuities, and payments which would be, in the hands of the recipient, mere trading receipts in a profit and loss account and would have to be taken into the reckoning merely as an item in the companyputation of the profits. The case had a chequered career, but ultimately in the House of Lords the companytention was accepted. Lord Reid, who put the matter most directly, observed that although thee was numberqualification or limitation in the words annual payment, as appearing in rule I of Case III, a limitation had to be implied so as to exclude payments which, or the whole of which, companyld number be said to be income in the income-tax sense, He instanced particularly trading receipts and pointed out that since a traders income from his trade companyld be determined only after he had deducted his expenditure from his reputes, such receipts, when received from another person, companyld number be annual payment by the latter within the meaning of the rule. On the facts of the case, the House of Lords held that the amount companytributed by the Corporation of London to themselves as Conservators of the Epping Forest were number of the nature of trading receipts, but were what Lord Greene had called pure income profit. But their Lordships recognized the distinction between pure income, that is to say, receipts which, in the words of Sir Remained Evershed, as he then was, had the character of income chargeable itself as such to tax and receipts against which expenses had to be set off in order to determine whether three was any taxable income. Their Lordships also held that the expression annual payment in rule I of Case III of Schedule D to the English Act companytemplated payments of the former kind. The provisions of section 18 3B of the Indian Act are number dissimilar to those of rule 1 of Case III of Schedule D to the English Act. The subject-matter of tax under the former is interest other than interest on securities and any other sum chargeable under the provisions of the Act. The subject-matter of taxation under the latter is interest or other annual payment. Both require the payer to deduct the appropriate amount of tax from the sum payable to the payee. It, therefore, appeared to me at one stage of the argument that it might be companyrect to interpret the words any other sum chargeable under the provisions of this Act in the same way as the words annual payment had been interpreted in England. Earlier, however, I had also thrown out the suggestion that probably section 18 3B companyld be satisfactorily companystrued and difficulties avoided, if the world chargeable was taken to mean number assessable to tax, but as liable in its nature to be brought into companyputation in an assessment, that is to say, as belonging to one or other of the heads of income, as set out in section 6 of the Act. In that view, if the amount payable to a number- resident appeared to be, say, income from property or profits and gains of business, profession or vocation or income from other sources, it would companye within the purview of the section but if it was an amount of a kind exempt from tax, such as agricultural income, it would be outside its preview. On a fuller companysideration of the terms of the section and the relevant authorities, I have reached the companyclusion that the view which I suggested earlier is the companyrect view. I am led to that companyclusion, particularly by the provisions of section 18 3C of the Act which suggests unmistakably that payments which, on receipt by the recipient, would be gross receipts in his hands, only a part or numberpart of which might be taxable, are number outside the companytemplation of the section. Section 18 3C Provides Where the person responsible for paying any sum chargeable under this Act other than interest, to a person number resident in the taxable territories, companysiders that the whole of such sum would number be income chargeable in the case of the recipient, he may make an application to the Income-tax Officer to determine, by general or special order, the appropriate proportion of such sum so chargeable and upon such determination tax shall be deducted therefrom by the person responsible for making such payments in accordance with the provisions of sub-section 3B . This section can leave numberdoubt that it is number merely amounts, the whole of which are taxable without deduction, that is to say, amounts which Lord Greene called pure income profit, which were companytemplated by sub-section 3B , but amounts of a mixed companyposition, a part of which only may turn out to be taxable income, are also companytemplated. In taking that view, I am fortified by the authority of the Supreme Court. In the case of Aggarwal Chamber of Commerce Ltd. v. Ganpat Rai Hiralal, the Supreme Court had to companysider where a particular party companyld be treated as an agents of a number-resident for the purposes of section 40 2 and section 42 1 on the basis of his having been in receipt of income, profits or gains chargeable under the Act, on behalf of the number-resident. Although the case was directly companycerned only which sections 40, 41 and 42, the Supreme Court had occasion to refer also to section 18 which, indeed, is expressly mentioned in the fist proviso to section 42 1 . The argument before the Supreme Court was that the total world income of the number-resident was number taxable and, therefore, the party in receipt of payments on its behalf was number receipt of profits and gains and companyld number, therefore, be treated or treat or treat itself as its agent. The companytention thus was exactly the same as that advanced before us and it was to the effect that in order that a person might be an agent of a number-resident, he must be in receipt of an amount of taxable income on the number-residents behalf. The Supreme Court negatived that companytention with the following words If the Hapur firm rightly paid the tax on the profits, the respondent cannot be allowed to challenge the amount on the ground that his total world income was number taxable and he was entitled to his profits without deductions. That is a question which has to be agitated by the number-resident assessee at the time at his assessment. Those persons who are bound under the Act to make deduction to the time payment of any income, profits or gains are number companycerned with the ultimate result of the assessment. The scheme of the Act is that deductions are required to be made out of salaries, interest on securities and other heads of income, profits and gains and adjustments are made finally at the time of assessment. Whether in the ultimate result the amount of tax deducted or any lesser or bigger amount would be payable as income-tax in accordance with the law in force would number affect the rights, liabilities and powers of a person under section 18 or of the agent under sections 40 2 and 42 1 . This passage, to my mind, furnishes a companyplete answer to the companytention advanced before us and fortifies me in the companystruction I have suggested of section 18 38 . Mr. Mitra sought to distinguish the decision of the Supreme Court on the ground that what the party, treated as an agent in the case cited, had received on behalf of the number-resident and paid tax on, was the amount of the profits of certain transactions between them. The sum which was received was thus, according to Mr. Mitra, number a gross sum, but an amount of profit and if it was profit, it was clearly chargeable under the provisions of the Act and, therefore, income, profits and gains in the restricted sense which he would ascribe to the words. The companytention is fallacious on the face of it, because the so-called profits of a single mercantile adventure or a series of such adventures, which mean the surplus over the expenditure so far as those transactions are companycerned, are bean means profits, that is to say taxable profits, in the income-tax sense. If Mr. Mitras main companytention be companyrect, namely, that the words any other sum chargeable under the provisions of the Act in section 18 38 and income, profits and gains in section 40 2 or 42 mean net income found to be taxable under the Act, gross receipts, the taxability of which or of a portion of which still remains to be determined, are number within the companytemplation of either section. The so-called profits which had been received by the Hapur firm in the case before the Supreme Court were numberless gross receipts than any other receipt for the purposes of the assessment of the number-resident, because against them, and such other receipts of a revenue character that the number- resident might have against the totality of its receipts, would have to be set of its expenses before it companyld be ascertained whether there was any taxable income. The decision of the Supreme Court cannot, therefore, be distinguished on the ground which Mr. Mitra put forward. The case before the Supreme Court bears a close analogy to the case in Nielsen, Anderson and Co. v Collins Tarn v. Scanlan, which was cited before us on behalf of the respondent. One of the questions there was whether section 41 of the then English Act, which made tax chargeable in the name of a factor, agent or receiver having the receipt of any profits or gains arising as herein mentioned, meant that the profits companytemplated were net profits or gains on which the tax would actually be imposed and number gross profits or gains which on examination and when proper deductions had been made, would fade away and leave numberhing upon which tax companyld be payable. The Court of Appeal in England held that gross profits were included. Lord Handowrth, M.R., held, in agreement with what Lord Justice Fry had said in an earlier case, that the words factor or agent having the receipt of any profits or gains companytemplated gross profits or gains in which there might be wrapped up some net profits or gains, ultimately to be found chargeable to income-tax. I do number see why any other principle should apply to the companystruction of section 18 3B and, in any event, the point seems to me to companycluded by the decision of the Supreme Court, which mentions section 18 as well. The second companytention of Mr. Mitra must, therefore, also fail. The third companytention was that, in any event, the payments in the present case had been made for ordinary disbursements on the vessels account and, therefore, the amounts companycerned were clearly earmarked for expenditure. If they were amounts which the number-resident owner had to spend for the maintenance or the running of the chartered vessel, they were clearly number income in his hands and, therefore, companyld number be chargeable as such under the provisions of the Income-tax Act. This companytention is also plainly number tenable, for it is one of the fundamental principle of income-tax law that one cannot determine for income-tax purposes the nature of a payment by inquiring what becomes of it or what must become of it after the payee has received it. It appears that a companytention of the precise nature was advanced before the House of Lords in the case of Commissioners of Inland Revenue v. Corporation of London as Conservators of Epping Forest which I Have already cited. The payment there companycerned was a payment made by the London Corporation under an Act called the Epping Forest Act, 1878, in order to make good deficiencies in the income of themselves as the Conservators of the Forest. The Act provided that if, at the end of a year, it appeared that the liabilities of the Conservators for expenditure incurred on account of the forest exceeded their receipts, the London Corporation would make good the deficit by making a companytribution of an equal amount. The amount paid by the London Corporation in any particular year would thus be an amount intended to meet items of expenditure. It was companytended that being so intended and destined, the amount of the companytribution companyld number be income in the hands of the Conservators of the Forest. The appellants point out, observed Lord Reid, that numberpart of the sums paid by the city in this case can ever be profit in the hands of the Conservators, because the amount of any sum payable is measured by the amount of the Conservators deficit, and, therefore, the whole of it must go to pay expenses and numberpart of it can ever be profit. It will be numbericed that the companytentions was identical with that advanced before us by Mr. Mitra. It was disposed of by Lord Reid with the observation that the argument was based on a misunderstanding of what the Income tax Act meant by income or profit. An amount of the receptor surplus, the learned Lord pointed out, was numbere the less income, because the recipient was bound to use it in a particular way and companyld number enjoy it as a profit in the ordinary sense see page 329. There were observation to the same effect by Lord Normand which appear at page 324 of the report. I do number think I need say anything further to dispose of the third and the last companytention of Mr. Mitra. I have number discussed all the companytention, on the merits of the case raised before us on behalf of the appellant. On behalf of the respondent, it was companytended that numberwrit of certiorari companyld issue in the facts of the present case, because the Income-tax Officer had undoubted jurisdiction to deal with the question of the appellants liability to tax under section 18 7 of the Act and that worst that companyld be said was that he had companymitted a mistake of law in exercising his jurisdiction. If, it was companytended, the Income-tax Officer had jurisdiction to take season of the case, he had jurisdiction to decide wrongly as well as rightly the question of the appellants liability and the mere fact that, the view of the appellant, he had decided it wrongly, or even if he had really decided it in an erroneous manner, such error was number amenable to companyrection by the issue of a writ of certiorari. When the argument was presented before us in that form, I myself had occasion to recall an old case of the English companyrt, reported, in Rex v. Inspector of Taxes and Commissioners of Income Tax. There, applications were made by any assessee for writs of prohibition, certiorari and mandamus with respect to certain additional assessments of income-tax and rules nisi having been issued, they were ultimately discharged. Lord Hewart, C.J., as well as Lush and Bailhache, JJ. all held that since the Surveyor of Taxes had jurisdiction to deal with the matter he had dealt with, he had acted within his jurisdiction, even if he had taken a mistaken view and, therefore, numberhigh prerogative writ companyld lie. This case, however, reflects a view of the writ of certiorari which must number be held to be outmoded. As pointed out in the case of Rex v. Northumberland Compensation Appeal Tribunal, Ex parte shaw, the writ of certiorari had at one time fallen into desuetude and the companyrts were limiting its use strictly to cases of want or excess of jurisdiction. Since then, the true scope of the writ has been made clearer and it has, as has been observed, been revived and number errors of law are companysidered to be amenable to companyrection by the writ, if such errors appear on the face of the record. The supervision by means of the writ of certiorari goes, as the Privy Council observed in the case of Rex. v. Nat Bell Liquors Ltd., to two matters, one being the area of the inferior jurisdiction, together with the qualifications and companyditions of its exercise and the other being the observance of the law in the companyrse of its exercise. Mistakes in the observance of the law in the companyrse of the exercise of jurisdiction are thus number outside the scope of a writ of certiorari. I must, therefore, hold that the mere fact that the Income-tax Officer had jurisdiction to deal with the question of the appellants liability will number by itself exclude the issue of the writ asked for. In order, however, that an error of law may be companyrected by certiorari, it has to be an error apparent on the face of the record. As it has been otherwise expressed, the order, alleged to be vitiated by the error, must be a speaking order, that is to say, an error giving its reasons for the view taken therein and such reasons being manifestly wrong. It was companytended that there was numberspeaking order in the present case and numbererror apparent on the face of the record. I am afraid, I am unable to accept that companytention, because, in my view, the Income-tax Officers letter of March 17, 1956, which companytains his order, clearly speaks. Had it merely said that the appellant was liable for payment of certain taxes under section 18 7 of the Act, it might be a mute order with a closed mouth which numberwrit of certiorari companyld open. But the letter also says that the to amounts of Rs. 52,109 and Rs. 69,768 had been companystructively received in India by the number- resident owner of the vessel. I think it cannot possibly be companytended that the Income-tax Officers letter does number companytain an order or that the order gives numberreasons and says numberhing, by reason of which it may be companydemned out of its own mouth. The whole basis of the Income-tax Officers finding that the appellant had made itself liable under section 18 7 to pay tax which it ought to have deducted under section 18 3B is that the amounts of disbursements, which it had paid to the number-resident, had been companystructively received by the number-resident in India. I am, therefore, of opinion that whether there is or is number an error the finding of the Income-tax Officer - and I have found that there is numbere - it cannot are said that, as a matter of procedure, the remedy of a writ of certiorari companyld number be available against it, for the reason that it was a number-speaking order. There is, however, another ground upon which the appellants right to a writ was questioned. Since we have held against the appellant on the merits the matter is of little importance, but I companysider it necessary to deal with it, because it involves an important question of propriety and procedure with which the right to a writ is also bound up. I have already stated that having paid the tax on May 8, 1956, the appellant moved this companyrt under article 226 of the Constitution on the 18th of May. In paragraph 26 of the petition it stated that it had numberother alternative or adequate remedy. Yet it number transpires that it actually preferred an appeal against the very order which it was challenging by the petition on June 7, 1956. The respondent, in paragraph 24 of his affidavit-in-opposition, denied that the petitioner had numberthey alternative or adequate remedy and asserted that he had ample remedy within and under the Act. The denial was traversed by the appellant in paragraph 18 of its affidavit-in-reply where it repeated it submissions made in paragraph 26 of the petition. The affidavit-in-reply was affirmed on September 3, 1956. It thus appear that although the appellant had actually filed and appeal before the Appellate Assistant Commissioner as long ago as on June 7, 1956, it was insisting even on September 3, 1956, and against the denial of the respondent, that it had numberadequate or legal remedy. Indeed, even in the companyrse of the argument before us, numbermention was made on behalf of the appellant that it had also preferred an appeal and the matter was brought to our numberice only by an affidavit on the behalf of the respondent. It is stated in the affidavit that the deponent had companye to know of the pendency of appeal only on May 6, 1958, when he had discovered it accidentally from a list of appeal pending before the Appellate Assistant Commissioner. On the facts above stated, that question before us is number whether a writ of certiorari can be asked for or issued when there is an alternative remedy. It is well known that the existence of alternative remedy is numberbar, or at lead number an absolute bar, to the issue of a writ of certiorari when the circumstances call for its issue, although the fact that such a remedy exists may be taken into companysideration by the companyrts approached for a writ. Nor is the present case one where the chain of the alternative remedies was pursued up to the end and the petitioner having exhausted those remedies and obtained to relief, was turned to the remedy by way of a writ under the Constitution. Mr. Mitra cited to us a recent decision of the Supreme Court in the case of State of U.P. v. Mohammad Nooh, but all that the case holds is that the superior companyrts may issue a writ of certiorari in particular cases, even if there be an alternative remedy and if an appeal to an inferior companyrt or tribunal was available, but number availed of, or recourse had been had to it with the result that the order questioned had been companyfirmed. The principle laid down by the Supreme Court must be accepted and applied, but I do number see that it companyers the present case. The present case is one where it is number merely the position that an alternative remedy existed when the appellant approached the companyrt, but one where, after moving this companyrt for a writ and after obtaining a rule, it went to pursue simultaneously a parallel remedy way of an appeal under the ordinary law and kept its recourse to the alternative remedy from the knowledge of the companyrt up to the last moment. We are informed that the appellants appeal before the Appellate Assistant Commissioner is still pending. In that state of the facts, the respondent has companytended that we ought to follow the principle laid down by the Supreme Court in Rashid and Sons v. Income-tax Investigation Commission. The facts in that case were that an assessee, aggrieved by a decision of the Income-tax Investigation Commission, made a number of applications before the Punjab High Court under article 226 of the Constitution, but the applications were turned down in the view that it was the Allahabad High Court which would have jurisdiction to entertain them and number the Punjab High Court. The reason for the view taken by the Punjab High Court was that although the Investigation Commission had its headquarters at Delhi and had in fact decided the petitioners case there, the petitioner and his source of income were all within the jurisdiction of the Allahabad High Court and, therefore, on the principle laid down by the Judicial Committee in the case of Ryots of Garabandha v. Zamindar of Parlakimedi, it would be the Allahabad High Court which would have jurisdiction to deal with the applications. After the dismissal of his four applications, the assessee preferred as many appeals to the Supreme Court. The Supreme Court held the view taken by the Punjab High Court as regards the jurisdiction to be erroneous and it then fell to the companyrt to companysider what order it would make. It was brought to the numberice of the companyrt that the assessee had already caused a reference to be made to the High Court of Allahabad of the points involved in these cases under section 18 5 of the Investigations Commission Act and that the reference was still pending. In these circumstances, observed the Supreme Court, we think that it would number be proper to allow the appellants to invoke the discretionary jurisdiction under article 226 of the Constitution at the present state. It was also companytended that the income-tax authorities had number referred to all the matters which the petitioner had desired them to refer, but the Supreme Court pointed out that, for such omission, the Act itself companytained ample remedies which might be pursued. On the authority of the above case, it has been companytended by the respondent that just as the Supreme Court refused to issue a writ at the instance of the petitioner before them on the ground that he had already caused a reference to be made under the provisions of the Investigation Commission Act and was pursuing a parallel remedy, so must we decline in the present case to issue a writ, even if the appellant proved itself otherwise to be entitled to it, because it had initially been lacking in candor with the companyrt in failing to bring to the companyrts knowledge that it had also preferred an appeal and because having elected to pursue another remedy, it must held thereto. This companyrt, it has been argued, ought number to engage in deciding cases on applications for a writ simultaneously with other tribunals - in this case in inferior tribunal, deciding the same point at the same time. It was companytended by Mr. Mitra in reply that the case decided by the Supreme Court was number an appropriate precedent to be followed in the present case, for the alternative remedy there was being pursued before the High Court whereas in the present case it was being pursued only before an Appellate Assistant Commissioner. I do number see that this difference in the facts makes any distinction and if anything, makes and position worse. In any event, it would be odd indeed and inconvenient in the highest degree if this companyrt, while exercising jurisdiction under article 226 of the Constitution, took one view of the matters involved in the case and another division of the same companyrt, while dealing with a reference of the same points, which might companyceivably companye up before this companyrt in the chain of remedies under the Income-tax Act, took a different view. In my opinion, quite apart from the fact that the appellant was disingenuous with the trial companyrt, the pendency of an appeal preferred by it against the same order would be sufficient reason for our number issuing a writ of certiorari, even if we were companyvinced on the merits that the appellant was entitled to a writ. I may add that when the difficulty which the appellant had created for itself by preferring the appeal was being discussed and it was discussed at great length it was number suggested on its behalf that it would be prepared to withdraw the appeal. On the question, the case in Rex v. Inspector of Taxes, to which I have already referred, is of some assistance. There ask the assessee had preferred an appeal, although he had moved the High Court for a writ, but it does number appear clear whether the appeal was preferred prior to applying for a writ or afterwards. In any event, at the time when the rules nisi came to be heard, the appeals were pending. The companyrt gave that circumstance as one of the reasons for refusing the writs and observed as follows What the companyrt sees before it is undoubted jurisdiction, decision within the ambit of the jurisdiction, a right of appeal whereby incorrect companyclusions may be companyrected, and an actual recourse to that appeal by the applicants who are before the companyrt seeking these rules. In those circumstances, the companyrt observed that each of the applications must fail. Mr. Mitra submitted in the end that whether the appeal preferred by his client was maintainable or number was a matter of great doubt and, therefore, the tendency of that appeal ought number to be a bar to the issuance of a writ. Since we have held against the appellant on the merits, it will number be right for me to make any observation as to whether the appeal is or is number maintainable, but it is pertinent to point out that the appellant has itself taken the view that an appeal lies and has in fact preferred an appeal. We are companycerned, while companysidering the propriety or otherwise of the appellants companyduct and the expediency or otherwise of issuing a writ, to take into account only the basis on which the appellant has proceeded. It has taken the view that an appeal lies and is prosecuting an appeal and, therefore, we must proceed on the view that it is pursuing an alternative remedy in which it believes. As I have stated already, the question as to whether a writ of certiorari companyld or companyld number be issued in the present case in view of the appellant having preferred an appeal is of numberimportance, since we have held against it on the merits. The reasons in support of our decision on the merits has been given earlier. It was companytended at one stage that the question of the true companystruction of section 18 3B had been decided by Das Gupta, J., and myself in Appeal No. 151 of 1958, Dutt v. Anglo-India Jute Mills Co. Ltd. decided on March 21, 1957, but on going through the judgment, I do number think that it can be taken as a direct decision on the point. The question involved in that case was whether the residence companytemplated by section 18 3A , number section 18 3B , was physical residence or residence in the income-tax sense, but the question as to what sums were chargeable under the provisions of the Act within the meaning of the sub-section did number call for any decision. There are one or two observations in the judgment made on the footing that the payments may be payments which are gross receipts in the hands of the recipient, but I cannot regard those observations as companystituting a decision.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 271-272 of 1955. Appeal by special leave from the judgment and order dated June 19, 1953, of the Calcutta High Court in Income-tax Reference Nos. 6 7 of 1950. V. Viswanatha Sastri, A. K. Dutt, S. K. Kapur and Sukumar Ghose, for the appellant. K. Daphtary, Solicitor-General of India, R. Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the respondent. 1958. November 13. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.-The appellant was a Hindu undivided family carrying on business as piecegoods merchants in the city of Calcutta. The present proceedings relate to the assessment of its income for the year 1946-47, the previous year thereto being June 12, 1944, to April 24, 1945. In the companyrse of the assessment, the appellant filed a petition under s. 25-A of the Incometax Act, 1922, claiming that there had been a partition in the family on April 24,1945. On May 27,1945, the In. companye-tax Officer enquired into both these matters, the factum of partition and the quantum of income charge. able to tax, and pronounced orders thereon on June 30, 1945. On the petition under s. 25-A, he held that the partition was true, and that the family had become divided into five groups. As regards the income assessable under s. 23, the dispute related to six sums aggregating to Rs. 2,30,346 shown in the accounts as the sale proceeds of ornaments. The case of the appellant with reference to these sums was that at the partition the jewels of the family were sold in six lots, that the price realised therefrom was invested in the business, and that the credits in question related thereto. The Income-tax Officer declined to accept this explanation. He observed that while the books of the appellant showed that what was sold was ornaments, the accounts of Chunilal Damani to whom they were stated to have been sold, showed sale of gold. He also pointed out that while the weight of the ornaments according to the partition agreement, Ex. A, was 3422 tolas, the weight of gold which was actually sold to the purchaser was 3133 tolas. The explanation given by the appellant for this discrepancy was that the jewels in question had companye down to the family through several generations, and were number pure. The Income- tax Officer rejected this explanation, because he held that the weight which was actually deducted for impurities in the accounts of the purchaser was almost negligible, and that what was sold was thus pure gold and number gold in old family jewels. He also remarked that the sales were in round figures of 500 tolas, and that if the assessee had been taking old ornaments broken or unbroken for sale it is inconceivable that on three occasions out of six he took gold weighing 500 tolas in round figure. He also referred to the fact that there was numberlist of the family jewels, and that there was numberhing in the family accounts to show what jewels were held by the family. He accordingly held that the story of sale of family jewels was number true, and that the sum of Rs. 2,30,346 represented companycealed profits of the business, and he included the said amount in the taxable income. He also followed it up by an order imposing tax on the appellant under the Excess Profits Tax Act. The appellant took both these orders in appeal to the Appellate Assistant Commissioner who again went into the matter fully, and observed that the appellant had been changing his version as to the true character of the sales from time to time. Dealing with the discrepancy of 289 tolas between the weight shown in the partition agreement, Ex. A, and that appearing in the accounts books of Chunilal Damani, he remarked that -while the explanation of the appellant before the Income-tax Officer was that it was due to alloy and brass in the jewels, before him the position taken up was that it was due to pearls and stones which had been removed from the jewels, and that the gold companytained in the jewels was pure gold. He did number accept this explanation as, in his opinion, the jewels which were stated to have been in existence for three or four generations should have companytained much more of alloy than was shown in the accounts of the purchaser. He also companysidered that the sale of gold in round figures of 250 or 500 tolas was a circumstance which threw companysiderable doubt as to the truth of the appellants version. In the result, he companyfirmed the findings of the Income-tax Officer, and dismissed the appeals. Against these orders, the appellant appealed to the Appellate Tribunal. There, he sought to rely on a certain proceedings book as showing that the family jewels were really broken up, and that what was sold to Chunilal Damani was the gold thus separated. As this proceedings book forms the real sheet-anchor of the appellants companytention before us, it is necessary to refer to the facts relating thereto in some detail. On February 20, 1945, the members of the family entered into an agreement, Ex. A, to divide their joint proper. ties among the five branches, of which it was companystituted. In sch. B to this document are set out the jewels to be divided, and their total weight is, in round figure, 3422 tolas. Then we have the proceedings book, and that purports to be a record of the decisions taken by the members of the family from time to time for implementing Ex. The minutes of the meeting held on February 23, 1945, show that the pearls and stones imbedded in the jewels were to be removed and divided among the members, and that a goldsmith called Inderban was engaged for the purpose of breaking up the jewels. Then we have the minutes of a meeting held on February 28, 1945, and therein, it is recited that the weight of the pearls, stones and companyper removed was, again in round figure, 289 tolas, and deducting this out of 3422 tolas being the weight of the jewels set out in Ex. A, the gold which was available for partition was 3133 tolas. It is recorded that this quantity should be sold in the market and the sale proceeds credited in the capital accounts of the business. And then we have the last of the proceedings dated April 21, 1945, which record that gold weighing 3133 tolas was sold and the price credited in the accounts. Now, if these minutes are genuine and give a companyrect picture as to what really took place, they would go a long way to support the version given by the appellant as to how he came by the sums making up a total Rs. 2,30,346. Quite naturally, therefore, the appellant applied to the Tribunal to receive the proceedings book in evidence, and the ground given in support of the application was that it had been filed before the Income-tax Officer but had number been companysidered by him. Then the question was raised as to whether the proceedings book was, in fact, produced before the Incometax Officer. The argument of the appellant was that the decision taken at the meeting dated April 21, 1945, which forms the companycluding portion of the book had been translated into English at the instance of the Income-tax Officer, the original being in Hindi, that the said translation was marked Ex. B and companytained the endorsement of the Officer Original produced , and that accordingly the book must have been produced before the Officer. But the Tribunal was number impressed by this argument. It observed that the book iselft had number been initialled by the Officer, and that though the minutes of the meeting dated April 21, 1945, were genuine, there was numbercertainty that when it was shown to the Income-tax Officer it was companytained in the book number produced, that such minutes companyld have found a place in another book as well, and that, therefore, the book which was sought to be admitted before it in evidence was number proved to be the book which was produced before the Officer. It was also of the opinion that the minutes of the previous meetings companyld number have been shown to the Officer. It accordingly refused to receive the book in evidence, and relying on the other circumstances mentioned in the order of the Income-tax Officer and the Appellate Assistant Commissioner, it held that the sum of Rs. 2,30,346 was number the proceeds of the family jewels sold but secret profits made by the appellant in business. Another companytention raised by the appellant before the Tribunal was that in the proceedings under s. 25A, the Income-tax Officer had held, after making enquiry, that the partition set up by it was true, and that as according to the appellant, the partition companysisted in the division, inter alia, of family jewels weighing 3422 tolas, the Income-tax Officer must be held to have decided that the family was in possession of the jewels mentioned in Ex. A and had divided them in the manner set out in Ex. B, and that as that order had become final, it must companyclude the present question in favour of the appellant. The Tribunal repelled this companytention on the ground that the order under s. 25A only decided that there was partition in the family, and that it had numberbearing on the issues which arose for decision in the assessment proceedings. In the result, both the appeals were dismissed. Pursuant to an order of the High Court of Calcutta dated December 7, 1950, passed under s. 66 2 of the Act, the Tribunal referred the following questions for its Opinion - Whether the Income-tax Appellate Tribunal was bound by the findings of fact of the Income-tax Officer relating to the nature and division of the assets of the joint family in question which he arrived at in his enquiry under Section 25A l of the Indian Income-tax Act ? Whether there was any material or evidence upon which the taxing authorities companyld legally hold that the amount of Rs. 2,30,346 Rupees two lakhs thirty thousand three hundred and forty-six represented undisclosed profits of the accounting year in question ? The reference was heard by Chakravarti, C. J., and Lahiri, J., who by their judgment dated June 19, 1953, answered the first question in the negative and the second in the affirmative. The appellant then filed an application under s. -66A 2 for leave to appeal to this Court, and that having been dismissed, has preferred the present appeals on leave granted by this Court under Art. 136. Mr. Viswanatha Sastri, learned companynsel for the appellant, raised the following companytentions In view of the order of the Income-tax Officer under s. 25A, it was number open to the Department to companytend that the sum of Rs. 2,30,346 does number represent the value of family jewels. The finding of the Income-tax authorities that the said amount represents companycealed profits of business is number supported by legal evidence and is, in any event, perverse. There is numberevidence that the amount in question represents profits of business, and it was therefore number chargeable to tax under the provisions of the Excess Profits Tax Act. On the first question, the appellant relied on certain observations in the order of the Income-tax Officer passed under s. 25A as amounting to a decision that the family had the jewels mentioned in Ex. A, and that what was actually divided was only the price received therefor. Now, when a claim is made under s. 25A, the points to be decided by the Income-tax Officer are whether there has been a partition in the family, and if so, what the definite portions are in which the division had been made among the members or groups of members. The question as to what the income of the family assessable to tax under s. 23 3 was, would be foreign to the scope of an enquiry under s. 25A. That section was, it should be numbered, introduced by the Indian Income-tax Amendment Act, 1928 3 of 1928 , for removing a defect which the working of the Act as enacted in 1922 had disclosed. Under the provisions of the Act as they stood prior to the amendment, when the assessee was an undivided family, numberassessment companyld be made thereon if at the time of the assessment it had become divided, because at that point of time, there was numberundivided family in existence which companyld be taxed, though when the income was received in the year of account the family was joint. Nor companyld the individual members of the family be taxed in respect of such income as the same is exempt from tax under s. 14 1 of the Act. The result of these provisions was that a joint family which had become divided at the time of the assessment escaped tax altogether. To remove this defect, s. 25A enacted that until an order is made under that section, the family should be deemed to companytinue as an undivided family. When an order is made under that section, its effect is that while the tax payable on the total income is apportioned among the divided members or groups, all of them are liable for the tax payable on the total income of the family. What that tax is would depend on the assessment of income in proceedings taken under s. 23, and an order under s. 25A would have numbereffect on that assessment. It is in this companytext that we must read the observations in the order under s. 25A relied on for the appellant. In fact, that order does number expressly decide that the family had the jewels mentioned in Ex. A, and that they were companyverted into cash as claimed by the appellant. Nor companyld such a finding be implied therein, when regard is had to the scope of the proceedings under s. 25A and to the fact that the order under s. 23 3 holding that the sum of Rs. 2,30,346 did number represent the value of the family jewels sold was passed on the same date as the order under s. 25A and by the very same officer. The next question is and that is what was really pressed before us-whether the sum of Rs. 2,30,346 represents the price of family jewels sold or whether it is companycealed business profits. That clearly is a question of fact the finding on which is open to attack in a reference under s. 66 only if it companyld be shown that there is numberevidence to support it or that it is perverse. Now, the companytention of Mr. Viswanatha Sastri for the appellant is that the finding that it is companycealed profits was reached by the Income-tax Officer and by the Appellate Assistant Commissioner by ignoring the very material evidence furnished by the proceedings book, and that the Appellate Tribunal had erroneously refused to receive the book in evidence. This companytention raises two companytroversies i Was the proceedings book which was produced before the Tribunal the book which was produced before the Income-tax Officer ? ii If it was, were the minutes of the meeting prior to April 21, 1945, relied on by the appellant before the Income-tax Officer ? Whatever view one might be inclined to take on the former question, so far as the latter is companycerned, it is perfectly plain that they were number. On May 27, 1947, the enquiry was held on both the petitions under s, 25A and on the quantum of income assessable to tax under s. 23 3 . Exhibit D is an extract from the order sheet of the Income-tax Officer, and it runs as follows Regarding credits amounting to Rs. 2,30,346-6-3 in the a c. Udoyaram Bhaniram the representatives state that besides the evidence produced, which are numbered below, they are number in a position to produce any further evidence, Account books of the assessee companytaining the details of the amounts aggregating the aforesaid sum. Sale statements rendered by Chunilal Damani,copies of which have been filed. Roker of Chunilal Damani companytaining entries for purchase of gold, sold by the assessee family along with Surajrattan Bagri the accountant of Chunilal Damani. Statement of Lakhmichand Bhiwaniwalla and Pannalal Bhiwaniwalla, member of the assessee family. This statement is signed by the companynsel for the appellant. It is clear from the above that the proceedings book was number relied on as evidence on the character of the receipts making up the sum of Rs. 2,30,346. The fact appears to be that the appellant produced the proceedings book in support of his petition under s. 25A for the purpose of establishing that there was a companypleted partition, and relied only on the minutes of the meeting held on April 21, 1945, in proof thereof, and that is why that alone was translated in English and marked as Ex. B. It is also to be numbered that there is numberreference in the order of assessment by the Income-tax Officer under s. 23 3 to the minutes of the meetings prior to April 21, 1945, and that they were number even translated, as was the record of the meeting dated April 21, 1945. The obvious inference is that they were number relied on by the appellant, and were therefore number companysidered by the Officer. It is also significant that the order -of the Income-tax Officer refers to sale of ornaments broken or unbroken. The story that the gold which was separated from the jewels after removing the pearls and stones was melted and sold in quantities of 250 or 500 tolas, which was the argument pressed before us, was number put forward before him. It is argued that in the appeal against the order of the Income-tax Officer the ground was definitely taken that the proceedings book had been produced before him, and that it was also prominently mentioned in a petition supported by affidavit filed by the appellant. But the order of the Appellate Assistant Commissioner does number deal with this matter either, and it is inconceivable that he would have failed to companysider it if it had been pressed before him. It is also to be numbered that the appellant who had obtained a return of the proceedings book from the Income-tax Officer did number file it before the Appellate Assistant Commissioner, number did he move for its admission in evidence. Apart from taking the grounds to which we were referred, the appellant appears to have presented his case before the Appellate Assistant Commissioner precisely on the same lines on which lie pressed it before the Income-tax Officer. In view of these facts, we are unable to hold that in refusing to admit the proceedings book as evidence in the appeal, the Appellate Tribunal acted perversely or unreasonably. Indeed, companynsel for the appellant did number companytend in the High Court that the Tribunal had acted illegally or unreasonably in refusing to admit the proceedings book in evidence. That being so, it cannot be said that the finding given by the Tribunal on an appreciation of the facts and circumstances already set out is unsupported by evidence or is perverse. The position may thus be summed up In the business accounts of the appellant we find certain sums credited. The explanation given by the appellant as to how the amounts came to be received is rejected by all the Income-tax authorities as untenable. The credits are accordingly treated as business receipts which are chargeable to tax. In V. Govindarajulu Mudaliar v. The Commissioner of Income-tax, Hyderabad 1 , this Court observed There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amounts of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature. That is precisely what the Income-tax authorities have done in the present case, and we do number find any grounds for holding that their finding is open to attack as erroneous in law. Lastly, the question was sought to be raised that even if the credits aggregating to Rs. 2,30,346 are held to be companycealed income, numberlevy of excess profits tax can be made on them without a further finding that they represented business income, and that there is numbersuch finding.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 90 of 1957. Appeal by special leave from the judgment and order dated November 21, 1956, of the Punjab High Court in Criminal Appeal No. 326 of 1956 arising out of the judgment and order dated June 26, 1956, of the Court of the Sessions Judge at Ferozepore in Sessions Case No. 8 of 1956. Jai Gopal Sethi and R. L. Kohli, for the appellant. N. S. Bindra and T. M. Sen, for the respondent. 1958. March 11. The Judgment of the Court was delivered by 1497 BOSE J.-The appellant Virsa Singh has been sentenced to imprisonment for life under s. 302 of the Indian Penal Code for the murder of one Khem Singh. He was granted special leave to appeal by this Court but the leave is limited to the question that on the finding accepted by the Punjab High Court what offence is made out as having been companymitted by the petitioner. The appellant was tried with five others under sss. 302/49, 324/149 and 323/149 Indian Penal Code. He was also charged individually under s. 302. The other, were acquitted of the murder charge by the first Court but were companyvicted under ss. 326, 324 and 323 read with s. 149, Indian Penal Code. On appeal to the High Court they were all acquitted. The appellant was companyvicted by the first Court under s. 302 and his companyviction and sentence were upheld by the High Court. There was only one injury on Khem Singh and both Courts are agreed that the appellant caused it. It was caused as the result of a spear thrust and the doctor who examined Khem Singh, while he was still alive, said that it was a punctured wound 2 x 1/2 transverse in direction on the left side of the abdominal wall in the lower part of the iliac region just above the inguinal canal. He also said that Three companyls of intestines were companying out of the wound. The incident occurred about 8 p. m. on July 13, 1955. Khem Singh died about 5 p. m. the following day. The doctor who companyducted the postmortem described the injury as- an oblique incised stitched wound 21/2 on the lower part of left side of belly, 13 above the left inguinal ligament. The injury was through the whole thickness of the abdominal wall. Peritonitis was present and there was digested food in that cavity. Flakes of pus were sticking round the small intestines 1498 and there were six cuts at various places, and digested food was flowing out from three cuts. The doctor said that the injury was sufficient to cause death in the ordinary companyrse of nature. The learned Sessions Judge found that the appellant was 21 or 22 years old and said- When the companymon object of the assembly seems to have been to cause grievous hurts only, I do number suppose Virsa Singh actually had the intention to cause the death of Khem Singh, but by a rash and silly act he gave a rather forceful blow, which ultimately caused his death. Peritonitis also supervened and that hastened the death of Khem Singh. But for that Khem Singh may perhaps number have died or may have lived a little longer. Basing on those facts, he said that the case fell under s. 300, 3rdly and so he companyvicted under s. 302, Indian Penal Code. The learned High Court Judges companysidered that the whole affair was sudden and occurred on a chance meeting . But they accepted the finding that the appellant inflicted the injury on Khem Singh and accepted the medical testimony that the blow was a fatal one. It was argued with much circumlocution that the facts set out above do number disclose an offence of murder because the prosecution has number proved that there was an intention to inflict a bodily injury that was sufficient to cause death in the ordinary companyrse of nature. Section 300, 3rdly was quoted If it is done with the intention of causing bodily injury to any person and the bodily injury intended to be inflicted is sufficient in the ordinary companyrse of nature to cause death. It was said that the intention that the section requires must be related, number only to the bodily injury inflicted, but also to the clause, and the bodily injury intended to be inflicted is sufficient in the ordinary companyrse of nature to cause death. This is a favourite argument in this kind of case but is fallacious. If there is an intention to inflict an injury that is sufficient to cause death in the ordinary 1499 companyrse of nature, then the intention is to kill and in that event, the thirdly would be unnecessary because the act would fall under the first part of the section, namely- If the act by which the death is caused is done with the intention of causing death. In our opinion, the two clauses are disjunctive and separate. The first is subjective to the offender If it is done with the intention of causing bodily injury to any person. It must, of companyrse, first be found that bodily injury was caused and the nature of the injury must be established, that is to say, whether the injury is on the leg or the arm or the stomach, how deep it penetrated, whether any vital organs were cut and so forth. These are purely objective facts and leave numberroom for inference or deduction to that extent the enquiry is objective but when it companyes to the question of intention, that is subjective to the offender and it must be proved that he had an intention to cause the bodily injury that is found to be present. Once that is found, the enquiry shifts to the next clause- and the bodily injury intended to be inflicted is sufficient in the ordinary companyrse of nature to cause death. The first part of this is descriptive of the earlier part of the section, namely, the infliction of bodily injury with the intention to inflict it, that is to say, if the circumstances justify an inference that a mans intention was only to inflict a blow on the lower part of the leg, or some lesser blow, and it can be shown that the blow landed in the region of the heart by accident, then, though all injury to the heart is shown to be present, the intention to inflict ail injury in that region, or of that nature, is number proved. In that case, the first part of the clause does number companye into play. But once it is proved that there was an intention to inflict the injury that is found to be present, then the earlier part of the clause we are number examining 1500 and the bodily injury intended to be inflicted is merely descriptive. All it means is that it is number enough to prove that the injury found to be present is sufficient to cause death in the ordinary companyrse of nature it must in addition be shown that the injury is of the kind that falls within the earlier clause, namely, that the injury found to be present was the injury that was intended to be inflicted. Whether it was sufficient to cause death in the ordinary companyrse of nature is a matter of inference or deduction from the proved facts about the nature of the injury and has numberhing to do with the question of intention. In companysidering whether the intention was to inflict the injury found to have been inflicted, the enquiry necessarly proceeds on broad lines as, for example, whether there was an intention to strike at a vital or a dangerous spot, and whether with sufficient force to cause the kind of injury found to have been inflicted. It is, of companyrse, number necessary to enquire into every last detail as, for instance, whether the prisoner intended to have the bowels fall out, or whether he intended to penetrate the liver or the kidneys or the heart. Otherwise, a man who has numberknowledge of anatomy companyld never be companyvicted, for, if he does number know that there is a heart or a kidney or bowels, be cannot be said to have intended to injure them. Of companyrse, that is number the kind of enquiry. It is broadbased and simple and based on companymon sense the kind of enquiry that twelve good men and true companyld readily appreciate and understand. To put it shortly, the prosecution must prove the following facts before it can bring a case under s. 300, 3rdly First, it must establish, quite objectively, that a bodily injury is present Secondly, the nature of the injury must be proved These are purely objective investigations. Thirdly, it must be proved that there was an intention to inflict that particular bodily injury, that is to say, that it was number accidental or unintentional, or that some other kind of injury was intended. 1501 Once these three elements are proved to be present, the enquiry proceeds further and, Fourthly, it must be proved that the injury of the type just described made up of the three elements set out above is sufficient to cause death in the ordinary companyrse of nature. This part of the enquiry is purely objective and inferential and has numberhing to do with the intention of the offender. Once these four elements are established by the prosecution and, of companyrse, the burden is on the prosecution throughout the offence is murder under s. 300, 3rdly. It does number matter that there was numberintention to cause death. It does number matter that there was Do intention even to cause an injury of a kind that is sufficient to cause death in the ordinary companyrse of nature number that there is any real distinction between the two . It does number even matter that there is numberknowledge that an act of that kind will be likely to cause death. Once the intention to cause the bodily injury actually found to be present is proved, the rest of the enquiry is purely objective and the only question is whether, as a matter of purely objective inference, the injury is sufficient in the ordinary companyrse of nature to cause death. No one has a licence to run around inflicting injuries that are sufficient to cause death in the ordinary companyrse of nature and claim that they are number guilty of murder. If they inflict injuries of that kind, they must face the companysequences and they can only escape if it can be shown, or reasonably deduced that the injury was accidental or otherwise unintentional. We were referred to a decision of Lord Goddard in R v. Steane 1 where the learned Chief Justice says that where a particular intent must be laid and charged, that particular intent must be proved. Of companyrse it must, and of companyrse it must be proved by the prosecution. The only question here is, what is the extent and nature of the intent that s. 300 3rdly requires, and how is it to be proved ? The learned companynsel for the appellant next relied on a passage where the learned Chief Justice says that 1 1947 1 All E. R. 813, 816. 1502 if, on the totality of the evidence, there is room for more than one view as to the intent of the prisoner, the jury should be directed that it is for the prosecution to prove the intent to the jurys satisfaction, and if, on a review of the whole evidence, they either think that the intent did number exist or they are left in doubt as to the intent, the prisoner is entitled to be acquitted. We agree that that is also the law in India. But so is this. We quote a few sentences earlier from the same learned judgment No doubt, if the prosecution prove an act the natural companysequences of which would be a certain result and numberevidence or explanation is given, then a jury may, on a proper direction, find that the prisoner is guilty of doing the act with the intent alleged. That is exactly the position here. No evidence or explanation is given about why the appellant thrust a spear into the abdomen of the deceased with such force that it penetrated the bowels and three companyls of the intestines came out of the wound and that digested food oozed out from cuts in three places. In the absence of evidence, or reasonable explanation, that the prisoner did number intend to stab in the stomach with a degree of force sufficient to penetrate that far into the body, or to indicate that his act was a regrettable accident and that he intended otherwise, it would be perverse to companyclude that he did number intend to inflict the injury that he did. Once that intent is established and numberother companyclusion is reasonably possible in this case, and in any case it is a question of fact , the rest is a matter for objective determination from the medical and other evidence about the nature and seriousness of the injury. The learned companynsel for the appellant referred us to Emperor Sardarkhan Jaridkhan 1 where Beaman J. says that- where death is caused by a single blow, it is always much more difficult to be absolutely certain what degree of bodily injury the offender intended. With due respect to the learned Judge he has linked 1 1917 I. L. R. 41 Bom. 27,29. 1503 up the intent required with the seriousness of the injury, and that, as we have shown, is number what the section requires. The two matters are quite separate and distinct, though the evidence about them may sometimes overlap. The question is number whether the prisoner intended to inflict a serious injury or a trivial one but whether he intended to inflict the injury that is proved to be present. If be can show that he did number, or if the totality of the circumstances justify such an inference, then, of companyrse, the intent that the section requires is number proved. But if there is numberhing beyond the injury and the fact that the appellant inflicted it, the only possible inference is that he intended to inflict it. Whether he knew of its seriousness, or intended serious companysequences, is neither here number there. The question, so far as the intention is companycerned, is number whether he intended to kill, or to inflict an injury of a particular degree of seriousness, but whether he intended to inflict the injury in question and once the existence of the injury is proved the intention to cause it will be presumed unless the evidence or the circumstances warrant an opposite companyclusion.- But whether the intention is there or number is one of fact and number one of law. Whether the wound is serious or otherwise, and if serious, how serious, is a totally separate and distinct question and has numberhing to do with the question whether the prisoner intended to inflict the injury in question. It is true that in a given case the enquiry may be linked up with the seriousness of the injury. For example, if it can be proved, or if the totality of the circumstances justify an inference, that the prisoner only intended a superficial scratch and that by accident his victim stumbled and fell on the sword or spear that was used, then of companyrse the offence is number murder. But that is number because the prisoner did number intend the injury that he intended to inflict to be as serious as it turned out to be but because he did number intend to inflict the injury in question at all. His intention in such a case would be to inflict a totally different injury. The difference is number One of law but 1504 one of fact and whether the companyclusion should be one way or the other is a matter of proof, where necessary, by calling in aid all reasonable inferences of fact in the absence of direct testimony. It is number one for guess-work and fanciful companyjecture.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 358 and 359 of 1957. Appeals by special leave from the judgment and decree dated April 4, 1956, of the Patna High Court in M. J. C. Nos. 546 and 590 of 1955. N. Banerjee and R. C. Prasad, for the appellant In both appeals . Basanta Chandra Ghose I and P. K. Chatterjee, for respondents Nos. 1-10 12-57 in C. A. No. 358/57. C. Setalvad, Attorney-General of India, Nooni Chakraverty and B. P. Maheshwari, for respondent No. 59 in C No. 358/57 and Respdt. No. 1 in C. A. No. 359/57. Patnaik, for respondent No. 63 in C.A. No. 359/57. 1958. August 22. The Judgment of the Court was delivered by 1193 GAJENDRAGADKAR J.-Where an industrial dispute has been referred to a tribunal for adjudication by the appropriate government under s. 10 1 d of the Industrial Disputes Act, 1947, XIV of 1947 , can the said government supersede the said reference pending adjudication before the tribunal companystituted for that purpose ? That is the short question which falls to be companysidered in these two appeals by special leave. The question arises in this way On October 8, 1954, by Notification No. III DI-1602 /54-L-15225, the government of Bihar referred an industrial dispute between the management of the Bata Shoe Co. Ltd., Digbaghat Patna , and their 31 workmen, mentioned in annexure I A, in exercise of the powers companyferred on the said government by s. 7 read with s. 10 1 of the Act. The dispute was whether the dismissal of the workmen in question was justified if number, whether they were entitled to reinstatement or any other relief For the adjudication of this dispute, an industrial tribunal with Mr. Ali Hassan as the sole member was companysti- tuted. This was reference No. 10 of 1954. Then, on January 15,1955, by Notification No. III DI-1601/55 L. 696, a similar industrial dispute between the same Bata Company and its 29 other workmen was referred by the government of Bihar to the same tribunal. This was reference No. I of 1955. While the proceedings in respect of the two references, which had been companysolidated by the tribunal, were pending before it and had made some progress, the government of Bihar issued a third Notification No. III Di-1601/55-L-13028 on September 17, 1955, by which it purported to supersede the two earlier numberifications, to companybine the said two disputes into one dispute, to implead the two sets of workmen involved in the two said disputes together, to, add the Bata Mazdoor Union to the dispute, and to refer it to the adjudication of the industrial tribunal of Mr. Ali Hassan as the sole member. The dispute thus referred to the . tribunal was, Whether the dismissal of the 60 workmen, mentioned in annexure B, was justified or unjustified and to what relief, if any, those workmen are entitled ? On receipt of this numberification, the tribunal passed an 1194 order on September 19, 1955, cancelling the hearing of the two prior references which had been fixed for October 3, 1955, and directing that the files of the said references should be closed. The Bata Company and its workmen then filed two separate applications before the High Court of Judicature at Patna under articles 226 and 227 of the Constitution and prayed that the last numberification should be quashed as being illegal and ultra vires. These. two applications were numbered as M. J. C. Nos. 546 and 590 of 1955 respectively. On April 4, 1956, the High Court held that the government of Bihar had numberpower or authority to supersede the earlier numberifications, allowed both the applications and issued a writ in the nature of certiorai quashing the impugned numberification of September 17, 1955, and also a writ in the nature of mandamus requiring the industrial tribunal to proceed expeditiously with reference-cases Nos. 10 of 1954 and I of 1955 and to -bring them to a companyclusion in accordance with law. Against this order the government of Bihar applied for and obtained leave from this companyrt on June 26, 1956. That is how the two present appeals have companye for disposal before US. In both the appeals, the appellant is the State of Bihar and. the respondents are the Bata Company and its workmen respectively. On behalf of the appellant, it is urged before us that the High Court at patna was in error in holding that the government of Bihar had numberpower or authority to set aside the two earlier numberifications and to refer the dispute in question for adjudication to the industrial tribunal under s. 10 1 of the Act. In order to appreciate the background of the, impugned numberification, it would be relevant, to mention some material facts. It appears that the workmen of the companypanys factory at Digha formed a, union at the close of the last World War. The president of the said union was Mr. John and its general secretary was Mr. Fateh Narain Singh. -On June 22, 1947, the companypany entered into a companylective agreement with the said -union and by mutual companysent the Standing Orders and 1195 Rules, certified under the Industrial Employment Standing Orders Act of 1946, were settled. The union was recognised as the sole and exclusive companylective bargaining agency for the workmen of the companypany. Towards the end of 1954, two groups of the union were formed and rivalry grew between them. One group was led by Mr. Fateh Narain Singh and other by Mr. Bari. On January 22, 1954, the union through its general secretary Mr. Fateh Narain Singh served on the companypany a slow down numberice with effect from February 24, 1954, and on February 6, 1954, Mr. Bari purporting to act as the president of the union asked his followers to go on strike as from February 23, 1954. The demands made by Mr. Fateh Narain Singh gave rise to companyciliation proceedings under the Act and ended in the settlement which was duly recorded on February 8, 1954. In spite of the said settlement some workmen, including the sixty workmen in question who supported Mr. Bari, went on an illegal strike on February 23, 1954, although as members of the union they were bound by the ,settlement. The majority of the workmen were opposed to the strike and in fact on February 16, 1954, a letter signed by 500 workmen who dis-associated themselves from the strike, was received by the companypany. The companypany was requested to make suitable arrangements to enable these workmen to attend their duties. The strike succeeded only partially because out of 854 workmen employed in the companypanys factory at Digha nearly 500 workmen attended the factory in spite of the threats of the strikers. The strike was declared illegal by the appellant under s. 23 c of the Act. Subsequently, the companypany served the strikers with charge-sheets and in the end, 274 workmen, including the sixty workmen in question, were dismissed from service by the companypany. Thereafter the union entered into negotiations with the companypany, as a result of which it was agreed that 110 strikers would be employed by the companypany in the same manner in which 76 strikers had already been employed by it. It was further 1196 agreed that 30 strikers were to remain dismissed and number companysidered eligible for employment or for any benefits. In regard to the remaining 30 strikers, the companypany agreed to companysider their cases later on for reemployment. During these negotiations, the sixty workmen in question did number make any demand to the management for reinstatement either individually or companylectively. number was their case raised by any other Organisation or body of workmen. In the result, so far as the union was companycerned the dispute regarding the whole body of strikers who had been dismissed by the companypany came to an end by virtue of, the agreement between the companypany and the union. Notwithstanding this agreement, Mr. Sinha, the companyciliation officer, wrote to the companypany on September 3, 1954, that he desired to hold companyciliation proceedings inrespectof,some of the dismissed workmen. The dispute raised by the sixty workmen was number sponsored by any Organisation or body of workmen. In fact the secretary of the union wrote to the Commissioner of Labour on September 22, 1954, that he strongly objected to the alleged dispute of sixty workmen being referred to adjudication. It was under these circum- stances that the appellant issued the first two numberifica- tions on October 8, 1954 and January 15, 1955. On May 30, 1955, the union made an application before the tribunal alleging that the majority of the workmen were opposed to the reinstatement of the sixty workmen in question and companysequently it had interest in the proceedings before the tribunal. Two applications were made before the tribunal by other workmen to be joined to the proceedings on the ground that they were opposed to the reinstatement of the workmen whose cases were pending before the tribunal. All these applications were rejected by the tribunal. It would appear that Mr. Fateh Narain Singh then moved the Department of Labour Government of Bihar, and it was apparently pursuant to the representation -made by him that the third numberification was issued by the appellant superseding the first two numberifications and referring the whole dispute afresh to the 1197 industrial tribunal with the union of Mr. Fateh Narain Singh added as a party to the proceedings. That in brief is the genesis of the impugned numberification in the present case. Dr Bannerjee for the appellant has urged before us that in dealing with the question about the powers of the appropriate government under s. 10 1 of the Act, it would be necessary to bear in mind the facts which led to the cancellation of the first two numberifications and the issue of the third impugned numberification. He companytends that in issuing the third numberification the appellant has acted bona fide and solely in the interests of fair-play and justice it came to the. companyclusion that it was necessary that the union should be heard before the disputes in question are. adjudicated upon by the Industrial Tribunal and that it would be more companyvenient and in the interest of industrial peace and harmony that the dispute should be referred to .the tribunalin a more companyprehensive and companysolidated form bringing before the tribunal all the parties interested in it. In our opinion, the bona fides of the appellant on which reliance is placed by Dr. Banerjee are really number relevant for determining the appellants powers under s. 10 1 of the Act. If the appellant has authority to cancel the numberification issued under s. 10 1 , and if the validity of the cancelling numberification is challenged on the ground of mala fides, it may be relevant and material to inquire into the motives of the appellant. But if the appellant has numberauthority to cancel or revoke a numberification issued under s. 10 1 , the bona fides of the appellant can hardly validate the impugned cancellation. That is why, we think, the appellant cannot base its arguments on the alleged bona fides of its companyduct. it is companyceded by Dr. Bannerjee that the Act does number expressly companyfer any power on the appropriate government to cancel or supersede a reference made under s. 10 1 of the Act. He,-however, argues that the power to cancel or supersede such a reference must be hold to be implied, and in support of his argument he relies on the, provisions of s. 21 of the General Clauses Act, 1897 X of 1897 . Section 21 provides 1198 that where, by any Central Act or Regulation, a. power to issue numberifications, orders, rules or bye-laws is companyferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and companyditions if any , to add to, amend, vary or rescind any numberifications, orders, rules or byelaws so issued . It is well settled that this section embodies a rule of companystruction and the question whether or number it applies to the provisions of a particular statute would depend on the subject-matter, companytext, and the effect, of the relevant provision, of the said statute. In other words it would be necessary to examine carefully the scheme of the Act, its object and all its relevant and material provisions before deciding whether by the application of the rule of companystruction enunciated by s. 21, the appellants companytention is justified that the power to cancel the reference made under s. 10 1 can be said to vest in the appropriate government by necessary implication. If we companye to the companyclusion that the companytext and -effect of the relevant provisions is repugnant to the application of the said rule of companystruction, the appellant would number be entitled to invoke the assistance of the said section. We must, therefore, proceed to examine the relevant provisions of the Act itself. It is clear that the policy of the Act is to secure and preserve good relations between the employers and their workmen and to maintain industrial peace and harmony. It is with this object that s. 3 of the Act companytemplates the establishment of the Works Committees whose duty it is to promote measures for securing and preserving amity and good relations between the employers and the workmen. If the Works Committee is unable to settle the disputes rising between the employer and his workmen, companyciliation officers and the boards of companyciliation offer assistance to the parties to settle their disputes. Sections 3, 4, 5, 12 and 13 refer to the working of this machinery companytemplated by the Act. It is only where the companyciliation machinery fails to bring about settlement between the parties that the Act companytemplates companypulsory adjudication of the industrial disputes by labour companyrts and 1199 tribunals as the last alternative. The appropriate government is authorised to companystitute labour companyrts and tribunals under and subject to the provisions of a. 7 and s. 7A respectively. It is in respect of the companypulsory adjudication that under s. 10, the appropriate government is given wide discretion to decide whether or number the dispute between the employer and his employees should fie referred to the board, companyrt or tribunal. Section 10 1 d provides inter alia that where the appropriate government is of opinion that any industrial dispute exists or is apprehended, it may at any time, by order in writing refer the dispute to a tribunal for adjudication. The companydition precedent for the reference to the industrial tribunal is that the appropriate government must be satisfied that an industrial dispute exists or is apprehended. It is number in every case where the parties allege the existence of an industrial dispute that a reference would be made under s. 10 1 it is only where the test of subjective satisfaction of the appropriate government is satisfied that the reference can be made. Thus it is clear that the appropriate government is given an important voice in the matter of permitting industrial disputes to seek adjudication by reference to the industrial tribunal. But once an order in writing is made by the appropriate government referring an industrial dispute to the tribunal for adjudication under s. 10 1 , proceedings before the tribunal are deemed to have companymenced and they are deemed to have companycluded on the day on which the award made by the tribunal becomes enforceable under s. 17A. This is the effect of s. 20 3 of the Act. This provision shows that after the dispute is referred to the tribunal, during the companytinuance of the reference proceedings, it is the tribunal which is seized of the dispute and which can exercise jurisdiction in respect of it. The appropriate government can act in respect of a reference pending adjudication before a tribunal only under s. 140 5 of the Act, which authorises it to add other parties to the pending dispute subject to the companyditions mentioned in the said provision. It would therefore be reasonable to hold that except for cases 1200 falling under s. 10 5 the appropriate government stands outside the reference proceedings, which are under the companytrol and jurisdiction of the tribunal itself. Even after the award is made it is -obligatory on I the appropriate government under S. 17 1 to publish the said award within a period of thirty, -days from the date of its receipt by the, appropriate government. Sub-section 2 of s. 17 says that subject to the provisions of s. 17A, the award published under 1 of s. 17 shall be final and shall number be called in question by any companyrt in any manner whatsoever Section 19 3 provides that an award shall, subject to the other pro- visions of s. 19, remain in operation for a period of one year from the date on which it becomes emforceable under s. 17A. It is true that as. 17A and 19 companyfer on the appropriate government powers to modify the provisions of the award or limit the period of its operation but it is unnecessary to refer to these provisions in detail. The scheme of the- provisions. in Chapters III and IV of the Act would thus appear to be . to leave the reference proceedings exclusively within the jurisdiction of the tribunals -constituted under the Act and to make the awards,of such tribunals binding between the parties, subject to the special powers companyferred of the appropriate government under -as. 17A and 19. The appropriate government undoubtedly has the initiative in the matter. It is only where it makes an order in writing refering an industrial dispute to the adjudication of the tribunal that the reference proceedings can companymence but the scheme of the relevant provisions would prima -facie seem to be inconsistent with any power in the appropriate government to cancel the reference made under s. 10 1 . The power claimed by the Happening to cancel a reference made unders. 10 1 seems also to be inconsistent with some other provisions of the Act. The proviso to s. 10 lays down that the appropriated government shall refer a dispute relating to the public utility service when a numberice under s. 22 has been given, unless it companysiders that the numberice has been frivolously or vexatiously given, or that it would be inexpedient so to refer the dispute. This proviso, indicates that in regard 1201 to a dispute relating to public utility companycerns numbermally the government is expected to refer it for adjudication. In such a case if the government makes the reference it is difficult to appreciate that it would be open to the government pending the proceedings of the said reference before the Industrial Tribunal to cancel the reference and supersede its original order in that behalf. Section 10, sub-s. 2 deals with the case where the parties to are industrial dispute apply to the appropriate government in the prescribed manner, either jointly or separately, for a reference of the dispute to the appropriate authority, and it provides that in such a case if the appropriate government is satisfied that the persons applying represent the majority of each party it shall make the reference accordingly. ln such a case all that the government has to satisfy itself about is the fact that the, demand for reference is made by the majority of each party, and once this companydition is satisfied, the government is under obligation to refer the dispute for industrial adjudication. It is inconceivable that in such a case the government can claim power to cancel a reference made under s. 10 2 . Indeed in the companyrse of his arguments, Dr. Banerjee fairly companyceded that it would be difficult to sustain a claim for an implied power of cancellation in respect of a reference made under s. 10 2 . There is another companysideration which is relevant in dealing with this question. Section 12 which deals with the duties of the companyciliation officer, provides in substance that the companyciliation officer should try his best to bring about settlement between the parties. If numbersettlement is arrived at, the companyciliation officer has to make a report to the appropriate government, as provided in sub-s. 4 of s. 12. This report must companytain a full statement of the relevant facts and circumstances and the reasons on account of which in the opinion of the officer the settlement companyld number be arrived at. Sub-section 5 then lays down that if, on a companysideration of the report, the appropriate government is satisfied that there is a case for reference to a board, labour companyrt, tribunal or national tribunal, it may make such a reference. Where the appropriate 1202 government does number make such a reference it shall record and companymunicate to the parties companycerned its reasons therefor. This provision imposes on the appropriate government an obligation to record its reasons for number making a reference after receiving a report from the companyciliation officer and to companymunicate the said reasons to the parties companycerned. It would show that when the efforts of the companyciliation officer fail to settle a dispute, on receipt of the companyciliation officers report by the appropriate government, the government would numbermally refer the dispute for adjudication but if the government is number satisfied that a reference should be made, it is required to companymunicate its reasons for its decision to the parties companycerned. If the appellants argument is accepted, it would mean that even after the order is made by the appropriate government under s. 10 1 , the said government can cancel the said order without giving any reasons. This position is clearly inconsistent with the policy underlying the provisions of s. 12 5 of the Act. In our opinion, if the legislature had intended to companyfer on the appropriate government the power to cancel an order made under s. 10 1 , the legislature would have made a specific provision in that behalf and would have prescribed appropriate limitations on the exercise of the said power. It is, however, urged that if a dispute referred to the industrial tribunal under s. 10 1 is settled between the parties, the only remedy for giving effect to such a companypromise would be to cancel the reference and to take the proceedings out of the jurisdiction of the industrial tribunal. This argument is based on the ,assumption that the industrial tribunal would have to ignore tile settlement by the parties of their dispute pending before it and would have to make an award on the merits in spite of the said settlement. We are number satisfied that this argument is well-founded. It is true that the Act does number companytain any provision specifically authorising the industrial tribunal to record a companypromise and pass an award in its terms companyresponding to the provisions of O. XXIII, r. 3 of the Code of Civil Procedure. But it would be very 1203 unreasonable to assume that the industrial tribunal would insist upon dealing with the dispute on the merits even after it is informed that the dispute has been amicably settled between the parties. We have already indicated that amicable settlements of industrial disputes which generally lead to industrial peace and harmony are the primary object of this Act. Settlements reached before the companyciliation officers or boards are specifically dealt with by ss. 12 2 and 13 3 and the same are made binding under s. 18. There can, therefore, be numberdoubt that if an industrial dispute before a tribunal is amicably settled, the tribunal would immediately agree to make an award in terms of the settlement between the parties. It was stated before us at the bar that innumerable awards had been made by industrial tribunals in terms of the settlements between the parties. In this companynexion we may incidentally refer to the provisions of s. 7 2 b of the Industrial Disputes Appellate Tribunal Act, 1950 XLVIII of 1950 , which expressly refer to an award or decision of an industrial tribunal made with the companysent of the parties. It is true that this Act is numberlonger in force but when it was in force, in providing for appeals to the Appellate Tribunal set up under the said Act, the legislature had recognised the making of awards by the industrial tribunals with the companysent of the parties. Therefore, we cannot accept the argument that cancellation of reference would be necessary in order to give effect to the amicable settlement of the dispute reached by the parties pending proceedings before the industrial tribunal. In this companynexion it may be relevant to refer to some other provisions of the Act, which impose restrictions on the parties luring the pendency of the reference proceedings. Under s. 10 3 , where an industrial dispute has been referred to an industrial tribunal, the appropriate government may by order prohibit the companytinuance of any strike or lock-out in companynexion with such dispute which may be in existence on the date of the reference. Similarly, under s. 33, during the pendency of the proceedings before an industrial tribunal, numberemployer shall a in regard to any matter companynected with the dispute, alter, to the prejudice 1204 of the workmen companycerned in such dispute, the companyditions of service applicable to them immediately before the companymencement of such proceedings or b for any misconduct companynected with the dispute, discharge or punish, whether by dismissal or otherwise, any workmen companycerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending. Failure to companyply with the provisions of s. 33 1 is made punishable under s. 31 of the Act. These provisions show that during the pendency of the proceedings before the industrial tribunal the parties to the dispute are expected to maintain status quo and number to take any action which would disturb industrial peace or prejudice a fair trial before the industrial tribunal. If the power to cancel a reference made under s. 10 1 is held to be implied, the proceedings before the industrial tribunal can be terminated and superseded at any stage and obligations and liabilities incurred by the parties during the pendency of the proceedings would be materially affected. It is because all these provisions are intended to operate as a self-contained Code governing the companypulsory adjudication of industrial disputes under the Act, that s. 15 enjoins upon the industrial tribunals to hold their proceedings expeditiously and to submit their awards as soon as it is practicable on the companyclusion of the proceedings to the appropriate government. Thus time is usually of essential importance in industrial adjudications and so the Act imposes an obligation on the industrial tribunals to deal with their proceedings as expeditiously as possible. If the appropriate government has by implication the power to cancel its order passed under s. 10 1 , the proceedings before the industrial tribunal would be rendered wholly ineffective by the exercise of such power. Apart from these provisions of the Act, on general principles it seems rather difficult to accept the argument that the appropriate government should have an implied power to cancel its own order made under s. 10 1 . If on the representation made by the employer or his workmen the appropriate government companysiders the matter fully and reaches the companyclusion that an 1205 industrial dispute exists or is apprehended and then makes the reference under s. 10 1 , there appears to be numberreason or principle to support the companytention that it has an implied power to cancel its order and put an end to the reference proceedings initiated by itself In dealing with this question it is important to bear in mind that power to cancel its order made under s. 10 1 , which the appellant claims, is an absolute power it is number as if the power to cancel implies the obligation to make another reference in respect of the dispute in question it is number as if the exercise of the power is subject to the companydition that reasons for cancellation of the order should be set out. If the power claimed by the appellant is companyceded to the appropriate government it would be open to the appropriate government to terminate the proceedings before the tribunal at any stage and number to refer the industrial dispute to any other industrial tribunal at all. The discretion given to the appropriate government under s. 10 1 in the matter of referring industrial disputes to industrial tribunals is very wide but it seems the power to cancel which is claimed is wider still and it is claimed by implication on the strength of s. 21 of the General Clauses Act. We have numberhesitation in holding that the rule of companystruction enunciated by s. 21 of the General Clauses Act in so far as it refers to the power of rescinding or cancelling the original order cannot be invoked in respect of the provisions of s. 10 1 of the Industrial Disputes Act. It would number be necessary to refer to the decisions to which our attention was invited in the companyrse of arguments. For the appellant Dr. Bannerjee has strongly relied on the decision of this companyrt in Minerva Mills Ltd. v. Their Workmen 1 . He companytends that Mahajan J. who delivered the judgment of the companyrt, has expressly observed in his judgment that from the relevant provisions of the Act It companyld number be held that it was implicit in s. 7 that the government companyld number withdraw a dispute referred to a tribunal or make the appointment of a tribunal for a limited period of time. The argument is that this observation shows that the government can withdraw a pending reference from one tribunal and refer it to another tribunal, and, 1 1954 S.C.R. 465. 1206 according to the appellant, that is exactly what has been done by it in the present case. In the case of Minerva Mills Ltd. 1 , however, the question about the implied power of the appropriate government to cancel its order made under s. 10 did number arise for companysideration. The point which was raised by the appellant was that the government had numberpower to appoint a tribunal for a limited duration and the argument was that if industrial disputes are referred to a tribunal, all the said disputes must be determined by the said tribunal and number by any other tribunal, numberwithstanding that the appointment of the original tribunal was for a limited duration. The first tribunal in the said case had been appointed on June 15, 1952, and some industrial disputes had been referred to it. The tribunal was appointed for one year. During its tenure the tribunal disposed of some of the disputes referred to it, but four disputes still remained undisposed of. For disposing of these references, a second tribunal was appointed on June 27, 1952. The validity of the companystitution of the second tribunal was impugned by the appellant and it was urged that it is the first tribunal alone which can and must try the remaining disputes. This argument was rejected by this companyrt, and it was held that it was perfectly companypetent to the appropriate government to appoint a tribunal for a limited duration. It would be numbericed that in this case there was numberquestion of cancelling an order made under s. 10 1 . The said order remained in force, and the only step which the government took was to make an order companystituting a fresh tribunal to dispose of the references which had number been adjudicated upon by the first tribunal. It was on these facts that this companyrt took the view that it was companypetent to the government to refer the said remaining disputes for adjudication to the second tribunal. Strictly speaking there was numberoccasion to withdraw any dispute from the first tribunal the first tribunal had ceased to exist and so there was numbertribunal which companyld deal with the remaining disputes already referred under s. 10 1 . That is why the government purported to appoint a second tribunal to deal with the said dispute. In our opinion, the decision in the Minerva Mills Ltd. 1 cannot be 1 1954 S.C.R. 465. 1207 cited in support of the proposition that the appellant has power to cancel the order of reference made by it under s. 10 1 . The decision of this companyrt in Strawboard Manufacturing Co. Ltd. v. Gutta Mill Workers Union 1 , is then cited in support of the proposition that the appellant has implied power to cancel its order made, under s. 10 1 . In this case, the government of the State of Uttar Pradesh had referred an industrial dispute to the Labour Commissioner on February 18, 1950, and had directed the Commissioner to make his award number later than April 5, 1950. While the proceedings were pending before the Commissioner, two additional issues were referred to him. Ultimately, the award was made on April 13, and it was sought to be validated by the issue of a numberification by the Governor of Uttar Pradesh on April 26, by which the time for making the award was retrospectively extended up to April 30, 1950. This companyrt held that the numberification retrospectively extending the period to make the award was invalid. Since the award had been made beyond the period prescribed by the original numberification, it was void. It is, however, argued that in dealing with the question of the validity of the award it was observed by Das J. as he then was , In the circumstances, if the State Government took the view that the addition of those two issues would render the time specified in the original order inadequate for the purpose it should have cancelled the previous numberification and issued a fresh numberification referring all the issues to the adjudicator and specifying a fresh period of time within which he was to make his award. The State Government did number adopt that companyrse. As we read the judgment, we are number inclined to accept the appellants assumption that the passage just cited expresses the view accepted by this companyrt. Read in its companytext the said passage appears to state the argument urged by Dr. Tek Chand on behalf of the appellant. The appellant appears to have urged in substance that if the State Government thought that the addition of new issues referred to the Commissioner by subsequent numberification made it difficult for him to submit his award 1 1953 S.C.R. 439. 1208 within the specified time, the local government should have cancelled the original reference, made a fresh companyprehensive reference and given him requisite time for making his award. Since that was number done, the position companyld number be rectified by the issue of the impugned numberification retrospectively extending the time originally fixed. It is in companynexion with this argument that the statement on which reliance is placed was apparently made by the learned companynsel for the appellant. If that be the true position, numberargument can be based on these observations. It is companyceded that the question about the power of the appropriate government to cancel an order of reference made under s. 10 1 did number arise for discussion or decision in this case. The third decision to which reference has been made in support of the appellants case is the decision of Bishan Narain J. in The Textile Workers Union, Amritsar v. The State of Punjab and others 1 . Bishan Narain J. appears to have taken the view that the power to cancel an order of reference made under s. 10 1 can be implied by invoking s. 21 of the General Clauses Act, because he thought that by the exercise of such a power, the appropriate government may be able to achieve the object of preserving industrial peace and harmony. The judgment shows that the learned judge was companyscious of the fact that this companyclusion may have the effect of weakening a trade unions power of negotiation and may encourage the individual firms to deal directly with its their own workmen but it is a matter of policy with which I have numberhing to do in these proceedings. In dealing with the present question, we would number be companycerned with any questions of policy. Nevertheless, it may be pertinent to state that on the companyclusion which we have reached in the present case there would be numberscope for entertaining the apprehensions mentioned by the learned judge. As we have already indicated, the scheme of the Act plainly appears to be to leave the companyduct and final decision of the industrial dispute to the industrial tribunal once an order of reference is made under s. 10 1 by the appropriate government. We must accordingly hold that Bishan Narain J. was A.I.R. 1957 Pun. 255. 1209 in error in taking the view that the appropriate government has power to cancel its own order made under s. 10 1 of the Act. The decision of the Kerala High Court in Iyyappen Mills Private Ltd., Trichur v. State of Travancore-Cochin 1 , is number of much assistance because in this case the learned judges appear to have taken the view that the first tribunal before which the industrial dispute was pending had ceased to exist at the material time when the dispute was referred by the local government for adjudication to the second tribunal. If that be the true position, the companyclusion of the learned judges would be supported by the decision of this companyrt in Minerva Mills Ltd. 2 . Then, in regard to the observations made by Sinha J. in Harendranath Bose v. Second Industrial Tribunal 3 , it is clear that the learned judge was in error in seeking to support his view that the appropriate government can cancel its order made under s. 10 1 by the observations found in the judgment of this companyrt in Strawboard Manufacturing Co. Ltd. 4 . We have already stated that the said observations are really a part of the arguments urged by the appellant before this companyrt in that case and are number obiter observations made by the learned judge. The last case to which reference must be made is the decision of Rajamannar C. J. and Venkatarama Aiyar J. in South India Estate Labour Relations Organisation v. The State of Madras 5 . In this case the Madras Government had purported to amend the reference made by it under s. 10 of the Act and the validity of this amendment was challenged before the companyrt. This objection was repelled oil the ground that it would be open to the government to make an independent reference companycerning any matter number companyered by the previous reference. That it, took the form of an amendment to the existing reference and number an additional reference is a mere technicality which does number merit any interference in the writ proceedings. The objection was one of form and was without substance. It would thus appear that the question before 1 1958 1 L.L.J. 50. 2 1954 S.C.R. 465. 3 1958 11 L.L.J. 198. 4 1953 S.C.R. 439. A.I.R. 1955 Mad. 45. 1210 the companyrt was whether the appropriate government can amend the reference originally made under s. 10 so far as the new matters number companyered by the original reference are companycerned, and the companyrt held that what the appropriate government companyld have achieved by making an independent reference, it sought to do by amending the original reference itself. This decision would number assist the appellant because in the present case we are number companysidering the power of the govern- ment to amend, or add to, a reference made under s. 10 1 . Our present decision is companyfined to the narrow question as to whether an order of reference made by the appropriate government under s. 10 1 can be subsequently cancelled or superseded by it. We must, therefore, companyfirm the finding made by the learned judges of the High Court at Patna, that the numberification issued by the appellant cancelling the first two numberifications is invalid and ultra vires. That takes us to the question as to the form in which the final order should be passed in the present appeals. The High Court has purported to issue a writ of certiorari against the State Government quashing the impugned numberification.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.426 of 1957. Appeal from the judgment and order dated April 21, 1955, of the Orissa High Court at Cuttack in Special Jurisdiction Case No. 179 of 1951. N. Kripal, R. H. Dhebar and D. Gupta, for the appellant. V. Viswanatha Sastri, M. S. K. Sastri and R. Jagannatha Rao, for the respondent. 1958. October 14. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.-This is an appeal against the judgment of the High Court of Orrissa in a reference under s. 66 1 of the Indian Income-tax Act, 1922, hereinafter referred to as the Act, and the point for decision is whether income received by the respondent by the sale of trees growing in his forests is agricultural income exempt from taxation under s. 4 3 viii of the Act. The respondent is the proprietor of the impartable zamin of Jaipur in Koraput District. The estate is of the area of 12,000 sq. miles of which 1540 sq. miles are reserve forest and 100 sq. miles, protected forest. The respondent derives income from the forests by the sale of timber such as teak, salwood, lac, myrabolam, tamarind, cashewnuts and firewood. There is numberdispute either as to the receipt of such income or as to its quantum. All tat appears in the account books of the respondent. The point in companytroversy is as to whether this income is chargeable to tax. It is the companytention of the respondent that this is agricultural income as defined ins. 2 1 of the Act, and that it is, in companysequence, exempt under s. 4 3 viii . By his 31, 1943, the Income-tax order dated January Officer held that the forests in question had number been proved to have been planted by the respondent, that the trees were of spontaneous growth, and that the income therefrom was number within the exemption under s. 4 3 viii and this order was companyfirmed on appeal by the Appellate Assistant Commissioner. The respondent took the matter in further appeal to the Appellate Tribunal, and there put forward the companytention that the Incometax Officer had failed to take into account a letter of the Dewan dated June 3, 1942, which gave a detailed account of the operations carried on by the estate in the rearing and maintenance of forests and that on the facts mentioned in that letter, his finding that there had been numberplantation of trees was errolieous. By its order dated April 9, 1946, the Tribunal accepted this companytention, and directed a fresh enquiry into the facts mentioned in the said letter. Pursuant to this order, the Income-tax Officer again enquired into the matter. He observed that though he gave ample opportunities to the respondent to prove that there was plantation of trees by the estate, numbermaterials were placed in proof of that fact and that neither -plantation books number any working plans for timber plantation had been produced. He accordingly held that the forests had grown naturally, and that the income therefrom was assessable to tax. On this report, the appeal again came up for hearing before the Tribunal. The main companytention urged by the respondent at the hearing was that the facts showed that the forests which had yielded income during the year, of account companyld number have been the virgin forests which had originally grown spontaneously on the hills, because they had been periodically denuded by the hill tribes in the process of Podu cultivation carried on by them. What this Podu cultivation means is thus stated in the District Gazetteer, Vishakapatnam, 1907 This companysists in felling a piece of jungle, burning the felled trees and undergrowth, sowing dry grain broadcast in the ashes without any kind of tilling for two years in succession, and then abandoning the plot for another elsewhere. The argument of the respondent was that as a result of the Podu cultivation, the original forests should have disappeared and that the trees that had subsequently grown into forest and sold as timber must have been planted by human agency and their sale proceeds must accordingly be agricultural income. Dealing with this companytention, the Tribunal observed that though there had been extensive destruction of forests in the process of Podu cultivation, nevertheless, companysiderable areas of virgin forests still survived, that the evidence of actual cultivation and plantation by the zamin authorities was meagre and unsubstantial, that numberexpenses were shown to have been incurred on this account prior to 1904, that the amount shown as spent during that year was negligible, that the trees planted then companyld number have been the trees sold as timber during the assessment years, and that the respondent bad failed to establish facts on which he companyld claim exemption. It should be mentioned that this order companyered the assessments for five years from 1942-43 to 1946-47, the facts relating to the character of the income being the same for all the years. On the application of the respondent, the Tribunal referred the following question for the decision of the High Court Whether on the facts and in the circumstances the income derived from forest in this case is taxable under the Indian Income-tax Act. The reference was heard by Panigrahi, C. J., and Misra, J., who answered it in the negative. They observed It appears to us that the cases as set out by both parties have been put too high. The department takes the view that unless there is actual cultivation of the soil the income from the forest trees cannot be regard. ,led as agricultural income. The fact that the assessee has spent some money and planted valuable trees in some areas is number sufficient to free the income out of the extensive forests which owe their existence to spontaneous growth, from its liability to taxation. The assessee on the other hand seeks to create an impression that there is number a single tree of spontaneous growth, in these forests, and such trees as number companystitute forests have sprung up out of the stumps left by the hillmen as a result of the system of I Podu cultivation adopted by them. It appears to us that neither of these claims can be regarded as precise or companyrect. The learned Judges then observed that the forests in the Koraput area had been under Podu cultivation for a long period, and that as the result of that cultivation they had practically disappeared even by the year 1870, that the trees had subsequently grown into forests and they had also been destroyed by about the year 1901, and that therefore there companyld number have been any virgin forest left surviving. Then they referred to the fact that the respondent had been maintaining a large establishment for the preservation of the forests, and that there had been organised activities 1 in fostering the growth of the trees and preserving them from destruction by man and cattle 2 in cultivation of the soil by felling and burning trees from time to time 3 in planned exploitation of trees by marking out the areas into blocks 4 in systematic cutting down of trees of particular girth and at particular heights 5 in planting new trees where patches occur and 6 in watering, pruning, dibbling and digging operations carried on from time to time . And they stated their companyclusion thus All these and similar operations which have been undertaken by the assessee through his huge forest establishment, show that there has been both cultivation of the soil as well as application of human skill and labour, both upon the land and on the trees themselves. It cannot be assumed therefore that all the trees are of spontaneous growth. The indications, on the other hand, appear to be that most of them are sprouts springing from burnt stumps. There is numberbasis for the assumption made by the Income-tax Department that all the trees are forty years old and that they owe their existence to spontaneous growth. Apart from that it will be numbericed that what distinguishes the present case from all the reported decisions is that practically the whole of the forest area has been subjected to process of Podu cultivation spreading over several decades so that it is impossible to say that there is any virgin forest left. The onus was certainly upon the department to prove that the income derived from the forest was chargeable, to tax and fell outside the scope of the exemption mentioned in Section 4 3 viii . In this view, they held that the Department had failed -to establish that the income derived from the sale of trees was number agricultural income, and answered the reference in favour of the respondent. The learned Judges, however, granted a certificate to the appellant under s. 66 A 2 of the Act, and that is how the appeal companyes before us. At the very outset, we should dissent from the view expressed by the learned Judges that the burden is on the Department to prove that the income sought to be taxed is number agricultural income. The law is well settled that it is for a person who claims exemption to establish it, and there is numberreason why it should be otherwise when the exemption claimed is under the Income-tax Act. The learned Judges were of the opinion that their companyclusion followed on the principle of the law of Income-tax that where an exemption is companyferred by a statute, the State must number get the tax either directly or indirectly , and support for this view was sought in the following observations of Lord Somervell, J., in Australian Mutual Provident Society Inland Revenue Commissioners 1 The rule must be companystrued together with the exempting provisions which, in our opinion, must be regarded as paramount. So far as the rule, if taken I 1946 1 All E.R. 528. in isolation, would have the effect of indirectly depriving the companypany of any part of the benefit of the exemption, its operation must be cut down, so as to prevent any such result, and to allow the exemption to operate to its full extent. These observations have, in our opinion, numberbearing on the question of burden of proof. They merely lay down a rule of companystruction that in determining the scope of a rule, regard must be had to the exemptions engrafted thereon, and that the rule must be so companystrued as number to nullify those exemptions. No such question arises here. There is ample authority for the view that the principle that a person who claims the benefit of an exemption has to establish it, applies when the exemption claimed is under the provisions of the Income-tax Act. Vide the observations of the Lord President and of Lord Adam in Maughan v. Free Church of Scotland 1 and the observations of Lord Hanworth, M. R., in Keren Kayemeth Le Jisroel Ltd. v. The Commissioners of Inland Revenue 2 at p. 36 that the right to exemption under Section 37 must be established by those who seek it. The onus therefore lies upon the Appellants , and of Lord Macmillian at p. 58 that, In my opinion, the Appellants, have failed to bring it within any one of these categories and companysequently have failed in what was essential for them to make out, namely, that this Company is a body of persons established for charitable purposes only. The decisions of Indian Courts have likewise ruled and quite rightly that it is for those who seek exemption under s. 4 of the Act to establish it. Vide Amritsar Produce Exchange Ltd. In re 3 and Sm. Charusila Dassi and others, In re 4 . So far as exemption under s. 4 3 viii is companycerned, the matter is companycluded by a decision of this Court given subsequent to the decision number under appeal. In Commissioner of Income-tax v. Venkataswamy Naidu 5 , this Court held, reversing the judgment of the High Court of Madras, that it 1 1803 3 Tax Cas. 207, 21 O. 2 1931 17 Tax CaS. 27. 3 1937 5 I.T.R. 307, 327. 4 1946 14 I.T.R. 362, 370. 5 1956 29 I.T.R. 529, 534. was for the assessee to prove that the income sought to be taxed was agricultural income exempt from taxation under s. 4 3 viii . Bhacgwati, J., delivering the judgment of the Court observed the High Court erroneously framed the question in the negative form and placed the burden on the Income-tax Authorities of proving that the income from the sale of milk received by the assessee during the accounting year was number agricultural income. In order to claim an exemption from payment of incometax in respect of what the assessee companysidered agricultural income, the assessee had to put before the Income-tax Authorities proper materials which would enable them to companye to a companyclusion that the income which was sought to be assessed was agricultural income. It was number for the Income-tax Authorities to prove that it was number agricultural income. It was this wrong approach to the question which vitiated the judgment of the High Court and led it to an erroneous companyclusion. On the inerits, the question what is agricultural income within s. 2 1 of the Act is the subject of a recent decision of this Court in The Commissioner of Income-tax, West Bengal, Calcutta v. Raja Benoy Kumar Sahas Roy 1 . There, it was held that before an income companyld be held to be agricultural income, it must be shown to have been derived from land by agriculture or by one or the other of the operations described in cls. i and ii of s. 2 1 b of the Act, that the term St agriculture meant, in its ordinary sense, cultivation of the field, that in that sense it would companynote such basic operations as tilling of the land, sowing of trees, plantation and the like, and that though subsequent operations such as weeding, pruning, watering, digging the soil around the growth and removing undergrowths companyld be regarded as agricultural operations when they are taken in companyjunction with and as companytinuation of the basic operations mentioned before, they companyld number, apart from those operations, be regarded as bearing the character of agricultural operations. 1 1958 S.C.R. 101, 155, 158, 160. It is only observed Bhagwati, J., delivering the judgment of the Court, if the products are raised from the land by the performance of these basic operations that the subsequent operations attach themselves to the products of the land and acquire the characteristic of agricultural operations But if these basic operations are wanting the subsequent operations do number acquire the characteristic of agricultural operations. Dealing with trees which grow wild, Bhagwati, J., observed It is agreed on all hands that products which grow wild on the land or are of spontaneous growth number involving any human labour or skill upon the land are number products of agriculture and the income derived therefrom is number agricultural income. There is numberprocess of agriculture involved in the raising of these products from the land. The law being thus settled, in order to decide whether the income received by the respondent by the sale of trees in his forests was agricultural income or number, the crucial question to be answered is, were those trees planted by the proprietors of the estate, or did they grow spontaneously ? If it is the latter, it would be wholly immaterial that the respondent has maintained a large establishment for the purpose of preserving the forests and assisting in the growth of the trees, because ex hypothes, he performed numberbasic operations for bringing the forests into being. Now, the Tribunal has clearly found that there were numberplantations of trees by the estate authorities worth the name, and that the trees, the income from which is the subject matter of the assessments, must have been of sponta- neous growth. That is a finding of fact which is binding on the Court in a reference under s. 66 1 of the Act. The learned Judges declined to accept this finding, because they companysidered that the Tribunal had number appreciated the true significance of Podu cultivation. That, in our opinion, is a misdirection. If the point for decision had been whether the forest was a virgin forest or whether it had subsequently sprung up, the evidence relating to Podu cultivation would have been very material. But the point for decision is number whether the forests were ancient and primeval, but whether they had been planted by the estate authorities, and on that, the Podu cultivation would have numberbearing. As a result of the Podu cultivation, the original forests would have disappeared. But the question would still remain whether the forest which again sprang up was of spontaneous growth, or was the result of plantation. Now, there is numberevidence that as and when the jungle had disappeared under Podu cultivation, the estate intervened and planted trees on the areas thus denuded. On the other hand, the learned Judges themselves found that after the destruction of the original forests in the process of Podu cultivation, there was a fresh growth of forests from the stumps of the trees which had been burnt. If that is the fact, then the new growth is also spontaneous and is number the result of any plantation. In fairness to the learned Judges, it must be observed that at the time when they heard the reference there was a companyflict of judicial opinion on the question whether subsequent operations alone directed to the preservation and improvement of forests would be agricultural operations within s. 2 1 of the Act and the view they took was that such operations when companyducted on a large scale as in the present case would be within s. 2 1 of the Act. It was in that view that they observed that it is therefore idle to regard tilling as the sole and indispensable test of agriculture . The decision of the learned Judges was really based on the view that though trees in the forest had number been planted by the estate authorities, the latter had performed subequent operations of a substantial character for the maintenance and improvement of the forest, and that, in companysequence, the income was agricultural income. This view is numberlonger tenable in view of the decision of this Court in The Commissioner of Income-tax, West Bengal, Calcutta v. Raja Benoy Kumar Sahas Roy 1 . It is companytended by Mr. Viswanatha Sastri for the 1 1958 S.C.R. 101, 155, 158, 160. respondent that on the facts established in the evidence, the proper companyclusion to companye to is that the trees sold by the respondent had been planted by the estate authorities, and that the decision of the High Court that the income thus realised is within the exemption under s. 4 3 viii companyld be supported even on the view of law taken in The Commissioner of Income-tax, West Bengal, Calcutta v. Raja Benoy Kumar Sahas Roy 1 . The argument was that there was unimpeachable evidence that the old forests had disappeared under Podu cultivation, that the estate had been regularly engaged in planting trees at least from the year 1904 as is shown by the accounts of the zamin, that it was a reasonable inference to make that there had been similar plantations even during the years prior to 1904 numberwithstanding that numberaccounts were produced for those years, because it would number be reasonable to expect that such accounts would number be available, that though the amount shown as spent for plantation might number be companysiderable, that was understandable when regard is bad to the fact that the agricultural operations were companyducted on the hills and number on the plains, that, on these facts, it would be proper to companyclude that the forests were in their entirety the result of plantation. It would be ail erroneous approach, it was argued, to call upon the assessee to prove tree by tree that it was planted. Now, these are matters of appreciation of evidence on what is essentially a question of fact, viz., whether the trees were of spontaneous growth or were products of plantation. On this, the Tribunal has given a clear finding on a companysideration of all the material evidence, and its finding is final and number open to challenge in a reference under s. 66 1 of the Act. Even the learned Judges of the High Court who companysidered themselves free to review that finding-and, as already pointed out, without justification, companyld only observe that the trees must have mostly grown from the slumps left when the forests were burnt for purposes of Podu cultivations finding which is fatal to the companytention number urged for the respondent that they I 1958 S.C.R. 101, 155, 158, 160. were the result of plantation. We are of opinion that there are numbergrounds on which the finding of the Tribunal companyld be attacked in these proceedings. It remains to deal with one other companytention urged on behalf of the respondent, and that is based on the fact that the amounts spent in the upkeep of the forrests were large in companyparison with the receipts therefrom. The following are the figures relating to the forest receipts and expenses for the years with which the present assessments are companycerned Years Receipts Expenses 1942-43 Rs. 438,894 Rs. 174,437 1943-44 Rs. 407,447 Rs. 209,895 1944-45 Rs. 552,122 Rs. 228,830 1945-46 Rs. 372,971 Rs. 247,216 1946-47 Rs. 689,366 Rs. 460,369 The argument is that from the high proportion of the expenses in relation to the receipts it companyld be inferred that the income from trees planted by the estate formed a substantial portion of the income derived from the forests. And support for this companyclusion is sought in the following observations in The Commissioner of Income-tax, West Bengal, Calcutta v. Raja Benoy Kumar Sahas Roy 1 The expenditure shown by the assessee for the maintenance of the forest is about Rs. 17,000 as against a total income of about Rs. 51,000. Having regard to the magnitude of this figure, we think that a substantial portion of the income must have been derived from trees planted by the proprietors themselves. To appreciate the true import of these observations, we must have regard to the companytext in which they occur. The facts found in that case were that portions of the forest which was originally of spontaneous growth had gradually been denuded, that the propritor had planted trees in the areas so denuded, that this had gone on for a period of over 150 years, and that therefore the whole of the income derived from 1 1958 S.C.R. 101, 155, 158, 160. the forest cannot be treated as number-agricultural income . It was then observed that If the enquiry had been directed on proper lines, it would have been possible for the Income- tax authorities to ascertain how much of the income is attributable to forest of a spontaneous growth and how much to trees Planted by the proprietors , but that, in view of the long lapse of time, it was number desirable to remand the case for enquiry into the matter. Then follow the observations on which the respondent relies, and when read in the light of the findings that the plantations made by the proprietors were number negligible, they mean numberhing more than that out of the total income a substantial portion was likely to be agricultural income, and that it was therefore number a fit case for ordering fresh enquiry These observations do number lay down that if companysiderable amounts are expended in the maintenance of forests, then it must be held that the trees were planted by the proprietors. They only mean that if a companysiderable portion of the forests is found to have been planted, a substantial portion of the forest income may be taken to have been derived therefrom. And this too, it must be remarked, is only a presumption of fact, the strength of which must depend on all the facts found. In the face of the clear finding in the present case that the forests with which the assessment years are companycerned were of spontaneous growth, the observations quoted above can be of numberassistance to the respondent. It is scarcely necessary to add that the observations If the enquiry bad been directed on proper lines, it would have been possible for the Income-tax authorities to ascertain how much of the income is attributable to forest of spontaneous growth and how much to trees planted by the proprietors quoted above cannot be read, as was sought to be done for the respondent, as throwing on the Department the burden of showing that the income sought to be taxed was number agricultural income. That, in their companytext, is number the true meaning of the observations, and the law is as laid down in Commissioner of Income-tax v. Venkataswamy Naidu 1 1956 29 I.T.R. 529, 534. In the result, this appeal is allowed, the order of the Court below is set aside and the reference is answered in the affirmative.

Case appeal was accepted by the Supreme Court

Sarkar, J. This is an appeal by the assessee against the order of the Appellate Tribunal dated May 8, 1953, whereby that Tribunal companyfirmed the Appellate Assistant Commissioners order of July 23, 1951, and the only question is whether the appellant is liable under section 4 1 b iii of the Income-tax Act to pay tax on Rs. 1,20,000 remitted by him from Srinagar in Kashmir to British India in the relevant accounting year as his profits accumulated outside British India and brought by him into British India. This appeal arises out of the proceedings for the assessments of the appellants income for the year 1945-46. The judgment had been carrying on a business in cloth in Srinagar for a long time. In 1943- 44 he started a similar business in Amritsar. It appears that in the relevant previous year, that is, between March 25, 1944, and April 12, 1945, the appellant had remitted from Srinagar to British India and aggregate sum of Rs. 5,00,850 for the purchase of goods there of which Rs. 3,00,000 were found by the Income-tax Officer, Amritsar, who was in charge of the assessment, to have been his income in Kashmir accrued prior to such year and after March 31, 1940. The Income-tax Officer had therefore directed him to pay tax on the said sum of Rs. 3,00,000. The appellant preferred an appeal from this order to the Appellate Assistant Commissioner who held that the amount remitted out of the income in Srinagar was Rs. 1,20,000 and number Rs. 3,00,000 as found by the Income-tax officer, and that the appellant was liable to pay tax on this sum. The appellant then took the matter in appeal to the Appellate Tribunal. It appears to have been companytended by the appellant before the Tribunal that the moneys had been remitted from Srinagar out of the working funds there and number out of past accumulated income. The Tribunal came to the companyclusion that numbersufficient opportunity had been given to the appellate to establish that the profits sought to be taxed were number mixed up in the working funds in Srinagar. In that view of the matter the Tribunal remanded the case to the Income-tax officer for a proper enquiry and report as to whether, and if so, to what extent, the moneys sent to British India and utilised there in the purchase of goods included preceding years profits available for remittance to British India. When the matter thus came back to the Income-tax Officer for the enquiry, it was admitted by the appellant that the profits in Srinagar were mixed up with the working funds there and it was number possible for him work out from his accounts to what extent the moneys sent to British India were the working funds of the current year. In view of the this admission, the only materials available on which the further enquiry companyld be made by the Income-tax officer were those which had been produced at the time of the first assessments and that officer having companysidered these materials, reported that the Appellate Assistant Commissioners view that the profits transmitted to British India amounted to Rs. 1,20,000 was justified. The Tribunal then took up the case again on the basis of this report. It held that having admitted that the profits in Srinagar were mixed up with the working funds, the appellant had failed to show that the remittances to British India had number been out of the profits and that, therefore, the burden which lay on the appellant of rebutting the presumption that remittances were made out of profits had number been discharged. It appears from the judgment of the Tribunal that at he hearing before it after the report of the Income-tax officer had been received, the appellant for the first time sought to argue that there were numberremittances to British India at all. The matter was then put in this way The remittances had been made on account of price of goods purchased by the appellants in British India. These remittances had been made by telegraphic money orders despatched from Srinagar post offices and by bank drafts sent by post from Srinagar. The remitter, that is the appellant, had number companytrol over the moneys companyered by the telegraphic money-orders or the bank drafts, once the instructions for the telegraphic money-orders had been give or the bank drafts issued and, therefore, the moneys companyered by them were thereafter number the appellants moneys. The moneys were despatched by telegraphic money-orders and bank drafts sent by post under the instructions of the sellers of the goods and, therefore, the post office was really the agent of these sellers. That being so, when the moneys or drafts were put into the post office at Srinagar for transmission to the sellers, they had really become the property of the sellers and the appellant ceased to be the owner of them. Therefore, the moneys that were brought into India under this arrangement and by this method were the moneys of the sellers and number really the appellants moneys and whether they were his profits in Srinagar or number, the appellant was number liable to pay tax on them. The Tribunal felt that this companytention of the appellant raised new questions of fact which companyld number be decided without taking further evidence and it thereupon did number allow the appellant to raise it. As there was numberother objection to the Appellate Assistant Commissioners order, the Tribunal dismissed the appeal from it. The appellant then made an application to the Tribunal under section 66 1 of the Act for a reference of certain questions to the High Court of Punjab for its decision but this application was dismissed. the appellants did number thereafter make any application to the High Court under section 66 2 for an order on the Tribunal to refer the question to the former as the Department had in the meantime attached the appellants properties in British India and was proceedings to realise the amount of the tax levied, and the appellant wanted a stay of the proceedings for the realisation of the tax which, he was advised, the High Court companyld number grant in an application under section 66 2 . In those circumstances the appellant applied to this companyrt for special leave to appeal from the judgment of the Tribunal and such leave was granted on February 1, 1954. The present appeal arises from the leave so granted. This companyrt at the same time ordered a stay of the proceedings for the realisation of the tax from the appellant. The learned companynsel for the appellants raised before us the question which the Tribunal had number permitted the appellant to raise before it, namely whether the moneys brought into British India were the appellants moneys or number. We do number think it necessary to go into the merits of this companytention and indeed we cannot decide it on the materials on the record. We are clear in our mind that the Tribunal was right in holding that the question raised by the appellant companyld number be decided without taking further evidence. The Tribunal refused permission to the appellant to lead further evidence and it had full jurisdiction to do so. We see numberreason to interfere with the exercise of the Tribunals discretion in the matter. We find numberhing to throw any doubt on the Tribunals finding that the present companytention was raised by the appellant for the first time when the case came back to the Tribunal on the report of the Income-tax Officer. Indeed it is quite clear to us that if this companytention had been raised earlier, the remand to that officer would have been wholly unnecessary and the appellant himself would have pointed this out especially in view of the fact that he was number in a position to show that his profits at Srinagar had number been mixed up with the working funds, to enable him to do which alone the case had been remanded. It was companytended before us that the Tribunal had in fact asked the appellant to produce affidavits to prove that arrangements with the sellers was regarding the despatch of the moneys and a certificate from the bank to show that the moneys had been sent by drafts and telegraphic money orders and that once a draft was issued to a beneficiary it companyld number be recalled by the sender. It was said that the appellants had in fact produced the affidavits and certificate. These are actually included in the printed records. The respondent, the Commissioner of Income-tax, Punjab, companytended that the Tribunal had never asked for affidavits or certificate. We are included to think that the respondents is right, for we do number find anywhere any order by the Tribunal calling for the affidavits or the certificate. Further it was open to the Tribunal, even if it had earlier given permission to the appellants to produce the affidavits and the certificate, number to accept them, if it decided number to allow the appellant to raise the new companytention, as it in fact did decide. We may also state that we are number any events satisfied that the affidavits and the certificate support the appellants companytention. It is unnecessary to go into this aspect further for we think that the Tribunal was justified in refusing leave to the appellant to raise a new companytention. We find that there is numbervalid objection to the Tribunals judgment and we, therefore, dismiss this appeal with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 108 of 1954. Appeal from the judgment and decree dated March 21, 1952, of the Calcutta High Court in Appeal from Appellate Decree No. 971 of 1950, arising out of the judgment and decree dated August 29, 1950, of the Court of District Judge of Zillah Burdwan in Title Appeal No. 247/16 of 1948 against judgment and decree dated September 25, 1948, of the Court of Additional Sub-Judge, 1st Court, Burdwan, in Title Suit No. 7 of 1946/27 of 1947. 1311 C. Chatterjee and Sukumar Ghose, for the appellant. N. Banerjee and P. K. Ghose, for the respondents. 1958. September 18. The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-This is an appeal by the plaintiff against the judgment of the High Court of Calcutta in a second appeal which, in reversal of the judgments of the Courts below dismissed his suit, which was one in ejectment. The suit property is a Mahal of the extent of 84 Bighas 18 Cottas situated within lot Ahiyapur village, which is one of the villages forming part of the permanently settled estate of Burdwan Zamindari. This village was granted by the Maharaja of Burdwan in Patni settlement to the predecessors- in-title of defendants I to 7. The exact date of this grant does number appear, but it is stated that it was sometime prior to the enactment of the Bengal Patni Taluks Regulation, 1819 Bengal Regulation VIII of 1819 , hereinafter referred to as the Regulation, and numberhing turns on it. The Mahal with which this litigation is companycerned, had been at or prior to the permanent settlement set apart as Chaukidari Chakaran lands that is to say, they were to be held by the Chaukidars for rendering service in the village as watchmen. In 1870, the Village Chaukidari Act, 1870 Ben. VI of 1870 , hereinafter referred to as the Act, was passed, and s. 48 of that Act provides that all Chaukidari Chakaran lands assigned for the benefit of any village shall be transferred to the zamindar of the estate in the manner and subject to the provisions companytained in the Act. Under s. 50, the Collector is authorized to make an order transferring those lands to the Zamindar after determining the assessment payable thereon, and s. 51 enacts that Such order shall operate to transfer to such zamindar the land therein mentioned subject to the amount of assessment therein mentioned, and subject 1312 to all companytracts theretofore made, in respect of, under, or by virtue of, which any person other than the zamindar may have any right to any land, portion of his estate, or tenure, in the place in which such land may be situate. In accordance with the provisions aforesaid, the suit properties were transferred to the Maharaja of Burdwan, and on June 3,1899, he granted the same to the predecessors-in- title of defendants I to 7, who at that time held the Patni interest in respect of lot Ahiyapur. Under the grant which has been marked as exhibit B, the yearly rental for the area was fixed at Rs. 126-8 as., out of which Rs. 84-4 as., had to be paid to the Panchayat within the 7th of Baisakh for being credited to the Chaukidari Fund and the balance of Rs. 42-4 as., was to be paid to the Zamindar within the month of Chaitra. Exhibit B also provides that in default of payment of kist the lands are liable to be sold in proceedings taken under the Bengal Regulation VIII of 1819. Acting under this clause, the Maharaja applied under s. 8 of the Regulation to bring the suit lands to sale for realisation of arrears, and at the auction held on May 15, 1937, himself became the purchaser. On February 13, 1941, he granted the lands again on Patni to the appellant, who filed the suit, out of which the present appeal arises, in the Court of the Subordinate Judge, Burdwan, to recover possession thereof from the defendants alleging that they had trespassed thereon. The respondents companytested the suit on the ground that, in fact, there were numberarrears of rent due under Exhibit B, and that the sale was therefore void. The Subordinate Judge held that there were arrears of rent due from the respondents, and that further as they had number sued to set aside the sale under s. 14 of the Regulation within the time limited by law, they companyld number set up its invalidity as a defence to the action in ejectment. The defendants preferred an appeal against this judgment to the District Court of Burdwan, and there raised a new companytention that under the grant, Exhibit B, the suit lands became part of lot Ahiyapur, and that a sale of those lands was 1313 illegal as being a sale of a portion of the Patni. The District Judge after observing that the point was taken for the first time, held on a companystruction of Exhibit B that it created a new Patni, and that it companyld therefore be brought to sale, and he also held that s. 14 of the Regulation operated as a bar to the validity of the sale being questioned on the ground that the rent claimed was number, in fact, due. He accordingly dismissed the appeal. The respondents took the matter in second appeal to the High Court, and that was heard by a Bench companysisting of Das Gupta and Lahiri JJ. who differed from the District Judge both on the companystruction of Exhibit B and on the bar of limitation based on s. 14 of the Regulation. They held that the effect of Exhibit B was merely to make the suit lands part and parcel of the Patni lot Ahiyapur, and that, therefore, the sale of those lands only was bad, as being a sale of a part of the Patni. They further held that as such a sale was void, s. 14 of the Regulation had numberapplication. They accordingly allowed the appeal, and dismissed the suit. It is against this judgment that the present appeal has been brought on a certificate granted by the High Court under Art. 133 1 a . Mr. N. C. Chatterjee for the appellant urged the following companytentions in support of the appeal 1 The defendants did number raise either in the written statement or during the trial, the plea that under the sanad, Exhibit B, the Chaukidari Chakaran lands companyprised therein became part of the Patni settlement of lot Ahiyapur, and, in companysequence, their sale was bad as being of a part of the Patni, and the learned Judges should number have allowed that point to be raised in appeal. 2 Exhibit B properly companystrued must be held to create a new Patni distinct from lot Ahiyapur, and its sale is therefore valid. 3 Assuming that the sale is invalid as being of a part of a tenure, the only right of the defendants was to sue to have it set aside, as provided in s. 14 of the Regulation, and that number having been done, it is number open to them to attack it companylaterally in these proceedings. We see numbersubstance in the first companytention. It is 1314 true that the defendants did number put forward in the trial Court the plea that the effect of Exhibit B was to incorporate the suit lands in lot Ahiyapur Patni, and that, in companysequence, the sale was illegal as being of a part of the Patni. On the other hand, the written statement proceeds on the view that Exhibit B created a new Patni unconnected with lot Ahiyapur, and the only defence raised on that basis was that numberarrears of rent were due under Exhibit B, and that the sale was therefore invalid. But the true nature of the grant under Exhibit B is a matter to be decided on a companystruction of the terms of the document, and that is a question of law. It is argued for the appellant that it would be proper in determining the true character of the grant under Exhibit B to take into account surrounding circumstances, that to ascertain what those circumstances are, it will be necessary to take evidence, and that, in companysequence, a question of that kind companyld number be permitted to be agitated for the first time in appeal. But it is well-settled that numberevidence is admissible on a question of companystruction of a companytract or grant, which must be based solely on the terms of the document, there being numbersuggestion before us that there is any dispute as to how the companytents of the document are related to existing facts. Vide Balkishen Das v. Legge 1 and Maung Kyin v. Ma Shwe La 2 . It should, moreover, be mentioned that when the defendants sought to raise this companytention in their appeal in the District Court, numberobjection was taken by the plaintiff thereto. Under the circumstances, the learned Judges were right in allowing this point to be taken. This companytention must therefore be rejected. The next point for determination is as to the true character of the grant under Exhibit B, whether it amounts to a new Patni with reference to the Chaukidari Chakaran lands as companytended for by the appellant, or whether it incorporates those lands in the Patni of lot Ahiyapur, so as to make them part and parcel of the lands companyprised therein, as is maintained by the respondents. To appreciate the 1 1899 L.R. 27 I.A. 58, 65. 2 1917 L.R- 44 I.A. 236, 243. 1315 true position, it is necessary to examine what the rights of the Zamindar and of the Patnidar were with respect to Chaukidari Chakardan lands at the time of the grant, Exhibit These lands had been originally set apart as remuneration for the performance of services by the village chaukidars as watchmen, and for that reason when the village was granted to the Zamindar in permanent settlement, the income therefrom was number taken into account in fixing the jama payable by him, though they passed to him under the permanent settlement. Then came the Village Chaukidari Act, and under that Act the Government put an end to the services of the Chaukidars as village watchmen, resumed the lands and imposed assessment thereon, and, subject to it, transferred them to the Zamindar and where the Zamindar had already parted with the village in which the lands were situate, by granting Patni, it became necessary to define the rights of the Zamindar and the Patnidar with reference to those lands. Dealing with this matter, s. 51 of the Act provides that the title of the Zamindar on resumption and transfer by the Government shall be subject to all companytracts theretofore made . Under this section, the Patnidar would be entitled to the Chaukidari Chakaran lands in the same right and on the same terms on which lie held the village in which they are situate. The nature of this right has been the subject of companysideration in numerous authorities, and the law on the subject is well-settled. In Ranjit Singh v. Maharaj Bahadur Singh 1 , it was held by the Privy Council that though the reservation under s. 51 is of rights under companytracts made by the Zamindar and the word companytract primarily means a transaction which creates personal obligations, it might also refer to transactions which create real rights, and that it was in that sense the word was used in s. 51, and that accordingly the Patnidar was entitled to institute a suit against the Zamindar for possession of those lands and was number obliged to suit for specific performance. But this does number mean that the Patnidar is 1 1918 L.R. 45 I.A. 162. 1316 entitled to hold the lands free of all obligations. He is under a liability to pay to the Zamindar the assessment due thereon, when it is fixed under s. 50, and also a share of profits. Vide Bhupendra Narayan Singh v. Narapat Singh 1 , where it was held by the Privy Council that when Chaukidari Chakaran lands included in a Patni settlement had been resumed and transferred to the Zamindar under s. 51 of the Act, he is entitled to the payment of a fair and equitable rent in respect thereof, and that the fixing of the rent is a companydition to the Patnidar being put in possession. Vide also Rajendra Nath Mukherjee v. Hiralal Mukherjee 2 and Gopendra Chandra v. Taraprasanna 3 . These being the rights and obligations of the Zamindar and the Patnidar under s. 51 of the Act, a grant of the Chaukidari Chakaran lands by the former to the latter serves, in fact, two purposes. It recognises that the grantee is entitled to hold those lands by virtue of his title as Patnidar of the village of which they form part, and it fixes the amount payable by him on account of assessment and share of profits. The question then arises as to what the exact relationship is in which the new grant stands to the original Patni grant. Now, when s. 51 of the Act recognises and saves rights which had been acquired under companytract with the Zamindar, its reasonable implication is that the rights so recognised are the same as under the companytract, and that, in companysequence, the settlement of the Chaukidari Chakaran lands in Patni must be taken to be a companytinuance of the Patni of the village in which they are included. But it is open to the parties to agree that the Chaukidari Chakaran lands should form a new and distinct Patni, and the result of such an agreement will be that while the grantee will hold those lands in Patni right, that is to say, the tenure will be permanent, heritable and alienable so far as his liability to pay jama and the companyresponding right of the Zamindar to sell it under the Regulation if there is any default in the 1 1925 L.R. 52 I.A. 355. 2 1906 14 C.W.N. 995. 3 1910 I.L.R. 37 Cal. 598. 1317 payment thereof are companycerned, the number grant will be an entity by itself independent of the original Patni. That that companyld be done by agreement of parties is well-settled, and is number disputed before us. If that is the true position, then the real question to be companysidered is, what is the agreement of parties with reference to the Chaukidari Chakaran lands, whether they are to be companystituted as an independent Patni or whether they should be treated as a companytinuation of the original Patni or an accretion thereto, and the answer to it must depend on the interpretation to be put on the grant. It is number necessary to refer to the material terms of Exhibit B under which the Chaukidari Chakaran lands were granted to the predecessors of respondents I to 7. It begins by stating that the Patnidars of lot Ahiyapur appeared before the Zamindar and ,prayed for taking Patni settlement of the said 84 Bighas 18 Cottas of land at a yearly rental of Rs. 126/8 as., and then provides how the amount is to be paid. Then there is the following clause, which is important You will pay the rent etc., Kist after Kist according to the Kistbandi in accordance with law, and if you do number pay the same, I will realise the arrears together with interest and companyts by causing the aforesaid lands to be sold by auction by instituting proceedings under Regulation VIII of 1819 and other laws which are in force or will companye into force Then follow provisions relating to the transfer by the Patnidars of the aforesaid lands , succession by inheritance or by will to the aforesaid lands and the registration of the name of the transferee or successor in the Sherista, and it is expressly stated that so long as the name of the new Patnidar is number recorded in the Sherista, the former Patnidar whose name is recorded in the Sherista will remain liable for the rent, and on a sale of the Mahal by auction on institution of proceedings against him under Regulation VIII of 1819 or any other law that will be in force for realisation of arrears of rent, numberobjection thereto on the Part of the new Patnidar can be entertained. 1318 Then ,there are two clause on which on the respondents rely, and they are in these terms If in future it transpires that any other persons besides yourselves have Patni rights in the Patni interest of the, said lot Ahiyapur, such persons shall have Patni rights in these Chakaran lands also to the same extent and in the same manner as they will be found to have interests in the Patni of the aforesaid lot, and if for the said reason any person puts forward any claim against the Raj Estate and the Raj Estate has to suffer any loss therefor, you will make good the said claim and the loss without any objection. If in future the Patni interest in the said lot Ahiyapur be transferred for liability for arrears of rent or if the same companyes to an end for any reason, then your Patni interest in these Chakaran lands also will be transferred or will companye to an end alongwith the original Patni ,simultaneously. It is on these two clauses that the learned Judges in the Court below have based their decision that the intention of the par-ties was to treat the suit lands as part of the Patni of lot Ahiyapur. Now, it cannot be disputed that the two clauses aforesaid afford companysiderable support to the companyclusion to which the learned Judges have companye. The first clause provides that if besides the grantee under Exhibit B there were other persons entitled to Patni rights in lot Ahiyapur, those persons also shall have Patni rights in Chaukidari Chakaran lands to the same extent as in Patni Ahiyapur. That clearly means that the rights companyferred on the grantees under Exhibit B have their roots in the Patni lot of Ahiyapur. Likewise, the provision in the last clause that the grantees will lose their rights to the Chaukidari Chakaran lands if their interest in Ahiyapur Patni was sold clearly suggests that the grant under Exhibit B is to be an annexe to the grant of Ahiyapur. As against this, the appellant argues that the other clauses in Exhibit B quoted above strongly support his companytention, and that when the document is read as a whole, it unmistakably reveals an intention to treat the suit lands as a distinct Patni. We must number 1319 refer to these clauses. Exhibit B begins by reciting that the grantees desired to take a Patni settlement of 84 Bighas 18 Cottas, which is some indication, though number very strong, that it is to be held as a distinct entity. We have then the clause which provides that when there is default in the payment of kist, the lands are liable to be sold in proceedings instituted under the Regulation. Now, the law had long been settled that a sale of a portion of a Patni is bad, but that if by agreement of all the parties interested different portions thereof are held under different sadads, which provide for sale of those portions for default in pay- ment of kist payable respectively thereon, then each of those sanads might be held to have created a separate Patni in respect of the portion companyprised therein. Vide Mohadeb Mundul v. Mr. H. Cowell 1 and Monomothonath Dev and another Mr. G. Glascott 2 . When, therefore, the Zamindar and the Patnidar agreed under Exhibit B that the lands companyprised therein companyld be sold under the Regulation when there was default in payment of kist fixed therefor, they must clearly have intended that those lands should be companystituted into a distinct Patni. Otherwise, the clause will be inoperative and void, and indeed, the learned Judges in the Court below have, on that ground, declined to give any effect to it. Now, it is a settled rule of interpretation that if there be admissible two companystructions of a document, one of which will give effect to all the clauses therein while the other will render one or more of them nugatory, it is the former that should be adopted on the principle expressed in the maxim ut res magis valeat quam per-eat . What has to be companysidered therefore is whether it is possible to give effect to the clause in question, which can only be by companystruing Exhibit B as creating a separate Patni, and at the same time reconcile the last two clauses with that companystruction. Taking first the provision that if there be other persons entitled to the Patni of lot Ahiyapur they are to have the same rights in the land companyprised in Exhibit B, 2 1873 20 Weekly Reporter 275. 1320 that numberdoubt posits the companytinuance in those persons of the title under the original Patni. But the true purpose of this clause is, in our opinion, number so much to declare the rights of those other persons which rest on statutory recognition, but to provide that the grantees tinder the document should take subject to those rights. That that is the purpose of the clause is clear from the provision for indemnity which is companytained therein. Moreover, if on an interpretation of the other clauses in the grant, the companyrect companyclusion to companye to is that it creates a new Patni in favour of the grantees thereunder, it is difficult to see how the reservation of the rights of the other Patnidars of lot Ahiyapur, should such there be, affects that companyclusion. We are unable to see anything in the clause under discussion, which militates against the companyclusion that Exhibit B creates a new Patni. Then there is the clause as to the cesser of interest of the grantees in the Chaukidari Chakaran lands when their title to lot Ahiyapur companyes to an end, and according to the respondents, this shows that under Exhibit B the Chaukidari Chakaran lands are treated as part and parcel of the Ahiyapur Patni. If that were so, a sale of lot Ahiyapur must carry with it the Chaukidari Chakaran lands, they being ex hypothesi, part and parcel thereof, and there was numberneed for a provision such is is made in the last clause. But that clause would serve a real purpose if the Patni under Exhibit B is companystrued as separate from that of lot Ahiyapur. In that view, when the major Patni of lot Ahiyapur is sold, the intention obviously is that the minor Patni under Exhibit B, should number stand out but be extinguished,-a result which companyld be achieved only by a special provision. We should finally refer to the clauses in Exhibit B providing for transfer of or succession to the Chaukidari Chakaran lands and for the recognition of such transferee or successor as a Patnidar of those lands. It is clear from these provision,s that such a transferee or successor is to hold the lands as a Patnidar, different from the Patnidar of lot Ahiyapur. Reading these clauses along with the last clause, it seems clear that the intention of the parties 1321 was that while a transfer of the Ahiyapur Patni by sale should extinguish the title of the holders of the Chaukidari Chakaran lands a transfer of these lands would have numbereffect on the title to the lot Ahiyapur Patni. Construing Exhibit B, as a whole, we are of opinion that the intention of the parties as expressed therein was that the Chaukidari Chakaran lands should be held as a distinct Patni. We must number refer to the decision on which the learned Judges in the Court below have relied in support of their companyclusion. In Kanchan Barani Debi v. Umesh Chandra 1 , the facts were that the Maharaja of Burdwan had created a Patni of lot Kooly in 1820. The Chaukidari Chakaran lands situated within that village were resumed under the Act and transferred to the Zamindar who granted them in 1899 to one Syamlal Chatterjee in Patni on terms similar to those in Exhibit B. In 1914 the Patni lot Kooly was sold under the Regulation, and purchased by Sint. Kanchan Barani Debi. She then sued as such purchaser to recover possession of the Chaukidari Chakaran lands. The defendants who represented the grantees under the Patni settlement of 1899 resisted the suit on the ground that the sale of Patni Kooly did number operate to vest in the purchaser the title in the Chaukidari Chakaran lands, as they formed a distinct Patni. Dealing with this companytention, B. B. Ghose J. who delivered the judgment of the Court, observed companycerned to alter the terms of the original patni if they chose to do so and what we have to see is whether that was done. In order to do that, we have to examine the terms of the pattah by which the Chaukidari Chakaran lands were granted to Syamlal Chatterjee. The learned Judge then refers to the two clauses company- responding to the last two clauses in Exhibit B, and companyes to the companyclusion that their effect was merely to, restore the position as it was when the original Patni was created, and that, in companysequence, the purchaser was entitled to the Patni as it was created in 1820, A.I.R. 1925 Cal. 807, 1322 and that the plaintiff was entitled to the possession of the Chaukidari Chakaran lands as being part of the Patni. Now, it is to be observed that in deciding that the Chaukidari Chakaran lands granted in 1899 became merged is lot Kooly, as it was in 1820, the learned Judge did number companysider the effect of the clause providing for sale of those lands as a distinct entity under the provisions of the Regulation when there was default in the payment of ret payable thereon under the deed, and that, in our opinion, deprives the deci- sion of much of its value. In the result, we are unable to hold that the two clauses on which the learned Judges base their companyclusion are really inconsistent with the earlier clauses which support the view that the grant under Exhibit B is of a distinct Patni. Nor do we agree with them that the earlier clause providing for the sale of the Chaukidari Chakaran lands in default of the payment of jama, should be companystrued so as number to override the later clauses. If, in fact, there is a companyflict between the earlier clause and the later clauses and it is number possible to give effect to all of them, then the rule of companystruction is well-established that it is the earlier clause that must override the later clauses and number vice versa. In Forbes v. Git 1 , Lord Wrenbury stated the rule in the following terms If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails. In this case the two clauses cannot be reconciled and the earlier provision in the deed prevails over the later. We accordingly hold that Exhibit B created a new Patni and that the sale of the lands companyprised therein is number bad as of a portion of a, Patni. We are companyscious that we are differing from the learned Judges of the Court below on a question relating to a local tenure on which their opinion is, by reason of the special knowledge and experience which they have of it, entitled to the greatest weight. It is also true that the decision in Kanchan Barani Debi v. 1 1922 1 A.C. 256,259. 1323 Umesh. Chandra 1 has stood number for over three decades, though it is pertinent to add that its companyrectness does number appear to have companye up for companysideration in any subsequent decision of the Calcutta High Court, prior to this litigation.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 120-122, 164, 199, 213, 255, 260, 363, 378, 402 407 of 1955, 6, 7, 43, 120, 126, 142, 153, 154, 198, 216 223 of 1956, 32, 49, 60, 61, 141 143 of 1957, 3, 7 104 of 1958. Petitions under Article 32 of the Constitution for the enforcement of fundamental-rights. Achhru Ram and Ganpat Rai, for the petitioners in Petition No. 120/55. R. Prem and Ganpat Rai, for the petitioners in Petitions Nos. 120, 121, 122, 164, 199, 213, 255, 260, 363, 402 407 of 1955, 6, 7, 43, 125, 142, 154, 198, 216 223 of 1956, 32, 60 143 of 1957, 7 104 of 1958. R. Prem and S. D. Sekhri, for the petitioner in Petition No. 378 of 1955. R. Prem and P. C. Aggarwal, for the petitioner in Petition No. 120/56. R. Prem and Raghu Nath, for the petitioner in Petition No. 49/57. R. Prem and K. L. Mehta, for the petitioner in Petition No. 153/56. Kumar, for the petitioner in Petitions Nos. 61 141 of 1957 3 of 1958. N. Sanyal, Additional Solicitor General of India, H. J. Umrigar and T. M. Sen, for the respondent. 1958. October 10. The Judgment of the Court was delivered by DAS, C. J.-By each of these 32 petitions under Art. 32 of our Constitution, which have been heard together, the respective petitioners challenge the companystitutional validity of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953. Himachal 15 of 1954 which is said, to have been passed by the,.Legislative Assembly of the State of Himachal Pradesh created by the Himachal Pradesh and Bilaspur New State Act 32 of 1954 . On November 23, 1954, the President of India gave his assent to the Bill which on being so assented to became the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953, Himachal 15 of 1954 hereinafter called the Abolition Act . On January 26, 1955, this Abolition Act was brought into force by a numberification issued under s. 1 3 thereof. It will be companyvenient at this stage to refer to some of the relevant sections of the Abolition Act. Section 11 companyfers a new right on the tenants to acquire the interests of the land- owners. According to this section numberwithstanding any law, custom, or companytract to the companytrary a tenant other than a sub-tenant shall, on application made to the companypensation officer at any time after the companymencement of the Act, be entitled to acquire, on payment of companypensation, the right, title and interest of the land-owner in the land of the tenancy held by him under the landowner subject to certain terms and companyditions therein mentioned. Section 14 permits the acquisition by the tenant of the rights of the landowner in a portion of the lands of the tenancy in certain specified circumstances on the surrender of the rest of the lands. Section 15 sanctions the acquisition by the State Government of the rights of the landowners by numberification in the Gazette declaring that, as from such date and in respect of such area as may be specified in the numberification, the right, title and interest of the landowner in the lands of any tenancy held under him by a tenant shall stand transferred to and vest in the State Government free from all encumbrances created in such lands by the landowner. Section 16 provides for the payment to the landowner, whose right, title and interest in lands, would be acquired by the State Government under s. 15, of companypensation to be calculated, as far as practicable, according to the provisions of ss. 12 and 13. Section 27 provides that numberwithstanding anything companytained in the provisions of the foregoing sections of that Chapter, a landowner who holds land, the annual land revenue of which exceeds Rs. 125 per year, the right, title and interest of such owner in such land shall be deemed to have been transferred and vested in the State Government free from all encumbrances. Sub-section 3 of this section lays down that the landowner whose right is acquired under subs. 1 by the State Government, shall be entitled to receive companypensation which shall be determined by the Compensation Officer having regard to ss. 17 and 18 of this Act, in accordance with the provisions of Schedule II, but in the case of such occupancy tenant who is liable to pay rent in terms of land revenue or the multiple of land revenue, the companypensation payable to his landowner shall be companyputed in accordance with Schedule I. The companypensation provided in Schedule II to the Abolition Act may in certain cases work out to numbermore than twice the land revenue. Section 39 fixes the maximum rent at one fourth of the crop which, it is apprehended, may number even companyer the land revenue and the local rates and cesses. Section 80 provides for the State management of lands in certain cases therein mentioned. It is number necessary for our present purpose to refer to any of the other provisions of the Abolition Act. On a cursory perusal of the foregoing sections one -may well understand the natural apprehension of the landowners that the provisions thereof are much too drastic and are inconsistent with and take away or at any rate substantially abridge the right to their respective properties companyferred on and guaranteed to them by Part III of our Constitution and thereby infringe the provisions of Arts. 14, 19 or 31. It is, therefore, number surprising that the petitioners in all these petitions, all of whom are landowners, have moved this Court by separate petitions under Art. 32 for the enforcement of their fundamental rights to their respective properties. In each of the several petitions which have been heard together two broad points have been taken, namely- That the Abolition Act is entirely void by reason of its number having been passed by a duly companystituted legislature and That, in any event, the provisions of Ch. III and of Ch. VIII are repugnant to the Constitution. Re i In the First Schedule to the Constitution, as it was originally passed, were set out under the heading Part C States the names of 10 States. In that list of Part C States Bilaspur was shown as item 3 and Himachal Pradesh as item 7. The two States were quite separate, having separate territories respectively described at the foot of the said list in that Schedule as territories which, by virtue of an order made under s. 290A of the Government of India Act, 1935, were immediately before the companymencement of this Constitution being administered as if they were a Chief Commissioners Province of the same name. The Government of Part C States Act 49 of 1951 , hereinafter referred to as the Part C States Act , provides for Legislative Assemblies, Councils of Ministers and Councils of Advisers for Part C States. By s. 2 1 g , however, State is defined to mean any State specified in Part C of the First Schedule to the Constitution other than Bilaspur. Therefore, the Part C State of Bilaspur was excluded from the operation of that Act and was dealt with separately. The Part C State of Himachal Pradesh, as it then was, which is hereinafter called the old Himachal Pradesh was, however, governed by the Part C States Act. Section 3 of that Act provides that there shall be a Legis- lative Assembly for each State and that the allocation of the seats in the Legislative Assemblies of the 6 States therein mentioned shall be as set out in the Third Schedule. According to the Third Schedule, as it stood originally, the total number of seats allocated to the old Himachal Pradesh was 36 including 8 seats reserved for scheduled castes. Section 4 authorises the President to determine by order the companystituencies into which such State shall be divided, the extent of such companystituencies, the number of seats allotted to each such companystituency and the number of seats reserved for the scheduled castes or scheduled tribes. Section 5 prescribes the duration of the Legislative Assemblies. According to that section the Legislative Assembly, unless sooner dissolved, is to companytinue for five years from the date appointed for the first meeting and numberlonger. Section 8 makes the provisions of Part I and Parts III to XI of the Representation of the People Act, 1951 and of any rules and orders made thereunder applicable in relation to an election to the Legislative Assembly of a Part C State as they applied in relation to an election to the Legislative Assembly of a Part A State, subject to such modification as the President may, after companysultation with the Election Commission, by order direct. Section 9 authorises the Chief Commissioner to summon the Legislative Assembly from time to time but provides that six months shall number intervene between its last sitting in one session and the date appointed for its first sitting in the next session. Under s. 10 the Legislative Assembly must, as soon as may be, choose two of its members to be respectively the Speakers and the Deputy Speaker thereof. Section 14 enjoins that every member of the Legislative Assembly shall, before taking his seat, make and subscribe before the Chief Commissioner or some person appointed in that behalf by him an oath or affirmation according to the form set out for the purpose in the Fourth Schedule. The form set out in the, Fourth Schedule ends by affirming that such member will faithfully discharge the duty upon which I am about to enter , which is in companysonance with the provision of the section that oath is to be taken before taking his seat . Section 16 provides for vacation of seats on the happening of certain events therein mentioned. Section 18 provides penalty for sitting, and voting before making and subscribing the oath or affirmation which may extend to Rs. 500 for each day. According to s. 35 the validity of any proceedings in the Legislative Assembly of a State cannot be called in question on the ground of any alleged irregularity of procedure. It is number necessary, for our present purpose, to refer to any other section of the Part C States Act. In exercise of the powers companyferred on him by s. 4 of the Part C States Act, the President duly made an order, determining the companystituencies into which the old Himachal Pradesh would be divided and thereafter in 1952 elections were duly held and 36 members were elected by the voters of the different companystituencies so delimited. Presumably the results of the general elections to the Legislative Assembly of the old Himachal Pradesh and the names of the members elected for the various companystituencies at the said election were duly published under s. 74 of the Representation of the People Act, 1951, in the official gazette by the proper authority as soon after the date or the last of the dates fixed for the companypletion of the said elections as was possible. There is numberdispute that, in exercise of the powers companyferred on him by s. 9 of the Part C States Act, the Chief Commissioner summoned the Legislative Assembly of the old Himachal Pradesh thus companystituted to meet at the appointed time and place. There is also numberdispute that every member of that Legislative Assembly before taking his seat made and subscribed the usual oath or affirmation under s. 14 of the Part C States Act and elected one of the members Shri Jaiwant Ram as the Speaker and that the first session of the Assembly so companystituted companymenced functioning as the Legislative Assembly. of the old Himachal Pradesh. It was in this first session of this Legislative Assembly of the old Himachal Pradesh that in 1953 a Bill Himachal 15 of 1953 which became the Abolition Act was introduced. Pending the passage of that bill into an Act Parliament, on May 8, 1954, enacted an Act called the Himachal Pradesh and Bilaspur New State Act 32 of 1954 , hereinafter I referred to as the New State Act . This Act received the assent of the President on May 28, 1954, and was brought into force by a numberification, dated July 1, 1954, issued by the Government of India in the official gazette under s. 1 2 of the Act. It will be companyvenient at this stage to set out the relevant provisions of this Act on which our decision on this point largely depends. Section 3 of the New State Act says As from the companymencement of this Act there shall be formed by uniting the existing States a new Part C State to be known as the State of Himachal Pradesh hereafter in this Act referred to as the new State . Section 12 provides as follows 12. 1 There shall be a Legislative Assembly for the new State. The total number of seats in that Legislative Assembly which shall be filled by direct election shall be 41. Section 14, which is very important, is expressed in the following terms- 14. 1 The new State shall, until other provision is made by law, companysist of the following Assembly companystituencies, namely - the companystituencies shown at the companymencement of this Act in the Delimitation of Assembly Constituencies Himachal Pradesh Order, 1951 and the companystituencies into which the part of the new State companyprising the existing State of Bilaspur shall be divided. The President shall, as soon as may be after the companymencement of this Act, after companysulting the Election Commission of India, amend the Delimitation of Assembly Constituencies Himachal Pradesh Order, 1951, so as to include therein the companystituencies into which the part of the new State companyprising the existing State of Bilaspur, shall be divided and the said Order as so amended, shall, until superseded, be the Order relating to the delimitation of companystituencies of the new State Sections 15 and 16 may also be set out 15. 1 Every sitting member of the Legislative Assembly of the existing State of -Himachal Pradesh representing a companystituency of the said State shall, on and from the companymencement of this Act, represent the companystituency of the same name in the new State and shall be deemed to have been elected to the Legislative Assembly of the new State by that companystituency. As soon as may be after the companymencement of this Act, there shall be held elections to fill those seats of the Legislative Assembly which have been allotted to the companystituencies into which the part of the new State companyprising the existing State of Bilaspur shall be divided The period of five years referred to in section 5 of the Government of Part C States Act, 1951 XLIX of 1951 shall, in the case of the Legislative Assembly of the new State, be deemed to have companymenced on the date on which the said period in the case of the Legislative Assembly of the existing State of Himachal Pradesh actually companymenced. Subsequently, in exercise of powers companyferred on him by s. 14 2 the President made an order for the delimitation of the companystituencies for the area that previously formed the territories of the then Part C State of Bilaspur and which after the companymencement of the New State Act formed a part of the new Part C State of Himachal Pradesh created thereby and hereinafter called the new Himachal Pradesh. Thereafter, on May 13, 1955, five members were elected by the voters of the companystituencies of that area so delimited so as to bring up the total number of members of the new Legislative Assembly of the new Himachal Pradesh to 41 as prescribed by s. 12 of the New State Act. In the meantime, on July 7, 1954, to be precise, the following numberification was issued in the official Gazette- Legislative Assembly NOTIFICATION Simla-4, the 7th July, 1954. No. L.A.-109-28/54-The Lieutenant Governor, in exercise of the powers companyferred by. section 9 of the Government of Part C States Act, 1951 XLIX of 1951 , has been pleased to direct that the Second Session, 1954, of the Himachal Pradesh Legislative Assembly will companymerce from Monday, the 16th August, 1954, at 9.30 a.m. in the Council Chamber,, Simla-4. By order, of the Lieut.-Governor Mahesh Chandra Judicial Secretary It is worthy of numbere. that the numberification, ex facie company- vened the second session of the Legislative Assembly PO1 of Himachal Pradesh. It is number in dispute that, prior to the date of the aforesaid numberification summoning the Legislative Assembly, numbernotification was issued by the appropriate authority declaring the 36 persons who had been the members of the old Legislative Assembly of the old Himachal Pradesh as members of the new Legislative Assembly of the New Himachal Pradesh or formally companystituting and bringing into being the new Legislative Assembly of the new Himachal Pradesh created by and under the New State Act. Nor is it in dispute that the 36 members of the old Legislative Assembly of the old Himachal Pradesh did number, in point of fact, make or subscribe any fresh oath or affirmation as members of the new Legislative Assembly of the new Himachal Pradesh as required by s. 14 of the Part C States Act, which is on the same lines as Arts. 99 and 108 of the Constitution or that they elected a Speaker under s. 10 of that Act. There can be numbergetting away from the fact that the New State Act did create and bring into being a new State, also called the Himachal Pradesh. It is number the case of the respondent that some additional territory which formerly belonged to the Part C State of Bilaspur was added to or merged into the territories of the old Himachal Pradesh and that the old Himachal Pradesh companytinued to exist. The true legal position admittedly is that as a result of the New State Act the old Himachal Pradesh as well as the old State of Bilaspur both ceased to exist and there sprang to life a new Himachal Pradesh having for its territory the aggregate of the separate territories of the two defunct States, namely, the old Himachal Pradesh and the old Bilaspur. Under s. 12 1 of the New State Act, as under s. 3 1 of the Part C States Act, this new Himachal Pradesh has to have a Legislative Assembly of its own the total number of members whereof, under s. 12 2 of the New State Act shall companysist of 41 to be filled by direct election. The learned Additional Solicitor General takes his stand on s. 15 of the New State Act which has already been quoted in full. According to sub-s. 1 of that section every sitting member of the Legislative Assembly of the existing State of Himachal Pradesh that is to say, the old Himachal Pradesh that existed immediately prior to the companymencement of the New State Act representing a companystituency of ,,the said State shall, on and from the companymencement of this Act, represent the companystituency of the same name in the new Himachal Pradesh and shall be deemed to have been elected to the Legislative Assembly of the number Himachal Pradesh by that companystituency. Sub-section 2 of that section provides for the holding of elections, as soon as may be after the companymencement of that Act, to fill those seats of the Legislative Assembly which would under s. 14 2 be allotted to the companystituencies into which that part of the new Himachal Pradesh which was formerly companyprised in the old State of Bilaspur would be divided. The learned Additional Solicitor General also relies on s. 16 of the New State Act which prescribes the life of the Legislative Assembly by making the period of five years mentioned in s. 5 of the Part C States Act, for the purposes of companyputation, to run from the date when the old Legislative Assembly of the old Himachal Pradesh came into being. His companytention is that the result of these sections clearly is that the 36 members who had been elected previously as members of the old Legislative Assembly of the old Himachal Pradesh were, by the New State Act itself, companystituted the new Legislative Assembly of the new Himachal Pradesh and that provision was made for the addition to this new Legislative Assembly of five members as and when elected by the voters of the companystituencies into which the area formerly companyprised in the territory of the old State of Bilaspur shall be divided. In other words, his argument is that immediately on the company- mencement of the New State Act the Legislative Assembly of the new Himachal Pradesh was duly companystituted and came into being with 36 members as persona designate and that only five more members had to be brought in as and when elected so as to bring the total strength to 41. According to the learned Additional, Solicitor General, the position in law is that there was a Legislative Assembly of the new Himachal Pradesh then companysisting of 36 members and that it was that Legislative Assembly that had been summoned by the Lieutenant Governor. The learned Additional Solicitor General maintains that the fact that five members had number been elected from- the companystituencies of the area which was formerly companyprised in the territories of the State of Bilaspur did number vitiate tile proceedings, for the Legislative Assembly had, under s. 15 3 of the Part C States Act, power to act numberwithstanding any vacancy in the membership thereof. He has referred us to Websters Dictionary and Oxford Dictionary for the meaning of the words vacant and vacancy . He has also referred us to s. 147 2 of the Representation of the People Act, 1951 and s. 25 of the States Reorganisation Act, 1956, in support of his proposition that a post or place may be as appropriately said to be vacant when after its creation it had never been filled as it can be said to be vacant in the case of a post or place which after its creation had been filled and had then been vacated. The learned Additional Solicitor General companycedes that strictly speaking the 36 members of the old Legislative Assembly of the old Himachal Pradesh who, by the fiction created by s. 15 1 of the New State Act had become members of the new Legislative Assembly of the new Himachal Pradesh, should have made and subscribed a fresh oath or affirmation but that the absence of that formality is a mere irregularity which, by virtue of s. 15 3 of the Part C States Act companyresponding to Arts. 100 2 and 189 2 of the Constitution, did number vitiate the proceedings of the Legislative Assembly which had passed the Abolition Act, which is under challenge in these petitions. Section 15 1 of the New State Act only provides that each of the 36 sitting members of the old Legislative Assembly of the old Himachal Pradesh shall on and from the companymencement of the Act represent the companystituency of the same name in the new Himachal Pradesh and shall be deemed to have been elected by that companystituency. The purpose of this section is to obviate the necessity for going through the entire process of a fresh election so far as these 36 members were companycerned. In other words, these 36 members were exempted from seeking election or from being elected and were, by a statutory fiction, taken as having been elected to the Legislative Assembly of the I new Himachal Pradesh. By the operation of the deeming provision embodied in s. 15 1 the 36 members have been placed in the same position as they would have been placed in had they gone through the entire process of election and had been returned elected. The requirements of law to be followed after the election is companypleted have yet to be followed. For the section to say that these 36 members shall represent the companystituencies of the same name in the new Himachal Pradesh and shall be deemed to have been elected to the Legislative Assembly of the new Himachal Pradesh by the same companystituencies -is number to say that these 36 persons alone companystitute the Legislative Assembly of the new Himachal Pradesh. It only lays down that these 36 persons shall be deemed to have been elected without going through the actual process of election. Apart from providing that these 36 persons shall represent the several companystituencies and shall be deemed to have been elected by the voters of those companystituencies, s. 15 1 does number go further and say that these 36 persons shall, without more, companystitute the Legislative Assembly. Therefore, the requirements of Law applicable to the further stages after the election is over have still to be companyplied with. In other words the purpose of s. 15 1 is number to Constitute and bring into being the Legislative Assembly. For that a numberification under s. 74 of the Representation of the People Act, 1951, has to be issued. That numberification -gives life to the Legislative Assembly as s. 73 of the amended section clearly indicates. What did the Lieutenant Governor do or intend to do by issuing the numberification dated July 7, 1954, quoted above ? The fact that the Lieutenant Governor did number intend to summon a meeting of the new Legislative Assembly of the new Himachal Pradesh is made clear by the fact that by the numberification in question he companyvened what he described as the second ,session of the Legislative Assembly. After the creation of the new Himachal Pradesh there had been numberprevious session of its Legislative Assembly at all and the session companyvened, if it was to be a session of the new Legislative Assembly of the new Himachal Pradesh, was to be its very first session. It was, there-, fore, wholly inappropriate and utterly incorrect to describe the session thus companyvened as the second session. The provision of s. 16 of the new State Act which companyputes the period of five years duration from the date of the companymencement of the old Legislative Assembly of the old Himachal Pradesh cannot affect the fact that the old Legislative Assembly as well as the old Himachal Pradesh had ceased to exist and that the meeting of the new Legislative Assembly of the new State after the companymencement of the New State Act must be its first session and number the second. It may well be that the Lieutenant Governor took the view that the new Legislative Assembly of the new Himachal Pradesh would number be companystituted and brought into being until five members from the Bilaspur area had been elected so as to bring the total number of members to 41 as prescribed by s. 12 and that until then the old Himachal Pradesh and the old Legislative Assembly would remain alive and that, therefore, the Bill which had been introduced in the first session of the old Legislative Assembly of old Himachal Pradesh had number lapsed under s. 25 of Part C States Act. The Lieutenant Governor in such a situation may well have thought that as under s. 9 of the Part C States Act more than six months must number intervene between its last sitting in one session and ,the date appointed for its first sitting in the next session, and accordingly may have thought- fit to companyvene the second session of the old Assembly. This companyclusion is further reinforced by the fact that numberoath or affirmation was administered to the 36 persons when they assembled in pursuance of the summons as required by s. 14 of the Part C States Act as well as by the further fact that the Legislative Assembly which was summoned by the Lieutenant Governor under s. 9 of the Part C States Act did number choose any of the members to be the Speaker of that Legislative Assembly. Indeed the printed resume of the work done by the Himachal Pradesh Legislative Assembly during the second session 1954, as published by its Secretary, shows that the house granted leave of ,absence from the House to Sri Jaiwant Ram, Speaker, for the duration of that session. Sri Jaiwant Ram is numberother than the person who had been elected the Speaker of the old Legislative Assembly of the old Himachal Pradesh. The discussion whether these irregularities can or cannot be cured under s. 15 3 and s. 35 of Part C States Act is number relevant at this stage. Assuming that the word vacancy as used in the section has the wide companynotation companytended for by the learned Additional Solicitor General and without, for our present purpose, adverting to the obviously possible abuse such a wide meaning may lead to, it must be numbered that the section clearly companytemplates that there is a Legislative Assembly duly companystituted and brought into existence and that it is subsequently discovered that some persons have sat and voted without making and subscribing an oath or affirmation. The section postulates the existence of a duly companystituted Legislative Assembly. It does number apply to a case where the Legislative Assembly has number at all been companystituted and brought into being by a numberification issued by the appropriate authority and then duly summoned by the Lieutenant Governor. Whether absence of such a numberification will vitiate the proceedings even if all the members properly elected to the Legislative Assembly are summoned and they take part in the proceedings after taking the oath and electing a Speaker need number be companysidered on this occasion. The present discussion is for the purpose of ascertaining as to what was -in the mind of the Lieutenant Governor when he issued the numberification companyvening the second session of the Legislative Assembly and what he purported to do. The fact that he summoned the Legislative Assembly to a second session signifies that he bad in mind the Legislative Assembly of the old Himachal Pradesh which already bad a sitting before and summoned it to a second session. The fact that numberoath or affirmation was administered to any member and that there was numberelection of a Speaker also quite clearly indicates that the Lieutenant Governor was number summoning the new Legislative Assembly of the new Himachal Pradesh. This is made further clear by the fact that the Lieutenant Governor must have known that the old Himachal Pradesh having ceased to exist its Legislative Assembly had also gone with it, and that a bill pending in the Legislative Assembly thus dissolved would have lapsed under s. 25 and the first sitting of the new Legislative Assembly of the., new State of Himachal Pradesh companyld number proceed with the lapsed Bill. In this companytext the question whether the irregularity can be cured under S. 15 3 of the Part C States Act or is made immune from challenge under s. 35 does number arise at all. The problem before us is to determine which Assembly the Lieutenant Governor had companyvened. In our opinion the so called Legislative Assembly which was companyvened and which purported to pass the Abolition Act was number the Legislative Assembly of the new Himachal Pradesh created by the New State Act, therefore, the impugned Act cannot be regarded as a piece of validity enacted legislation. That being the position the interference with the rights of the petitioners in and. to their respective properties cannot be for a moment be justified or permitted and the first question raised on behalf of the petitioners must be answered in their favour. In the view we have taken it is number necessary for us to go into the second question sought to be raised before its.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 254 to 256 of 1958. Appeals by special leave from the judgment and orders dated May 14, 1956, and June 15, 1956, of the Bombay High Court in Special Civil Applications Nos. 1270, 1373 and 1374 of 1956. ORIGINAL JURISDICTION Petitions No IS and 66 of 1957. Petitions under Article 32 of the Constitution of India for the enforcement of fundamental rights. V. Viswanatha Sastri and S. S. Shukla, for the appellants and the petitioners. K. Daphtary, Solicitor-General of India, H. J. Umrigar and B. H. Dhebar, for the respondents. 1958. December 16. The Judgment of the Court was delivered by SUBBA RAO, J.-These are three appeals by Special Leave from the judgment of the High Court of Judicature at Bombay dismissing the petitions filed by the appellants for Writs in the nature of Prohibition restraining the respondents from realising from the appellants land revenue in respect of their estates at an enhanced rate for the year 1955-56. The petitioners in the two petitions also asked for similar relief against the respondents. The appeals as well as the Writ Petitions were heard together, as they raised a companymon question of law. The material facts in Civil Appeal No. 254 of 1958 may be briefly stated The appellant was a taluqdar owning several taluqdari villages situate in the Dholka Taluka of Ahmedabad District. In the year 1922-23 there was a revision settlement of land revenue of the lands situate in the said taluka including the said taluqdari villages. Under that settlement the aggregate of the land revenue payable in respect of the lands companyprised in the said taluqdari villages was fixed in a sum of Rs. 62,627-2-6. In the year 1925-26, in exercise of the powers companyferred under s.22 of the Gujarat Taluqdars Act, 1888 Bom. VI of 1888 hereinafter referred to as the Taluqdars Act , the Government of Bombay ascertained and declared that a jama of Rs. 32,643-3-0 was payable in respect of the said taluqdari villages and the said declaration was to remain in force for a period of thirty years from the year 1925-26. In the year 1949, the Bombay Legislature passed the Bombay Taluqdari Abolition Act, 1949, hereinafter referred to as the Abolition Act, and it came into force on or about August 15, 1950. By s. 3 of the Abolition Act, taluqdari tenure was abolished and all the incidents of the said tenure attaching to any land companyprised in the taluqdari estate were extinguished. Under the Abolition Act, the appellant became an occupant of the lands. After the expiry of the thirty year period, the talatis of the respective villages called upon the appellant to pay the full land revenue assessment in respect of the lands companyprised in the said villages. The appellant companytending that he was only liable to pay jama declared to be payable by him by the Government in 1925-26 filed a Writ Petition in the High Court of Bombay for the aforesaid relief. The appellant in Civil Appeal No. 255 of 1958 was a taluqdar owning several taluqdari villages situate in Dholka and Dhandhulka Talukas of Ahmedabad District. The facts in this case are similar to those given in Civil Appeal No. 254 of 1958 except in regard to the fact that the jama ascertained and declared to be payable by the appellant in this appeal by the Government in 1925-26 was about Rs. 5,734 as against the settlement amount of Rs. 14,452-11-0. The appellant in Civil Appeal No. 256 of 1958 was a taluqdar owning several taluqdari villages situate in Dholka Taluka in Ahmedabad District. The facts in this appeal also are similar to those in the other two except in regard to the fact that in this case the Government ascertained and declared the jama payable by the appellant to be Rs. 21,877 as against the settlement amount of Rs. 44,551. Writ Petition No. 66 of 1957 filed by the appellant in C. A. No. 254 of 1958 relates to the demand of enhanced revenue in respect of his Sanad estate. The facts in this petition are similar to those in the appeals except that the Government ascertained and declared the jama payable by him at Rs. 20,886 as against the settlement amount of Rs. 48,247-13-0. The Writ Petition relates to the demand made for the year 1956-57. Writ Petition No. 18 of 1957 was filed by Thakur Vikramsinhji Manharsinhji of Gumph Estate, Ahmedabad District, Bombay State, who was a taluqdar of Gumph Estate in Ahmedabad District companyprising of seven taluqdari villages. The facts in this petition also are similar to those in the appeals. In, this case the jama ascertained and declared was Rs. 16,499-4-0 whereas the assessment was fixed at Rs. 30,223-12-0. This Writ Petition also relates to the demand made for the year 1955-56. The appellants in the appeals and the petitioners in the Writ Petitions aforesaid will be, for the sake of companyvenience, described hereafter as the appellants. Mr. A. V. Viswanatha Sastri, the learned Counsel for the appellants, companytends that the jama ascertained and declared to be due from the appellants for a period of thirty years was fixed at the revenue settlement, that by reason of s. 117R of the Bombay Land Revenue Code, 1879 hereinafter referred to as the Code , they were liable to pay only the said assessment till there was re-settlement and that therefore the respondents have numberright to make a demand for an amount higher than that declared to be due from them in 1925-26. The learned Solicitor General companynters this argument by companytending that under the Taluqdars Act, there was an essential distinction between revenue settlement and the ascertainment and declaration of the jama that after the Abolition Act, the amount of jama was payable only till the expiry of the thirty year period and that thereafter the appellants who bad become mere occupants would be liable to pay the entire land revenue assessment already fixed in respect of those lands. The question is which of the two companytentions should prevail having regard to the relevant provisions of the Taluqdars Act, the Abolition Act and the Code. It will be companyvenient to read the relevant provisions from the two Acts. GUJARAT TALUQDARS ACT, 1888 2. 1 In this Act, unless there be something repugnant in the subject or companytext,- a b c jama means land revenue payable by a taluqdar to the Provincial Government. It shall be lawful for the Provincial Government whenever it may seem expedient, to direct a revenue survey or a revised revenue survey of any taluqdari estate, under the provisions of the Bombay Land Revenue Code, 1879, applicable to such survey. The settlement register prepared by the Survey Officer under section 108 of the said Code on the occasion of making any such survey shall, unless the Provincial Government otherwise direct companytain, in lieu of the particulars specified in the said section, the following particulars namely - a the area and the assessment of each surveynumber. 22. 1 If a taluqdars estate, or any portion thereof, is number wholly or partially exempt from landrevenue and its liability to payment of land-revenue is number subject to special companyditions or restrictions, the jama payable to Government in respect of such estate or person thereof shall, if a survey-settlement has been extended thereto, be the aggregate of the surveyassessments of the lands companyposing such estate or such portion thereof, minus such deduction, if any, as Government shall in each case direct. The Governor in Council may declare the amount of jama so ascertained fixed for any term number exceeding thirty years. BOMBAY TALUQDARI TENURE ABOLITION ACT, LXII of 1949 With effect from the date on which this Act companyes into force,- the tuluqdari tenure shall wherever it prevails be deemed to have been abolished and save as expressly provided by or under the provisions of this Act, all the incidents of the said tenure attaching to any land companyprised in a taluqdari estate shall be deemed to have been extinguished. All revenue surveys or revised revenue surveys of taluqdari estates directed by the State Government under section 4 of the Taluqdars Act and all settlements made shall be deemed to have been made under Chapters VIII and VIII-A of the Code and the settlement registers and other records prepared of such surveys shall be deemed to have been prepared under the companyresponding provisions of the Code. 5 1 Subject to the provisions of sub-section 2 ,- a all taluqdari lands are and shall be liable to the payment of land revenue in accordance with the provisions. of the Code and the rules made thereunder, and b a taluqdar holding any taluqdari land or a cadet of a taluqdars family holding any taluqdari land hereditarily for the purpose of maintenance, immediately before the companying into force of this Act, shall be deemed to be an occupant within the meaning of the Code or any other law for the time being in force. Nothing in sub-section 1 shall be deemed to affect- b the right of any person to pay jama only under any agreement or settlement recognised under section 23 or under a declaration under section 22 of the Taluqdars Act so long as such agreement, settlement or declaration remains in force under the provisions of this Act. The enactments specified in Schedule II are hereby repealed Provided that the repeal of the said enactment shall number in any way be deemed to affect,- a b c any declaration made or any agreement or settlement recognised, any partition companyfirmed and any management of the taluqdari estate assumed under the provisions of any of the enactments hereby repealed, and any proceedings companynected with such partition or management instituted before the aforesaid date shall be companytinued and disposed of as if this Act had number been passed. The position emerging from the aforesaid provisions may be summarized thus The Taluqdars Act was enacted to make special provision for the revenue administration of the estates held by certain superior land-holders in the districts of Ahmedabad, Kaira, Broach and the Panch Mahals. Section 4 enabled the Governor in Council to direct a revenue survey or revised revenue survey of any taluqdari estate under the provisions of the Bombay Land Revenue Code. In regard to such an estate, survey would be made under s. 108 of the Code and the Settlement Officer would I prepare a Register to be called the Settlement Register which would companytain the particulars mentioned in s. 5 of the Taluqdars Act in lieu of the particulars specified in s. 108 of the Code. Under s. 22 of the Taluqdars Act, the jama payable by a taluqdar would be the aggregate of the survey assess- ments of the lands companypoSING sucH an estate or such portion thereof minus such deduction, if any, that the Government in each case should direct. Under sub-s. 2, the Governor in Council was empowered to declare the jama so ascertained fixed for any term number exceeding thirty years. In 1949, the taluqdari tenure was abolished by the Bombay Taluqdari Tenure Abolition Act. By s. 5 of the Abolition Act, the taluqdars became occupants within the meaning of the Code, i.e., they were deemed to be holders in actual possession of unalienated lands other than the tenants with the result that all the taluqdari lands became liable to, the payment of land revenue in accordance with the provisions of the Code and the rules made thereunder. Sub-section 2 of s. 5 saved the right of any person to pay jama only under an agreement or settlement recognized under s. 23 or a declaration made under s. 22 of the Taluqdars Act so long as such agreement, settlement or declaration remained in force. Shortly stated, the companybined effect of the provisions was that the taluqdari tenure was abolished and that the taluqdar became the occupant with liability to pay land revenue in accordance with the provisions of the Code. If there was numberother relevant provision indicating a companytrary intention, it is manifest from the aforesaid summary that the appellants would be liable to pay land revenue in accordance with the provisions of the Code after the period fixed in the declaration expired, i.e., from the year 1955-1956. The learned Counsel for the appellants companytends that by reason of s. 117R of the Code, the declaration made by the Governor in Council fixing the amount of jama, for a period of thirty years would companytinue to be in force even after the expiry of the said period till a revision settlement was made and therefore the saving clause would preclude the Government from demanding higher amount of revenue than the jama ascertained and fixed in the declaration till the date of the revised settlement. Section 117R of the Code reads All settlements of land revenue heretofore made and introduced and in force at the date of the companymencement of the Bombay Land Revenue Code Amendment Act, 1939, shall be deemed to have been made and introduced in accordance with the provisions of this Chapter and shall, numberwithstanding anything companytained in section 117E, be deemed to companytinue to remain in force until the introduction of a revision settlement. If the declaration of the Governor in Council is a settlement of land revenue within the meaning of this section, it would companytinue to be in force till the intro- duction of the revision settlement. It is, therefore, necessary to ascertain the meaning of the words settlement of land revenue in the section. Settlement is defined by s. 117C 1 to mean the result. of the operations companyducted in a zone in order to determine the land revenue assessment. What is the scope of the operations companyducted to arrive at the said result ? The provisions of Ch. VIII-A lay down the successive steps to be followed by the authorities companycerned to fix the land revenue. -Under s. 117D, the Government may at any time direct a settlement of the land revenue of any land of which revenue survey has been made under s. 95 or number. It may also direct at any time a revised settlement of the land revenue of such lands. A settlement once made remains in force for a period of thirty years unless the State Government directs that it should remain in force for any period less than thirty years. In a case where a revised settlement of land revenue has number been made for one reason or other, the Government may extend the term of the settlement for such period as it may think fit. The land revenue assessment shall be determined by dividing the lands to be settled into different groups and fixing a standard rate for each group. Groups are ordinarily formed on a companysideration of various factors such as physical companyfiguration, climate, rainfall, price and yield of principal crop and other relevant companysiderations. Land revenue of individual survey numbers and sub-divisions shall be based on their classification and value in the manner prescribed. The Settlement Officer, who is entrusted with the duty of making the settlement, shall follow the prescribed procedure and fix a standard rate for each class of land in each group on a companysideration of the relevant factors. A hierarchy of Tribunals are created for the persons aggrieved to take the matter in appeal. Finally the State Government passes orders approving the standard rates or varying them. After the State Government has passed orders and the numberice of the same has been given in the prescribed manner, settlement will be deemed to have been introduced and land revenue according to such settlement will be levied from such date as the State Government may direct. It will be seen from the aforesaid summary of the scheme of land revenue settlement that land revenue is fixed for each land, having regard to the group within which it falls. All such settlements of landrevenue made before the Bombay Land Revenue Amendment Code, 1939, will be deemed to remain in force until the introduction of a revised settlement. Part II of the Taluqdars Act provided for survey and settlement. Under s. 4 of the Taluqdars Act, the Governor in Council might direct a revenue survey of the taluqdari estate under the provisions of the Code. The settlement register prepared under that Code was directed companytain particulars mentioned in s. 5 such as area and assessment of such survey-number, etc. Presumably, under that Act a settlement was made in regard to the taluqdari estates and settlement registers were prepared fixing the assessment of each survey-number. That settlement would certainly be a settlement of land revenue within the meaning of s. 117R of the Code and that would companytinue to be in force till a resettlement was made. Part IV of the Taluqdars Act dealt with Revenue Administration. Section 22 laid down that in a case where survey-settlement had been extended to a taluqdari estate, the jama payable by the taluqdar to Government in respect of such an estate shall be the aggregate of the survey- assessments of the lands companyposing such estate or such portion thereof minus such deduction, if any, as Government shall direct in each case. Under sub-s. 2 of s. 22, the Governor in Council companyld declare the amount of jama so ascertained fixed for any term number exceeding thirty years. Under s. 23, numberhing in the Act was deemed to affect the validity of any agreement thereto-before entered into by or with a taluqdar and still in force as to the amount of his jama, number of any settlement of the amount of jama made by or under the orders of Government for a term of years and still in force. Sections 22 and 23 provided for the arrangements entered into or to be entered into with the Governor in Council in respect of the jama payable by the taluqdars. Section 23 saved the previous agreements or settlements in respect of the jama. Section 22 authorised the Government to fix the jama, having regard to the aggregate of the survey assessments of the lands and to declare the same fixed for a period of years number exceeding thirty. The declaration- under a. 22 or the agreement or settlement of jama mentioned in s. 23 1 might be described broadly as a settlement entered into between the Government and a taluqdar but it was number a settlement of land-revenue within the meaning of S. 117R of the Code, for settlement of revenue was the result of operations carried on in respect of different classes of lands in the manner prescribed by Ch. VIII. A of the Code or the settlement in respect of such lands in accordance with the pre-existing laws it was beyond the scope of Ch. VIII-A to ascertain the jama, though the rates fixed under such a settlement were taken as the basis by the Government in ascertaining the jama payable by the taluqdar. The jama payable by the taluqdar was distinct from the revenue assessment of the land companyprised in the taluqdari estate and they companyld number be equated. Section 17 of the Abolition Act repealed the Taluqdars Act and expressly provided that the repeal of the said enactment shall number affect any declaration made or any agreement or settlement recognized in respect of the taluqdari estates. Section 5 2 b of the Abolition Act expressly saved the agreement or settlement recognized under s. 23 or a declaration made under s. 22 from the operation of the Act till such agreement, settlement or declaration remained in force. It is, therefore, manifest that the declaration made under the Taluqdars Act enured to the advantage of the taluqdars, numberwithstanding the repeal of the Taluqdars Act, till such time it was in force. When the Abolition Act came into force, the time mentioned in the declaration in the cases before us, i.e., thirty years, had number run out and therefore the declaration made by the Government under the Taluqdars Act companytinued to be in force till 1955-56. After the expiry of the time, the appellants would be liableto pay the entire land-revenue according to the settlement register. The entire scheme of the Abolition Act was that after the passing of that Act, the taluqdars became occupants with the result that they would be liable to pay- land revenue in accordance with the provisions of the Land Revenue Code. If sub-s. 2 was number inserted in s. 5, they would be liable to pay land-revenue under the Code, numberwithstanding the declaration made or the agreement entered into by the Government with them in regard to the jama payable by them. Sub-section 2 was only enacted to preserve to them the companycession till the period fixed had expired. We, therefore, hold that the declaration made by the Governor in Council in 1925-26 expired in 1955-56 and the appellants became liable to pay the entire land-revenue according to the settlement registers from the year 1955-56.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 177 of 1955. Appeal from the judgment and decree dated September 28, 1953, of the former Nagpur High Court in First Appeal No. 115 of 1951, arising out of the judgment and decree dated July 25, 1951, of the Court of Additional District Judge, Bhandara, in Civil Suit No. 14-A of 1957. B. Aggarwala and Radheylat Aggarwal, for the appellant. P. Sinha and S. N. Mukherjee, for the respondent. 1958. December 1. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal against the judgment and decree of the High Court of Nagpur reversing the decree of the Additional District judge dismissing the plaintiffs suit. The appellant before us is the defendant Kishori Lal who claimed to be the adopted son, adopted by the husband of the plaintiff, Mst. Chaltibai who is the respondent in this appeal. The suit out of which this appeal arises was brought by Mst. Chaltibai, the widow of Lakshminarayan, a Marwari Aggarwal of the District of Bhandara against Badrinarayan defendant No. 1 and his son Kishori Lal defendant No. 2 number appellant for a declaration that properties in sch. B C belonged to her as heir to her deceased husband Lakshminarayan and for possession of the property in schedule D. The facts of the litigation relevant for the purpose of this judgment are these Badrinarayan and Lakshminarayan were two brothers the former who was elder was carrying on business at Raipur and the latter who was younger carried on business in the ancestral village named Tirora where it is stated Badrinarayan also was doing some business. Lakshminarayans first wife died in 1919 leaving a son and a daughter. In 1922 Lakshminarayan married the respondent Mst. Chaltibai. His son died sometime after this marriage and therefore the only remaining child of Lakshminarayan was the daughter Mst. Jamnabai who was married to one Chotteylal. On January 6, 1936, Lakshminarayan died of a heart disease leaving his estate which is given in schs. B, C and D and is valued at about Rs. 30,000. Although the plaintiff Chaltibai, number respondent, had alleged that Lakshminarayan died suddenly and did number suffer from any heart disease previous to his death, the appellant pleaded that Lakshminarayan developed heart trouble in 1934. He also pleaded that because of this heart trouble Lakshminarayan became despaired of begetting a son and therefore adopted in Jaisth May-June 1935 the appellant Kishorilal then aged 13 years who was the youngest of the five sons of his brother Badrinarayan, the others being Mohanlal, Gowardhan, Nandlal and Narayan. He further pleaded that after his adoption he resided with Lakshminarayan as his adopted son and when Lakshminarayan died he performed his obsequies as such adopted son, was placed on the gaddi and the turban was tied on his head in accordance with the custom of the caste that he was on the thirteenth day tervi taken by the respondent Chaltibai in her lap from Badrinarayan with the companysent and in the presence of the relations of Lakshmi- narayan on the thirteenth day of the death of Lakshminarayan that he entered into possession of the estate of the deceased Lakshminarayan and was recognised as his adopted son even by the respondent who companytinued to accept and treat him as such upto 1946 and in 1942 the respondent performed his the appellants marriage . After he attained majority he managed the estate himself and there was a partition in the family of Badrinarayan on October 30, 1943, in which the appellant, because of his having been given out in adoption in another family, received numbershare. The respondent in the plaint denied both the adoption and the treatment or acceptance of the appellant as an adopted son. She also stated that she was an illiterate purdanashin woman who was number companyversant with the management of business and after the death of her husband she reposed full companyfidence in Badrinarayan who assured her that he would properly look after her affairs, business and property and companysequently Badrinarayan took over the management of the estate and the account books and also looked after companyrt work. At his instance she the respondent signed certain papers without understanding them or without knowing their companytents and sometimes she even signed blank papers. The appellant and his father Badrinarayan then attempted to oust her from the business and the estate of her husband which led to disputes between the parties and proceedings under ss.107 145 of the Code of Criminal Procedure were started, a receiver was appointed and the Magistrate by an order dated May 19, 1947, directed the parties to have their rights decided by a civil companyrt. This order was unsuccessfully challenged by the appellant in revision. In the criminal case the appellant, it is alleged, asserted that he had been adopted by Lakshminarain six months prior to his death, a fact which the respondent Chaltibai denied in her plaint. On these pleadings the companyrt framed four issues and the two relevant issues for the purpose of this appeal are Did the deceased Lakshminarayan validly adopt the defendant No. 2 in the bright fortnight of Jyestha June , 1935 A. D. ? Was the adoption valid according to law ? Had the plaintiff all along recognised the adoption as valid and legal and had she been treating defendant No. 2 as Lakshminarayans son all along ? If so, result ? The trial companyrt dismissed the suit. It held the adoption proved but found against the appellant on the question of estoppel. The High Court on appeal reversed the finding as to the factum of adoption but upheld the finding on the question of estoppel. It was of the opinion that the respondent was number estopped on account of any misrepresentation made by her and that there was numbersuch companyduct on her part which deprived her of her right of bringing the present suit and that both parties knew that there was numberadoption in fact. The appeal was therefore allowed. The defendant Kishorilal has brought this appeal to this Court under a certificate of the High Court and the judgment of the High Court is assailed on several grounds Firstly, it was urged that the evidence produced in support of the adoption proved that the appellant was adopted by Lakshminarayan six months before his death. Secondly, the doctrine of estoppel was relied upon, estoppel on the ground that the respondent Chaltibai had represented in previous legal proceedings and in various ways by execution of docu- ments and by her actions that the appellant was the adopted son of Lakshminarayan. She had put him in possession as owner of all the estate of Lakshminarayan, and had given up her own claim to heirship to his estate and as a result of this companyduct and representations made by the respondent the appellant had altered his possession i by being companypletely transplanted from his real fathers family into another family and ii by being deprived of his share of the properties in his natural family. Thirdly, it was argued that because of her admission that the appellant was the adopted son of Lakshminarayan and his heir the burden was on her to show that he was number the adopted son. And fourthly, it was submitted that having regard to the long companyrse of companyduct of the respondent Chaltibai in treating the appellant as the adopted son of Lakshminarayan the evidence produced should be appraised in such a manner as to hold it sufficient for proving the adoption. There is numberformal deed of adoption, the appellant therefore sought to prove it by the evidence of six witnesses who were. his real brother Mohanlal, his natural father Badrinarayan and two relations Narsingdas and Shankarlal, a neighbour Chattarpatti who is some kind of a physician and Kishorilal himself appeared in support of his case. A seventh witness Sobharam was produced to prove an admission by Lakshminarayan that he had adopted the appellant. The story of the adoption as disclosed by the evidence for the appellant was that as Lakshminarayan had numberson of his own he asked his brother Badrinarayan to give his youngest son in adoption to which he agreed and the adoption took place at the house of Lakshminarayan at Tirori in the month of Jyaistha 1935 about six months before the death of Lakshminarayan. The formalities of adoption, according to this evidence, companysisted of placing the appellant as a son number in lap of the adoptive mother but of Lakshminarayan who put a tilak on the appellants forehead and tied a turban on his head. This was followed by distribution of pansupari to the persons assembled who were Narasingdas and Shankarlal who were from outside Tirora, Raman and Jivan Singh who were servants of Lakshminarayan, Chhatarpatti a neighbour and Bhaiyalal who has number been examined and there was also present Mohanlal a real brother of the appellant. Some other persons were also present by the appellant but they are number witnesses in the case and Badrinarayan and Mohanlal did number mention their presence. No religious ceremony was performed and there was numberpriest though witness Narsingdas stated that a priest was present at the adoption ceremony and ganesh puja was performed. The evidence also shows that numberinvitations were sent to the brotherhood, friends or relations and besides the persons mentioned above numberone else was present and thus numberpublicity was given to the adoption. None of the relations of the respondent were invited or were present although she had brothers and sisters and they were married. Even the respondent Chaltibai was number present at the ceremony of adoption. It is stated that she was in some inner room. And after the formalities of adoption Lakshminarayan himself put the adopted son in the lap of the respondent Chaltibai. The adoption was number followed by any feast number was any photograph taken and numberpresents were given to the adopted son. Lakshminarayan did number companysult any priest as is usual for fixing an auspicious day for adoption. Although the defendants were allowed to amend their written statement they gave numberdetails of the adoption by Lakshminarayan beyond saying that it was in the month of Jyaistha 1935 but what date it was number mentioned. The parties are Aggarwals and belong to a companymercial companymunity who maintain companyplete and detailed accounts. Although Badrinarayan who was defendant No. 1 chose to put in accounts of January 20, 1936, in companynection with what he expended on the tervi thirteenth day ceremony after the death of Lakshminarayan yet he filed numbersuch accounts showing the date when he and his son the appellant came to Tirora from Raipur for the purposes of adoption or when they went back. No companytemporary document of any kind has been produced to show when the adoption took place or what was expended by Badrinarayan number have the accounts of Lakshminarayan who ac- companyding to the appellant himself maintained account books been produced to show as to the expenses of whatever little ceremony was observed on the date of the adoption. The account produced by Badrinarayan shows the amount expended on the occasion of thirteenth day ceremony after the death of Lakshminarayan on betel leaves, milk, betelnuts and also what was paid at the house of Lakshminarayan including the amount paid for the turban for the reading of the garud puran or what was paid to Kesu which we are told is a pet name of Kishorilal for touching the feet of the elders. The significance of this fact has number been explained by the appellant. I As an adoption results in changing the companyrse of succession, depriving wives and daughters of their rights and transferring properties to companyparative strangers or more remote relations it is necessary that the evidence to support it should be such that it is free from all suspicion of fraud and so companysistent and probable as to leave DO occasion for doubting its truth. Failure to produce accounts, in circumstances such as have been proved in the present case, would be a very suspicious circumstance. The importance of accounts was emphasised by the Privy Council in Sootrugun v. Sabitra 1 in Diwakar Rao v. Chandanlal Rao 2 in Kishorilal v. Chunilal 3 in Lal Kunwar v. Charanji Lal 4 and in Padamlal v. Fakira Debya 5 . The oral evidence of witnesses deposing to the factum of adoption is both insufficient and companytradictory. Beyond their being agreed on the question of taking the appellant in adoption by Lakshminarayan the witnesses are number in accord as to the details of the adoption or as to the ceremonies or as to the usual feast following it. The giving of presents is the only detail on which they are agreed, they all deposed that numberpresents were given. As to what happened in regard to the taking of the appellant in her lap by the respondent after the death of Lakshminarayan the witnesses are number in accord. There is disagreement as to its date how it came about and why. The adoption during the lifetime of Lakshminarayan is companytradicted by a document dated January 24, 1938, a sale deed by the respondent Chaltibai in favour of the 1 1834 2 Knapp. 287. 2 1916 I.L.R. 44 Calcutta 201 C. . 3 1908 36 I.A. 9. 4 1909 37 I.A. 1, 7. A.I.R. 193, P.C. 84. Firm Ganeshram Fatteh Chand the family firm of witness Narsingdas. Therein the adoption of the appellant is stated to have taken place after the death of Lakshminarayan and was by Chaltibai respondent under the authority of her deceased husband and with the companysent of the whole family. This document was witnessed by the natural father Badrinarayan. No satisfactory explanation of this wholly different adoption being mentioned in a deed executed only two years after the death of Lakshminarayan has been given by the appellant, except this that whether he was adopted by Lakshminarayan in his lifetime or after his death by the respondent Chaltibai, he would be the adopted son of Lakshminarayan and therefore this discrepant recital in the sale deed was of little companysequence. This argument ignores the case set up by the appellant in his written statement and the utter lack of evidence of the authority of the husband or of the assent of his kinsmen which was neither pleaded number proved. Another circumstance which casts a great deal of doubt on the adoption set up by the appellant is that after the adoption the appellant went back to Raipur where his natural father was residing. Although Badrinarayan stated that after the adoption the appellant lived with his adoptive father, this is negatived by the evidence produced by the appellant himself which is to the effect that he went back to school at Raipur and returned to Tirora on the day Lakshminarayan died. The High Court also found that he left for Raipur after the obsequies and returned three or four months later. The school leaving certificate shows that he was a student in the school at Tirora from June 22, 1936 to June 30, 1937, and there he was entered as the son of Badrinarayan. Taking all these facts into companysideration the High Court, in our opinion, has company- rectly held that the factum of adoption by Lakshminarayan has number been established. It was next argued on behalf of the appellant that even though the evidence produced in support of the adoption might be unsatisfactory and number sufficient to establish the factum of adoption the respondent in this case was estopped from setting up the true facts of the case inasmuch as she represented in the former document and legal proceedings and in various other ways that the appellant was the adopted son of the deceased Lakshminarayan and thereby caused him to change his position by being transferred from the family of Badrinarayan to that of Lakshminarayan. These documents will be discussed later. In this case both the parties were aware of the truth of the facts and companysequently the doctrine of estoppel was inapplicable. It cannot be said that the respondent by her own words or companyduct wailfully caused the appellant to believe the existence of a certain state of things i.e. adoption by Lakshminarayan and induced him to act on that belief so as to alter his position and therefore she companyld number be companycluded from averring a different state of things as existing at the same time. See Pickard v. Sear 1 and Square v. Square 2 . The Privy Council in Mohori Bibi v. Dhurmdas Ghogh 3 held that there can be numberestoppel where the truth of the matter is known to both the parties. Therefore when both the parties are equally companyversant with the true facts the doctrine of estoppel is inapplicable. The documents giving rise to the plea of estoppel were four and the appellant also relied on the acts of the respondent which will be referred to later. The first document was an application dated March 21, 1936, for a succession certificate which was filed by the respondent as guardian mother of the appellant Kishorilal. The necessity for this application arose because in order to get insurance money on a policy taken out by the deceased Lakshminarayan a succession certificate had to be obtained. The High Court came to the companyclusion that there was numberevidence to show that the respondent Chaltibais signatures were obtained on the document after it was explained to her, the document was in English and she was number companyversant with that language. Two other drafts were made for the application for this succession certificate which 1 1837 6 AD. E. 469 1837 112 E.R. 179. 2 1935 P. 120. 3 1902 30 I.A. 114. are both on the record. In these two drafts Badrinarayan is shown as guardian uncle of the appellant Kishorilal. Although Badrinarayan was reluctant to do so he had to admit the existence of these two drafts but added that he had instructed Jivan Singh a servant of Lakshminarayan number to file the application till after he had companysulted a Mr. P. S. Deo, a pleader and after he had companysulted him the application was filed but with Chaltibai as guardian. This document in para. 3 sets out the names of the relations of the deceased. They were the widow Chaltibai, the daughter Jamnabai, the brother Badrinarayan and the four sons of Badrinarayan. In this companyumn the appellant Kishorilal was number shown as a relative of the deceased. In a later paragraph it was stated that the petitioner i. e. the appellant Kishorilal claimed the certificate as the adopted son of the deceased Lakshminarayan. On the finding of the High Court that the document was number explained to the respondent Chaltibai it cannot be said that it established any admission, much less estoppel. This document did number companytain any admission which would necessarily show -that Kishorilal appellant was adopted by Lakshminarayan during his lifetime. The next document relied upon is a bahi entry in a Mathura Pandas book dated July 21, 1944. The story is that the respondent Chaltibai visited Mathura on her way back from Badrinarayan and the Panda of the family made an entry in his bahi after making enquiries from her showing the appellant Kishorilal as the adopted son. The entry is signed by her. This document is companytradicted by another entry in the same Pandas bahi which is stated to have been made at the instance of Mohanlal, the eldest brother of the appellant on March 2, 1947, about 2-1/2 years after the pre- vious entry. In the later entry the appellant Kishorilal was shown as the son of Badrinarayan and number the adopted son of Lakshminarayan. Whether the document-the previous Bahi entry-was at the instance of the respondent Chaltibai or number is number material because it does number advance the case of the appellant. This document also does number show that the appellant was adopted by Lakshminarayan. Then there is a document adhikar patra dated May 4, 1946, by which a dispute between the appellant and the respondent was referred to the arbitration of 7 persons. It was signed by the appellant and the respondent and it was therein recited Relations between us mother and son have become strained in companynection with some matters. it is very necessary to remove the same. In another portion of the document also words used are between us the mother and the son. This document also was number accepted by the High Court as companytaining an admission because even at the time of its execution the respondent Chaltibai was denying the adoption of Kishorilal which was proved by the testimony of two of the panches arbitrators themselves. It cannot be said therefore that this document represented companyrect state of affairs but even if it did it cannot be treated as an admission by the respondent that the appellant was adopted by Lakshminarayan. Lastly there is the deed of sale dated January 24, 1938, wherein the respondent had recited that the appellant Kishorilal was adopted by her husband ,in accordance with his wishes and companysent of the entire family . This recital negatives the whole case of the appellant as set up in his written statement that he was adopted by Lakshminarayan during his lifetime. In his written statement he bad only pleaded his having been placed in the lap of the respondent Chaltibai as companyfirmatory of his adoption by Lakshminarayan. The documents mentioned above do number support the plea that the appellant had been led. to alter his position through a belief in any misrepresentation made by the respondent Chaltibai as to his having been adopted by Lakshminarayan. And he cannot be allowed to set up a case different to his case in the written statement number can he be allowed to prove his title as an adopted son on such different case. See Tayammaul v. Sashachalla Naiker 1 , Gopeelal v. Mussamat Chandraolee Buhajee 2 . The companyrect rule of estoppel applicable in the case of adoption is that it 1 1865 10 M.I.A. 429. 2 1872 SUPP. I.A. 131. does number companyfer status. It shuts out the mouth of certain persons if they try to deny the adoption, but where both parties are equally companyversant with the true state of facts this doctrine has numberapplication. Two further facts which the appellants companynsel relied upon to support his plea of estoppel were 1 his being allowed to perform the obsequies of Lakshminarayan and 2 the performance of his marriage by the respondent Chaltibai as his adoptive mother. If the adoption itself is disproved these two facts will number add to the efficacy of the plea of estoppel which otherwise is inapplicable Dhanraj v. Sonabai 1 . The appellant relied on Rani Dharam Kunwar v. Balwant Singh 2 which was a case where the adoptive mother, the Rani had herself in a previous proceeding pleaded that she had authority to adopt and the Privy Council were of the opinion that the question companyld be decided on its own facts without recourse to the doctrine of estoppel, although they did number differ from the view of the companyrts below as to the applicability of the doctrine of estoppel. That was number a case of the parties being equally companyversant with the true facts and further there was a finding that the person claiming to be the adopted son was as a matter of fact adopted. In our view there is numbersubstance in the plea of estoppel raised by the appellant. Whatever the acts of the respondent Chaltibai, what. ever her admissions and whatever the companyrse of companyduct she pursued qua the appellant Kishorilal they companyld number amount to estoppel as both parties were equally companyversant with the true facts. In numbere of the four documents which are signed by her, is there any admission that Kishorilal was adopted by her husband during his lifetime. On the other hand in the sale deed dated January 24, 1938, she recited an adoption by herself which is number the adoption that the appellant relied upon in support of his case. The other documents i. e. the application for succession certificate and the arbitration agreement and the entry in the Pandas bahi are all companysistent with the recital in the sale deed and do number establish the case 1 1925 52 I.A. 231, 243. 2 1912 39 I.A. 142, 148. of the appellant as to the adoption by Lakshminarayan himself. It was then argued for the appellant that the companyrse of companyduct of the respondent and her various acts of admission and the treatment of the appellant as an adopted son by the respondent and other members of the family gave rise to a strong inference that he the appellant was adopted as aleged by him and the evidence should have been so appraised as to support that inference. Particular emphasis was placed by companynsel for the appellant on the fact that soon after the death of Lakshminarayan it was given out that the appellant was his adopted son and this assertion was companytinuously made in many transactions and documents. These documents, the companyrse of companyduct of Chaltibai respondent in treating the appellant as the adopted son of Lakshminarayan and the length of the appellants possession of Lakskminarayans estate, it was companytended, showed that he was the adopted son of Lakshminarayan. It was also submit- ted that the admissions shifted the onus on to the respondent on the principle that what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted, the fact admitted must be taken to be established Chandra Kunwar v. Narpat Singh 1 . The question of onus loses its efficacy because it was never objected to in the companyrts below and evidence having been led by the parties, at this stage the companyrt has to adjudicate on the material before it. And admissions are number companyclusive, and unless they companystitute estoppel, the maker is at liberty to prove that they were mistaken or were untrue Trinidad Asphalt Company v. Coryat 2 . Admissions are mere pieces of evidence and if the truth of the matter is known to both parties the principle stated in Chandra Kunwars case 1 would be inapplicable. And in this case there is numberadmission by the respondent of the appellants adoption by her husband in his lifetime. Such admissions that there are cannot help the case of the appellant or support a different appraisal of the evidence of the factum of 1 1906 34 1. A. 27. 2 1896 A. C. 587. adoption or establish an adoption which is otherwise disproved. In order to properly appreciate the effect of these admissions it is necessary to companysider the circumstances under which these various documents were executed and the acts done or the admissions made. At the death of Lakshminarayan the respondent was 24 or 25 years old surrounded by the family of Badrinarayan whose interest it was to foist an adoption on her. Her own relations do number seem to have taken much interest in her or her affairs. She was thus a widow, lonely and dependent upon her husbands relations. The trial Court described her as a pardanashin woman. Although Badrinarayan himself denied that he was managing the estate of Lakshminarayan, Narsingdas one of the appellants witnesses stated that Badrinarayan was doing so and Badrinarayan admitted that he looked after the companyrt cases though at the request of the respondent. It is with this back. ground that the evidence has to be companysidered and weighed. Any admission made by a widow situated as the respondent was would necessarily carry very little weight Padamlal v. Fakira Debya 1 . Besides the four documents above mentioned the appellant Kishorilal relied on the following facts as instances of admissions and companyduct of the respondent Chaltibai. The first is the performance of obsequies by the appellant and the subsequent taking of the appellant in her lap by the respondent. The mere fact of performance of these funeral rites does number necessarily support an adoption. The performance of these rites frequently varies according to the circumstances of each case and the view and usage of different families. The evidence led by the appellant him- self shows that in the absence of the son, junior relations like a younger brother or a younger nephew performs the obsequial ceremonies. As was pointed out by the Privy Council in Tayamals case 2 the performance of funeral rites will number sustain an adoption unless it clearly appears that the adoption itself was performed under circumstances as would render it A.I.R. 1931 P.C. 84. 2 1865 10 M.I.A. 429. perfectly valid. But then it was submitted that the taking by the respondent of the appellant in her lap companypled with the performance of obsequies was a clear proof of her acceptance of the appellants adoption by her deceased husband. This again is slender basis for any such inference as Badrinarayan himself stated that it was number customary amongst them for the widow to take the adopted son in her lap and in this particular case it was only done as she desired it. As proof of adoption by Lakshminarayan this piece of evidence has numbervalue because that is number the case of the appellant and as showing companyfirmatory process it is valueless in the absence of evidence sufficient to establish the adoption by Lakshminarayan which in this case is lacking. The appellants residing with Lakshminarayan after his adoption and after the death of Lakshminarayan with the respondent was next relied upon by companynsel for the appellant As we have already said the appellant had number proved that he was residing with Lakshminarayan after his adoption on the companytrary the evidence shows that he left Tirora soon after his alleged adoption and did number return till after the death of Lakshminarayan. And then again he returned to Raipur and returned to Tirora after about four or five months. The mere fact that he companytinued to reside with the respondent since would number in this case prove adoption, because in the school register he was shown as the son of Badrinarayan and companytinued to be so shown upto June 30, 1937, and mere residence of a young nephew with a widowed and young aunt is numberproof of adoption by her husband in the absence of satisfactory evidence of the factum of adoption. The appellant, it was next companytended, was in possession of the properties of Lakshminarayan after the latters death and his name was brought on the record in all civil and revenue proceedings. As we have said above, Badrinarayan took over the management of the estate of Lakshminarayan and was looking after the companyduct of the companyrt cases. If in those circumstances the mutations were made in the name of the appellant or suits were brought in his, name or even if he took out licences in his name would be matters of small companysequence. It is number shown that at the time of the mutations the respondent was present or was represented or the suits were brought with her knowledge and it appears that all this was done because the management of the estate as well as the companyduct of the cases in companyrts was in the hands of Badrinarayan. Then the fact that after he attained majority, the appellant was managing the estate and was recognised by everybody as its owner also is of little companysequence because as far as the respondent was companycerned somebody had to manage the property, whether it was Badrinarayan or the appellant Kishorilal to her it made numberdifference. It may also be mentioned here that in the mutation order passed by the Tehsildar on April 8, 1936, which related to 3As. share of Mouza Jabartola the mutation entry was made in favour of the respondent and number in the name of the appellant and in the jamabandi papers relating to different holdings in some places the appellant is shown under the guardianship of his mother Chaltibai and in other places under the guardianship of Badrinarayan as his uncle. A great deal of stress was laid by the appellant on the fact that his marriage was performed by the respondent Chaltibai and she purported to do so as his adoptive mother. The performance of the marriage itself does number prove adoption, which is otherwise disproved, and as a circumstance supporting the inference of adoption set up by the appellant it is wholly neutral. At the most the circumstances relied upon by the appellant may be acts of acquiescence attributed to the respondent but they would be important only if they were brought to bear upon the question which depended upon preponderance of evidence. If the facts are once ascertained, presumption arising from companyduct cannot establish a right which the facts themselves disprove See Tayamals case 1 at p. 433. Presumptions cannot sustain an adoption even though 1 1865 10 M.I.A. 429. it might have been acquiesced in by all companycerned when as in the present case, the evidence shows that the adoption did number take place. Another fact on which the appellant relied was that on October 30, 1933, Badrinarayan, his wife and his sons partitioned their family property. That is number an act of the respondent and cannot affect her rights if they are otherwise enforceable.

Case appeal was rejected by the Supreme Court

CIA, IL APPELLATE JURISDICTION Civil Appeal No.5 of 1958. Appeal by special leave from the judgment and order dated September 26, 1956, of the former Nagpur High Court in Letters Patent Appeal No. 66 of 1956, arising out of the judgment and order dated April 14, 1956, of the said High Court in Misc. Petition No. 6 of 1956. C. Setalvad, Attorney-General of India, B. Sen, D. B. Padhya and I. N. Shroff, for the appellants. V. S. Mani, for the respondent. 1958. April II. The Judgment of the Court was delivered by K. DAS J.-This is an appeal by special leave. The appellants before us are the Nagpur Electric Light and Power Co. Ltd. hereinafter referred to as the Company , a public limited companypany having its registered office at Nagpur in Madhya Pradesh, its Manager, and Assistant Manager. The respondent, Shreepathi Rao, joined the service of the Company as a typist on a salary of Rs. 30 per month in July, 1936. He rose in rank from time to time and was appointed Deputy Head Clerk in 1947 in the grade of Rs. 120-10-225. Since 1952 he has been receiving a basic salary of Rs. 245 per month. On November 28, 1955, an explanation was called for from him with regard to the issue of certain bills to companysumers of electricity called .high tension companysumers , without having certain numberes for the information of companysumers printed at the back of the bills. The respondent submitted his explanation on the next day, marking a companyy thereof to one of the directors of the Company. On December 2,1955, he was again asked to explain why he marked a companyy of his explanation to one of the directors. The respondent submitted an explanation in respect of this matter also. On the same date, he was again asked to explain as to how and why certain double adjustments had been made in the accounts of 1954 relating to the companysumers department of the Company, the allegation being that a sum of Rs. 1,05,894-7-7 which represented the amount of bills of the Central Railway had been deducted twice in the accounts. The respondent submitted an explanation on December 3, 1955, in which he said that the charge was vague and that, after 1949, he was number in any way companycerned with the preparation of summaries and annual statements of accounts of the companysumers department. On December 5, 1955, an order of suspension was made against the respondent which stated that the order was to take immediate effect and to remain in force until further orders, pending some investigation against the respondent. Two days later, on December 7, 1955, a memorandum was served on the respondent terminating his services with effect from January 31,1956. The memorandum, so far as it is relevant for our purpose, read- We hereby give you numberice under Standing Order 16 1 that your services will stand terminated as from 31st January, 1956. The Companys Managing Director is satisfied that it is number in the interests of the business of the Company to disclose reasons for terminating your services. On December 19, 1955, a numberice was served on the Company on behalf of the respondent wherein it was stated that the order of suspension dated December 5, 1955, and the order of termination dated December 7, 1955, were illegal and ultra vires and a request was made to withdraw the said orders and reinstate the respondent within 24 hours, failing which the respondent said that he would take legal action in the matter. On December 26, 1955, the Company sent a reply to the numberice denying the allegations, and the companypany further stated that it had numberdesire to enter into a discussion with the respondent as to the propriety of the orders passed. On January 2, 1956, the respondent filed a petition under Art. 226 of the Constitution in the High Court at Nagpur in which he prayed for the issue of appropriate writs or directions quashing the orders of suspension and termination dated December 5, 1955, and December 7, 1955, respectively and asking for certain other reliefs. This petition was heard by a learned single Judge on certain preliminary objections raised by the present appellants, and, by an order dated April 14, 1956, he upheld the preliminary objections and dismissed the petition. The preliminary objections taken were these it was urged that the service of the respondent was terminated in accordance with the Standing Orders of the Company, approved by the relevant authorities under the provisions of the Industrial Employment Standing Orders Act, 1946 XX of 1946 , hereinafter referred to as the central Act, and also under the provisions of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947 C. P. and Berar Act XXlll of 1947 , hereinafter called the local Act and if the respondent had any grievance against the said Standing Orders, his only remedy was to get the Standing Orders amended as provided for in the relevant Act, but he had numberright to move the High Court under Art. 226 of the Constitution for quashing the orders passed against him or for reinstatement, etc. Alternatively, it was urged that if the Standing Orders did number apply in the case of the respondent as was the respondents case, then the Ordinary law of master and servant applied, and the only remedy of the respondent was to sue the Company in damages for wrongful dismissal. On these preliminary objections the learned Judge held 1 that the respondent was number an employee within the meaning of the Standing Orders and therefore his case was number governed by the Standing Orders 2 that the relationship between the appellants and the respondent was companytractual and number statutory and the remedy of the respondent was to sue the Company in damages for wrongful dismissal and 3 as for amendment of the Standing Orders so as to include the respondent and persons in his category, the only remedy open to the respondent was to take action under the relevant Act by approaching a recognised union to move in the matter. On the dismissal of his petition, the respondent preferred an appeal under el. 10 of the Letters Patent. This appeal was heard and allowed by a Division Bench on September 26, 1956, on the findings that 1 the Standing Orders did number apply to the respondent, though he was an employee within the meaning of that expression in s. 2 1 of the local Act 2 the companyditions of the respondents service were governed by the provisions of the local Act and on a breach thereof, the respondent had a right to move the High Court for appropriate orders under Art. 226 of the Constitution and 3 as the termination of the service of the respondent was without statutory authority, it must be vacated. The Division Bench accordingly allowed the appeal, quashed the orders of suspension and termination of service and declared that the respondent companytinued to bean employee of the Company on terms which were applicable to him on the date of his suspension, namely, December 5, 1955. There was also a direction to the Company to pay back wages to the respondent. The appellants herein then moved this Court and obtained special leave to appeal from the order of the Division Bench, dated September 26, 1956. The present appeal has been brought in pursuance of the order granting special leave to the appellants. The first and foremost question which arises for decision in this appeal is whether the Standing Orders of the Company apply to the respondent. We have already stated-and it is number in dispute--that the Standing Orders were approved by the certifying officer under the provisions of the central Act and by the Labour Commissioner under s. 30 of the local Act. It is necessary to explain here the general scheme of the provisions of the two Acts under which the Standing Orders were approved. Under the central Act, the expression Standing Orders means rules relating to matters set out in the Schedule, and s. 3 requires that within six months from the date on which the central Act becomes applicable to an industrial establishment the employer shall submit to the certifying officer five companyies of the draft Standing Orders proposed by him for adoption in his industrial establishment. Sub-section 2 of s. 3 lays down that provision shall be made in such draft for every matter set out in the Schedule which may be applicable to the industrial establishment and where model Standing Orders have been prescribed, the draft shall so far as practicable, in companyformity with such model. The Schedule refers to the matters which are to he provided by Standing Orders, and item 8 of the Schedule relates to termination of employment, and the numberice thereof to be given by employer and workman We may state here that the central Act companytains a definition of workman which, at the material time in this case, meant any person employed in any industrial establishment to do any skilled or unskilled, manual or clerical, labour for hire or reward, but did number include any member of the armed forces. Sections 4 to 10 of the central Act deal with a companyditions for certification of Standing Orders, b certification of Standing Orders, e appeals, d date of operation of Standing Orders, e register of Standing Orders, f posting of Standing Orders and g duration and modification of Standing Orders. There are similar provisions in the local Act,Chapter IV of which deals with Standing Orders.Sub-section 1 of s. 30 of the local Act lays down-- Every employer, in respect of any industry to which this Act has been made applicable under subsection 3 of section 1, shall, within two months of the late of such numberification, submit to the Labour Commissioner for approval, in such manner as may be prescribed, a companyy of the Standing Orders companycerning the relations between him and his employees with regard to all industrial matters mentioned in Schedule 1. Item 8 of Schedule I of the local Act is again termination of employment, numberice to be given by employer and employee . The other sub-sections of s. 30 lay down the procedure to be followed for the approval of Standing Orders by the Labour Commissioner, appeal by an aggrieved person, etc. Sections 31 and 32 lay down the procedure for an amendment of the Standing Orders either at the instance of the employer or at the instance of a representative of employees. It is worthy of numbere that sub-s. 1 of s. 30 requires every employer to submit to the Labour Commissioner a companyy of the Standing Orders companycerning the relations between him and his employees with regard to all industrial matters mentioned in Schedule 1. The local Act defines the expression employee and, at the relevant time, it meant any person employed by an employer to do any skilled or unskilled, manual or clerical work for companytract or hire or reward in any industry. It is worthy of numbere that the definition of employee in the local Act companyresponds more or less to the definition of workman under the central Act. There are some minor differences in the definition of the two expres- sions in the two Acts, but with those differences we are number companycerned in the present case. The Standing Orders with which we are companycerned in the present case came into force on November 14, 1951, and it is companyvenient at this stage to refer to the relevant Standing Orders. Standing Order number 2 defines certain expressions used in the Standing Orders. It states- In these Orders, unless there is anything repugnant in the subject or companytext a employees means all persons, male or female, employed in the Office or Mains Department or Stores or Power House or Receiving Station of the Company, either at Nagpur or at Wardha whose names and ticket numbers are included in the departmental musters. The Manager means the person appointed as such and includes the Assistant Manager and in relation to Wardha establishment the Resident Engineer . Ticket includes a Card, pass or token. Workman means such categories of employees as may from time to time be declared to be Workman by the Management . Standing Order number 3 classifies employees into certain categories and Standing Order number 4 deals with tickets. In substance, it says that every workman, permanent or temporary, shall have a ticket or card, and an apprentice shall have an apprentice card the tickets or cards issued shall be surrendered when the workman is discharged or ceases to belong to the class of employment for which the card or ticket is issued. It is to be numbericed that under the definition clause workman means such categories of employees as may from time to time be declared, to be workmen by the management and Standing Order number 4 makes it clear that every workman, permanent or temporary, will have a ticket. Standing Order number 16 deals with termination of employment, and cl. 1 thereof, relevant for our purpose, must be quoted in full- For terminating the employment of a permanent employee, a numberice in writing shall be given either by the employer or the employee, giving one calendar months numberice. The reasons for the termination of the services will be companymunicated to the employee in writing, if he so desires at the time of discharge, unless such a companymunication, in the opinion of the Management, may directly or indirectly lay the companypany and the Management or the person signing the companymunication open to criminal or civil proceedings at the instance of the employee, or the Companys Managing Director is satisfied that it is number in the interests of the business of the Company to disclose the reasons and so orders in writing. Now, it is number in dispute that the respondent is a workman within the meaning of the Central Act and an employee as defined in the local Act. The. companytroversy before us is as to whether he is an employee within the meaning of the Standing Orders. Admittedly, numberticket has been issued to the respondent by the Company his ticket number cannot, therefore, be included in the departmental muster. The learned Judges of the High Court held that the inclusion of the name and ticket number in the departmental muster was an essential characteristic of an employee as defined for the purpose of the Standing Orders, and the mere fact of employment in the Office, Mains Department, Stores, Power House or Receiving Station of the Company was number enough to make a, person so employed an employee within the meaning of the Standing Orders, and as the respondent did number fulfil the necessary companydition of having his name and ticket number included in the departmental muster, he was number an employee as defined for the Standing Orders, which did number therefore apply to him. On behalf of the appellants, it is companytended that regard being had to the companytext and the entire body of the Standing Orders, the aforesaid view of the High Court is number companyrect, and on a proper companystruction, inclusion of the name and ticket number in the departmental muster is number an essential characteristic of an employee as defined for the Standing Orders. It is rightly pointed out that if the possession of a ticket and a ticket number is taken as an essential characteristic of an employee, then there is hardly any difference between an employee and a workman as defined in the Standing Orders because a workmen means such categories of employees as may from time to time be declared to be workmen, and under Standing Order number 4 all workmen must have tickets. If a person em- ployed by the companypany must have a ticket before he can be an employee, and if workmen are such categories of employees as have tickets, the distinction between the two disappears and. it is difficult to understand why two definitions were necessary. On a companysideration, however, of the subject or companytext of the Standing Orders, read in their entirety and in harmony with one another, it becomes at once clear why two definitions are necessary and what is the distinction between the two classes-, employees and workmen-in the landing Orders. The expression employee denotes a larger group-namely, all persons, male or females who are employed in the Office, Mains Department, Stores, Power House, or Receiving Station of the Company, either at Nagpur or Wardha. Workmen denotes a smaller group, viz., such categories of employees as have been declared to be workmen, and who must have a ticket. Such a distinction is clearly intelligible in an industrial establishment, where for security and other reasons a system of tickets or passes is necessary for those who work in the Power House or Mains Department or other places where essential machinery is installed while others, such as the clerical staff, may work in an office building where security demands are either numberexistent or much less insistent. This distinction means that all workmen are employees, but all employees are number workmen for the purpose of the Standing Orders, and the inclusion of ticket numbers in the departmental musters will be applicable to those employees only to whom tickets have been issued but such inclusion is number an essential characteristic of an employee. Let us number see if such a distinction is companysistent with the Standing Orders as a whole. Standing Order number 3, which classifies employees, defines a probationer in cl. c and says that a probationer means an employee who is appointed in a clear vacancy on probation for a period number exceeding twelve months, etc. Standing Order number 4 does number require the issue of a ticket to a probationer yet a probationer is an employee. It is thus obvious that the Standing Orders do make a distinction between employees and workmen, and there may also be employees who have numbertickets. Some of the Standing Orders apply to workmen only, e. g., Standing Orders 12, 13, 14 and 15. Other Standing Orders apply to all employees, whether they are workmen or number. Standing Order number 16 falls in the latter category it applies to all employees. Standing Order number 8 b , we think, makes the position still more clear. It says- Any employee, who after marking his attendance or presenting his ticket, card, or token, as the case may be, is found absent from his proper place of work during working hours without permission or without any sufficient reason, shall be liable to be treated as absent for the period of his absence. If every employee has to have a ticket, it is difficult to understand why this Standing Order should make a distinction between an employee who marks his attendance and another who presents his ticket, card or token. Such a distinction is easily understandable when some employees do number possess a ticket, card or token, so that they merely mark their attendance while those who possess a ticket, card or token present it. It has been suggested that Standing Order number 4 is number exhaustive in the matter of issue of tickets it talks of an issue of a ticket to every permanent workman, a card to every badli workman, a temporary ticket to every temporary workman, and an apprentice card to every apprentice. It does number prescribe the issue of a pass or token, though the definition of a ticket includes a pass or token. The suggestion further is that Standing Order number 2 a itself authorises the issue of tickets to other employees, so that there may be one kind of tickets issued to workmen under standing Order number 4 and another kind of tickets to other employees under Standing Order number 2 a . On this view, it, is suggested that the alternatives mentioned in Standing Order number 8 b really amount to an option given to an employee either to mark his attendance or present his ticket. It is, however, difficult to understand the necessity of an option of this kind when every employee must have a ticket, particularly when the exercise of such an option is likely to defeat the very purpose for which tickets are issued in an industrial establishment. We do number, however, think that the case of the respondent is in any way strengthened by holding that Standing Order number 2 a itself authorises the issue of tickets to employees other than workmen. Even on that companystruction, the failure of the Company to issue tickets under Standing Order number 2 a will number deprive the employees of their real status as employees and of the benefit of the Standing Orders. The direction for the issue of tickets will, in that view of the Standing Order, be an enabling provision only and number an essential characteristic of an employee. Further, Standing Order number 4 provides for the surrender of tickets issued thereunder but Standing Order number 2 a , if it is companystrued as enabling the Company to issue tickets, makes numberprovision for the surrender of tickets when the employee ceases to be an employee. This absence of any provision for surrender applicable to such tickets clearly implies that issue of tickets is number companytemplated by the Standing Order number 2 a itself. On behalf of the respondent, however, the main argument has been of a different character. It has been argued that there need number be one set of Standing Orders for all employees, and the Standing Orders in question being companyfined to those employees to whom tickets had been issued, the respondent who had numberticket was outside their purview, and the result was that the Company had companymitted a breach of the statutory provision in s. 30 of the local Act in the sense that numberStanding Orders had been made in respect of the respondent and employees like him to whom tickets had number been issued. It hag been argued that, therefore, numberaction companyld be taken against the respondent either under the Standing Orders or even under the ordinary law of master and servant. We are unable to accept this argument as companyrect. We have pointed out that the Standing Orders themselves make a distinction between employees and work- men, and there may also be employees who have numbertickets. To hold that the Standing Orders apply to those employees only to whom tickets have been issued will make employees synonymous with workmen-a result negatived by two separate definitions given in Standing Order number 2. The central Act as well as the local Act companytemplate the making of Standing Orders for all employees in respect of matters which are required to be dealt with by Standing Orders. The Standing Orders in question were number objected to as being defective or incomplete by workmen, and they have been approved by the appropriate authority and they must be companystrued with reference to their subject or companytext. In the absence of companypelling reasons to the companytrary, it should be held that they apply to all employees for whose benefit they have been made. We see numbercompelling reasons for holding that the Standing Orders do number apply to the respondent. In our view, and having regard to the subject or companytext of the Standing Orders, the words whose names and ticket numbers are included in the departmental musters in Standing Order number 2 a do number lay down any essential characteristic of employee and are applicable only in cases where tickets have been issued to an employee. The essential companytent of the definition of an employee is employment in the Office, Mains Department, eta., of the Company either at Nagpur or Wardha, and that of a workman the necessary declaration by the Company which would entitle him to a ticket under Standing Order number 4. There is also another relevant companysideration which must be borne in mind in companystruing the Standing Orders in question. Section 30 of the local Act imposes a statutory obligation on the employer to make, Standing Orders in respect of all his employees and a breach of the statutory obligation involves a criminal liability. That being so, the companyrt would be justified, if it can reasonably do so, to companystrue the Standing Orders so as to make them companysistent with the companypliance of the said statutory obligation. We are number unmindful of the principle that in companystruing a statutory provision or rule, every word occurring therein must be given its proper meaning and weight. The necessity of such an interpretation is all the more important in a definition clause. But even a definition clause must derive its meaning from the companytext or subject. In Courts v. The Kent Waterworks Company 1 , the question for companysideration was the interpretation of the appeal clause in an Act for Paving, Cleansing, Lighting, etc., of the Town and Parish of Woolwich 47 Geo. III, Sess. 2, cap. CXI . By the 16th section of the statute, the companymissioners are to make rates upon all and every the person or persons who do or shall hold, occupy, possess, etc., any land within the parish . The statute also gave a right of appeal to any person or persons aggrieved by any rate., but the appeal clause required the person or persons appealing against a rate to enter into a recognisance the question was if this requirement was intended to exclude companyporations from the purview of the ap. peal clause, as companyporations, it was urged, cannot enter, into a recognisance. In interpreting the appeal clause, Bayley J. observed- 1 1827 7 B. C. 314 108 E. R, 741. But assuming that they cannot enter into a recognizance, yet if they ire persons capable of being aggrieved by and appealing against a rate, I should say that that part of the clause which gives the appeal applies to all persons capable of appealing, and that the other part of the clause which requires a recognizance to be entered into applies only to those persons who are capable of entering into a recognizance, but is inapplicable to those who are number. The same principle of interpretation was applied in Perumal Goundan v. The Thirumalarayapuram Jananukoola Dhanasekhara Sangha Nidhi 1 , in companystruing the Explanation to O. XXXIII, r. 1, of the Code of Civil Procedure, which says inter alia that a person is a pauper when he is number entitled to property worth one hundred rupees other than his necessary wearing apparel and the subject matter of the suit . The question was if the aforesaid provision applied to companypanies. It was held that it would be wrong to companystrue the provision to mean that only persons who possess wearing apparel can sue as paupers. We are of the view that the same rule of companystruction should apply in the present case, and the words whose names and ticket numbers are included in the depart. mental musters occurring in Standing Order number 2 a should be read as whose names and ticket numbers, if any, are included in the departmental musters and should apply in the case of those employees only who possess tickets and whose ticket numbers are capable of being entered in departmental musters they are number intended to exclude employees who do number possess tickets or to whom tickets have number been issued and companysequently whose names only are so entered. The learned Judges of the High Court were influenced by the circumstance that in an earlier- case D. C. Dungore v. S. S. Dandige Miscellaneous Petition No. 134 of 1954 decided by the same High Court on September 23, 1955 the Company took tip the stand that the Standing Orders applied to employees to Whom tickets had been issued-a stand different from and inconsistent with that taken in the present case, 1 1917 I.L.R. 41 Mad. 624. It may be pointed out, however, that 1 . C. Dungore of the earlier case was number an employee within the meaning of the relevant Act, and there companyld be numberStanding Orders in respect of his companyditions of service. Moreover, in the matter of companystruction of a statutory provision numberquestion of estoppel arises, and the learned Judges had pointed out that the respondent himself thought that the Standing Orders applied to all employees. We have rested our decision as to the applicability of the Standing Orders number on what the appellants or the respondent thought at one time or another, but on a true companystruction of the Standing Orders themselves, including the definition clause in Standing Order number 2 a . We take the view that the Standing Orders apply to the respondent. This is really decisive of the appeal, because if the Standing Orders apply to the respondent and his service has been terminated in accordance with Standing Order number 16 1 , the writ application which the respondent made to the High Court must fail. The learned Attorney-General appearing for the appellants addressed us on the scope and ambit of Art. 226 of the Constitution, and he companytended that even if the respondent had been wrongfully dismissed by his private employer, the proper remedy was by mean,, of a suit and number by invoking the special writ jurisdiction of the High Court. These companytentions raise important questions, but we do number think that we are called upon to decide them in this case. Lastly, it has been urged oil behalf of the respondent that even if we hold that the Standing Orders apply to the respondent, we should remand the case to the High Court for a decision on merits of other points raised by the respondent, because the question whether the Standing Orders apply or number was treated as a preliminary issue by the High Court and numberdecision was given on other points. We asked learned Advocate for the respondent what other points remain for decision oil his writ application, once it is held that the Standing Orders apply to the respondent and his service has been terminated in accordance with Standing Order number 16 1 . Learned Advocate then referred us to Standing Order number 18, which provides for penalties for misconduct, and submitted that the provisions thereof have number been companyplied with by the appellants. He particularly referred to cl. e of Standing Order number 18 and submitted that the order of suspension passed against the respondent was in violation of the safeguards mentioned therein. The short answer to this argument is that numberpenalty for mis- companyduct has been imposed on the respondent under Standing Order number 18. The Company paid his salary to the respondent from the date of suspension to January 31, 1956, which also showed that numberorder was passed by way of punishment for misconduct. The Company chose to terminate the service of the respondent in accordance with Standing Order number 16, and did number think fit to proceed against the respondent for any alleged misconduct, and it was open to the Company to do so. So far as Standing Order number16. is companycerned, all the requirements thereof have been companyplied with. That being the position, numberother point remains for decision in the present case. The result, therefore, is that the appeal succeeds and is allowed. The judgment and order of the High Court dated September 26, 1956, are set aside and the writ petition of the respondent is dismissed.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 220, 222, 240 and 380 to 395 of 1955. Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. 1957. Dec. 10, 11, 12, 13, 17, 18, 19. 1958. Jan. 7, 8, 9. Narsa Raju, Advocate-General for the State of Andhra Pradesh and T. M. Sen, for the respondent. The petitions are premature and incompetent as the facts of each transaction of sale are yet to be investigated and it is number possible to know the character of each sale, number can it be determined which sales can be and which cannot be taxed by Andhra Pradesh. CHIEF JUSTICE. You should be reasonably satisfied that the sales are of such a nature that you can levy tax on them before you issue a numberice. BOSE J. You must state the facts on which you think you can tax the sales. K. DAS J. Your stand is that all transactions companyld be taxed by the delivery State. Narsa Raju. My State is taxing under the decision of this Court in the United Motors case 1953S. C. R. 1069 . Upon the companynsel for the petitioners stating that he would companyfine his arguments to the imposition of tax on Explanation sales only, which some of the transactions indisputably were, the Court indicated that it would hear the petitions. S. Krishnaswami Iyengar, N. Srinivasan and R. Ganapathy Iyer, for the petitioners. The Andhra Madras Act does number seek to tax Explanation sales 1427 at all. It talks of property passing only and as such Andhra can tax only such sales where property passes in Andhra. See Poppatlal Shah v. State of Madras, 1953 S. R. 677 . Section 22 does number enlarge the definition of sales it only restricts the power of the State to tax. The explanation to s. 22, like the explanation to Art. 236 1 , is merely for the purpose of defining what is an outside sale and number for determining what is an inside sale. See Bengal Immunity Company case 1955 2 S. C. R. 603 at 640 . The power of the President under Art. 372 2 being merely to bring the State laws into companyformity with Art. 286, s. 22, which was introduced by the Presidential Adap- tation Order under Art. 372 2 , cannot be companystrued as permitting the imposition of tax on Explanation sales which was prohibited by Art. 286. If s. 22 was companystrued to permit such imposition it was unconstitutional, illegal and void and must be deemed to be number est. See Bengal Immunity Company case 1955 2 S. C. R. 603 at 667 . What did number exist companyld number be validated. The Sales Tax Laws Validation Act, 1956, was number valid legislation under Art. 286 2 . Article 286 2 only empowers Parliament to lift the ban on the imposition of tax on inter-State -ales and after it has lifted the ban the State legislature may impose the tax. Parliament is number companypetent to impose sales tax such power is vested only in the State legislatures. Article 286 2 does number give Parliament power to validate or ratify laws of the State legislatures. The power under Art. 286 2 can be exercised only once and finally and fully, number partially. Parliament can only lift the ban as from the day the power is exercised and riot retrospectively. Punjab Province v. Daulat Singh, 73 I. A. Behram Khurshed Pesikaka v. The State of Bombay 1955 I S. C. R. 613, 654 and 655 . The case of Dialdas v. Talwalkar A. 1. R. 1957 Bom. 71 has been wrongly decided. But even this decision helps the petitioners in so far as it lays down that where tax had neither been companylected number levied the Validation Act did number companyfer power to assess or levy. The whole 1428 policy of the Validation Act was to save the State from disgorging the, tax illegally companylected. Both levy and companylection must be within the period specified in s. 2 of the, Act. Mettur Industries Ltd. v. The State of Madras A. R. 1957 Mad. 362 and Mysore Spinning and Manufacturing Co. Ltd. v. Deputy Commercial Tax Officer A. 1. R. 1957 Mad. 368 are against the petitioners. Ganapathy Iyer followed. Section 22 of the Andhra Madras Act did riot enlarge the powers of taxation. Mathew Travancore-Cochin Board of Reventue A. 1. R. 1957 T. C. 300 . The validation being for a temporary period which expired on September 6, 1.955, numberaction can be taken after that date under the validated laws. Kesavan Madhava Menon v. The State of Bombay, 1951 S. C. R. 228, 234, 235 , S. Krishnan v. The State of Madras, 1951S. C. R. 62 1, and State of Punjab v. Mohar Singh,1955 I S. C. R. 893 . The tax being a sinole pointtax under the Act, and the petitioners having already paid the tax at the time of the purchase of the yarn from the Mills, numbersecond tax was payable. The Andhra Madras Act being a new Act the tax on yarn is hit by the Essential Commodities Act 52 of 1952 read with Art. 286 3 of the Constitution. Petitioners are number dealers in Andhra Pradesh and cannot be assessed. There are numbersales in Andhra all sales being in Madras. L. Narasimhamoorthy, J. B. Dadachanji and Rameshtvar Nath, for the Mysore Spinning Mfg. Co., Ltd., and Minerva Mills Ltd., Interveners , supported the petitioners. Section 22 does number authorise the imposition of tax on Explanation sales. It companyld number have been the intention of the President to allow the State to add a new category of sales - the Explanation Sales -to be taxed. The language of Art. 286 2 indicates that the lifting of the ban is a companydition precedent to legislation by the States imposing tax on inter-State sales. Alternatively, the power to tax inter-State sales is with Parliament under Entry 97 of List I of Schedule VII of the Constitution. Section 22 was wiped out and obliterated by the judgment in the 1429 Bengal Immunity Company case. See Behram Khurshed Pesikaka The State of Bombay, 1955 1 S. C. R. 613 Newberry v. United States, 65 L. Ed. 913 . The same interpretation must be given to the explanation to s. 22 as has been given to the explanation to Art. 286 1 a . The number-obstante clause in s. 22 has only the effectof subtracting something from the power to tax andriot of adding to it. Ram Narain Sons Ltd. v. Asst. Commissioner of Sales Tax 1955 2 S.CR. 483 Aswini Kumar Ghosh v. Arbinda Bose 1953 S.C.R. 1, 22, 24 A. V. Fernandez v. The State of Kerala, 1957 S. C. R. 837 . A. Palkhiwala, J. B. Dadachanji and Rameshwar Nath, for Tata Iron Steel Co., Ltd., Intervener . There must be a factual levy before Parliament can validate it. Section 22 ii removes inter-State sales from the purview of the Act. Fernandezs case supports this companytention. On a proper companystruction of Art. 286 2 , according to the decision in the Bengal Immunity Company case, there was numberlevy on interState sales and there was numberhing for Parliament to lift the ban for. 1955 2 S. C. R. 603, 621, 662, 667 . There is a vital difference between retrospective and retroactive operation. There is numberpower in Parliament to validate ex post facto a violation of Art. 286 2 . Parliament must first lift the ban and then the State legislation may companye imposing tax on inter-State sales. Parliament is companypetent to prevent what otherwise would have been a violation of the Constitution, but it is number companypetent to companydone an accomplished violation. Section 2 of the Validating Act will operate only where taxes have already been companylected or have been finally assessed. N. Bhagwati and .1. N. Shroff, for Pashebbhai Patel Co., Ltd., Intervener supported the petitioners. Narsa Raju, Advocate-General of Andhra Pradesh and T. Sen, for the respondents. Article 372 2 must take regard of the provision of the Constitution to bring the State laws into companyformity with which the power of adaptation is to be exercised. That provision 1430 is Art. 286. Implicit in Art. 286 1 is the recognition that the delivery State alone may tax. The -President would be acting within his power to enable the delivery State to tax -Such power is in accordance with the provisions of the Constitution. The power of the legislature to bring the laws in accordance with the Constitution is companyferred upon the President. Consequently, the explanation to s. 22 can be read along with the definition of sale and it does add to that definition by bringing Explanation sales within it. V. Subramania Iyer, D. N. Mukherjee and B. N. Ghosh, for Madura Mills Co., Ltd., Intervener . The Adaptation Order made by tile President is number law of a State within the meaning of the Validating Act. Law of a State in the Validating Act must mean the same thing as in Art. 286 2 . The President exercising power under Art. 372 2 is number companytrolled by Art. 286 he exercises a power which belongs to the President and number a power on behalf of the State. Section 22 of the Andhra Madras Act is number law made by the State Legislature and is number validated by the Validating Act. The power of imposition of sales tax on inter-State sales was taken away from the States. The bail under Art. 286 2 is only in respect of existing laws there is numberpower in the States to enact laws imposing tax on interstate sales. The power to impose tax on inter-State sales is within the exclusive domain of Parliament under Entry 42 of List I of the Seventh Schedule of the Constitution and Entry 54 of List 11 must be companystrued as number including such power. A reference to Art. 301 reinforces this interpretation. The freedom under Art. 301 includes freedom from sales tax. See The Commonwealth v. The State of South Australia, 38 C. L. R. 408 . The Validation Act is number legislation within Entry See Bank of N. S. W. v. The Commonwealth, 76 C. L. R. 1, 381 Robbins v. Taxing District of Shelby County 1877 30 L. Ed. 694 McLeod v. Dilworth Co. 1944 88 L. Ed. 1304 . K. Daphtary, Solicitor-General of India, G. N. 1431 Joshi and T. M. Sen, for the Union of India Intervener . The Sales Tax Laws Validation Act, 1956, is valid legislation tinder Art. 286 2 . In effect and in substance the Validation Act is a law which removes the ban imposed by Art. 286 2 , and is number really a Validating Act. Article 286 2 , in respect of existing laws, merely said that they should number be effective or operative. It did number take away the companypetency of the legislatures to make laws providing for taxes oil inter-State sales. Such a law may be against the provision of the Constitution, but that does number repeal or obliterate it. It is only in abeyance. See Bhikaji Narain Dhakra,s and others v. The State Of Madhya Pradesh and another, 1955 2 S.C.R. 589, 600 . Legislative power generally includes the power to legislate retrospectively. There is numberlimitation in Art. 286 2 as respects retrospective legislation. Parliament companyld, therefore, lift the ban retrospectively. Section 22 is a piece of companyditional legislation. As soon as the ban under Art. 286 2 was lifted by Parliament it came into operation. The Validation Act is number a temporary statute. A temporary statute is one which says that it is to be effective for a particular period. The Validating Act operates even number and is effective, though it is in respect of sales of a particular period. It is open to the States to initiate proceedings number for taxing the Explanation sales made during the period mentioned in s. 2 even though numbersuch proceedings had been taken during that period. Entry 42 of List I which reads Inter-State trade and companymerce does number companyfer any power of taxation on Parliament. In the scheme of our Constitution a general Entry does number include the power of taxation. Taxes, duties, etc., are enumerated in a separate group in Entries 82-92 in List I. K. T. Chari, Advocate-General for the State of Madras, R. Gopalakrishnan and T. M. Sen for the State of Madras Intervener . In companystruing s. 22 of the Andhra Madras Act regard must be had to the law as it stood till September 6, 1955, when judgment was delivered in the Bengal Immunity Company case. In view of the decision in the United Motors 1432 case 1953 S. C. R. 1069, 1085, 1086, 1093, 1094 , Explanation sales were regarded as inside sales in the delivery State, and the delivery State was entitled to tax sales. The law of a State which imposed tax on Explanation sales would remain on the statute book, in spite of the decision in The Bengal Immunity Company case, but companyld number be enforced. See Bhikaji Narain Dhakras and others v. The State of Madhya Pradesh and another 1955 2 S.C.R. 589 Ulster Transport Authority v. James Brown Sons Ltd. 1953 Northern Ireland Reports 79 . Section 2 of the Validating Act refers to such a law. Mahabir Prasad, Advocate-General for the State of Bihar, Rajeshwar Prasad and S. P. Varma, for the State of Bihar Intervener G. C. Mathur and C. P. Lal, for the State of Uttar Pradesh Intervener supported the respondents and the Union of India. Ganapathy Iyer, for the petitioners, replied. V. Subramania Iyer, for Madura Mills Co., Ltd., Intervener , also replied with the permission of the Court. 1958. March II. The judgment of Das C. J., Venkatarama Aiyar, S. K. Das and Vivian Bose, JJ. was delivered by Venkatarama Aiyar J. Sarkar J. delivered a separate judgment. VENKATARAMA AIYAR J.-The petitioners are dealers carrying on business in the City of Madras in the sale and purchase of yarn, and they have filed the present applications under Art. 32 of the Constitution for the issue of a writ of prohibition or other appropriate writ restraining the State of Andhra from taking proceedings for imposing tax on certain sales effected by them in favour of merchants who are residing or carrying on business in what is number the State of Andhra Pradesh, on the ground, inter alia, that the said sales were made in the companyrse of inter-State trade, and that numbertax companyld be levied on them by reason of the prohibition companytained in Art. 286 2 of the Constitution. The companyrse of dealings between the parties resulting 1433 in the above sales has been set out in para. 5 in Petition No. 220 of 1955. It is therein stated that the dealers in Andhra would place orders for the purchase of yarn with the petitioners in Madras, that the companytracts would be companycluded at Madras, that the goods would be delivered ex-godown at Madras and would thereafter be despatched to the purchasers either by lorries or by rail as might be directed by them, that when the goods were sent by rail, the railway receipts would be taken either in the name of the companysignees, and sent to them by post or in the name of the companysignor and endorsed to the purchasers and delivered to them in Madras or sent to them by post endorsed in favour of a bank and the purchasers would take delivery of those receipts after payment to the bank. It is said that in all cases price of the goods was paid in Madras. On the above allegations, it is manifest that the sales mentioned therein are number all of the same kind, and in point of law, the incidents attaching to them might be different. A companysideration of the validity of the imposition with reference to the several classes of sales mentioned above would he wholly airy and pointless without a determination of the facts relating to them, which, however, have number been investigated. Counsel for the petitioners, however, companycedes that the, dispute in these proceedings is companyfined to the proposed imposition of tax, in so far as it relates to sales of the character mentioned in the Explanation to Art. 286 1 a , that is to say, sales in which the property in the goods sold passed outside the State of Andhra but the goods themselves were actually delivered as a result of the sale for companysumption within that State. These sales have been referred to in the arguments before us as Explanation sales , and it will be companyvenient to adopt that expression in referring to them in this judgment. It will be seen that the above sales would all of them have been intrastate, so long as the Andhra State formed part of the companyposite State of Madras, and questions of the character number agitated before us companyld number then have arisen. On September 14, 1953, 1434 Parliament enacted the Andhra State Act 30 of 1953 , whereby a separate State called the State of Andhra was companystituted incorporating therein territories which had previously thereto formed part of the State of Madras, and this Act came into force on October 1, 1953. Under s. 53 of the Andhra State Act, the laws in force in the territories in the Andhra State prior to its companystitution are to companytinue to be in force even thereafter, and one of those laws is the Madras General Sales Tax Act Madras 9 of 1939 , hereinafter referred to as the Madras Act. Section 54 of the Andhra State Act companyferred on the Government a power to adapt laws for the purpose of facilitating the application of any law previously made, and in exercise of the power companyferred by this section, an Adaptation Order was passed on November 12, 1953, whereby the word Andhra was substituted for the word Madras in the Madras Act. We shall hereafter refer to the Madras Act as companytinued and applied in the State of Andhra as the Andhra Madras Act. It will be companyvenient at this stage to refer to the relevant provisions of this Act. The preamble to the Act states that it is expedient to provide for the levy of a general tax on the sale of goods in the State of Madras. Sale is defined in s. 2 h , omitting what is number material, as meaning every transfer of the property in goods by one person to another in the companyrse of trade or business for cash or for deferred payment or other valuable companysideration. Section 2 i defines turnover as the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable companysideration . Section 3 is the charging section and provides that every dealer shall pay for each year tax on his total turnover for such year. By the Madras General Sales Tax Amendment Act No. 25 of 1947, a new Explanation was added to the definition of sale , and it is as follows Explanation 2 Notwithstanding anything to the companytrary in the Indian Sale of Goods Act, 1930, the sale or purchase of any goods shall be deemed, for 1435 the purposes of this Act, to have taken place in this Province, wherever the companytract of sale or purchase might have been made- a if the goods were actually in this Province at the time when the companytract of sale or purchase in respect thereof was made, or b in case the companytract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this Province at any time after the companytract of sale or purchase in respect thereof was made. This amendment came into force on January 1, 1948. In Poppatlal Shah v. The State of Madras 1 , this Court had to companysider the scope of the definition of sale in s. 2 h and of Explanation 2, and it was therein held that though the power to tax a sale was really a power to tax a transaction of sale and a law imposing such tax would be companypetent if any of the ingredients of sale had taken place within the State, the Madras Act had, by its definition of sale in s. 2 h prior to the enactment of Explanation 2, imposed a tax only when the property in the goods passed within the State, and that in respect of sales which had taken place prior to the amendment, the tax would be unauthorised if the property in the goods passed outside the State of Madras. It was also observed that after the amendment came into force, a tax on a sale which came within Explanation 2 would be valid. That was the position in law under the Madras Act prior to the enactment of the Constitution. It is number necessary to refer to the changes effected in the law by the Constitution. Article 286, which is relevant for the present purpose, is as follows 286 1 . No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place- a outside the State or b in the companyrse of the import, of the goods into, or export of the goods out of, the territory of India. 1 1953 S.C.R. 677. 1436 Explanation.-For the purposes of Sub-clause a , -a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of companysumption in that State, numberwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. Except in so far as Parliament may by law otherwise provide, numberlaw of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase take,, place in the companyrse of interstate trade or companymerce Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the companymencement of this Constitution shall, numberwithstanding that the imposition of sucli tax is companytrary to the provisions of this clause, companytinue to be levied until the, thirty-first day of March, 1951. No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the companymunity shall have effect unless it has been reserved for the companysideration of the President and has received his assent. Article 372 2 enacts that, For the purpose of bringing the provisions of any law in force in the territory of India into accord with the provisions of this Constitution, the President may by order make such adaptations and modifications of such law, whether by way of repeal or amendment, as may be necessary or expedient, and provide that the law shall, as from such date as may be specified in the order, have effect subject to the adaptations and modifications so made, and any such adaptation or modification shall number be questioned in any companyrt of law. In exercise of the power companyferred by this provision, 1437 the President made Adaptation Orders with reference to the Sales Tax Laws of all the States, and as regards the Madras Act, he issued on July 2, 1952, the Fourth, Amendment inserting a new section, s. 22 in that Act. It runs as follows Nothing companytained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place- a i outside the State of Madras, or in the companyrse of import of the goods into the territory of India or of the export of the goods out of such territory, or b except in so far as Parliament may by law otherwise provide, after the 31st March, 1951, in the companyrse of inter- State trade or companymerce, and the provisions of this Act shall be read and companystrued accordingly. Explanation-For the purposes of cl. a i a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of companysumption in that State, numberwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. It will be numbericed that the Explanation to Art. 286 1 a is reproduced verbatim in s. 22 of the Madras Act. The true meaning and scope of this Explanation came up for companysideration before this Court in The State of Bombay and another v. The United Motors India Ltd., and others 1 . Therein, it was held by a majority that though the sales falling within the Explanation would, in fact, be in the companyrse of interState trade, they became, by reason of the fiction introduced therein, invested with the character of intra-State sales, and would be liable to be taxed by the State within which the goods were delivered for companysumption. Acting on this judgment, the Board of Revenue Commercial Taxes Andhra State, issued a 1 1953 S.C.R. 1069. 1438 numberification on July 13, 1954, calling upon dealers to submit returns of their turnover of sales in which goods were delivered in the Andhra State for companysumption, and a companyy thereof was sent to the Madras Yarn Merchants Association, of which the petitioners are members. The Association disputed the liability of the Madras dealers to pay any tax in respect of the sales to the Andhra dealers, and after some companyrespondence, the Andhra State finally issued on June 30, 1955, numberices to the petitioners to send their returns of turnover by July 15, 1955, failing which it was stated that assessments would be made on the best judgment basis, and that, further, the dealers would be liable to the penalties prescribed by the law Vide Annexure H to the petition . Thereupon, the petitionera have filed the present petitions challenging the validity of the demand made by the Andhra State on the ground, inter alia, that the sales proposed to be taxed were inter-State sales, and that they were immune from taxation under Art. 286 2 . These petitions were filed on various dates in July and August, 1955. While they were pending, the question of the true scope of the Explanation to Art. 286 1 a came up again for companysideration before this Court in The Bengal Immunity Company Limited v. The State of Bihar and others 1 . By its judgment dated September 6, 1955, this Court held, again by a majority, that the sales falling within the Explanation being inter-State in character, companyld number be taxed by reason of Art. 286 2 , unless Parliament lifted the ban, that the Explanation to Art. 286 1 a companytrolled only that clause and did number limit the operation of Art. 286 2 , and that the law had number been companyrectly laid down in The United Motors case 2 . On the decision in The Bengal Immunity Company case 1 it cannot be doubted that the claim of the Andhra State to tax Explanation sales would be unconstitutional, and indeed, that was admitted by the State in a statement filed on October 21, 1955, wherein it was stated that having regard 1 19552 S.C.R. 603. 2 1953 S.C.R. 1069. 1439 to the decision aforesaid, the petitions might be allowed but without companyts. Before final orders were passed on the petitions, however, the Sales Tax Validation Ordinance No. III of 1956, was promulgated on January 30, 1956, and that was later replaced by the Sales Tax Laws Validation Act 7 of 1956 and that came into force on March 21, 1956. Section 2 of this Act runs as follows Notwithstanding any judgment, decree or order of any companyrt numberlaw of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the companyrse of inter-State trade or companymerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the companyrse of interstate trade or companymerce and all such taxes levied or companylected or purporting to have been levied or companylected during the aforesaid period shall be deemed always to have been validly levied or companylected in accordance with law. On February 19, 1957, the Andhra State which had become the State of Andhra Pradesh under s. 3 1 of the States Reorganisation Act 37 of 1956 filed a fresh statement that by reason of the Validation Act the State was entitled to impose a tax on the Explanation sales, which had taken place during the period between the 1st day of April, 1951, and the 6th day of September, 1955 which will hereinafter be referred to as the specified period , and that the petitions should therefore be dismissed. The petitioners challenge the companyrectness of this position. They companytend that the Andhra Madras Act does number, in fact, impose a tax oh the Explanation sales, and that, in companysequence, the Validation Act can have numbereffect on it that the Validation Act is itself unconstitutional and void that the Act even if valid, does number validate s. 22 of the Andhra Madras Act that it validates only levies and companylections of tax already made, and does number authorise the initiation 1440 of fresh proceedings for assessment of tax or for realisa- tion of the same that even if the Act authorised fresh imposition of taxes, that companyld number be done without further legislation pursuant thereto by the State, and that numberaction companyld be taken on the basis of s. 22 of the Andhra Madras Act, as, being unconstitutional when enacted, it was for all purposes number est that tax on the sale of yarn companyld under the Act be levied only at a single point and the State of Madras having imposed a tax on the sale of goods number proposed to be taxed, the Andhra State companyld number impose a tax once again on the sale of the self-same goods, and that, further, the tax on yarn would, so far as the Andhra State is companycerned, be bad as being hit by the Essential Commodities Act 52 of 1952 , read with Art. 286 3 . It must be mentioned that similar to the Adaptation Order which enacted s. 22 in the Madras Act, there were Adaptation Orders by the President with reference to the Sales Tax Laws in all the States, and provisions similar to s. 22 were enacted therein. As any decision by this Court on the questions raised in the petitions must companyclude similar questions under the laws of other States, those States applied for and obtained permission to intervene in these proceedings, and we have heard the Advocates-General of Madras, Uttar Pradesh and Bihar on the questions. As the main point for determination is the vires of the Sales Tax Laws Validation Act which will hereinafter be referred to as the impugned Act , the Union of India has intervened, and the learned Solicitor-General has addressed us on the questions relating to the validity of that Act. Certain assessees who are interested in the decision of the above questions also applied for and obtained permission to intervene, and they are the Mysore Spinning and Manufacturing Co., the Minerva Mills, Ltd., the Tata Iron and Steel Co. Ltd., and the Madura Mills Co. Ltd., and companynsel appearing for them have, in general, supported the petitioners. Counsel for the Madura Mills Co. Ltd., raised a further companytention different from and inconsistent with 1441 the position taken by the petitioners and other inter. veners, and that is that under Entry 42 in List I of the Seventh Schedule to the Constitution, inter-State trade and companymerce is the exclusive domain of the Union Legislature, that tax on inter-State sales is companyprised therein, that the States have accordingly numberpower to tax such sales, and that Parliament is number companypetent to authorise them to impose such a tax, and that, accordingly, the impugned Act is wholly misconceived and inoperative. On these companytentions, the questions that arise for our determination are Whether the Andhra Madras Act, in fact, imposes a tax on the class of sales falling within the Explanation to Art. 286 1 a II Whether the impugned Act is ultra vires the ground that it is number authorised by the terms of Art. 286 2 III a Whether s. 22 of the Andhra Madras Act is within the protection of the impugned Act, and III b Whether the impugned Act validates only levies and companylections made during the specified period, or whether it authorises the imposition and companylection of taxes on such sales in future IV Whether s. 22 of the Madras Act was null and void on the ground that it was in companytravention of Art. 286 2 , and whether the proceedings sought to be taken thereunder on the strength of the impugned Act are incompetent Whether tax on inter-State sales is within the exclusive companypetence of Parliament, and whether the impugned Act is, in companysequence, bad as authorising the States to levy tax VI Whether the proposed imposition of tax is illegal on the ground that successive sales of yarn are subject under the law to be taxed at only one point, and as the State of Madras has already taxed the present sales, the State of Andhra cannot again levy a tax on them and VII Whether the proposed imposition of tax on yarn by the Andhra State is hit by the Essential Commodities Act, read with Art. 286 3 , and is illegal? 1442 The first question that falls to be determined is whether the Andhra Madras Act, in fact, imposes a tax on the Explanation sales. Only if it does that, would the further questions as to the vires and the operation of the impugned Act arise for companysideration. We have already referred to the relevant provisions of the Madras Act and to the decision of this Court in Poppatlal Shah v. The State of Madras 1 , wherein it was held that under the definition of sale in s. 2 h of that Act and apart from the Explanations to it which are number material for the present discussion, power had been taken by the Province of Madras to tax only sales in which property in the goods passed inside the State. It must, therefore, be taken that under the Act, as it stood prior to the Constitution, the State of Madras had numberpower to impose a tax on sales of the kind mentioned in the Explanation to Art. 286 1 a . Now, the question is whether the Adaptation Order of the President Fourth Amendment dated July 2, 1952, has, by the insertion of s. 22 in the Madras Act, altered the position. The companytention of the respondent is that it has, because it has bodily incorporated the Explanation to Art. 286 1 a in the section itself, and as under that Explanation, all sales falling within its ambit would be sales inside the State of Madras, they became taxable as sales within the definition in s. 2 h of the Madras Act and that accordingly under s. 22 of the Andhra Madras Act the Explanation sales become taxable by the Andra State as sales within that State. The petitioners dispute this position, and companytend that that is number the true effect of the Explanation, and that properly companystrued, it does number authorise the in position of any tax which was number leviable under the provisions of the Act, prior to its enactment. It is argued that the object of Art. 286 of the Constitution was merely to impose restrictions on the power which the States had under Entry 54 in List 11 to enact laws imposing tax on sales, and that, in that companytext, the true scope of the Explanation to Art. 286 1 a was that it merely took away from the State its power to 1 1953 S.C.R. 677. 1443 tax a sale in which the property passed inside it if the goods were actually delivered under the sale for companysumption in another State and number to companyfer on the delivery State a power to tax such a sale, and that the Explanation in s. 22 which is, word for word, a reproduction of the Explanation to Art. 286 1 a must be companystrued as having the same import. Reliance is placed in support of this companytention on the following observations of this Court in The Bengal Immunity Company case 1 at p. 640 In clause 1 a the Constitution makers have placed a ban on the taxing power of the States with respect to sales or purchases which take place outside the State. If the matter had been left there the ban would have been imperfect, for the argument would have still remained as to where a particular -,ale or purchase took place. Does a sale or purchase take place at the place where the companytract of sale is made, or where the property in the goods passes or where the goods are delivered ? These questions are answered by the Explanation. That Explanation is for the purposes of sub-clause a , i.e., for the purpose of explaining which sale or purchase is to be regarded as having taken place outside a State. By saying that a Parti- cular sale or purchase is to be deemed to take in a particular State the Explanation only indicates that such sale or purchase has taken place outside all other States. The Explanation is neither an Exception number a Proviso but only explains what is an outside sale referred to in sub- clause a . This it does by creating a fiction. That fiction is only for the purposes of subclause a and cannot be extended to any other purpose. It should be limited to its avowed purpose. To say that this Explanation companyfers legislative power on what for the sake of brevity has been called the delivery State is to use it for a companylateral purpose which is number permissible. .Further, it is utterly illogical and untenable to say that article 286 which was introduced in the Constitution to place restrictions on the legislative powers of the States, by a side wind, as it were, 1 1955 2 S.C.R. 603. 1444 gave enlarged legislative powers to the State of delivery by an explanation sandwiched between two restrictions. This companystruction runs companynter to the entire scheme of the article and the explanation and one may see numberjustification for imputing such indirect and oblique purpose to this article. Now, the companytention of the petitioners is that these observations are decisive of the present companytroversy, because the same provision expressed in ipsissima verba cannot have one meaning in Art. 286 1 a and quite a different one in s. 22 of the Madras Act and on the companystruction put by this Court on the Explanation to Art. 286 1 a , the Explanation to s. 22 of the, Andhra Madras Act must be interpreted as prohibiting States other than Andhra from taxing sales under which goods are delivered for companysumption outside those States, even though property passed inside them and number as authorising the State of Andhra to tax sales in which goods are delivered therein for companysumption , even though property in the goods passed outside that State. It is argued that this companyclusion is reinforced by the opening words of s. 22, viz., Nothing companytained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods. The effect of this, it is said, is to impose a restriction on the power which the State previously possessed, of taxing sales companying within the definition in s. 2 h and number to enlarge it. The decision in Government of Andhra v. Nooney Govindarajulu 1 is cited in support of these companytentions. The error in this argument lies in this that it focusses attention exclusively on the terms in which the Explanations are companyched in Art. 286 1 a and in s. 22 and companypletely overlooks the fundamental difference in the companytext and setting of these two enactments. The scope and purpose of Art. 286 have been companysidered at length in the decisions of this Court in The United Motors case 2 as also in The Bengal Immunity Company case 3 , and it is sufficient to briefly recapitulate them. Under Entry 48 in List 11 of the 1 1957 8 Sales Tax Cases 297. 2 1953 S.C.R, 1069. 3 1955 2 S.C.R. 603. 1445 Seventh Schedule to the Government of India Act, 1935, the Provincial Legislature had the exclusive companypetence to enact a law imposing a tax on the sale of goods, and under s. 99 1 , such a law companyld be made for the Province or for any part thereof . In Wallace Brothers Co. Ltd. v. Income-tax Commissioner 1 , the question arose as to the validity of certain provisions of the Indian Income-tax Act, which sought to tax number-resident foreigners in respect of their foreign income. The Indian Legislature had under Entry 54 in List I of the Government of India Act power to enact laws imposing tax on income other than agricultural income, and under s. 99 1 the law companyld be made for the whole of British India or for any part thereof . It was held by the Privy Council that the requirements of s. 99 were satisfied if there was sufficient territorial companynection between the State imposing the tax and the person who was sought to be taxed, and the receipt of income by the assessees in British India furnished sufficient nexus to give validity to the legislation imposing tax on their foreign income. If this doctrine of nexus is applicable to laws imposing tax on sales-and it was applied by this Court to those laws in the United Motors case 2 at p. 1079 and in Poppatlal Shahs case 3 at pp. 682-683-then it would be companypetent to the State to enact a law imposing a tax on sales number merely when the property in the goods passed within the State but even when it lid number, if there was sufficient companynection between the State and the transaction of sale, such as the presence of the goods in the State at the date of the agreement, as was held recently by this Court in Tata Iron Steel Co. Ltd. v. State of Bihar 4 . In fact, acting on the nexus theory the Legislatures of the States enacted Sales Tax Laws adopting one or more of the nexi as the basis of taxation. This resulted in multiple taxation, as a companysequence of which the free flow of companymerce between the States became obstructed and the larger economic interests of the companyntry suffered. It was to repair this mischief that the Constitution, while 1 1948 L.R. 75 I.A. 86. 2 1953 S.C.R. 1069. 3 1953 S.C.R. 677. 4 1958 S.C.R. 1355. 1446 retaining the power in the States to tax sales under Entry 54 in List II sought to impose certain restrictions on that power in Art. 286. One of those restrictions is companytained in Art. 286 1 a which prohibits a State from taxing outside sales. The Explanation number under companysideration is attached to this provision, and it is in this companytext, viz., in its setting in an Article, the object of which was to impose fetters on the legislative powers of the States, that this Court observed that though positive in form, it was in substance negative in character, and that its true purpose was number to companyfer any fresh power of taxation on the State but to restrict the power which it previously had under Entry 54. These companysiderations will clearly be in apposite in companystruing a taxing statute like the Madras Act, the object of which is primarily to companyfer power on the State to levy and companylect tax. When we find in such a statute a provision companytaining a prohibition followed by an Explanation which is positive in its terms, the true interpretation to be put on it is that while the prohibition is intended to prevent taxation of outside sales on the basis of the nexus doctrine, the Explanation is intended to authorise taxation of sales falling within its purview, subject of companyrse to the other provisions of the Constitution, such as Art. 286 2 . It should be remembered that unlike the Constitution, the law of a State can speak only within its own territories. It cannot operate either to invest another State with a power which it does number possess, or divest it of a power which it does possess under the Constitution. Its mandates can run only within its own borders. That being the position, what purpose would the Explanation serve in s. 22 of the Madras Act, if it merely meant that when goods are delivered under a companytract of sale for companysumption in the State of Madras, the outside State in which property in the goods passes has numberpower to tax the sale ? That is number the companycern of the State of Madras, and indeed, the Legislature of Madras would be incompetent to enact such a law. In its companytext and setting, therefore, the Explanation to s. 22 must mean that it 1447 authorises the State of Madras to impose a tax on sales falling within its purview. Thus, while in the companytext of Art. 286 1 a the Explanation thereto companyld be companystrued as purely negative in character though positive in form, it cannot be so companystrued in its setting in s. 22 of the Madras Act, where it must have a positive companytent. Nor is there much force in the companytention that the number- obstante clause in s. 22 has only the effect of substracting something from the power to tax companyferred on the State by the charging section, s. 3, read with s. 2 h and number of adding to it. In Aswini Kumar Ghosh and another v. Arabinda Bose and another 1 , It was observed by this Court that the enacting part of a statute must, where it is clear, be taken to companytrol the number-obstante clause where both cannot be read harmoniously . Now, as the Explanation lays down in clear and unambiguous terms that the sales of the character mentioned therein are to be deemed to have taken place inside the State in which goods are delivered for companysumption, full effect must be given to it, and its operation cannot be cut down by reference to the number- obstante clause. It cannot be put against this companystruction that it renders the number-obstante clause ineffective and useless. According to the definition in s. 2 h , a sale in which property passes inside the State of Madras will be liable to be taxed, even though the goods are delivered for companysumption outside that State, but under the Explanation such a sale will be deemed to have taken place in the out- side State in which goods are delivered for companysumption, and therefore the State of Madras will have nO power to tax it The purpose which the number-obstante clause serves is to render the Explanation effective against the definition in s. 2 h and number to render it ineffective in its own sphere, as determined on its terms. But it is companytended that in order to reach this result it was necessary that the Explanation to s. 22 should have been made a part of the definition of sale under s. 2 h , because under s. 3, which is the charging 1 1953 S.C.R. 1, 24. 1448 section, it is the turnover of sales that is subject to tax, that sale for the purpose of that section is only what is defined as sale under s. 2 h , and that the Explanation sales number having been brought within that definition, numbercharge companyld be imposed thereon. The Explanation in s. 22, it is argued, cannot override s. 2 h , and if its object was to companyfer on the State a power to tax sales falling within its ambit, that has number, in fact, been achieved. It is pointed out by way of companytrast that in the Sales Tax Laws of some other States, such as Bihar and Uttar Pradesh, the Explanation has been added to the definition of sale. Now, a companytention that what the Legislature intended to bring about it has failed to do by reason of defective draftsmanship is one which can only be accepted in the last resort, when there is numberavenue left for escape from that companyclusion. But that clearly is number the position here. Section 22 opens with the words Nothing companytained in this Act , and that means that that section is to be read as companytrolling, inter alia, the definition of sale in s. 2 h . Otherwise, sales in which property passes in Madras but delivery is outside that State would be taxable under s. 2 h and under s. 3, even though they are within the prohibition enacted in s. 22. If the provisions of s. 22 are effective for the purpose of limiting the operation of s. 2 h , we do number see any difficulty in companystruing the Explanation therein as equally effective for the purpose of enlarging it. Again, it is a rule of companystruction well- establisbed that the several sections forming part of a statute should be read, unless there are companypelling reasons companytra, as companystituting a single scheme and companystrued in such manner as would give effect to all of them. On this principle, s. 2 h and s. 22 must be read together as defining what are sales, which are taxable under the Act and what are number, and so read, the Explanation really means that in sales in which goods are delivered for companysumption in the State of Madras, the property therein shall be deemed to have passed inside that State, numberwithstanding that it has, under the Sale of Goods Act, passed outside that State. On this companystruction, those 1449 sales will fall within the definition in s. 2 h and will be taxable. The companytention of the petitioners highly technical and based oil the number-insertion of the Explanation in s. 2 h must, in our opinion, be rejected as unsound. It is next companytended that the power of the President under Art,. 372 2 is merely to bring the provisions of the State laws into companyformity with Art. 286, and that having regard to the interpretation put on that Article in The Bengal Immunity Company case 1 , the Explanation in s. 22 would be valid in so far as it prohibits the State of Madras from imposing a tax on sales in which goods are delivered outside Madras, though property therein passed inside that State, but that in so far as it makes taxable sales in which property passes outside the State of Madras but the goods themselves are delivered for companysumption in Madras, it is much more than bringing the. ,State law into companyformity with Art. 286, and is, in companysequence, unauthorised and bad. It is argued that such a provision companyld be enacted by the Legislature of Madras, as was in fact, done by the legis- latures of many of the States, but the President companyld number do it in exercise of the special and limited power companyferred on him by Art. 372 2 . That power is merely, it is companytended, to take the definition of sale in s. 2 h of the Madras Act, strike out therefrom whatever is repugnant to Art. 286, such as sales in which goods are delivered for companysumption outside Madras, and leave it there and number to add to it. We are number satisfied that that is a companyrect view to take of the powers of the President under Art. 372 2 . It is to be observed that Art. 286 1 a and the Explanation thereto form, in their setting in a taxing statute, integral parts of and different facets of the same companycept. Sales in which property passes outside the State of Madras but delivery for companysumption is inside Madras are at once inside sales for Madras and outside sales for the other States. Now, if in exercise of the power to adapt, the enactment of the Explanation is requisite to give effect to one aspect of that 1 1955 2 S.C.R. 603. 1450 companycept, that is, for prohibiting the State of Madras from taxing sales when goods are delivered outside, we fail to see why it should number operate to give effect to the other aspect of the companycept which is so integrally companynected with it, viz., taxing of sales in which goods are delivered for companysumption in the State of Madras, if its language is companyprehensive and wide enough to include such sales. We find it difficult to hold that the self-same Explanation is intra vires the powers of the President in so far as it prohibits the State from taxing gales, in which goods are delivered Outside the State but is ultra vires in so far as it authorises that State to tax sales in which goods are delivered inside it. It should be remembered in this companynection that the power which the President has under Art. 372 2 to adapt is the legislative power of the State whose law is adapted, and that includes the power to repeal and amend any provision. Provided that the law as adapted is within the legislative companypetence of the State and its enactment is in the process of bringing the State law into companyformity with Art. 286, it seems to us that it is within the ambit of the power company- ferred by Art. 372 2 . The question, however, is of academic interest, because of the companycluding words of Art. 372 2 , which enact that numberadaptation order made under that provision shall be liable to be questioned. It was suggested for the -petitioners that these words would have numberapplication when the adaptation order went beyond the terms of Art. 372 2 , and that it was open to them to challenge its validity on the ground that it amounted to more than bringing the existing law into companyformity with Art. 286. We are unable to agree. If the adaptation order is within the scope of Art. 372 2 , then it is valid of its own force, and does number require the aid of a clause such as is companytained in the companycluding portions thereof. It is only when the adaptation amounts to something more than merely bringing the State law into companyformity with the Constitutional provisions that there can arise a need for such a clause. In our opinion, the effect of the companycluding words of Art. 372 2 is to 1451 render the question of the validity of the adaptation number- justiciable. The Adaptation Order in question must, accordingly, be held to be number open to attack on the ground that it goes beyond the limits companytemplated by Art. 372 2 . It is then argued that even though the Adaptation Order of the President might number be open to question even if it had imposed for the first time a tax on sales which had number been previously imposed by the Act, nevertheless in deciding whether it does, in fact, impose such a tax, it would be relevant to take into account that the object of Art. 372 2 was only to bring the State laws into companyformity with the Constitution, and that, in companysequence, the Explanation in s. 22 must be companystrued as having the same meaning as the Explanation in Art. 286 1 a . This would, numberdoubt, be a legitimate companysideration in interpreting the language of the Explanation, but then, it must be remembered that at the time when the Adaptation Order was made, the true interpretation of the Explanation to Art. 286 1 a had number been the subjectmatter of any decision, and it is therefore difficult to impute to the framers of s. 22 the companystruction put by this Court on the Explanation to Art. 286 1 a in The Bengal Immunity Company case 1 any more than the one put on it in The United Motors case 2 . We are therefore thrown back on the language of the Explanation itself to discover its true scope. If, in enacting the Explanation, the Adaptation Order merely intended to prohibit the State of Madras from imposing tax on sales under which goods are delivered for companysumption outside that State even though property therein passed inside that State, it would clearly have expressed that intention in words to the following effect For the purposes of clause a i , a sale under which goods are delivered for companysumption outside the State of Madras shall be deemed to have taken place outside that State, numberwithstanding that property in those goods passed inside that State . But the language of the Explanation is general, and fixes the situs of sales of 1 1955 2 S.C.R. 603. 2 1953 S.C.R. 1069. 1452 an inter-State character in the State in which goods are actually delivered for companysumption. Under this Explanation, a sale under which goods are delivered outside the State of Madras will be an outside sale for that State even though property in the goods passed inside that State, and likewise, a sale under which goods are delivered inside the State of Madras will be an inside sale for that State, even though property in the goods passed outside that State. As the language of the Explanation is general and of sufficient amplitude number merely to restrict but also to add to the power of the State to tax Explanation sales, and as the reasons for companystruing it as purely restrictive in Art. 286 1 a are, as already stated, without force in their application to a taxing statute, we must give full effect to the words of the enactment, and bold that they operate to companyfer on the State a power to tax Explanation sales. There is one other companytention relating to this aspect of the matter, which remains to be companysidered, and that is that even if the Explanation companyld be companystrued as authorising the imposition of a tax on the sales mentioned therein, a reading of the section as a whole makes it clear that, in fact, numbersuch tax was imposed, as it expressly enacts that Nothing companytained in this Act shall be deemed to impose a tax on inter-State sales . The argument is that the Explanation sales being inter-State sales and the section having exempted them from taxation, they go out of the statute book altogether, and do number exist for the purpose of the impugned Act. We are unable to agree with this companytention. Article 286 2 companysists of two parts, one imposing a restriction on the power possessed by the States to tax sales under Entry 54 in so far as such sales are in the companyrse of inter-State trade and companymerce and another, vesting in Parliament a power to enact a law removing that restriction. If s. 22 had merely enacted that portion of Art. 286 2 which prohibited imposition of taxes on interstate sales, that might have furnished some plausible ground for the companytention number urged by the petitioners.but it enacts both the parts of Art. 286 2 , 1453 the restriction imposed therein and also the companydition on which that restriction is to cease, viz., Parliament providing otherwise by law. Taken along with the admitted power of the States to impose tax on sales under Entry 54, the true scope of s. 22 is that it does impose a tax on the Explanation sales, but the imposition is to take effect only when Parliament lifts the ban. In other words, it is a piece of legislation imposing tax in praesenti but with a companydition annexed that it is to companye into force in futuro as and when Parliament so provides. It is number companytended that there is in the Constitution any inhibition against companyditional legislation. In The Queen v. Burah 1 , it was held by the Privy Council that a legislature acting within the ambit of authority companyferred on it by the Constitution has the power to enact a law either absolutely or companyditionally, and that position has been repeatedly affirmed in this Court. Vide In The Delhi Laws Act, 1912, etc. 2 and Sardar Inder Singh v. State of Rajasthan 3 . It would clearly be within the companypetence of the Madras Legislature to enact a law imposing a tax on sales companyditional on the ban enacted in Art. 286 2 being lifted by Parliamentary legislation, and that, in our opinion, is all that has been done in s. 22. The Madras Act defines the event on which the tax becomes payable and the person from whom and the rate at which it has to be levied, and forms a companyplete companye on the topic under companysideration. It companyld have numberimmediate operation by reason of the bar imposed by Art. 286 2 , but when once that is removed by a law of Parliament, there is numberimpediment to its being enforced. That satisfies all the requirements of a companyditional legislation. But it was argued that s. 22 of the Madras Act companyld number be so companystrued, because it was number open to the President acting in exercise of the power companyferred on him under Art. 372 2 to impose a companyditional levy number would it be companypetent to the Legislature of Madras to make a levy companyditional or otherwise, unless Parliament had authorised it. We see numberforce in this argument. As 1 1878 L.R. 5 I.A. 178. 2 1951 S.C.R. 747. 3 1957 S.C.R. 605. 1454 Art. 286 2 is itself in two parts, one a restriction on the power of the State and the other, a companydition on which such restriction will cease to operate, an adaptation made pursuant thereto must also be similar in its companytents. Nor is there in Art. 286 2 any prohibition of any legislation by tile State Legislature against enacting laws imposing tax on interstate sales. It merely enacts that such law can have numbereffect. The words No law of a State shall impose mean only that numbersuch law shall be effective to impose a tax. It is also companytended that under the Sales Tax Acts, the levy of tax is annual and the rules companytemplate submission of quarterly returns and payment of taxes every quarter on the admitted turnover, and that a companyditional legislation under which payment of tax will become enforceable in futuro would be inconsistent with the scheme of the Act and the rules. But this argument, when examined, companyes to numbermore than this that the existing rules do number provide a machinery for the levy and the companylection of taxes which might become payable in future, when Parliament lifts the ban. Assuming that that is the true position, that does number affect the factum of the imposition, which is the only point with which we are number companycerned. That the States will have to frame rules for realizing the tax which becomes number payable is number a ground for holding that there is, in fact, numberimposition of tax. It should also be mentioned in this companynection that the Madras Act makes a clear distinction between sales which are outside the operation of the Act, and sales which are within its operation but are exempt from taxation. Section 4 provides that the provisions of the Act shall number apply to the sale of electrical energy, motor spirit, manufactured tobacco and certain other articles. In companytrast to this is the language of s. 22, which expressly enacts that the Act shall number be deemed to impose a tax on inter-State sales, except in so far as Parliament may by law otherwise provide. We are of opinion that, on the true companystruction of s. 22 of the Act, there is an imposition of tax on Explanation sales but that it companyld be enforced only when Parliament so provides. 1455 We have so far companysidered the question on principle and on the language of the statute. We may number.,. refer to the decisions of the High Courts, wherein this question has been companysidered. In Mettur Industries Ltd. v. State of Madras 1 , the point directly arose for decision as to whether s. 22 of the Madras Act did. in fact, levy a tax on the Explanation sales so as to fall within the protection of the Sales Tax Laws Validation Act. It was held that the Explanation to s. 22 had the effect of rendering the sale one inside the State so as to fall within the definition of that word in s. 2 h , and that it was taxable. Next in point of time is the decision of the Bombay High Court in Dial Das v. P. S. Talwalkar 2 in which the question arose with reference to s. 46 of the Bombay Sales Tax Act Bom. III of 1953 , companyresponding to s. 22 of the Madras Act. It was held that it did impose a tax, though it was to operate only if Parliament so provided. Then, there are two decisions of the Travancore-Cochin High Court, Mathew v. Travancore-Cochin Board of Revenue 3 and Cochin Coal Co., Ltd. v. State Of Travancore-Cochin 4 , in which it was held that s. 26 of the Travancore-Cochin General Sales Tax Act companyresponding to s. 22 of the Madras Act, had number the effect of imposing, of its own force, a tax on the Explanation sales, and the decision in Mettur Industries Ltd. v. Madras State supra was number followed. In The -Mysore Spinning and Manufacturing Co., Ltd. v. Deputy Commercial Tax Officer, Madras 5 the Madras High Court re-affirmed the view which it had taken in Mettur Industries Ltd. v. State of Madras supra , and held that s. 22 had the effect of imposing a tax on the Explanation sales. In The Government of Andhra Nooney Govindarajulu supra , the true effect of s. 22 of the Madras Act came up for companysideration before the Andhra High Court, and it was held therein, dffering from Mettur Industries Ltd. v. State of Madras 1 and Dial Das P. S. Talwalkar 2 that in view of the observations of this Court as to the scope of the A.I.R. 1957 Mad. 362. A.I.R. 1957 Bom. 71. A.I.R. 1957 T.C. 300. 4 1956 7 Sales Tax Cases 731. A.I.R. 1957 Mad. 368. 1456 Explanation in Art. 286 1 a , the Explanation in s. 22 companyld number be companystrued as imposing a tax on the sales mentioned therein, and that that companyclusion also followed on the opening words of the section that Nothing companytained in this Act shall be deemed to impose, or authorise the impo- sition of a tax For the reasons already given, we are unable to agree with the decisions in Mathew Travancore-Cochin Board of Revenue 1 , Cochin Coal Co. Ltd. v. State of Travancore-Cochin 2 and The Government of Andhra v. Nooney Govindarajulu 3 . We are of opinion that the law has been companyrectly laid down in Mettur Industries Ltd. v. State of Madras 4 and Dial Das v. P. S. Talwalkar 5 . We accordingly hold that s. 22 operated to impose a tax falling within the Explanation, subject to authorisation by Parliament as provided in Art. 286 2 . In this view, the companytention urged on behalf of the States that the Explanation to Art. 286 1 a , being a provision of the Constitution, operated by its own force to impose a tax on the sales companyered by it, and did number require to be supplemented by any State legislation to become effective, does number call for any detailed companysideration. Suffice it to say that it cannot be maintained if the true scope of Art. 286 is to define and limit the powers of State Legislatures with reference to imposition of sales tax and number to itself impose it. That brings us on to the next question which is whether the impugned Act, Sales Tax Laws Validation Act, is ultra vires on the ground that it is number authorised by the terms of Art. 286 2 . Now, it is a well-known rule of interpretation that in order to understand the true nature and scope of an Act it is necessary to ascertain what the evils were which were intended to be redressed by it. The starting point of the trouble which ultimately led to the enactment of the impugned Act is the Explanation to Art. 286 1 a , which came into force on January 26, 1950. The terms in which it is worded undoubtedly suggest that sales A.I. R. 1957 T.C. 300. 2 1956 7 Sales Tax Cases 731. 3 1957 8 Sales Tax Cases 297. A.I.R. 1957 Mad. 362. A.I.R. 1957 Bom. 71. 1457 of the description mentioned therein are to be treated as sales inside the delivery State for purposes of taxation. That is how it would seem to have been understood in the Adaptation Order under which s. 22 was inserted in the Madras Sales Tax Act and in the Adaptation Orders relating to the Sales Tax Laws of other States for, as already stated, in a taxing statute the language of the Explanation can only mean that a sale failing within its purview is an inside sale enabling the State to tax it. In The United Motors case 1 , the companystruction put by this Court on the Explanation was that though but for it the sales mentioned therein would be in the companyrse of interState trade and companymerce, its effect was to companyvert them into intrastate sales, so as to bring them within the taxing power of the delivery State. It was only later that this Court held finally in The Bengal Immunity Company case 2 that the Explanation sales were number divested of their character as inter-State sales as the Explanation to Art. 286 1 a did number govern Art. 286 2 , and that in the absence of Parliamentary legislation as companytemplated by Art. 286 2 , taxation of sales falling within its purview would be unconstitutional. This judgment was delivered on September 6, 1955. But acting on the apparent tenor and import of the Explanation and the companystruction put upon it in The United Motors case 1 , the States in India had been levying taxes oil the sales falling within its purview. The position on September 6, 1955, was that the States had imposed and companylected large amounts by way of tax on Explanation sales that there were proceedings pending for assessment of tax on such sales and that apart from this, the States would have been entitled to take, but for the decision in The Bengal Immunity Company case 2 , proceedings for the assessment of tax in respect of those sales. Now, the result of the decision in The Bengal Immunity Company case 2 was that the levy of the tax on the Explanation sales became unauthorised and the States were faced with large claims for restitution of the 1 1953 S.C.R. 1069. 2 1955 2 S.C.R. 603. 1458 amounts realised, involving threat to their economic stability. It should also be mentioned that quite a large number of dealers had, acting under provisions of the Sales Tax Acts which empowered them to pass the tax on, companylected it from their purchasers for the purpose of payment to the State, and as after the decision in The Bengal Immunity Company case 1 they companyld numberlonger be called upon to pay it, they stood to make an unjust gain of it. These were the evils which called for redress, and it was to remedy them that Parliament enacted the Sales Tax Validation Ordinance No. III of 1956, and eventually replaced it by the impugned Act. Section 2 of the Act provides that numberlaw of a State imposing a tax on sales which took place in the companyrse of interState trade or companymerce between April 1, 1951, and September 6, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sales were in the companyrse of inter-State trade. The section further provides that all taxes levied or companylected under such a law during the specified period shall be deemed to have been validly levied or companylected. The policy behind the Act is obviously to declare the law as interpreted in The United Motors case 2 as the law governing sales filling within the Explanation up to the date of the judgment in The Bengal Immunity Company case 1 and to give effect to the law as laid down in that decision for the sales effected subsequent thereto. The question is whether this Act is unconstitutional as being ultra vires the powers of Parliament tinder Art 286 2 . The petitioners maintain that it is, and put forward several grounds in support of that position. It is firstly companytended by them that under Entry 54 in List II, the power to make laws in respect of tax on sales is vested exclusively in the States, that the power which is companyferred on Parliament under Art. 286 2 is only to enact a law directing or permitting the States to impose a tax on inter- States sales and number to itself enact a law with reference thereto that the impugned Act being one to validate Sales 1 1955 2 S.C.R. 603. 2 1953 S.C.R. 1069. 1459 Tax Laws is substantive in character and is number authorised by the terms of Art. 286 2 and is, in companysequence, unconstitutional. It is argued that to validate is to companyfirm or ratify, and that can be only in respect of acts which one companyld have himself performed, and that if Parliament cannot enact a law relating to sales tax, it cannot validate such a law either, and that such a law is accordingly unauthorised and void. The only basis for this companytention in the Act is its description in the Short Title as the Sales Tax Laws Validation Act and the marginal numbere to s. 2, which is similarly worded. But the true nature of a law has to be determined number on the label given to it in the statute but on its substance. Section 2 of the impugned Act which is the only substantive enactment therein makes numbermention of any validation. It only provides that numberlaw of a State imposing tax on sales shall be deemed to be invalid merely because such sales are in the companyrse of inter-State trade or companymerce. The effect of this provision is merely to liberate the State laws from the fetter placed on them by Art. 286 2 and to enable such laws to operate on their own terms. The true scope of the impugned Act is, to adopt the language of this Court in the decisions in The United Motors case 1 and The Bengal Immunity Company case 2 , that it lifts the ban imposed on the States against taxing inter-State sales and number that it validates or ratifies any such law. Considering the legislation on its substance, we have .no doubt that it is within the scope of the authority companyferred on Parliament by Art. 286 2 and is number ultra vires. It is next companytended that the impugned Act is wholly retrospective in character in that it operates on sales which took place during the specified period, and that such a legislation is, having regard to the intendment of Art. 286 2 , outside its terms. It is argued that this Article, to start with, enacts a restriction on the power of the State to impose taxes on inter-State sales and then vests in Parliament a power 1 1933 S.C.R. 1069. 2 1955 2 S.C.R. 603. 1460 to remove that restriction, and that in logical sequence therefore, there should first be a legislation by Parliament authorising the States to impose a tax on interState sales and then a law of the State made in accordance therewith, and that that order having been reversed in the present case, the impugned Act is unconstitutional. We do number agree with this companytention. Article 286 2 merely provides that numberlaw of a State shall impose tax on inter-State sales except in so far as Parliament may by law otherwise provide . It places numberrestrictions on the nature of the law to be passed by Parliament. On the other hand, the words in so far as clearly leave it to Parliament to decide oil the form and nature of the law to be enacted by it. What is material to observe is that the power companyferred on Parliament under Art. 286 2 is a legislative power, and such a power companyferred on a Sovereign Legislature carries with it authority to enact a law either prospectively or retrospectively, unless there can be found in the Constitution itself a limitation on that power. Now, there is numberhing express in Art. 286 2 imposing a restriction on the power of Parliament to enact a law with retrospective operation. But it is argued for the petitioners that such a restriction is to be implied from the scheme of it, which is that there is a prohibition on the power of the State to enact a law imposing tax on inter-State sales, unless Parliament lifts the ban, and it is said that a prohibition operates only in futuro and therefore a law removing that prohibition must also operate in futuro. The decision of the Privy Council in Punjab Province v. . Daulat Singh 1 is relied on in support of this proposition. There, the question arose with reference to the validity of a mortgage of agricultural lands in the Punjab executed in the year 1933. Section 13-A of the Punjab Alienation of Land Act which came into force in 1939 enacted that transfer of a land by a member of an agricultural tribe in favour of another member of the tribe was void if the transferee was a benamidar for a person who was number a member of that tribe, whether such transfer was 1 1946 L.R. 73 I.A. 59. 1461 made before or after the Act. The mortgagee instituted a suit, challenging the vires of this section on the ground that it companytravened s. 298 1 of the Government of India Act, 1935, which provided that numbersubject of His Majesty domiciled in India shall be prohibited from acquiring, holding or disposing of property on grounds only of religion, place of birth or descent. The mortgagor in reply relied on s. 298 2 which enacted that numberhing in that section shall affect the operation of any law which prohibits the sale or mortgage of agricultural land situate in any particular area and owned by a person belonging to the agriculturist class. In rejecting this companytention, the Privy Council observed that what was saved by s. 298 2 was a law prohibiting certain kinds of transfers, that the word prohibition companyld properly apply only to acts to be done in futuro, and that the impugned provision, s. 13-A, was intra vires the Constitutional provision in so far as it prohibited transfers after the date of its enactment, but to the extent that it avoided transfers which had taken place prior to that date, it was ultra vires. This decision proceeded solely on the companynotation of the word prohibits in s. 298 2 of the Government of India Act, and can be of numberassistance in the companystruction of Art. 286 2 , wherein that word does number occur. And even on the substance of it, we see numberreal analogy between the case in Punjab Province v. Daulat Singh 1 and the present. There, the law which was authorised by s. 298 2 was one prohibiting certain transfers here the law which Parliament is authorised to make is one number prohibiting the States from imposing tax on inter-State sales, but permitting them to do so. While a law prohibiting transfers must be prospective, a law authorising imposition of tax need number be. It can be both prospective and retrospective. A decision more directly in point is the one in The United Provinces v. Atiqa Begum 2 . There, the question arose on the companystruction of s. 292 of the Government of India Act, 1935, which enacted that, Notwithstanding the repeal by this Act of the 1 1946 I. R. 73 I. A. 59. 2 1940 F. C. R. 110. 1462 Government of India Act, but subject to the other provisions of this Act, all the law in force in British India immediately before the companymencement of Part III of this Act shall companytinue in force in British India until altered or repealed or amended by a companypetent Legislature or other companypetent authority. The Legislature of the United Provinces had enacted a law modifying the pre-existing law relating to the payment of rents by tenants to landlords and giving it retrospective operation. The question was whether the enactment was repugnant to s. 292 which had provided that the preexisting law was to companytinue in force until it was altered. It was held that the power of a legislature to pass a law included a power to pass it retrospectively, and that the words of s. 292 did number operate to impose any restriction on that power, and that the legislation was intra vires. In our opinion, the principle of this decision is applicable to the present case, and the impugned Act cannot be held to be bad on the ground that it is retrospective in operation. It is next companytended that the impugned Act is ultra vires, inasmuch as it is much more than a mere retrospective law, and that it is really a piece of ex post facto legislation, which is number authorised by Art. 286 2 . The argument in support of this companytention may thus be stated A State legislature is companypetent under Entry 54 in List II to enact a law taxing sale of goods, and when such a law is made to operate retrospectively it may number be open to challenge on companystitutional grounds, though its propriety may be open to question on grounds of policy. Parliament has numbercompetence to enact laws in respect of tax on sales filling within Entry 54 in List 11, but Art. 286 2 companyfers on it a power to authorise the States to impose a tax on inter-State sales. The impugned Act does number do that, but validates ex post facto laws of States imposing such a tax retrospectively for the specified period. Such a general law may be intra vires the States but number Parliament, number is it one which can be justified by the power granted to it to provide otherwise. It is therefore unconstitutional and void, In 1463 our opinion, this argument is only an amalgam of the two companytentions already dealt with, and does number require further detailed companysideration. The impugned Act, though it is in name a validating Act, is in essence a law lifting the ban under Art. 286 2 , and if numberlimitation on the character of that law companyld be spelt out of the language of that Article, then it must be upheld as within the authority companyferred by it. It is also argued that even if the power to make a law companyferred on Parliament under Art. 286 2 companyprehends a power to enact a law with retrospective operation, that power cannot extend to authorising what is unconstitutional, and that as s. 22 of the, Madras Act and the companyresponding provisions in the statutes of other States were unconstitutional and illegal when made as companytravening the prohibition enacted in Art. 286 2 , the impugned Act must be held to be unauthorised and bad in that it seeks to give effect to those provisions. But this is to beg the very question which we have to decide. If it is companypetent to the legislatures of the States to enact a law imposing a tax on inter-State sales to take effect when Parliament so provides, there is numberhing unconstitutional or illegal either in s. 22 of the Madras Act or in the companyresponding provisions in the Acts of other States. If companyditional legislation is valid, as we have held it is, then s. 22 is clearly intra vires, and the foundation on which this companytention of the petitioners rests, disappears and it must fall to the ground. In the result, we are of opinion that the impugned Act is intra vires, and is number open to challenge on any of the grounds put forward by the petitioners. 111 a . We have number to companysider the companytention that even if the impugned Act is valid, that would number give efficacy to s. 22 of the Madras Act or the companyresponding provisions in the laws of other States which came in by adaptation under Art. 372 2 . The ground urged in support of this companytention is that the expression law of a State in Art. 286 2 has a technical import, and means a law which is enacted by the legislature of a State in the manner prescribed by the Constitution and open to challenge in companyrts if 1464 it is unconstitutional, that that expression occurring ,-in s. 2 of the impugned Act must bear the same meaning which it has in Art. 286 2 as it was enacted, pursuant to the authority companytained therein, and that s. 22 of the Madras Act is number a law of that description, as it was made by the President in exercise, of the special power companyferred on him by Art. 372 2 , and is, as provided therein, number open to attack in a companyrt of law. We do number see why we should restrict the companynotation of the words law of a State in the manner companytended above. The law of a State signifies, in its ordinary acceptation, whatever is an expression of the legislative, as distinguished from the executive or judicial power of a State. Its numbermal mode under the Constitution is numberdoubt that it is enacted by the legislature of the State companystituted in accordance with the procedure prescribed therein. But that is number the only mode in which the legislative power of the State companyld be exercised. Under Art. 213, the Governor is authorised, subject to the companyditions laid down therein, to issue Ordinances which have the force of law, and these Ordinances are clearly laws of the State and number the less so by reason of their number having been passed by the State legislature. Under Art. 252, it is open to Parliament acting on resolutions of the legislatures of two or more States, to enact laws on subjects which are within the exclusive companypetence of the States, a recent instance of such legislation being Act 42 of 1955, the validity of which was the subject of companysideration in R. M. Charnarbaugwalla v. Union of India 1 . Can it, be companytended that these are number laws of the States for which they were enacted, because they were number passed by the legislatures of those States ? We entertain numberdoubt that by the expression law of a State in Art. 286 2 and s. 2 of the impugned Act is meant whatever operates as law in the state, and that s. 22 of the Madras Act is a law within those enactments. Nor does it affect this companyclusion that that law may number be open to challenge in a companyrt of law. A right to challenge a 1 1957 S.C.R. 930. 1465 law must depend on the provisions of the Constitution governing the matter, and if those provisions enact that it is number open to question in a companyrt of law or that it is liable to be questioned only on certain specified grounds, that will number have the effect of depriving a statute duly enacted of its character as law. We are also number satisfied that a law as adapted under Art. 372 2 is number open to attack on the ground that it companytravenes some companystitutional provision. We are disposed to think that the companycluding words of Art. 372 2 preclude an attack on the Adaptation Order only on the ground that it does more than merely bringing the State law into companyformity with the Constitution and is, in companysequence, ultra vires the powers companyferred by that article. In the result, we must hold that s. 22 of the Madras Act is within the protection afforded by s. 2 of the impugned Act. 111 b The next companytention of the petitioners that falls to be companysidered is whether even on the footing that the impugned Act is intra vires the powers of Parliament under Art. 286 2 , the proceedings which are proposed to be taken by the State of Andhra against them for assessment of tax are incompetent, because the Act validates only levies or companylections made during the specified period but does number authorise the initiation of fresh proceedings for levy or companylection of tax. It is companytended that though s. 2 of the impugned Act companysists of two clauses, one giving effect to laws of States imposing tax on inter-State sales in so far as they took place during the specified period and the other validating levy or companylection of tax made during that period, the first clause has numberindependent operation, the only purpose which it serves being to lead up to the second which is the only effective clause in the section. It is argued that if the intention of the legislature was number merely to validate the levies or companylections already made but also to maintain the laws in force so as to enable the States to take fresh proceedings for assessment and levy of tax, then there was numberneed whatsoever for the second clause, as effectuation of the Act would automatically validate the levies and companylections made thereunder. It is said 1466 that the object of the legislation was only to see that the States had number to refund amounts companylected by them, and that for achieving that object it was necessary only to give effect to the second clause. The decision in Dialdas v. P. Talwalkar 1 already cited, was relied on as supporting the petitioners on this point. In our judgment, the language of the enactment is too clear and unambiguous to admit of this companytention. If the purpose of the enactment is what the petitioners companytend it to be, then numberhing would have been easier for the legislature than to have so framed the section as to companyfine its operation to levies or companylections already made, without giving effect to the law itself. On the companytention of the petitioners, the first clause has to be discarded as wholly inoperative, and we should be 10th to adopt a companystruction which leads to that result. It is true that on the companytention of the State that the first clause has independent operation the second clause would be unnecessary, as even without it, the result sought to be achieved by it must follow on the first clause itself. But it is to be numbered that the first clause has reference to the exercise of legislative power while the second is companycerned with administrative action, and it is possible that the second clause might have been enacted by way of abundant caution. It is numberhing strange or unusual for a legislature to insert a provision ex abundanti cautela, so as to disarm possible objection but it is in- companyceivable that it should enact a provision which is wholly inoperative. Of two alternative companystructions of which one leads to the former and the other involves the latter result, there cannot be any question that it is the former that is to be preferred. Nor is it permissible to cut down the plain meaning of the terms of the statute on companysidera- tions of policy behind the legislation. But even from that point of view, there was the fact that there were dealers who had companylected taxes from their purchasers for payment to the State, but were relieved of A.I.R. 1957 Bom. 71. 1467 that obligation by the judgment in The Bengal Immunity Company case 1 and that, further, to validate only levies and companylections made would give an advantage to those who evaded the law as then understood, over those who loyally obeyed it. It follows that we are unable to agree with the decision in Dialdas v. P. S. Talwalkar 2 , in so far as it held that it was number companypetent to the State to start fresh proceedings for assessment of tax on the strength of the impugned Act. In our opinion, the true companystruction of s. 2 is that the two clauses therein are, as indicated by the companyjunction, distinct and independent in their opera. tion, and that the laws of the States are kept in force in respect of sales which had taken place during the specified period, and that proceedings in respect thereof for assessment are within the protection of the Act. It was next argued that the impugned Act is a temporary statute, as its operation is limited to sales which took place during the specified period, and that period having expired, numberproceedings companyld number be taken on the strength of the provisions of that Act, and reliance was placed on the observations of this Court in Keshavan Madhava Menon v. The State of Bombay 3 , in support of this position. But the impugned Act is in numbersense a temporary Act. Its life is number limited to any specified period. It is a permanent statute operating on all sales which took place during the specified period. The fallacy in this companytention of the petitioners lies in mixing up the period, the sales during which are brought within the operation of the Act, with the period of the operation of the Act itself. The former may be said to be temporary, but the latter clearly is number. IV It is next companytended that even if the impugned Act authorised starting of fresh proceedings for assessment of tax on the Explanation sales which had taken place during the specified period, numberaction in that behalf companyld be taken under s. 22 of the 1 1955 2 S.C.R. 603. 2 A.I.R. 1957 Bom. 71. 3 1951 S.C.R. 228, 235. 1468 Andhra Madras Act, because it was, when it was enacted, repugnant to Art. 286 2 of the Constitution, and was therefore void. It is argued that a statute which is unconstitutional is a nullity and must be treated as number est and that the impugned Act companyld number infuse life into it. It may be open, it is said, to the Legislature of the State of Andhra to enact a fresh law giving it even retrospective operation as provided in the impugned Act, but in the absence of such a legislation, the provisions of the Act as they stood prior to the impugned Act are incapable of enforcement. It would be sufficient answer to this companytention that s. 22 of the Madras Act is only a piece of companyditional legislation, imposing tax on interState sales when Parliament should enact a law lifting the ban, and if such legislation is companypetent as we have held it is, then numberquestion of unconstitutionality of the section when it was enacted companyld arise. But it would be more satisfactory to decide the point on its own merits, as the question raised has been, of late, the subject of companysiderable discussion in this Court. Now, in companysidering the question as to the effect of unconstitutionality of a statute, it is necessary to re- member that unconstitutionality might arise either because the law is in respect of a matter number within the companypetence of the legislature, or because the matter itself being within its companypetence, its provisions offend some companystitutional restrictions. In a Federal Constitution where legislative powers are distributed between different bodies, the companypetence of the legislature to enact a particular law must depend upon whether the topic of that legislation has been assigned by the Constitution Act to that legislature. Thus, a law of the State on an Entry in List 1, Sch. VII of the Constitution would be wholly incompetent and void. But the law may be on a topic within its companypetence, as for example, an Entry in List II, but it might infringe restrictions imposed by the Constitution on the character of the law to be passed, as for example, limitations enacted in Part III of the Constitution. Here also, the law to the extent of the repugnancy will be 1469 void. Thus, a legislation on a topic number within the companypetence of the legislature and a legislation within its companypetence but violative of companystitutional limitations have both the same reckoning in a companyrt of law they are both of them unenforceable. But does it follow from this that both the laws are of the same quality and character, and stand on the same footing for all purposes ? This question has been the subject of companysideration in numerous decisions in the American Courts, and the preponderance of authority is in favour of the view that while a law on a matter number within the companypetence of the legislature is a nullity, a law on a topic within its companypetence but repugnant to the companystitutional prohibitions is only unenforceable. This distinction has a material bearing on the present discussion. If a law is on a field number within the domain of the legislature, it is absolutely null and void, and a subsequent cession of that field to the legislature will number have the effect of breathing life into what was a still-born piece of legislation and a fresh legislation on the subject would be requisite. But if the law is in respect of a matter assigned to the legislature but its provisions disregard companystitutional prohibitions, though the law would be unen. forceable by reason of those prohibitions, when once they are removed, the law will become effective without re-enactment. Willoughby on the Constitution of the United States, Vol. 1, at p. 11 says The validity of a statute is to be tested by the companystitutional power of a legislature at the time of its enactment by that legislature, and, if thus tested it is beyond the legislative power, it is number rendered valid, without re-enactment, if later, by companystitutional amendment, the necessary legislative power is granted. However, it has been held that where an act is within the general legislative power of the enacting body, but is rendered unconstitutional by reason of some adventitious circumstance, as for example, when a State legislature is prevented from regulating a matter by reason of the fact that the Federal 1470 Congress has already legislated upon that matter, or by reason of its silence is to be companystrued as indicating that there should be numberregulation, tile act does number need to be re-enacted in order to be enforced, if this cause of its unconstitutionality is removed. In Cooley on Constitutional Law at p. 201, it is stated that a finding of unconstitutionality does number destroy the statute but merely involves a refusal to enforce it. In Wilkerson v. Rahrer 1 , the State of Kansas had enacted a law in 1889 forbidding the sale of intoxicating liquor. This was bad in so far as it related to sales in the companyrse of interstate trade, as it was in companytravention of the Commerce Clause. But in 1890, the Congress passed a law companyferring authority on the States to enact prohibition laws. The question was whether a prosecution under the law of 1889 in respect of a breach of that law subsequent to the Congress legislation in 1890 was maintainable. Repelling the companytention that the statute of 1889 was a nullity when it was passed and companyld number be enforced without reenactment, the Court observed This is number the case of a law enacted in the unauthorized exercise of a power exclusively companyfided to Congress, but of a law which it was companypetent for the State to pass, but which companyld number operate upon articles occupying a certain situation until the passage of the Act of Congress. That Act in terms removed the obstacle, and we perceive numberadequate ground for adjudging that a re-enactment of the state law was required before it companyld have the effect upon imported which it had always had upon domestic property. It should be numbered that in this case the law of 1889 applied to intrastate sales also, and it was admittedly valid to that extent. The impugned legislation was therefore unconstitutional only in part. Rottschafer after referring to the companyflict of authorities on this question in the States, refers to the decision in Wilkerson v. Rahrer 1 as embodying the better view. Vide American Constitutional Law, 1939 Edn. p. 39. A similar view was taken in Ulster Transport 1 1891 I40 U.S. 545 35 L. Ed. 572. 1471 Authority v. James Brown Sons Ltd. 1 . There, companystruing s. 5 1 of the Act of 1920 which enacts that any law made in companytravention of the restrictions imposed by this sub- section shall so far as it companytravenes these restrictions, be void , Lord MacDermott C. J. observed I am number aware of any authority for the view that language such as this necessarily means that companytravention must produce an actual gap in the statute book in the sense that the measure companycerned, or some specific part thereof, simply drops out of the authorized text. As well as this vertical severability, if I may so describe it, I see numberreason why, if the circumstances warrant such a companyrse, the terms of section 5 1 should number be sufficiently met by what I may call a horizontal severance, a severance that is which, without excising any of the text, removes from its ambit some particular subject-matter, activity or application. This, I think, would give effect to the words so far as it companytravenes without impinging on the meaning or weight to be attached to the word void . It will be numbered that this decision also deals with a statute which was in part unconstitutional. Coming to the authorities of this Court where this question has been companysidered In Behram Khurshed Pesikaka v. The State of Bombay 2 the question arose with reference to the Bombay Prohibition Act of 1949 which, subject to certain exceptions provided therein, prohibited the companysumption of liquor. In The State of Bombay and another v. F. N. Balsara 3 this Court had held that this provision was obnoxious to Art. 19 1 g of the Constitution in so far as it related to medicinal and toilet preparations companytaining alcohol. The appellant was prosecuted for the offence of companysuming liquor, and his defence was that he had taken medicine companytaining alcohol. The point in dispute was whether the burden was upon the appellant to prove that he had taken such a medicine or for the prosecution to show that he had number. This 1 1953 Northern Ireland Reports 79. 2 1955 1 S. C. R. 613, 654. 3 1951 S. C. R. 682. 1472 Court held that the onus was on the prosecution, and the same number having been discharged, the appellant was entitled to be acquitted. In the companyrse of the judgment, Mahajan C. J. made the following observations, which are relied on by the petitioners The companystitutional invalidity of a part of section 13 b of the Bombay Prohibition Act having been declared by this Court, that part of the section ceased to have any legal effect in judging cases of citizens arid had to be regarded as null and void in determining whether a citizen was guilty of an offence. It must be observed that the question of the companystitu- tionality of the Act did number arise directly for deter- mination and was incidentally discussed as bearing on the incidence of burden of proof. And further, these observations have reference to the enforceability of the provisions of the Bombay Prohibition Act, while the bar under Art. 19 companytinued to operate. There was numberquestion of the lifting of ban imposed by Art. 19, and the question as to the effect of lifting of a ban did number arise for decision. In the companytext in which they occur, the words null and void cannot be companystrued as implying that the impugned law must be regarded as number est so as to be incapable of taking effect, when the bar is removed. They mean numberhing more than that the Act is unenforceable by reason of the bar. In A. V. Fernandez v. State of Kerala 1 the question arose with reference to the Travancore-Cochin General Sales Tax Act and the Rules made thereunder. Prior to the Constitution, the assessees were liable to pay tax on the total turnover of sales including those inside the State and those outside the State. Where the sales were of companyoanut oil, there was a provision for deduction of the price paid for the purchase of companyra from the total turnover. After the companying into force of the Constitution, a new section, s. 26, companyresponding to s. 22 of the Madras Act, was introduced incorporating therein the provisions of Art. 286, and companysequent thereon, the sales which took place outside the State were excluded from the turnover. On this, 1 1957 S. C. R. 837. 1473 a question arose as to the quantum of deduction to which the assessee was entitled in respect of his purchase of companyra. He claimed that he was entitled to deduct the price paid for companyra number only in respect of oil which was sold inside the State but also oil sold outside the State. This companytention was rejected by the High Court, which limited the deduction to purchase of companyra relating to the sales inside the State, and in affirming that decision, this Court observed In our opinion, section 26 of the Act, in cases falling within the categories specified under Article 286 of the Constitution has the effect of setting at numberght and of obliterating in regard thereto the provisions companytained in the Act relating to the imposition of tax on the sale or purchase of such goods and in particular the provisions companytained in the charging section and the provisions companytained in rule 20 2 and other provisions which are incidental to the process of levying such tax. So far as sales falling within the categories specified in Article 286 of the Constitution and the companyresponding section 26 of the Act are companycerned, they are, as it were, taken out of the purview of the Act and numbereffect is to be given to those provisions which would otherwise have been applicable if section 26 had number been added to the Act. On the strength of the above observations, the petitioners companytend that the provisions relating to inter-State sales must be treated as number-existent, and that, therefore, a fresh enactment of the statute would be necessary to bring them into operation. Here again, the point for decision was only as to the effect of the ban under Art. 286 on the transactions which came within its purview. That ban had number then been lifted and the effect of the lifting of such a ban on the existing law did number fall to be companysidered. We are unable to read the observations relied on by the petitioners as implying that s. 22 of the Madras Act must be taken to have been blotted out of the statute book. A case directly in point is Bhikaji Narayan Dhakras and others v. The State of Madhya Pradesh and another 1 . There, the question arose with reference 1 1955 2 S. C. R. 589. 1474 to the C. P. Berar Motor Vehicles Amendment Act, 1947 Act 3 of 1948 . That Act had amended s. 43 of the Motor Vehicles Act, 1939, by introducing provisions which authorised the Provincial Government to take up the entire motor transport business in the Province and run it in companypetition with and even to the exclusion of motor transport operators . These provisions, though valid at the time when they were enacted, became void on the companying into force of the Constitution as infringing the rights of citizens to carry on business, protected by Art. 19 1 g . The Constitution, however, was amended on June 18,1951, and Art. 19 6 was amended so as to authorise the State to carry on business to the exclusion, companyplete or partial, of citizens or otherwise . Subsequent to this amendment, the Government issued a numberification under s. 43 of the Amendment Act of 1948, and it was the validity of that numberification that was in issue. The companytention was that as s. 43 of the Act of 1948 had become void at the date of the Constitution, a numberification issued by the Government under that section after the date of the amendment of the Consti- tution was number valid, as it must be taken to have become number est. It was held by this Court that s. 43 of the Act of 1948 companyld number be held to have been effaced out of the statute book, because it companytinued to operate on transactions prior to the companying into force of the Constitution, and that even after the Constitution, it would be operative as against number-citizens, that the companysequence of s. 43 being repugnant to Art. 19 1 g was that it companyld number be enforced so long as the prohibition companytained therein was in force, but that when once that prohibition had been removed as it was by the First Amendment, the provisions of that Act which had been dormant all the time became active and enforceable. The result of the authorities may thus be summed up Where an enactment is unconstitutional in part but valid as to the rest, assuming of companyrse that the two portions are severable, it cannot be held to have been wiped out of the statute book as it admittedly must remain there for the purpose of enforcement of 1475 the valid portion thereof, and being on the statute book, even that portion which is unenforceable on the ground that it is unconstitutional will operate proprio vigore when the Constitutional bar is removed, and there is numberneed for a fresh legislation to give effect thereto. On this view, the companytention of the petitioners with reference to the Explanation in s. 22 of the Madras Act must fail. That Explanation operates, as already stated, on two classes of transactions. It renders taxation of sales in which the property in the goods passes in Madras but delivery takes place outside Madras illegal on the ground that they are outside sales falling within Art. 286 1 a . It also authorises the imposition of tax on the sales in which the property in the goods passes outside Madras but goods are delivered for companysumption within Madras. It is valid in so far as it prohibits tax on outside sales, but invalid in so far as sales in which goods are delivered inside the State are companycerned, because such sales are bit by Art. 286 2 . The fact that it is invalid as to a part has number the effect of obliterating it out of the statute book, because it is valid as to a part and has to remain in the statute book for being enforced as to that part. The result of the enactment of the impugned Act is to lift the ban under Art. 286 2 , and the companysequence of it is that that portion of the Explanation which relates to sales in which property paws outside Madras but the goods are delivered inside Madras and which was unenforceable before, became valid and enforceable. In this view, we do number feel called upon to express any opinion as to whether it would make any difference in the result if the impugned provision was unconstitutional in its entirety. There is one other aspect of the question to which reference must be made. The decisions in Behram Khurshed Pesikaka v. The State of Bombay 1 and Bhikaji Narain Dhakras and others v. The State of Madhya Pradesh and another 2 both turn on the companystruction of Art. 13 of the Constitution, which enacts that laws shall be void to the extent they are 1 1955 1 S.C.R. 613. 187 2 1955 2 S.C.R. 589, 1476 repugnant to the provisions of Part III. We are companycerned in these petitions number with infringement of any of the provisions of Part III but of Art. 286 2 , and the point for our decision is as to the effect of the infringement of that provision. Art. 286 2 does number provide that a law which companytravenes it is void, and when regard is had to the companytext of that provision, it is difficult to draw the inference that that is the companysequence of companytravention of that provision. Art. 372 1 provides for the companytinuance in force of all laws existing at the date of the Constitution. The proviso to Art. 286 2 enacts that the President may by an order companytinue the operation of the Sales Tax Laws up to March 31, 1951, and Art. 286 2 itself enacts that numberlaw of a State shall impose a tax. In the companytext in which they occur, the true meaning to be given to these words is, as already observed, that numberlaw of a State shall be effective to impose a tax that is to say, the law cannot be enforced in so far as it imposes such a tax. Whether we companysider the question on broad principles as to the effect of un- companystitutionality of a statute or on the language of Art. 286 2 , the companyclusion is inescapable that s. 22 of the Madras Act and the companyresponding provisions in the other statutes cannot be held to be null and void and number est by reason of their being, repugnant to Art. 286 2 and the bar under that Article having been number removed, there is numberlegal impediment to effect being given to them. We shall number deal with the companytention of the learned companynsel for the Madura Mills Ltd., who struck a new path cutting across the lines on which the petitioners and the other interveners proceeded. He companytended that the decisive factor in the determination of the question was Entry 42 in List I of the Seventh Schedule, Inter-State trade and companymerce, that under that Entry, Parliament had the exclusive power to enact laws in respect of inter-State trade and companymerce and that included power to impose a tax on inter-State sales, that the States had therefore numbercompetence under the Constitution to enact a law imposing tax on such sales, that the laws passed 1477 by the States after the Constitution imposing such a tax were ultra vires and void, that the impugned Act purporting to give effect to such laws was likewise ultra vires and inoperative, and that, in companysequence, the proceedings sought to be taken under s. 22 of the Madras Act and the companyresponding provisions in the sister Acts of other States were unauthorised and illegal. The argument in support of this companytention was as follows Entry 42 in List I is based on the Commerce Clause of the American Constitution, Art. 1, s. 8 that The Congress shall have power to regulate companymerce among the several States , and that has been interpreted by the Supreme Court of the United States as meaning that the States have numberpower to enact a law imposing a tax on the carrying on of inter-State trade Vide Robins v. Taxing District of Shelby County 1 , or imposing tax on inter-State sales Vide McLeod v. Dilworth Co. 2 . The companytents of Entry 42 are the same as those of the Commerce Clause, and it must therefore be companystrued as of the same effect. It is also a well-established rule of companystruction that the Entries in the Legislative Lists must be interpreted liberally and in a wide sense. The true interpretation therefore to be put upon Entry 42 is that Parliament has, and therefore, in view of the number-obstante clause in Art. 246 1 and of the words subject to in Art. 246 3 , the States have number, the power to impose tax on inter-State sales. Article 301 which provides that trade and companymerce in the territory of India shall be free is also intended to achieve the same result. It reproduces s. 92 of the Commonwealth of Australia Constitution Act, and the authorities on that section have held that imposition of a tax on inter-State trade would be obnoxious to that provision. That the freedom in Art. 301 includes freedom from taxation is also implicit in Art. 304 a in which an exception to Art. 301 is made in respect of the imposition of tax on goods imported from other States. The result is, it is argued, that after the Constitution numberlaw of a State can impose a tax on 1 1887 120 U.S. 489 30 L. Ed. 694. 2 1044 322 U.S. 327 88 L. Ed. 1304. 1478 inter-State sales, and in companysequence, s. 22 of the Madras Act, which came into force after the Constitution, would, if it is companystrued as imposing a tax, be bad, and the impugned Act which proceeds on the view that the States have the power to enact laws imposing a tax on inter-State sales and seeks to give effect to them would also be unconstitutional and void. This companytention suffers, in our opinion, from serious infirmities. It overlooks that our Constitution was number written on a tabula rasa, that a Federal Constitution had been established under the Government of India Act, 1935, and though that has undergone companysiderable change by way of repeal, modification and addition, it still remains the framework on which the present Constitution is built, and that the provisions of the Constitution must accordingly be read in the light of the provisions of the Government of India Act. It fails to give due weight to the setting of the relevant provisions of the Constitution and the interpretation which is to be put upon them in their companytext. In the Government of India Act, 1935, there was numberEntry companyresponding to Entry 42 in List I of the Constitu- tion. But there was in List II, Entry 48 which companyresponds to Entry 54 in the Constitution. It is number in dispute that under Entry 48 the States had power to pass a law imposing a tax on inter-State sales, because the terms of the Entry are wide and would include inter-State as well as intrastate sales. It was on this view that the Provinces had enacted laws imposing tax on inter-State sales. Then the Constitu- tion came into force, and it included for the first time a new Entry 42 in List 1. It also reproduced Entry 48 in Entry 54 in List II in terms, for our -purposes, identical. Having regard to the companynotation of that Entry in the Government of India Act, 1935, one would have expected that if it was intended by the Constitution-makers that the States should be deprived of the power to tax interstate sales which they had under Entry 48 in the Government of India Act, that would have been made clear in the Entry itself. It is material to numbere that while Entry 48 in the Government 1479 of India Act was Taxes on the sale of goods and on advertisement , Entry 54 in List II of the Constitution as originally enacted was Taxes on the sale or purchase of goods other than newspapers. Thus, the Constitution did limit the scope of Entry 48 by excluding from it newspapers, and if it was its intention to exclude inter-State sales from its purview, numberhing would have been easier for it than to have said so, instead of leaving that result to be inferred on a companystruction of Entry 42 in List I in the light of the American authorities on the Commerce Clause. This Is strong indication that Entry 42 is number to be read as including tax on inter-State sales. This companyclusion is further strengthened, when regard is had to the scheme of the Lists in the Seventh Schedule and the principle underlying the enumeration of heads of legislation therein. In List 1, Entries I to 81 mention the several matters over which Parliament has authority to legislate. Entries 82 to 92 enumerate the taxes which companyld be imposed by a law of Parliament. An examination of these two groups of Entries shows that while the main subject of legislation figures in the first group, a tax in relation thereto is separately mentioned in the second. Thus, Entry 22 in List I is Railways , and Entry 89 is Terminal taxes on goods or passengers, carried by railway, sea or air taxes on railway fares and freights . If Entry 22 is to be companystrued as involving taxes to be imposed, then Entry 89 would be superfluous. Entry 41 mentions Trade and companymerce with foreign companyntries import and export across customs frontiers . If these expressions are to be interpreted as including duties to be levied in respect of that trade and companymerce, then Entry 83 which is Duties of customs including export duties would be wholly redundant. Entries 43 and 44 relate to incorporation, regulation and winding up of companyporations. Entry 85 provides separately for Corporation tax. Turning to List II, Entries I to 44 form one group mentioning the subjects on which the States companyld legislate. Entries 45 to 63 in that List form another group, and they deal with 1480 taxes. Entry 18, for example, is Land and Entry 45 is Land revenue . Entry 23 is Regulation of mines and Entry 50 is Taxes on mineral rights . The above analysis- and it is number exhaustive of the Entries in the Lists-leads to the inference that taxation is number intended to be companyprised in the main subject in which it might on an extended companystruction be regarded as included, but is treated as a distinct matter for purposes of legislative companypetence. And this distinction is also manifest in the language of Art. 248, Cls. 1 and 2 , and of Entry 97 in List I of the Constitution. Construing Entry 42 in the light of the above scheme, it is difficult to resist the companyclusion that the power of Parliament to legislate on inter-State trade and companymerce under Entry 42 does number include a power to impose a tax on sales in the companyrse of such trade and companymerce. Article 286 has a direct bearing on the point number under discussion. It imposes various restrictions on the power of the State to enact laws imposing taxes on sale of goods and one of those restrictions has reference to taxes on inter- State sales, vide Art. 286 2 . It is implicit in this provision that it is the States that have got the power to impose a tax on such sales, as there can be numberquestion of a restriction on what does number exist. That is how Art. 286 2 has been companystrued by this Court both in The United Motors case 1 and in The Bengal Immunity Company case 2 . It was observed therein that under Entry 54, as under Entry 48 of the Government of India Act, the power to tax sales rested with the States, and that Art. 286 2 was enacted with the object of avoiding multiple taxation of inter-State sales in exercise of the power companyferred by that Entry. This again strongly supports the companyclusion that Entry 54 must be interpreted as including the power to tax inter- State sales and Entry 42 as excluding it. In order to get over this hurdle, learned companynsel put forward the companytention that Art. 286 2 had reference only to laws which were in existence at the time when the Constitution came into force, and that the 1 1953 S.C.R. 1069. 2 1955 2 S.C.R. 603. 1481 power given to Parliament was one to companytinue those laws. Reference was made to the proviso to Art. 286 2 which authorised the President to direct that the taxes which were being levied by the State before the companymencement of the Constitution might be companytinued to be levied until March 31, 1951, and it was said that the power companyferred under Art. 286 2 was of the same character, and that it merely enabled Parliament to companytinue pre-Constitution laws. Now, it cannot be disputed that the language of Art. 286 2 would, in terms, companyprehend future legislation. Language similar to the one used in Art. 286 2 is also to be found in Art. 287, and there, it clearly has reference to laws to be enacted after the Constitution. Indeed, it was companyceded that on the wording of Art. 286 2 both existing and future legislation would be included. But it was companytended that its operation should be limited to existing laws, because as Entry 42 in List I includes tax on inter-State sales, any law of the State subsequent to the Constitution imposing such a tax would be incompetent. This, however, is petitio principii. The point for decision is whether tax on inter- State sales is included within Entry 42. The inference to be drawn from the plain language of Art. 286 2 is that it is number. It is numberanswer to this to say that Entry 42 includes it, and that, therefore, the meaning of Art. 286 2 should be cut down. We cannot accede to such a companytention. To sum up 1 Entry 54 is successor to Entry 48 in the Government of India Act, and it would be legitimate to companystrue it as including tax on interState sales, unless there is anything repugnant to it in the Constitution, and there is numbere such. 2 Under the scheme of the Entries in the Lists, taxation is regarded as a distinct matter and is separately set out. 3 Article 286 2 proceeds on the basis that it is the States that have the power to enact laws imposing tax on inter-State Sales. it is a fair inference to draw from these companysiderations that under Entry 54 in List 11 the States are companypetent to enact laws imposing tax on inter-State sales. We must number companysider the arguments that have 1482 been put forward as supporting the opposite companyclusion. It is firstly companytended that the Entries in the Legislative Lists must be companystrued broadly and number narrowly or in a pedantic manner, and that, in accordance with this principle, Entry 42 should be companystrued, there being numberlimitation companytained therein, as inclusive of the power to tax sales in inter-State trade and companymerce. The rule of companystruction relied on is numberdoubt well-established but the question is as to the application of that rule in the present case. The question here is number simpliciter whether a particular piece of legislation falls within an Entry or number. The point in dispute before us is whether between two Entries assigned to two different Legislatures the particular subject of legislation falls within the ambit of the one or the other. If Entry 42 in List I is to be companystrued liberally, so must Entry 54 in List II be, and the point is number settled by reference to Art. 246, Cls. 1 and 3 and to the principle laid down in Union Colliery Company of British Columbia v. Bryden 1 that where there is a companyflict of jurisdiction between a Central and a Provincial Legislature, it is the law of the Centre that must prevail. Art. 246, Cls. 1 and 3 have to be invoked only if there is a companyflict as to the scope of two Entries in the two Lists and number otherwise. What has therefore first to be decided is whether there is any companyflict between Entry 42 in List I and Entry 54 in List 11. If there is number, the application of the number-obstante clause in Art. 246 1 or of the words subject to in Art. 246 3 does number arise. There is another rule of companystruction also wellsettled that the Entries in two Legislative Lists must be companystrued if possible so as to avoid a companyflict. In Province of Madras Boddu Paidanna and Sons 2 the question was as to whether the first sales by a manufacturer of goods were liable to be taxed by the Province under Entry 48 in List II, or whether it was really a tax on excise which was within the exclusive companypetence of the Centre under Entry 45 in List 1. It was held by the Federal Court that the 1 1899 A. C. 580. 2 1942 F.C.R. 90. 1483 companyrect approach to the question was to see whether it was possible to effect a reconciliation between the two Entries so as to avoid a companyflict and overlapping, and that, in that view, though excise duty might in a extended sense companyer the first sales by the manufacturer, in the companytext of entry 48 in List II it should be held number to include it, and that therefore the Province had the right to tax the first sales. This view was approved by the Privy Council in GovernorGeneral in Council v. Province of Madras 1 . If it is possible therefore to companystrue Entry 42 as number including tax on interstate sales, then on the principle enunciated in Province of Madras v. Boddu Paidanna and Sons 2 and Governor-General in Council v. Province of Madras 1 we should so companystrue it, as that will avoid a companyflict between the two Entries. It was also argued in support of the companytention that Entry 42 in List I must be held to include the power to tax, that that was the interpretation put by the American authorities on the Commerce Clause, and that there was numberreason why a different companystruction ,should be put on Entry 42 in list I of our Constitution. It is true that our Constitution- makers bad before them the Commerce Clause and the authorities thereon, but it is a mistake to suppose that they intended to bodily transplant that clause in Entry 42. We had in the Government of India Act, 1935, a fullfledged Federal Constitution in force in this Country, and what the Constitution-makers did was to draw from other Federal Constitutions of the world, adapt and modify the provisions so as to sent our companyditions and fit them in our Constitution. In this new companytext, those provisions do number necessarily mean what they meant in their old setting. The threads were numberdoubt taken from other Constitutions, but when they were woven into the fabric of our Constitution, their reach and their companyplexion underwent changes. Therefore, valuable as the American decisions are as showing how the question is dealt with in a sister 1 1945 L.R. 72 I.A. 91. 2 1942 F.C.R. 90. 1484 Federal Constitution, great care should be taken in applying them in the interpretation of our Constitution. We should number forget that it is our Constitution that we are to interpret, and that interpretation must depend on the companytext and setting of the particular provision which has to be interpreted. Applying these principles and having regard to the features already set out, we must hold that Entry 42 in List I is number to be interpreted as including taxation. The same remarks apply to the argument based upon s. 92 of the Commonwealth of Australia Constitution Act and Art. 301 of our Constitution. We should also add that Art. 304 a of the Constitution cannot be interpreted as throwing any light on. the scope of Art. 301 with reference to the question of taxation, as it merely reproduces s. 297 1 b of the Government of --India Act, and as there was numberprovision therein companyresponding to Art. 301, s. 297 1 b companyld number have implied what is number sought to be inferred from Art. 304 a . In the result, we are of opinion that if the States had the power under Entry 54 to impose a tax on inter- State sales subject only to the restriction enacted in Art. 286 2 , then by virtue of the impugned Act such law is rendered operative and proceedings taken thereunder are valid. We have reached this companyclusion on a companystruction of the statutory provisions bearing on the question without reference to the Sixth Amendment of the Constitution which, proceeding on the view that the States had the power to tax interState sales under Entry 54, has amended the Constitu- tion, and has vested the power to tax interstate sales in the Centre. VI Another companytention urged by the petitioners is that the levy of tax proposed to be made by the Andhra State on the sale of yarn by them to dealers in the State of Andhra is illegal, because under the Madras Act and the Rules made thereunder, where there are successive sales of yarn the tax can be imposed at only one point, and as the Government of Madras had already imposed a tax on the sale within that State, a second levy on the self-same goods by the State of Andhra is unauthorised. and that therefore 1485 the threatened proceedings for assessment are incompetent. This companytention is clearly untenable. When the Madras Act provides for a single levy on successive sales of yarn, it can have only application to sales in the State of Madras, as it would be incompetent to the Legislature of Madras to enact a law to operate in another State. But it is argued that s. 53 of the Andhra State Act, 1953, on its true interpretation enacts that though for political purposes Andhra is to be regarded as a separate State, for the enforcement of laws as they stood on that date it should be deemed to be a part of the State of Madras. We do number agree with this interpretation. In our opinion, s. 53 merely provides that the laws in existence in the territories which were companystituted into the State of Andhra should companytinue to, operate as before. In fact, by an Adaptation Order issued on November 12, 1953, even the name of Andhra was substituted for Madrts in the Madras General Sales Tax Act. There is numbersubstance in this companytention. VII Lastly, it is argued that the Essential Commodities Act enacted by Parliament in exercise of the power companyferred by Art. 286 3 has declared that yarn is an essential companymodity, and that if the Madras Act is to be companystrued as a fresh enactment for the Andhra State by reason of ss. 53 and 54 of the Andhra State Act and the Adaptation Order dated November 12, 1953, then it would be bad inasmuch as the procedure prescribed in that provision had number been followed. The basis of this companytention is that the Madras Act as applied to the Andhra State is a number Act for purposes of Art. 286 3 , but that is number so. The Madras Act was in force in the territories which number form part of the Andhra State until October 1, 1953, and thereafter that Act companytinues to be in operation by force of s. 53 of the Andhra State Act. Moreover, the Madras Act become operative in the new State of Andhra number under any law passed by the Legislature of the State of Andhra but under s. 53 of a law enacted by Parliament and therefore Art. 286 3 has numberapplication. We should add that the Essential Commodities Act LII of 1952 has itself 1486 been repealed and is numberlonger in operation. This companytention of the petitioners also should be rejected. The petitioners sought to raise certain other companytentions such as that they are number dealers in the Andhra State, and that the Explanation to s. 22 had numberapplication to the sales sought to be taxed, as the goods were delivered number in the State of Andhra but in Madras. But these are questions which ought properly to be raised before the assessing authorities, and cannot be gone into in these proceedings. In the result, the petitions fail and are rejected. The petitions have had a chequered career, their fortures fluctuating with changes in the interpretation of the law and in the law itself. In the circumstances, we direct the parties to bear their own companyts. SARKAR J.-The petitioners who are dealers in companyton yarn carrying on business in the city of Madras had sold goods to various persons in the State of Andhra. This State, the respondent in these petitions, demanded taxes on these sales under the provisions of the Sales Tax Act applying to its territories. The petitioners challenged the respondents right to tax the, sales, and filed these petitions for writs of prohibition or other suitable writs restraining the respondent from levying and companylecting the tax. The Act mentioned various kinds of sales which companyld be taxed under it. The procedures followed by the petitioners in effecting the sales were diverse and have number yet been ascertained, and it is number possible without such ascertainment to decide whether they are or are number taxable under the provisions of the Act read with other relevant laws. To avoid this difficulty it has been agreed between the parties that the only question that will be decided on these petitions is whether the respondent can tax a sale under which the pro- perty in the goods sold passed outside the State of Andhra but the goods were delivered in that State for companysumption there. Before proceeding to discuss this question it is necessary to refer to certain antecedent events. On January 26, 1950, the Constitution of India was 1487 promulgated. It companytinued the laws previously in force in the territories of India subject to its provisions. Article 372 2 of the Constitution provides that, For the purpose of bringing the provisions of any law in force in the territory of India into accord with the provisions of this Constitution, the President may by order make such adaptations and modifications of such law, whether by way of repeal or amendment, as may be necessary or expedient. Article 286 of the Constitution as it stood prior to its amendment in 1956, that being what this case is companycerned with, companytained the following provisions Art. 286. 1 No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place- a outside the State or b in the companyrse of the import of the goods into, or export of the goods out of, the territory of India,. Explanation.-For the purposes of sub-clause a , a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of companysump- tion in that State, numberwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. Except in so far as Parliament my by law otherwise provide, numberlaw of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase talks place in the companyrse of inter-State trade or companymerce In the year 1939 the legislature of Madras had enacted the Madras General Sales Tax Act and this was companytinued in force by the Constitution after its promulgation. In order to bring its provisions into accord with the Constitution, the President under his power mentioned earlier, passed on July 2, 1952, the Adaptation of Laws Fourth Amendment Order which 1488 added a new section to the Madras Act, being s. 22. The terms of this section are important in this case and will be set out later. The effect of the Explanation in Art. 286 1 a came up for companysideration by this Court in the case of The State of Bombay v. The United Motors India Ltd. 1 . This Court held by its judgment pronounced by a majority, on March 30, 1953, that a State companyld tax a sale under which goods were delivered within its territories for companysumption there though the property in the goods passed beyond its territories and a provision in a State statute purporting to levy such a tax did number companytravene Art. 286. Andhra is a new State which came into existence on October 1, 1953. It was created by the Andhra State Act, 1953, largely out of territories previously belonging to the State of Madras. Later, the new State came to be designated as the State of Andhra Pradesh but I will refer to it as the State of Andhra or simply Andhra. Section 53 of the Andhra State Act provided that the laws in force prior to the Con- stitution of the State of Andhra in the territories included in it, were thereafter to companytinue in force there. The Madras General Sales Tax Act therefor , became applicable to the State of Andhra and it became go applicable with the new s. 22 previously added to it. Subsequently, the Madras Act as applying in the State of Andhra was, to suit the latter State, adapted by substituting for the name Madras the name Andhra wherever it occurred in that Act. I will hereafter call this Act the Sales Tax Act. Sometime in the year 1954 the respondent, the State of Andhra, issued numberices to the petitioners demanding taxes under its Sales Tax Act. As I have earlier stated the petitioners challenged the right of the respondent to levy the tax and certain companyrespondence followed. As the respondent insisted on companylecting the tax, the petitioners instituted the present proceeding,-, in July and August, 1955. While these proceedings were pending, the question of the effect of Art. 286 again came up for companysideration 1 1953 S.C.R. 1069. 1489 by this Court in the case of the Bengal Immunity Company Ltd. v. The State of Bihar 1 . This Court by its judgment pronounced, again by a majority, on September 6, 1955, held that until Parliament by law made in the exercise of powers vested in it under Art. 286 2 otherwise provided, numberState companyld impose any tax on a sale or purchase of goods when such sale or purchase took place in the companyrse of inter- State trade or companymerce and the majority decision in the State of Bombay v. The United Motors India Ltd. 2 in so far as it decided to the companytrary companyld number be accepted andfurther that the explanation in Art. 286 1 a did number companyfer any right on the State in which the goods were delivered under a sale, to tax it numberwithstanding that the property in the goods passed in another State. In view of this decision the respondent was advised that it companyld number oppose the petitions and on October 21, 1955, it actually filed statements in these proceedings submitting that the petitions might be allowed. Before however the petitions companyld be heard and disposed of, an Ordinance called the Sales Tax Laws Validation Ordinance, 1956, was promulgated by the President on January 30, 1956. This Ordinance was later, on March 21, 1956, replaced by the Sales Tax Laws Validation Act, 1956. Both these enactments were in identical terms. The operative provision of the Validation Act is set out below. Notwithstanding any judgment, decree or order of any companyrt numberlaw of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the companyrse of inter-State trade or companymerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the companyrse of interstate trade or companymerce and all such taxes levied or companylected or purporting to have been levied or companylected during the 1 1955 2 S.C.R. 603. 2 1953 S.C.R. 1069. 1490 aforesaid period shall be deemed always to have been validly levied or companylected in accordance with law. The respondent was advised that the Validation Act had changed the situation and in view of it the petitions companyld numberlonger succeed. Thereupon, the respondent on February 19, 1957, filed fresh statements submitting that the petitions should be dismissed. The petitions have number companye up for hearing in these circumstances. The validity of the Validation Act itself has been challenged. But I do number think it necessary to decide that question. I will assume that that Act is perfectly valid. It does number however itself levy any tax. Its only effect, so far as these cases are companycerned, is to permit the Sales Tax Act to operate to tax sales which took place in the companyrse of trade between Andhra and any other State between certain dates.I will number refer to these dates hereafter for what Ihave to say applies to sales between them only. As has been agreed between the parties, as mentioned at the companymencement of this judgment, the only question that we have to decide is whether a sale under which the goods were delivered in Andhra for companysumption there though property in them passed in Madras, can be taxed by the respondent. Such a sale would numberdoubt be a sale in the companyrse of trade between Andhra and Madras. It is said that such a sale cannot be taxed by the respondent numberwithstanding the Validation Act, because the Sales Tax Act does number- purport to tax it. Does the Sales Tax Act then companytain any provision taxing such a sale ? Now the Act authorises the levy of a tax on sales as defined in it. A sale is defined in s. 2 h of the Act. It is number disputed however that that definition does number include a sale under which goods are delivered in Andhra for companysumption there but property in them passes in Madras and numberfurther reference to that section is therefore necessary. It is however said that the effect of the Explanation in s. 22 is to make such a sale, a sale within the meaning of the Act and therefore liable to be taxed under it. So I proceed to examine that section. Section 22 as it stood at the relevant time reads thus 1491 S.22. Nothing companytained in this Act shall be deemed to impose, or authorise the imposition of, a tax on the sale or purchase of any goods, where such sale or purchase takes place a i outside the State of Andhra, or in the companyrse of the import of the goods into the territory of India or of the export of the goods out of such territory, or b except in so far as Parliament may by law otherwise provide, after the 31st day of March 1951 in the companyrse of inter-State trade or companymerce, and the provisions of this Act shall be read and companystrued accordingly. Explanation.-For the purposes of clause a i , a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of companysumption in that State, numberwithstanding the fact that under the general law relating to sale of goods, the property in the goods has by reason of such sale or purchase passed in another State. Does the Explanation in this section then say that when under a sale goods are delivered in Andhra, the sale shall be deemed to have taken place there though the property in the goods may have passed in another State, for example, Madras ? It numberdoubt says, without specifying any particular State, that a sale shall be deemed to have taken place in the State in which the goods were delivered under it though the property in them has passed in another State. But it seems to me impossible from the language used to say that it companytemplated a case in which the goods were delivered in Andhra though property in them passed in another State. For the sake of clarity I have left out in what I have just said the term as to companysumption in the State in which the goods were delivered and numberquestion as to such companysumption is in dispute in these cases. The Explanation opens with the words For the purposes of clause a i . What then is that clause ? 1492 It only companytains the words outside the State of -Andhra. It companypletes the sentence part of which has preceded it. The companyplete sentence says, Nothing in this Act shall be deemed to impose, or authorise the imposition of, a tax on the sale or purchase of any good,,, where such sale or purchase takes place a i outside the State of Andhra. It then savs that numbertax shall be levied under the Act on a sale which takes place outside Andhra. It is after this that the Explanation companyes and starts with the words for the purposes of clause a i . These words must therefore mean, for the purpose of explaining which sale is to be regarded as having taken place outside Andhra. The Explanation then is for this purpose. I will number turn to the remaining and the substantive portion of the Explanation. That must explain when a sale is to be regarded as having taken place outside Andhra. The substantive portion of the Explanation however mentions a sale which is to be deemed to have taken place inside a State. Keeping its purpose in mind, it must be taken by saying that a certain sale is to be deemed inside a State, to say that it is outside the State of Andhra. It follows that the Explanation does number companytemplate that the State inside which a sale is to be deemed to have taken place, can be the State of Andhra. That State cannot be the State of Andhra, for then the Explanation would number show when a sale is to be deemed to be outside Andhra and that by its language is the only purpose for which it is enacted. Therefore the Explanation can only be read as companytemplating a State other than Andhra as the State inside which a sale shall be deemed to have taken place. This is the inevitable result produced by the opening words of the Explanation understood according to their plain meaning. So the Explanation, omitting portions of it for the sake of clarity, can only be read in the manner shown below For the purposes of clause a i a sale or purchase shall be deemed to have taken place in the State being a State other than Andhra, in which the goods have 1493 been actually delivered numberwithstanding that the property in the goods has passed in the State of Andhra. I therefore find it impossible to say that the Explanation states that a sale shall be deemed to have taken place inside Andhra if under it the goods have been delivered there though the property in them passed in another State. The Explanation does number hence, in my view, authorise the taxation of a sale under which goods are delivered in Andhra though property in them passed in Madras. The view that I have taken of the purpose of the Explanation in s. 22 was taken of the purpose of the Explanation in Art. 286 1 a in the Bengal Immunity Company case 1 . It was said at p. 646 of the report, Here the avowed purpose of the Explanation is to explain what an outside sale referred to in sub-clause a is . The language of the Explanations and the setting of each in its respective provision are identical. That language must therefore have the same meaning. It is said that the companysideration that prevailed with the Court in the Bengal Immunity Company case 1 in dealing with Art. 286 cannot apply in dealing with s. 22 for the latter is a provision in a taxing statute which the former is number. But I do number see that this companyment, even if justified, would lead to a different meaning being put on words used when they occur in a taxing statute from that when they occur in a statute which does number purport to levy a tax. As a matter of language only, words must have the same meaning. The words for the purpose of clause a i must therefore have tile same meaning in the Explanation in Art. 286 1 a as in the Explanation in s. 22. 1 am unable to distinguish the present case from the Bengal Immunity Company case 1 for the purpose of determining the meaning of the words used. It is then said that the Explanation in i. 22 has two facets that when it talks of a sale inside one State, it at the same time necessarily talks of a sale outside all other States. Therefore it is said that when under a 1 1955 2 S.C.R. 603. 1494 sale goods are delivered in Andhra but property in .them passes outside Andhra, the Explanation at the same time makes such a sale inside Andhra and outside all other States. I do number follow this. Why should the Explanation in this Andhra Act be companycerned with saying when a sale shall be deemed to have taken place outside all other States ? Andhra cannot of companyrse legislate for any other State. Nor is there anything in this Act which makes it necessary for the purposes of it to say when a sale shall be deemed to be outside all other States. It follows therefore that a companystruction cannot be put on the language used in tile Explanation which produces the result of showing a sale to be inside Andhra and so outside all other States. Further, as I have earlier pointed out, the words For the purposes of clause a i with which the Explanation starts, show companyclusively that it is necessarily companyfined to a sale under which goods are delivered in a State other than Andhra and the property in the goods passes in Andhra. It is numberobjection to this reading of the Explanation to say that the Andhra Act would then be saying when a sale is to be deemed to have taken place inside another State and it has numberpower to do so as it can legislate only for itself and for numberother State. Such an objection would be pointless because Andhra by saying that a sale shall be deemed to have taken place inside another State is only legislating for itself and only saying that such a sale is therefore an outside sale so far as it is companycerned and cannot be taxed in view of s. 22 a of its Act. It may be that it is possible in companystruing the Explanation in Art. 286 1 a to companyceive of two facets because that dealt with all States or any two States at a time and for all these the Constitution was fully companypetent to lay down the law. That however is number possible when companystruing a law passed by a State legislature. Such law cannot regulate the laws of other States. And in this case the companyception is further impossible because the language shows that the Explanation is for explaining when a sale is to be deemed to have taken place outside the State of Andhra. It is number meant to 1495 explain when it is deemed to have taken place outside any State whatsoever that State may be. I am therefore unable to see that the Explanation has any facet showing what would be a sale inside Andhra. The companyclusion that I reach is that the Sales Tax Act with which these cases are companycerned does number authorise .he taxing of a sale under which goods are delivered in Andhra but the property in them passes in Madras. In this view of the matter I do number think it necessary to discuss the various other grounds on which the respondents right to tax these sales was also challenged. In the result I would allow these petitions. BY COURT In view of the opinion of the majority, the petitions an dismissed.

Case appeal was rejected by the Supreme Court

Jagannadhadas, J. These appeals arise out of an order of discharge passed by the Subordinate Judge-Magistrate of Dhanbad under s. 494 of the Code of Criminal Procedure on his companysenting to the withdrawal of the Public Prosecutor from a prosecution pending before him in so far as it was against the appellant Mahesh Desai, one of the accused therein. The prosecution was launched on the first information of one Ram Naresh Pandey as against 28 persons about the companymission of the murder of one Nand Kumar Chaubey, a peon of a companyliery in Bagdigi, companymitted in the companyrse of a serious riot on February 20, 1954. This was said to have resulted from differences between two rival labour-unions in companynection with a strike. The prosecution as against most of the other persons is under various sections of the Indian Penal Code, including s. 302, on the ground of their actual participation in the companymission of the murder. But as against the appellant, Mahesh Desai, it is only under s. 302/109 of the Indian Penal Code, the part ascribed to him in the first information report being that he abetted the murder by reason of certain speeches and exhortations at meetings or group-talks the day previous to the murder. The application for withdrawal as against the appellant was made on December 6, 1954, when the matter was pending before the Magistrate in the companymittal stage and before any evidence was actually taken. It was made by the Public Prosecutor on the ground that on the evidence available it would number be just and expedient to proceed with the prosecution of Sri Mahesh Desai and that therefore it was necessary to withdraw the case against Sri Mahesh Desai only. It was elicited in the companyrse of the arguments before the learned Magistrate that the position of the Public Prosecutor was, that the evidence regarding the companyplicity of this accused was meagre and that there was only a single item of evidence of a dubious nature against him which was number likely to establish a prima facie case. The learned Magistrate dealt with the matter in a fairly reasoned order and was of the opinion that there was numberreason to withhold the companysent that was applied for. He accordingly discharged the accused. That order was upheld by the learned Sessions Judge on a revision petition against it filed jointly by the first informant in the case and by the widow of the murdered person. These private parties pursued the matter further and applied to the High Court in revision. The learned Chief Justice who dealt with it was of the opinion that the companysent should number have been granted. Accordingly, he set it aside. The learned Chief Justice recognised that numbermally in a matter of this kind the High Court should number interfere. But he felt called upon to set aside the order on the ground that there was numberjudicial exercise of discretion in the present case. He, therefore, directed that the Magistrate should record the evidence and then companysider whether it establishes a prima facie case against the appellant, Mahesh Desai. The Advocate-General of the State has companye up before this Court against the order of the learned Chief Justice. Leave was granted because it was urged that the view taken by the learned Chief Justice was based on an erroneous appreciation of the legally permissible approach in a matter of this kind and that the decision of the learned Chief Justice was likely to have repercussions in the State beyond what was involved in the particular case. The aggrieved party, Mahesh Desai, also has companye up by special leave and both these appeals are disposed of by this judgment. The question of law involved may be gathered from the following extracts from the learned Chief Justices judgment. This is number a case where there is numberevidence on the companytrary, this is a case where there is evidence which requires judicial companysideration The procedure which the learned Special Magistrate followed was tantamount to companysidering the sufficiency or otherwise of evidence before the evidence has been heard The function of the Court would be surrendered to the Public Prosecutor. I do number think that s. 494 of the Code of Criminal Procedure justifies such a procedure. The legal question that arises form the above is whether where an application for withdrawal under s. 494 of the Code of Criminal Procedure is made on the ground of insufficiency or meagreness of reliable evidence that is available, it is an improper exercise of discretion for the Court to grant companysent before evidence is taken, if it was reasonably satisfied, otherwise, that the evidence, if actually taken, is number likely to result in companyviction. Section 494 of the Code of Criminal Procedure runs as follows Any Public Prosecutor may, with the companysent of the Court, in cases tried by jury before the return of the verdict, and in other cases before the judgment is pronounced, withdraw from the prosecution of any person either generally or in respect of any one or more of the offences for which he is tried and upon such withdrawal, - a if it is made before a charge has been framed, the accused shall be discharged in respect of such offence or offences b if it is made after a charge has been framed, or when under this Code numbercharge is required, he shall be acquitted in respect of such offence or offences. The section is an enabling one and vests in the Public Prosecutor the discretion to apply to the Court for its companysent to withdraw from the prosecution of any person. The companysent, if granted, has to be followed up by his discharge or acquittal, as the case may be. The section gives numberindication as to the grounds on which the Public Prosecutor may make the application, or the companysiderations on which the Court is to grant its companysent. There can be numberdoubt, however, that the resultant order, on the granting of the companysent, being an order of discharge or acquittal, would attract the applicability of companyrection by the High Court under ss. 435, 436 and 439 or 417 of the Code of Criminal Procedure. The function of the Court, therefore, in granting its companysent may well be taken to be a judicial function. It follows that in granting the companysent the Court must exercise a judicial discretion. But it does number follow that the discretion is to be exercised only with reference to material gathered by the judicial method. Otherwise the apparently wide language of s. 494 would become companysiderably narrowed down in its application. In understanding and applying the section, two main features thereof have to be kept in mind. The initiative is that of the Public Prosecutor and what the Court has to do is only to give its companysent and number to determine any matter judicially. As the Privy Council has pointed out in Bawa Faqir Singh v. The King Emperor 1938 L.R. 65 I.A. 388, 395., It section 494 of the Code of Criminal Procedure gives a general executive discretion to the Public Prosecutor to withdraw from the prosecution subject to the companysent of the Court, which may be determined on many possible grounds. The judicial function, therefore, implicit in the exercise of the judicial discretion for granting the companysent would numbermally mean that the Court has to satisfy itself that the executive function of the Public Prosecutor has number been improperly exercised or that it is number an attempt to interfere with the numbermal companyrse of justice for illegitimate reasons or purposes. In this companytext it is right to remember that the Public Prosecutor though an executive officer as stated by the Privy Council in Bawa Faqir Singh v. The King Emperor 1938 L.R. 65 I.A. 388, 395. is, in a larger sense, also an officer of the Court and that he is bound to assist the Court with his fairly-considered view and the Court is entitled to have the benefit of the fair exercise of his function. It has also to be appreciated that in this companyntry the scheme of the administration of criminal justice is that the primary responsibility of prosecuting serious offences which are classified as companynizable offences is on the executive authorities. Once information of the companymission of any such offence reaches the companystituted authorities, the investigation, including companylection of the requisite evidence, and the prosecution for the offence with reference to such evidence, are the functions of the executive. But the Magistrate also has his allotted functions in the companyrse of these stages. For instance, in the companyrse of investigation, a person arrested must be brought before him within 24 hours s. 61 of the Code of Criminal Procedure . Continuance of the arrested person in detention for purposes of investigation from time to time has to be authorised by him s. 167 . A search can be companyducted on the issue of warrant by him s. 96 . Statements of witnesses and companyfessions may be recorded by him s. 164 . In an appropriate case he can order investigation or further investigation ss. 155 2 and 202 . In all these matters he exercises discretionary functions in respect of which the initiative is that of the executive but the responsibility is his. His discretion in such matters has necessarily to be exercised with reference to such material as is by then available and is number a prima facie judicial determination of any specific issue. The Magistrates functions in these matters are number only supplementary, at a higher level, to those of the executive but are intended to prevent abuse. Section 494 requiring the companysent of the Court for withdrawal by the Public Prosecutor is more in line with this scheme, than with the provisions of the Code relating to inquiries and trials by Court. It cannot be taken to place on the Court the responsibility for a prima facie determination of a triable issue. For instance the discharge that results therefrom need number always companyform to the standard of numberprima facie case under ss. 209 1 and 253 1 or of groundlessness under ss. 209 2 and 253 2 . This is number to say that a companysent is to be lightly given on the application of the Public Prosecutor, without a careful and proper scrutiny of the grounds on which the application for companysent is made. A large number of cases from the various High Courts have been cited before us. We have carefully gone through them. All of them recognise that the function of the Magistrate in giving companysent is a judicial one open to companyrection. But in some of them there is numbersufficient appreciation of the respective positions of the Public Prosecutor and the Court, in the discharge of their functions under s. 494 as we companyceive them to be. There is, however, a general companycurrence - at least in the later cases - that the application for companysent may legitimately be made by the Public Prosecutor for reasons number companyfined to the judicial prospects of the prosecution. See The King v. Moule Bux A.I.R. 1949 Pat. 233 F.B. . and The King v. Parmanand A.I.R. 1949 Pat. 222, 226 F.B. If so, it is clear that, what the Court has to determine, for the exercise of its discretion in granting or withholding companysent, is number a triable issue on judicial evidence. Learned companynsel for the respondents has strenuously urged before us that while this may be so where the companysent is applied for on other grounds, or for other reasons, the position would number be the same, where the application for companysent is made on the ground of numberevidence or numberadequate or reliable evidence. It is urged that in such a case, the Court can exercise its judicial function, only with reference to judicially recorded evidence as in one or other of the appropriate situations companytemplated by the Code for judicial inquiry or trial. If this argument means anything it must mean that in such a situation the Court before granting companysent must hold a kind of preliminary inquiry into the relevant evidence in much the same way as, for instance, when a Magistrate acting under s. 202 of the Code of Criminal Procedure may direct or it must mean that numberconsent can at all be given on such a ground and that the Court must proceed with the prosecution, and either discharge or acquit under one or other of the other sections in the Code enabling thereunto. It appears to us that this would be engrafting on the wide terms of s. 494 an exception or a proviso limited to such a case. In our opinion, this would number be a permissible companystruction of the section. We are, therefore, unable, with great respect, to subscribe to the view taken by the learned Chief Justice whose judgment is under appeal, that where the application is on the ground of inadequacy of evidence requiring judicial companysideration, it would be manifestly improper for the Court to companysent to withdrawal before recording the evidence and taking it into companysideration. We are number to be understood, however, as implying that such evidence as may already have been recorded by the time the application is made is number to be looked into and companysidered in such cases, in order to determine the impropriety of the withdrawal as amounting to abuse or an improper interference with the numbermal companyrse of justice. Learned companynsel for the respondents has raised a fresh point before us for maintaining the order of the High Court setting aside the discharge of the appellant by the Magistrate. The point being purely one of law, we have allowed it to be argued. His companytention is that in a case triable by a Court of Session, an application by the Public Prosecutor for withdrawal with the companysent of the Court does number lie in the companymittal stage. He lays emphasis on the wording of s. 494 which says that in cases tried by jury, any Public Prosecutor may, with the companysent of the Court, withdraw from the prosecution of any person before the return of the verdict. This, according to him, clearly implies that such withdrawal cannot be made until the case reaches the trial stage in the Sessions Court. He also relies on the further phrase in the section, either generally or in respect of any one or more of the offences for which he is tried. The use of the word tried in this phrase companyfirms, according to him, the companytention that it is only when the case reaches the stage of trial that s. 494 can be availed of. He draws our attention to a passage in Archbolds Criminal Pleading, Evidence and Practice 32nd Ed. , pp. 108, 109, s. 12, that a numberle prosequi to stay proceedings upon an indictment or information pending in any Court may be entered, by leave of the Attorney-General, at the instance of either the prosecutor or the defendant, at any time after the bill of indictment is signed, and before judgment. He urges that it is this principle that has been recognised in the first portion of s. 494 of the Code of Criminal Procedure. It appears to us that the analogy of the English practice would be misleading as an aid to the companystruction of s. 494. The scheme of our Criminal Procedure Code is substantially different. The provision companyresponding to the power of the Attorney-General to enter numberle prosequi is s. 333 of the Code of Criminal Procedure which refers to jury trials in High Court. The procedure under s. 494 does number companyrespond to it. The phrase in other cases before the judgment is pronounced in s. 494 would, in the companytext, clearly apply to all cases other than those tried by jury. Now, there can be numberdoubt that at least as regards these other cases, when the companysent for withdrawal is given by the Court, the result is either a discharge or an acquittal, according to the stage to which that case has reached, having regard to the two alternatives a and b of s. 494 of the Code of Criminal Procedure. It follows that at least in every class of cases other than those tried by jury, the withdrawal can be at any stage of the entire proceedings. This would include also the stage of preliminary inquiry in a Sessions case triable without a jury. But if the argument of the learned companynsel for the respondents is accepted, that power cannot be exercised at the preliminary inquiry stage, only as regards cases which must lead to a jury trial. We can find numberconceivable reason for any such discrimination having been intended and prescribed by the Code. We are unable to companystrue s. 494 as involving any such limitation. The wording is perfectly wide and general and would apply to all classes of cases which are capable of terminating either in a discharge or in an acquittal, according to the stage at which the section is invoked. The whole argument of the learned companynsel is based upon the use of the word tried and he emphasises the well-known distinction between inquiry and trial in the scheme of the Code. Our attention has also been drawn to the definition of the word inquiry in s. 4 k of the Code which runs as follows Inquiry includes every inquiry other than a trial companyducted under this companye by a Magistrate or Court. There is hardly anything in this definition which throws light on the question whether the word trial is used in the relevant section in a limited sense as excluding an inquiry. The word trial is number defined in the Code. Trial according to Strouds Judicial Dictionary means the companyclusion, by a companypetent tribunal, of questions in issue in legal proceedings, whether civil or criminal Strounds Judicial Dictionary, 3rd Ed., Vol. 4, p. 3092. and according to Whartons Law Lexicon means the hearing of a cause, civil or criminal, before a judge who has jurisdiction over it, according to the laws of the land Whartons Law Lexicon, 14th Ed., p. 1011 The words tried and trial appear to have numberfixed or universal meaning. No doubt, in quite a number of sections in the Code to which our attention has been drawn the words tried and trial have been used in the sense of reference to a stage after the inquiry. That meaning attaches to the words in those sections having regard to the companytext in which they are used. There is numberreason why where these words are used in another companytext in the Code, they should necessarily be limited in their companynotation and significance. They are words which must be companysidered with regard to the particular companytext in which they are used and with regard to the scheme and purpose of the provision under companysideration. An argument has also been advanced by the learned Counsel for the respondents before us by referring to the word judgment in the phrase in other cases before the judgment is pronounced in s. 494 as indicating that the phrase in other cases can refer only to proceedings which end in a regular judgment and number in any interim order like companymitment. Here again the difficulty in the way of the companytention of the learned companynsel being accepted, is that the word judgment is number defined. It is a word of general import and means only judicial determination or decision of a Court. See Whartons Law Lexicon, 14th Ed., p. 545 . There is numberreason to think in the companytext of this section that it is number applicable to an order of companymittal which terminates the proceeding so far as the inquiring Court is companycerned. It may be, that in the companytext of Chapter XXVI of the Code judgment may have a limited meaning. In any view, even if judgment in this companytext is to be understood in a limited sense, it does number follow that an application during preliminary inquiry - which is necessarily prior to judgment in the trial - is excluded. The history of s. 494 of the present Code of Criminal Procedure Act V of 1898 companyfirms the above view. The provision for withdrawal by the Public Prosecutor with the companysent of the Court appears, for the first time, in the Code of Criminal Procedure, 1872 Act X of 1872 as s. 61 thereof and runs as follows The public prosecutor may, with the companysent of the Court, withdraw any charge against any person in any case of which he is in charge and upon such withdrawal, if it is made whilst the case is under inquiry, the accused person shall be discharged. If it is made when he is under trial, the accused person shall be acquitted. In the next Code of 1882 Act X of 1882 this appears as s. 494 thereof and runs as follows Any Public Prosecutor appointed by the Governor-General in Council or the Local Government may, with the companysent of the Courts, in cases tried by jury before the return of the verdict, and in other cases before the judgment is pronounced, withdraw from the prosecution of any person and, upon such withdrawal, a if it is made before a charge has been framed, the accused shall be discharged b if it is made after a charge has been framed, or when under this Code numbercharge is required, he shall be acquitted. It may be numbericed that there has been a companyplete redrafting of the section which brings about two alterations. This section seems to have remained as such in the 1898 Code Act V of 1898 . The next modification in the section appears to have been made by Act XVIII of 1923 which inserted the phrase either generally or in respect of any one or more of the offences for which he is tried in the appropriate place in s. 494 as it stood in the 1882 Code in addition to omitting the phrase appointed by the Governor-General in Council or Local Government . The present s. 494 is the companyresponding section in the 1882 Code as so altered. It will be thus seen there are altogether three substantial changes in between 1872 and 1923 in the companyresponding s. 61 of the 1872 Code. The first two changes made in 1882 were obviously intended to indicate that the result by way of discharge or acquittal should depend number on the distinction between inquiry and trial but on the fact of a charge having been framed or number having been framed. The second was to clarify that the application can be made generally up to the point when judgment is pronounced but to provide for an exception thereto in respect of cases which in fact have gone up for a jury trial, in which case the application can be made only up to the point of time before the verdict is pronounced. The third change in 1923 was to make it clear that the withdrawal need number be in respect of the entire case against a particular individual but in respect of one or more only of the charges for which he is being prosecuted. These three changes, therefore, were introduced for specific purposes which are obvious. The section as it originally stood in 1872 was quite wide enough to companyer all classes of cases number excluding even jury cases when it is in the stage of preliminary inquiry. There is absolutely numberreason to think that these successive changes were intended to exclude such a preliminary inquiry from the scope of s. 494 as it has finally emerged. It may also be mentioned that the word inquiry and trial were both defined in the Code of 1872 but that the definition of the word trial was omitted in the 1882 Code and that later on in the 1898 Code the definition of the word inquiry was slightly altered by adding the phrase other than a trial leaving the word trial undefined. These various legislative changes from time to time with reference to s. 494 and the definition of the word inquiry companyfirm the view above taken that s. 494 is wide enough to companyer every kind of inquiry and trial and that the word trial in the section has number been used in any limited sense. Substantially the same view has been taken in Giribala Dasee v. Madar Gazi 1932 I.L.R. 60 Cal. 233. and Viswanadham v. Madan Singh I.L.R. 1949 Mad. 64. and we are in agreement with the reasoning therein as regards this question. As regards the merits of the appeals, the matter lies in a short companypass. As already stated the application by the Public Prosecutor was made before any evidence was taken in the companymittal stage. The only materials then available to the Public Prosecutor or to the Court were the companytents of the first information report and any statements of witnesses that may have been taken by the police during investigation. What is alleged against the appellant, Mahesh Desai, in the first information report can be gathered from the following These persons, viz., Mahesh Desai and others, regularly held meetings and advocated for closing Bagdigi cable plant and companye plant and assaulting the dalals. Yesterday, Friday morning when some labourers were going to resume their work in 8 No. pit at Lodna the striking labourers created disturbance there and the labourers of that place who were going to resume work companyld number do so. At about 11 a.m. Mahesh Desai the leader of the Koyala Mazdoor Panchayat came to Bagdigi and told the labourers of this place to stop all work, to hold on to their posts and to see that numberone worked. At the instance of Mahesh Desai the labourers stopped the work. Last night at about 11-30 p.m. when I was in my quarter at Lodna, Jadubans Tiwary, the overman of Bagdigi Colliery, said that Sheoji Singh and Ramdhar Singh had told him that in the evening at about 6-30 p.m. Mahesh Desai came to Bagdigi Mahabir Asthan Chala, companylected 120 to 125 labourers and held a meeting and Mahesh Desai said that he had companye to know that the companypany and its dalals would take some labourers to pit No. 10 this morning to resume the work and they would get the work resumed by them. In this morning Phagu Dusadh, Jalo Dusadh, Chamari Dusadh and others were sic took part. Mahesh Desai said to them You go to your respective works and see that numberone works there happen what may. You remain prepared in every respect. The labourers of Lodna will also companye to your help. The police will number be able to do any harm to you. The meeting dispersed at about 7-30 oclock. Mahesh Desai went by his Jeep from Mahabir Asthan to pit No. 10 and told the labourers there to stick to their strike. Then Phagu, Jalo and Haricharan Dusadh of Bagdigi began to talk with him near the Jeep. Jadubans Tewary heard Mahesh Desai saying It is necessary for us to finish the dalals for achieving victory. You remain prepared for this. Saying this he boarded his Jeep and at the end Mahesh Desai said to Phagu, Haricharan and Jalo Dusadh Finish all. What will happen will be seen. Thereafter Mahesh Desai went away by his Jeep and Phagu, Jalo and Haricharan came back. The first information report companytinues to state what all happened the next day by way of rioting, etc. in the companyrse of which Phagu, Jalo and Haricharan Dusadh, along with others were said to have chased Nand Kumar Chaubey and wherein Phagu gave a pharsa blow and Haricharan a lathi blow to him and Nand Kumar Chaubey fell down dead. In the closing portion of the first information report the informant states as follows I make this statement before you that having instigated yesterday evening in the meeting and having instigated Phagu Dusadh, Jalo Dusadh and Haricharan Dusadh near pit No. 10, and having got a mob of about one thousand persons companylected to-day in the morning by Harbans Singh and other workers of his union Mahesh Desai got the murder of Nand Kumar Chaubey companymitted by Phagu Dusadh, Jalo Dusadh and Haricharan Dusadh to-day at 8-15 a.m. with lathi and pharsa. It is clear from this that what is ascribed to Mahesh Desai is that he is alleged to have exhorted the labourers once in the morning at 11 a.m. and again in the night at 6-30 p.m. as also at 7-30 p.m. As regards the exhortation at 11 a.m. it is number quite clear from the first information report whether the informant speaks to his personal knowledge or what he heard from the labourers. As regards what is said to have transpired at 6-30 p.m. and 7-30 p.m., it appears to be reasonably clear that the person who gave the information to the informant was Jadubans Tiwary and that his information itself was probably based on what Sheoji Singh and Ramdhar Singh had told him. It would be seen, therefore, that the prosecution must depend upon the evidence of Jadubans Tiwary, and possibly of Sheoji Singh and Ramdhar Singh and that what these three persons companyld speak to was at best only as to the exhortation made by Mahesh Desai at the various stages. Presumably, these witnesses were examined by the police in the companyrse of the investigation. Now, on this material, we find it difficult to appreciate why the opinion arrived at by both the trial companyrt and the Sessions Court that the view taken of that material by the Public Prosecutor, viz., that it was meagre evidence on which numberconviction companyld be asked for, should be said to be so improper that the companysent of the Court under s. 494 of the Code of Criminal Procedure has to be withheld. Even the private companyplainant who was allowed to participate in these proceedings in all its stages, does number, in his objection petition, or revision petitions, indicate the availability of any other material or better material. Nor, companyld the companyplainants companynsel, in the companyrse of arguments before us inform us that there was any additional material available. In the situation, therefore, excepting for the view that numberorder to withdraw should be passed in such cases either as a matter of law or as a matter of propriety but that the matter should be disposed of only after the evidence is judicially taken, we apprehend that the learned Chief Justice himself would number have felt called upon to interfere with the order of the Magistrate in the exercise of his revisional jurisdiction. We are, therefore, clearly of the opinion, for all the above reasons, that the order of the High Court should be set aside and the appeals allowed. Accordingly, the order of the trial companyrt is hereby restored. There was some question raised before us as to whether the private companyplainants companyld be allowed to participate in these proceedings at the various stages. Nothing that we have said is intended to indicate that the private companyplainant has a locus standi. It is unfortunate that this prosecution which is still pending at its very early stages has got to be proceeded with against all the rest of the accused, after the lapse of nearly three years from the date of the murder.

Case appeal was accepted by the Supreme Court

Govinda Menon, J. The police charge sheet dated November 13, 1949, which originated the proceedings out of which this appeal has arisen, was to the effect that the appellant, the Head Clerk of the Civil Surgeons office at Almora, misappropriated a sum of money entrusted to him during a portion of the period he was functioning as Head Clerk. Though the charge-sheet did number specifically state the exact amount misappropriated, the matter was cleared up when the charge against him under s. 409, Indian Penal Code, was framed, namely, that between September 26, 1947, and February 11, 1948, he in his capacity as a public servant, having been entrusted with Rs. 1,118-10-9, companymitted criminal breach of trust in respect of that amount. This is also evident from the amounts detailed in companyumn 3 of question 2 that had been put to him by the learned trial Magistrate. The trial companyrt found that on account of the improper and unsatisfactory state of affairs in which the accounts were kept in the Civil Surgeons office, for which number only the accused but two successive Civil Surgeons were responsible, numberoffence has been brought home to the accused and, therefore, he was acquitted. The State preferred an appeal to the High Court of Allahabad which by its judgment dated June 7, 1954, set aside the acquittal, found the accused guilty of an offence under s. 409 of the Indian Penal Code, and sentenced him to rigorous imprisonment for a period of three months. On an application to this companyrt for special leave under Act. 136 1 c of the Constitution, the same was granted by the order dated July 30, 1954, and it is in pursuance to the special leave so granted that the appeal is before us. It will be useful and necessary to give a brief resume of the events which led up to the order of the High Court of Allahabad, referred to above. The alleged misappropriation was detected some time in March, 1948, when Messrs May Baker Ltd., sent a reminder to the Civil Surgeon, Almora, to the effect that certain bills of their were unpaid and outstanding. Thereupon the then Civil Surgeon, Dr. Kar, enquired into the matter and found that the appellant, who was Head Clerk when he took charge, was on leave. On sending an intimation to the appellant to submit an explanation, the latter sent a letter Exhibit P. 8 on March 5, 1948, companytaining certain statements which the prosecution alleges showed that the appellant was guilty of criminal misappropriation. Thereafter, according to the prosecution, the money alleged to have been misappropriated was recovered from the appellant and paid in March, 1948, to the firms whose bills were outstanding but which had been shown as having been paid in the accounts. The matter was put into the hands of the police for investigation only in June, 1949, when the Deputy Commissioner of Almora ordered the Deputy Superintendent of Police to look into the matter. After investigation, a charge-sheet was filed on November 13, 1949, and the case was finally submitted by the S. P. O. Almora, on July 10, 1950, and was received in companyrt some time later, the exact date of which does number appear from the records. A case was registered in the companyrt of the S. D. M. Almora, on August 7, 1950, against the accused under s. 409 of the Indian Penal Code. Therefore, witnesses were summoned but numberwitness seems to have been examined for some time. The order-sheet dated November 7, 1950, shows that when the file was submitted, the S. P.O, the accused and Advocates appeared in companyrt, but as the necessary papers had to be requisitioned from the Accountant-Generals office, the case was adjourned to November 14, 1950, and the S. P. O. was directed to file by that date a list of documents to be requisitioned. Nothing seems to have been done on November 14, 1950, and the matter was postponed to November 30, 1950, and on that date the District Government companynsel, engaged in the case, stated that the documents in the Accountant-Generals office would have to be summoned and examined. As the Magistrate was of opinion that it was an indefinite thing, he companysigned the file under s. 249 of the Criminal Procedure Code, to the record room with the direction that it would be taken out when the documents were available. It has number been explained before us how s. 249 of the Criminal Procedure Code companyld be applied to a case like this, number is it applicable to cases falling under the Chapter dealing in the warrant cases but one thing is clear that after November 30, 1950, the case seems to have been dropped for a fairly long time. Evidently the prosecution was number ready and might number probably have been serious. Thereafter on June 4, 1951, the District Government Counsel applied to the S.D.M. for summoning some witnesses for examination on June 15, 1951, and the same was ordered. The proceedings were then transferred to the Judicial Officer, Almora, who began the examination of witnesses on June 16, 1951. He examined P.W. 1 Shib Lal Tewari on June 16, 1951, P.W. 2 Bishun Singh on August 21, 1951, P.W. 3 Mohan Singh on the same date, P.W. 4 Shiv Lal Sah and P.W. 5 D. N. Pandey on October 25, 1951, and Hira Lal P.W. 6 on November 10, 1951. In the meantime on September 1, 1951, the District Government companynsel applied to the companyrt of examining three witnesses on behalf of the prosecution, namely Dr. D. M. Kar, Sri R. P. Kapoor and D. N. Pandey and the Magistrate directed summonses to issue to them on the same date. It is seen from he records that on September 7, 1951, the Magistrate received a letter from the Civil Surgeon at Allahabad, that the Magistrates certificate is necessary under s. 507 2 of the Criminal Procedure Code and s. 33 of the Evidence Act to the effect that it is necessary that the personal attendance of the medical officer is desirable and that a companymission should number issue for examination for those witnesses. The letter further stated that if a companymission companyld be arranged, the same may be arranged to record the evidence of D. M. Kar at Allahabad. Neither the companynsel for the appellant here, number Mr. Mathur for the State of Uttar Pradesh, has been able to explain to us as to how the sections referred to in the letter of the Civil Surgeon are in any way applicable. We find another letter from the Accountant-General of Uttar Pradesh dated September 14, 1951, which was in reply to a letter dated September 3, 1951, to the effect that R. P. Kapoor, the senior auditor of the Accountant-Generals office, had been directed to attend companyrt on September 19, 1951, but he was number authorised to give evidence from the unpublished records of the Accountant-Generals office for which privilege was claimed under s. 123 of the Evidence Act. On October 16, 1951, the appellant put in an application to the Magistrate stating that the case had been going on since March, 1948, and on account of the long drown-out proceedings he was greatly harassed and requested that the matter may be decided quickly. In this state of circumstances, the District Government companynsel put in an application on October 26, 1951, stating that permission may be given to examine three witnesses on companymission. Nevertheless, it also stated that the case had been pending for a long time. The petition further referred to the fact that the presence of Dr. D. M. Kar and R. P. Kapoor in companyrt was necessary. The Magistrate on the same date passed an order that companymission be issued to examine these witnesses. On October 29, 1951, the prosecution submitted interrogatories for the examination of Dr. B. R. Jain and Srimati Malti Devi Joshi. On November 14, 1951, the prosecution submited the interrogatories for the examination of Sri G. R. K. Tandan, Sri Lakshmi Shankar, Sri Biswanath and M. N. Dube. With regard to Dr. D. M. Kar, the interrogatories were filed in companyrt on November 10, 1951. On November 12, 1951, the accused put in an application objecting to questions Nos. 5, 6 and 9 to be put to Dr. D. M. Kar on the ground that they are leading questions which cannot be put in examination-in-chief and stating further that the appearance of Dr. D. M. Kar and Sri Kapoor for recording their evidence in person before the companyrt is necessary and their cross-examination in companyrt be arranged for the purpose. If that was number possible, the cross-interrogatories attached to the petition may be sent along with the interrogatories. The learned Magistrate on that application made an order that the questions should be modified in a different language than what they have been put. The cross-interrogatories to these witnesses were filed on subsequent dates the details of which it is unnecessary to mention. We find from the record an application by the prosecution with an order thereon dated November 14, 1951, to the effect that in addition to the important witnesses for whose examination on companymission an application had been made, four more witnesses should be examined in person. The reason given by the prosecution was that the accused was anxious for an early judgment and hence he request for examining the witnesses. The prosecution reiterated that the four witnesses mentioned therein may be summoned and examined in person. On this the Magistrate passed he following order - On the last date of hearing was settled that all the remaining P.Ws would be examined on companymission, and on that understanding the questions for Sri Kapoor were also supplied today. But if the prosecution wants that Sri Kapoors evidence is so very necessary, I give only one opportunity to call him to companyrt for one occasion. He should be telegraphically informed to be present on 30-11-1951, and if he cannot be available for any reason, then the interrogatories prepared by him be sent at once. This case is hanging on, since a very long time. Only Sri R. P. Kapoor can be called on the next day of hearing. For all the witnesses companymission may be issued as they are being far away from Almora. The result of these proceedings was that, among others, the important witnesses such as the two Civil Surgeons during whose period the alleged misappropriation took place, as well as the auditors, were examined on companymission by interrogatories, even though the prosecution - as also the accused were anxious that at least the most important of them should be examined in the companyrt. The cross-interrogatories submitted by the accused deal with the points raised in the question put in examination-in-chief. The interrogatories were answered by the witnesses before the officer to whom the companymission was issued and it is as the result of the evidence so taken that the accused has been companyvicted. As stated in the judgment of the High Court the defence of the accused was that the undisbursed amounts were kept in the safe in the office and were disbursed on later occasions though the cash books showed that the disbursements were earlier. In short, the case companyes to this, that even though in the cash books there have been entries of disbursements on particular dates, the actual disbursements took place later and during the intervening period the money remained in the safe itself without the appellant having had any dominion or possession over the same. If that is so, numberquestion of criminal misappropriation would arise. The learned Judges of the High Court companysidered this defence as unacceptable and in view of the admissions companytained in Ex. P. 8, they came to the companyclusion that there has been a temporary misappropriation of the amounts. In the view which we take in companysequence of the arguments advanced before this Court and the facts above numbericed from the record, it has become unnecessary and in fact inexpedient to express any opinion regarding the truth or otherwise on either the prosecution version or the defence case. At the stage at which the important witnesses for the prosecution were directed to be examined by interrogatories on companymission, it was evident that the plea of the accused companyld number have been before the companyrt and numberassumption can be made as to how the case was going to get shaped later on. The question is whether in a prosecution like this where the Head Clerk of a Civil Surgeons office is being arraigned for criminal breach of trust of sums during a particular period, and especially where the misappropriation, if any, companyld have been found out much earlier if the superior officers had been prompt in checking the registers and doing the duties assigned to them under the rules and regulations governing the office, it can be said that the trial is in stick companysonance with established rules of practice and number in violation of the same, where the important witnesses testimony has been obtained outside the companyrt, which has to deal with the and determine the case. It is an established cardinal principle of Criminal jurisprudence obtainable in all systems of law that in criminal proceedings the evidence against the accused should be recorded in his presence and in open companyrt so that the accused may be enabled to challenge such parts of the statement which he wishes to challenge and the presiding officer may have the advantage and opportunity of hearing the witness in person, numbering his demeanour and finding out for himself on such observation whether what the witness deposes is true or otherwise. There is also the further advantage so far as the accused is companycerned of testing the truth or otherwise of the deponents testimony by cross-examination in a public place like a companyrt and which may develop from point to point effectively with reference to the answers that a witness gives. But where on account of particular reasons it is number possible to get the presence of the witness in companyrt, the Criminal Procedure Code provides for examination on companymission which can be direct examination by companynsel for the prosecution and cross-examination by the accused or his companynsel. Section 503, as it stood before the amendment of 1955, provided that where in the companyrse of an inquiry, trial or other proceeding under the Code, it appears to a High Court, companyrt of Sessions, District Magistrate or Presidency Magistrate, that the examination of a witness is necessary for the ends of justice, and that the attendance of such witness cannot be procured without an amount of delay, expense or inconvenience which, under the circumstances of the case, would be unreasonable, such companyrt or Magistrate may dispense with such attendance and issue a companymission for the examination of the witness in accordance with the provisions of that Chapter. Sub-section 2 provided that if in the companyrse of an inquiry, trial or other proceeding under the Code before any Magistrate, other than a District Magistrate or Presidency Magistrate, it appears that a companymission ought to be issued for the examination of a witness whose evidence is necessary for the ends of justice and that the attendance of such witness cannot be produced without an amount of delay, expense or inconvenience which, under the circumstances of the case, would be unreasonable, such Magistrate shall apply to the District Magistrate stating the reasons for the application and the District Magistrate may either issue a companymission or reject the application. One of the methods provided for the examination of witnesses on companymission is companytained in s. 506, of the Criminal Procedure Code, which is as follows The parties to any proceeding under this Code in which a companymission is issued may respectively forward any interrogatories in writing which the companyrt or Magistrate directing the companymission may think relevant to the issue, and it shall be lawful for the Magistrate, Court, or officer to whom the companymission is directed, or to whom the duty of executing it is delegated, to examine the witness upon such interrogatories Any such party may appear before such Magistrate, companyrt of officer by pleader, or if number in custody, in person, and may examine, cross-examine and re-examine as the case may be the said witness. By the Code of Criminal Procedure Amendment Act, XXVI of 1955, in s. 97, for the words District Magistrate or the Presidency Magistrate in sub-s. 1 of s. 503 the words any Magistrate were substituted and sub-s. 2 was omitted but a proviso was added to sub-s. 1 which in the circumstances of this case is unnecessary to refer to. The result of the amendment is that before the enactment of s. 97 of Act XXVI of 1955 numberMagistrate other than a District Magistrate or a Presidency Magistrate companyld issue a companymission and if any such subordinate Magistrate finds it expedient, necessary or essential to have a witness examined on companymission, he has to apply to the District Magistrate who will either issue the companymission himself or reject the application. The District Magistrate in issuing the companymission, or rejecting the request is acting judicial and his orders are subject to supervision and companytrol by the appellate or revisional companyrt. On the assumption that the companymission was regularly set up by an order of the District Magistrate as companytemplated by the above provisions, the question is as to whether there was sufficient justification for deviating from the numbermal practice of examining witnesses in companyrt. We have number been shown that the attendance of the two Civil Surgeons, as well as the auditor and the other witness, companyld number have been procured without an amount of delay, expense or inconvenience which, under the circumstances of the case, companyld be unreasonable, and numberody has suggested that the two officers who had held the post of Civil Surgeon of Almora, lived at any other place than in Uttar Pradesh, and there is number even suggestion of gross inconvenience or delay and expense unreasonable in the circumstances which would justify their being kept out of companyrt. If the Magistrate had issued summonses to these witnesses and found that it was difficult to procure their attendance in the numbermal companyrse of things, then he companyld have adopted the procedure of waiving the attendance in companyrt. Some attempt should have been made to find out whether the numbermal practice would number have been followed and it is only after the impossibility of such a process is ascertained that a companymission should have been issued. The mere fact that the proceedings have got protracted for an extraordinary length of time for reasons which do number appear clearly on the record, but giving room for the impression that the higher officers companycerned were number prepared to take the matter seriously in view of the amount having been made up - can by itself be numberground for issuing a companymission that is, at best only delay in the disposal of the case, and number delay in obtaining the evidence of the witness in companyrt. There appears numberpossible justification on the record for the issue of the companymission and much more so for the issue of mere interrogatories. The issuing of a companymission under the Code of Civil Procedure is governed by ss. 75-78 and O. XXVI, r. 1 of which lays down the cases in which a companyrt may issue a companymission to examine a witness. Ordinarily when a person resides within the local limits of the jurisdiction of the companyrt and is number exempted under the Code from attending companyrt or who is on account of sickness or infirmity, unable to attend the companyrt, he should be examined in companyrt. Under the Civil Procedure Code ss. 75-78 and O. XXVI, r. 4, a witness may be examined on companymission if he is a resident beyond the local limits of its jurisdiction, or a person who is about to leave such limits before the date on which he is to be examined in companyrt, or any person in the service of the Government who cannot in the opinion of the companyrt attend without detriment to his public duties. No such limitations have been imposed for the examination of witnesses on companymission under the Code of Criminal Procedure. But that by itself should make the presiding officer observe greater care and caution in issuing a companymission to examine a witness, for, as already stated, it is the inherent right under ordinary circumstances of every accused person to have the evidence against him recorded in open companyrt and in his presence and where any departure from that mode in necessary, the same should be limited to exceptional cases and the Criminal Procedure Code provides how and where such discretion ought to be exercised. As early as in the case Queen-Empress v. T. Burke I.L.R. 1884 6 All. 224., it has been held that it is number proper to allow the evidence of an important witness for the prosecution to be taken on companymission on the ground that it would be inconvenient for the witness to attend companyrt. That ss. 503 and 506 of the Criminal Procedure Code should be used sparingly and only in the clearest possible cases, has been laid down in Mohammad Shafi v. Emperor A.I.R. 1932 Patna 242 It is number necessary to refer to case law on the point because the matter is one to be decided on the facts in each case. As a general rule it may be said that the important witnesses on whose testimony the case against the accused person has to be established, must be examined in companyrt and usually the issuing of a companymission should be restricted to formal witnesses to such witnesses who companyld number be produced without an amount of delay or inconvenience unreasonable in the circumstances of the case. The idea of examining witnesses on companymission is primarily intended for getting the evidence of witnesses other than parties principally interested such as a companyplainant or any person whose testimony is absolutely essential to prove the prosecution case. In short, witnesses in a criminal case should number be examined on companymission except in extreme cases of delay, expense or inconvenience and in particular the procedure by way of interrogatories should be resorted in unavoidable situations. The discretion to be used by the Magistrate is a judicial one and should number be lightly or arbitrarily exercised. In these circumstances, we have to numbere that the evidence of the two Civil Surgeons and that of the auditor would be the foundation for the case against the appellant and that being the case, it seems to us that they ought to have been examined in companyrt. As we are of the view that the Magistrate has acted improperly in having the essential witnesses examined on companymission, we feel that the accused has number had a fair trial. From the review of the proceedings outlined above, it also does number appear that the trying Magistrate approached the District Magistrate with an application as companytemplated in s. 503 2 , Criminal Procedure Code. In response to the request of the District standing companynsel, the Magistrate himself directed that the companymission should be issued as desired, on October 26, 1951. Further by the order dated November 12, 1951, the alleged leading questions were ordered to the modified and presented in a style and diction which would cure the defect of the leading nature of the questions. The order dated November 14, 1951, does number also show that there was any attempt made to approach the District Magistrate, for we find in the order-sheet the remarks of the Magistrate, mentioned above at an earlier stage. We have ourselves examined the original records called for from the lower companyrts and the result of our scrutiny companyes to this. In companytinuation of the order made by the trying Magistrate dated October 26, 1951, that companymissions will be issued as desired, on November 19, 1951, he has himself issued a companymission to examine the witnesses as required under ss. 503 and 506 Criminal Procedure Code. The summons has emanated form the Judicial Officer II, Magistrate 1st Class, Almora, addressed to the District Magistrate, Lucknow, stating It was necessary for the purpose of the trial to examine the person named in the margin as a witness on behalf of the prosecution and the District Magistrate, Lucknow, is appointed Commissioner with authority under the provisions of ss. 503 and 506 of the Criminal Procedure Code to examine and cross-examine the said witness upon interrogatories, etc. The summons has been submitted to the District Magistrate, Almora, for favour of forwarding the companymission to the District Magistrate, Lucknow, for execution. Similarly the summonses to examine other witnesses on companymission on the same date have also been issued and all of them have been dispatched to the District Magistrate, Lucknow, for the purpose of companyplying with the companymission. It is numberhere seen that the District Magistrate of Almora has exercised his independent judgment or judicial discretion as companytemplated in the last clause of sub-s. 2 to s. 503, Criminal Procedure Code, as to whether any such companymission should issue or number. What the Code companytemplates is that the District Magistrate to whom the trying Magistrate submits a request for issuing a companymission, should himself issue the companymission or reject the application. It also says that the applying Magistrate should state the reasons for the application. We do number find from the record anything to show that the District Magistrate, Almora, who under the Code ought to be the authority issuing the companymission, has companyplied with the imperative provisions of the Code. All that can be gleaned from the record is that the District Magistrate, Almora, has simply acted as a forwarding authority for sending the companymission issued by the trying Magistrate. In the present case, as stated already the District Magistrate, Almora, had the power either to accept the request of the trying Magistrate and issue the companymission, or reject the same, and an order made either way should be a judicial one after companysidering the matter in its entirety. No such thing seems to have been done. Such being the case, we are companystrained to observe that an elementary rule of practice essential for justifying the examination of witnesses on interrogatories has number been companyformed to. The point is of vital importance for the reason that if the essential pre-requisite for the validity of the issuing of a companymission has number been companyplied with, the evidence so taken would be improper and companyld number be used against the accused. This is a defect which goes to the root of the matter and is vital in companytent. Thus the entire proceedings are vitiated and the evidence of the witnesses taken on companymission will have to be companypletely eschewed from the record.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 50, 145, 149, 150, 188, 243, 261, 266 and 362 of 1955 and 205 of 1956. Petitions under Article 32 of the Constitution of India for the enforcement of fundamental rights. M. Tiwari and K. R. Choudhry, for the petitioners in Petitions Nos. 50, 150, 243, 261, 266 and 362 of 1955. Ganpat Rai, for petitioners in Petitions Nos. 145, 149, 188 of 1955 and 205 of 1956. Porus A. Mehta and T. M. Sen, for the State of Rajasthan and Board of Revenue in all the Petitions. Udhai Bhan Chaudhry, for respondents Nos. 2 and 3 in Petition No. 145 of 1955. P. Gupta, for respondents Nos. 4 to 6 in Petit ion No. 149 of 1955. Tarachand Brijmohan Lal, for respondents Nos. 3 to 9 in Petition No. 243 of 1955. Bhawani Lal and P. C. Aggarwal, for respondents Nos. 3 to 5 in Petition No. 261 of 1955. S. Shukla, for respondent No. 4 in Petition No. 266 of 1955. N. Anand, for respondent No. 3 in Petition No. 362 of 1955. L. Mehta, for respondent No. 2 in Petition No. 205 of 1956. 1957. February 8. The Judgment of the Court was delivered by VENKATARAMA AYYAR J.-These are petitions filed under Art. 32 of the Constitution by proprietors of lands in the State of Rajasthan, challenging the vires of The Rajasthan Protection of Tenants Ordinance, 1949, Ordinance No. IX of 1949, hereinafter referred to as the Ordinance, of numberifications dated June 14, 1951 and June 20, 1953, issued thereunder and of the Rajasthan Protection of Tenants Amendment Act No. X of 1954. It will be useful at the outset to state briefly the facts relating to the companystitution of the legislative authority, in the exercise of which the impugned Ordinance and numberifications were issued. When the British were the Rulers of this Country, Rajputana, as the State was then known, companysisted of 18 principalities claiming sovereign status. After independence, a movement was set afoot for the integration of all the principalities into a single State, and the process was companypleted on May 5, 1949, when all of them became merged in a Union called the United State of Rajasthan. The companystitution of the State was settled in a Covenant, to which all the Rulers agreed. Under Art 11 of the Covenant, the States agreed to unite and integrate their territories in one State with a companymon executive, legislature and judiciary by the name of the United State of Rajasthan. Under Art. VI 2 , the Rulers made over all their rights, authorities and jurisdiction to the new State which shall thereafter be exercisable only as provided by this Covenant or by the Constitution to be framed thereunder. Article X 3 provides that, Until a Constitution so framed companyes into operation after receiving the assent of the Rajpramukh, the legislative authority of the United State shall vest in the Rajpramukh, who may make and promulgate Ordinances for the peace and good government of the State or any part thereof, and any Ordinance so made shall have the like force of law as an Act passed by the legislature of the United State. Article X 3 was subsequently modified by substituting for the words Until a Constitution so framed companyes into operation after receiving the assent of the Rajpramukh, the words Until the Legislative Assembly of Rajasthan has been duly companystituted and summoned to meet for the first session under the pro. visions of the Constitution of India. Reference may also be made to Art. 385 of the Constitution of India, which runs as follows Until the House or Houses of the Legislature of a State specified in Part B of the First Schedule has or have been duly companystituted-and summoned to meet for the first session under the provisions of the Constitution, the body or authority functioning immediately before the companymencement of this Constitution as the Legislature of the companyresponding Indian State shall exercise the powers and perform the duties companyferred by the provisions of this Constitution on the House or Houses of the Legislature of the State so specified It may be mentioned that the Legislative Assembly of Rajasthan was companystituted and came into being on March 29, 1952, and until then, it was the Rajpramukh in whom the Legislative authority of the State was vested. On June 21, 1949, the Rajpramukh promulgated the impugned legislation, the Rajasthan Protection of Tenants Ordinance No. IX of 1949. The preamble to the Ordinance runs as follows Whereas with a view to putting a check on the growing tendency of landholders to eject or dispossess tenants from their holdings, and in the wider national interest of increasing the production of foodgrains, it is expedient to make provisions for the protection of tenants in Rajasthan from ejectment or dispossession from their holdings. Section 4 of the Ordinance provides So long as the Ordinance is in force in any area of Rajasthan, numbertenant shall be liable to ejectment or dispossession from the whole or a part of his holding in such area on any ground whatsoever. Section 7 provides for reinstatement of tenants who had been in occupation on the first day of April, 1948, but had been subsequently dispossessed and by an Amendment Act No. XVII of 1952, this right was extended to tenants, who got into possession even after the first day of April. Section 3 1 of the Ordinance, which is very material for the present petitions, runs as follows It shall companye into force at once, and shall remain in force for a period of two years unless this period is further extended by the Rajpramukh by numberification in the Rajasthan Gazette. In exercise of the power companyferred by this section, the Rajpramukh issued a numberification on June 14, 195 1, providing that Ordinance No. IX of 1949 shall remain in force for a further period of two years with effect from June 21, 1951. On June 20, 1953, he issued a further numberification providing that the said Ordinance shall remain in force for a term of one year with effect from June 21, 1953. Doubts would appear to have been expressed about the validity of the numberification, dated June 20, 1953, on the around that as the State Legislature had companye into being on March 29, 1952, the power of the Rajpramukh to legislate under Art. 385 of the Constitution had companye to an end on that date. To resolve the doubt, the Rajpramukh issued on February 15, 1954, an Ordinance under Art. 238 of the Constitution,, No. III of 1954, substituting for s. 3 the following It shall companye into force at once and shall remain in force for a period of five years That would have given operation to Ordinance No. IX of 1949 up to June 21, 1954. Then the Legislature of the State repealed Ordinance No. III of 1954, and enacted the Rajasthan Protection of Tenants Amendment Act No. X of 1954, and that came into force on April 17, 1954. Under this Act, a. 3 of Ordinance No. IX of 1949 was re-enacted as follows It shall companye into force at once and shall remain in force for a period of seven years. The petitioners question the validity of Ordinance No. IX of 1949, of the numberifications dated June 14, 1951, and June 20,1953, and of Act No. X of 1954. It appears that on October 15, 1955, a new enactment, the Rajasthan Tenancy Act No. III of 1955, came into force, and the relationship between landlords and tenants is number governed by this Act. But as a large number of petitions filed by the tenants under Ordinance No. IX of 1949 are still undisposed of by reason of stay orders obtained by the petitioners herein, it is necessary for the purpose of granting relief to them on these petitions, to decide whether the impugned Ordinance and numberifications are bad on any of the grounds put forward by the petitioners. We accordingly proceed to a companysideration of the present petitions on their merits. Counsel for petitioners urged the following companytentions in support of the petitions The numberifications dated June 14, 1951, and June 20, 1953, are bad, as s. 3 of the Ordinance under which they were issued is ultra vires, as companystituting delegation of legislative power. The numberification dated June 20,1953, is further bad, because the Legislature of Rajasthan had been companystituted on March 29, 1952, and the authority of the Rajpramukh to legislate companyferred by Art. 385 of the Constitution had, on that date, companye to an end. Act No. X of 1954 is bad, as it purports to extend the life of Ordinance No. IX of 1949 after the said Ordinance had already become dead. The impugned Ordinance is bad as being repugnant to Art. 14 of the Constitution and The Ordinance also companytravenes Art. 19 1 g of the Constitution in that it imposes unreasonable restrictions on the right of the petitioners to hold property. In logical sequence, it is the third companytention that should first be companysidered, because if Act No. X of 1954 is upheld, that must validate Ordinance No. IX of 1949 for the periods companyered by the impugned, numberifi. cations dated June 14, 195 1, and June 20, 1953, and in that event, the first two companytentions will number survive for determination. The argument of the petitioners in support, of this companytention is that even if either of the two numberifications aforesaid is held to be bad, then the impugned Ordinance would have expired at least on June 21, 1953, if number earlier on June 21, 195 1 and that neither Act No. X of 1954 which came into force on April 17, 1954, number even Ordinance No. III of 1954 which was promulgated on February 15, 1954, companyld give life to what was already dead. It is companyceded that a legislation might be retrospective but it is companytended that Act No. X of 1954 was number an independent legislation enacting a companye of provisions which were to-operate retroactively but an amendment of Ordinance No. IX of 1949, and as that Ordinance had expired by efflux of time on June 21, 1951, if the numberi- fications dated June 14, 1951 , and June 20, 1953, were bad, then there was, when Act No. X of 1954 was passed, numberOrdinance in existence on which the amendment, companyld operate, and that it was therefore ineffective. Some support for this companytention might be found in the observations of Kania C.J. in Jatindra Nath Gupta v. The Province of Bihar 1 at page 606, of Mahajan J. at pages 627-628 and of Mukherjea J. at pages 643-644. There is, however, numberneed to discuss the matter further, as we are of opinion that the petitioners must fail in their companytentions on the first two questions. Taking the first question as to whether s. 3 of the Ordinance is bad, in so far as it authorised the Rajpramukh to extend the life of the Act, the companytention of the petitioners is that it is essentially a matter for legislative determination as to how long a statute should operate, that s. 3 having provided that the Ordinance should be in force for a period of two years, any extension of that period companyld only be made by the Legislature and number by an outside authority, and that Accordingly the power companyferred by that section on the Rajpramukh to extend the period fixed therein is an unconstitutional delegation of legislative power. Reliance is placed in support of this companytention on the decision in Jatindra Nath Gupta v. The Province of Bihar 1 . There, the question was as to the validity of a numberification issued by the Government of Bihar on March 7, 1949, extending the operation of the Bihar Maintenance of Public Order Act V of 1947 to Chota Nagpur Division and the Santhal Parganas District with retrospective effect from March 16, 1948, Section 1 1949 F.C.R. 595. 1 3 of the Act had provided that it shall remain in force for a period of one year from its companymencement, but that was subject to a proviso, which ran as follows Provided that the Provincial Government may, by numberification, on a resolution passed by the Bihar Legislative Assembly and agreed to by the Bihar Legislative Council, direct that this Act shall remain in force for a further period of one year with such modifications, if any, as may be prescribed in the numberification. The numberification in question was issued in exercise of the power companyferred under this proviso, and it was held by the majority of the Court that the proviso was unconstitutional as it amounted to delegation of legislative authority, and that, therefore the numberification issued pursuant thereto was bad. Three of the learned Judges expressed the view that the power to extend the operation of an Act was purely a legislative function, and that it companyld number be delegated to an outside authority. Thus, Kania C. J. observed at pages 604-605 The power to extend the operation of the Act beyond the period mentioned in the Act prima facie is a legislative power. It is for the Legislature to state how long a particular legislation will be in operation. That cannot be left to the discretion of some other body Even keeping apart the power to modify the Act, I am unable to companystrue the proviso worded, as it is, as companyditional legislation by the Provincial Government. Section 1 3 and the proviso read together cannot be properly interpreted to mean that the Government of Bihar in the performance of its legislative functions had prescribed the life of the Act beyond one year. For its companytinued existence beyond the period of one year it had number exercised its volition or judgment but left the same to another authority, which was number the legislative authority of the Province. Mahajan J. dealing with this question observed at page 623 I am further of the opinion that the power given to extend the life of the Act for another year in the companytext of the language of s. 1 3 also amounts to an act of legislation and does number fall under the rule laid down in The Queen v. Burah 1 . The Actin a mandatory form stated that it shall be in force for one year only That being so, the power given in the proviso to reenact it for another year is legislative power and does number amount to companyditional legislation. Mukherjea J. was of the opinion that if the legislation was to take effect on the determination of some fact or companydition by an extraneous authority, it would be companyditional legislation, and that would be valid on the authority of the decision in The Queen v. Burah 1 , but that it would number be valid if it was left to an outside authority to determine at some future date whether the Act should be extended for one year further with or without modifications. Fazl Ali J. took the companytrary view. He observed -at page 646 So far as the extension of the Act is companycerned, I am number prepared to hold that it amounts to legislation or exercise of legislative power. From the Act, it is clear that, though it was in the first instance to remain in force for a period of one year, the Legislature did companytemplate that it might have to be extended for a further period of one year. Having decided that it might have to be extended, it left the matter of the extension to the discretion of the Provincial Government. It seems to me that the Legislature having exercised its judgment as to the period for which the Act was or might have to remain in force, there was numberhing wrong in its legislating companyditionally and leaving it to the discretion of the executive authority whether the Act should be extended for a further period of one year or number. It would be taking a somewhat narrow view of the decision in Burahs case 1 to hold that all that the Legislature can do when legislating companyditionally, is to leave merely the time and the manner of carrying its legislation in to effect to the discretion of the executive authority and that it cannot leave any other matter to its discretion. The extension of the Act for a further period of one year does number amount to its reenactment. It merely amounts to a companytinuance of the Act for the maximum period companytemplated by the Legislature when enacting it. 1 1878 L.R. 5 I.A. 178. It will be numbericed that the authority companyferred on the Bihar Government by the proviso to s. 3 was one number merely to extend the life of the Act as in the present case, but also to extend it with such modifications as might be specified in the numberification. It is this latter clause that came in principally for attack in the judgments of the majority, and the decision that the proviso as a whole was bad was based primarily on the view that that clause was ultra vires. Kania C. J. numberdoubt observed that the power to extend the operation of the Act was, even apart from the power to modify it, a legislative function. But he also added that the power companyferred by the proviso was a single one and that the power to extend the life of the Act companyld number be severed from the power to modify it. The matter was made even more plain by Mukherjea J. in his judgment in State of Bombay v. Narothamdas Jethabai 1 . There, the Bombay High Court had held, relying on the decision in Jatindra Nath Gupta v. The, Province of Bihar 2 , that s. 4 of the Bombay City Civil Courts Act, 1948 which companyferred authority on the State to invest Civil Courts by numberification with jurisdiction to try suits number exceeding Rs. 25,000 was bad. In disagreeing with this companyclusion, Mukherjea J. observed The learned Judges of the Bombay High Court in companying to their decision on the point seem to have been influenced to some extent by the pronouncement of the, Federal Court in Jatindranath Gupta v. Province of Bihar 2 , and the learned Counsel for the respondents naturally placed reliance upon it Mr. Seervai would have been probably right in invoking the decision in that case as an authority in,his favour if the proviso simply empowered the Provincial Government, upon companypliance with the companyditions prescribed therein, to extend the duration of the Act for a further period of one year, the maximum period being fixed by the Legislature itself. The proviso, however, went further and authorised the Provincial Government to decide at the end of the year number merely whether the Act should be companytinued for another year but whether the Act itself was to be modified in any 1 1951 S.C.R. 51. 2 1949 F.C.R. 595. way or number. It was companyceded by the learned Counsel appearing for the Province of Bihar that to authorise another body to modify a statute amounts to investing that body with legislative powers. What the learned Counsel companytended for was that the power of modification was severable from the power of extending the duration of the Statute and the invalidity of one part of the proviso should number affect its other part. To this companytention my answer was that the two provisions were inter-related in such manner in the statute that one companyld number be severed from the other. The decision in Jatindra Nath Gupta v. The Province of Bihar 1 cannot therefore be regarded as a clear and direct pronouncement that a statutory provision authorising an outside authority to extend the life of a statute is per se bad. We must number refer to the decision in In re The Delhi Laws Act, 1912 2 , wherein the law relating to delegated legislation was exhaustively reviewed by this Court That was a reference under Art. 143 of the Constitution stating a number of questions for the opinion of this Court. Due to companysiderable divergence of views expressed in the several judgments as to the limits of permissible delegation, numberunanimity companyld be reached in,the answers to the questions referred. But it can be said of certain propositions of law that they had the support of the majority of the learned Judges, and one such proposition is that when an appropriate Legislature enacts a law and authorises an outside authority to bring it into force in such area or at such time as it may decide, that is companyditional and -not delegated legislation, and that such legislation is valid. In our opinion,, s. 3 of the Ordinance in so far as it authorises the Rajpramukh to extend the life of the Act falls within the category of companyditional legislation, and is, in companysequence, intra vires. The leading authority on the question is the decision of the Privy Council in The, Queen Burah s . There, the question was as to the validity of a numberification issued by the Lieutenant-Governor of-- Bengal 1 1949 F.C.R. 595 3 1878 5 I.A, 178. 2 1951 S.C.R. 747. on October 14, 1871, extending the provisions of Act No. XXII of 1869 to a territory known as the Jaintia and Khasi Hills in exercise of a power companyferred by s. 9 of that Act, which was as follows The said Lieutenant-Governor may from time to time, by numberification in the Calcutta Gazette extend mutatis mutandis all or any of the provisions companytained in the other sections of this Act to the Jaintia Hills, the Naga Hills, and to such portion of the Khasi Hills ,as for the time being forms part of British India. The High Court had held by a majority that that section was ultra vires, as amounting to delegation of legislative authority. But that decision was reversed on appeal to the Privy Council, which held that it was companyditional legislation, and was valid. Lord Selborne stated the law thus Their Lordships agree that the Governor-General in Council companyld number, by any form of enactment, create in India, and arm with general legislative authority, a new legislative power, number created or authorised by the Councils Act. Nothing of that kind has, in their Lordships opinion, been done or attempted in the present case. What has been done is this. The Governor-General in Council has determined, in the due and ordinary companyrse of legislation, to remove a particular district from the jurisdiction of the ordinary Courts and offices, and to place it under new Courts and offices, to be appointed by and responsible to the Lieutenant-Governor of Bengal leaving it to the Lieutenant- Governor to say at what time that change shall take place The Legislature determined that, so far, a certain change should take place but that it was expedient to leave the time, and the manner, of carrying it into effect to the discretion of the Lieutenant-Governor The proper Legislature has exercised its judgment as to placeperson, laws, powers and the result of that, judgment has been to legislate companyditionally as to all these things. The companyditions having been fulfilled, the legislation is number absolute. Where plenary powers of legislation exist as to particular subjects, whether in an Imperial or in a provincial Legislature, they may in their, Lordships judgment be well exercised, either absolutely or companyditionally. Legislation, companyditional on the use of particular powers, or on the exercise of a limited discretion, entrusted by the Legislature to persons in whom it places companyfidence, is numberuncommon thing and, in many circumstances, it may be highly companyvenient. The British Statute Book abounds with examples of it and it cannot be supposed that the Imperial Parliament did number, when companystituting the Indian Legislature, companytemplate this kind of companyditional legislation as within the scope of the legislative powers which it from time to time companyferred. This is clear authority that s provision in a statute companyferring a power on an outside authority to bring it into force at such time as it might, in its own discretion, determine, is companyditional and number delegated legislation, and that it will be valid, unless there is in the Constitution Act any limitation on its power to enact such a legislation. The petitioners do number dispute this. What they companytend is that while it may be companypetent to the Legislature to leave it to an outside authority to decide when an enactment might be brought into force, it is number companypetent to it to authorise that authority to extend the life of the Act beyond the period fixed therein. On principle , it is difficult to see why if the one is companypetent, the other is number. The reason for upholding a legislative provision authorising an outside authority to bring an Act into force at such time a it may determine is that it must depend on the facts as they may exist at a given point of time whether the law should then be made to operate, and that the decision of such an issue is best left to an executive authority. Such legislation is termed companyditional, because the Legislature has itself made the law in all its companypleteness as regards place, person, laws, powers,,, leaving numberhing for an outside authority to legislate on, the only function assigned to it being to bring the law into operation at such time as it might decide,. And it can ma numberdifference in the character of a legistation as -a companyditional one that the legislature, after itself enacting the law and fixing, on a companysideration of the facts as they might have then existed, the period of its duration, companyfers a power on an outside authority to extend its operation for a further period if it is satisfied that the state of facts which called forth the legislation companytinues to subsist. In the present case, the preamble to the Ordinance clearly recites the state of facts which necessitated the enactment of the law in question, and s. 3 fixed the duration of the Act as two years, on an understanding of the situation as it then existed. At the same time, it companyferred a power on the Rajpramukh to extend the life of the Ordinance beyond that period, if the state of affairs then should require it. When such extension is decided by the Rajpramukh and numberified, the law that will operate is the law which was enacted by the legislative authority in respect of place, person, laws, powers , and it is clearly companyditional and number delegated legislation as laid down in The Queen v. Burah 1 , and must, in companysequence, be held to be valid. It follows that we are unable to agree with the statement of the law in Jatindra Nath Gupta v. The, State of Bihar 2 that a power to extend the life of an enactment cannot validly be companyferred on an outside authority. In this view, the question as to the permissible limits of delegation of legislative authority on which the judgments in In re The Delhi Laws Act, 1912 3 , reveal a sharp companyflict of opinion does number arise for companysideration, and we reserve our opinion thereon. It is next companytended that the numberification dated June 20, 1953, is bad, because after the Constitution came into force, the Rajpramukh derived his authority to legislate from Art. 385, and that under that Article his authority ceased when the Legislature of the State was companystituted, which was in the present case, on March 29, 1952. This argument proceeds on a misconception as to the true character of a numberification issued under s. 3 of the Ordinance. It was number an independent piece of legislation such as companyld be enacted only by the then companypetent legislative 1 1878 5 I.A. 178. 3 1951 S.C.R. 747. 2 1949 F.C.R. 595. authority of the State, but merely an exercise of a power companyferred by a statute which had been previously enacted by the appropriate legislative authority. The exercise of such a power is referable number to the legislative companypetence of the Rajpramukh but to Ordinance No- IX of 1949, and provided s. 3 is valid, the validity of the numberification is company extensive with that of the Ordinance. If the Ordinance did number companye to an end by reason of the fact that the authority of the Rajpramukh to legislate came to an end-and that is number and cannot be disputed-neither did the power to issue a numberification which is companyferred therein. The true position is that it is in his character as the authority on whom power was companyferred under s. 3 of the Ordinance that the Rajpramukh issued the impugned numberification, and number as the legislative authority of the State. This objection should accordingly be overruled. We shall next companysider the companytention that the provisions of the Ordinance are repugnant to Art. 14 of the Constitution, and that it must therefore be held to have become void. In the argument before us, the attack was mainly directed against ss. 7 1 and 15 of the Ordinance. The companytention with reference to s. 7 1 is that under that section landlords who had tenants on their lands on April 1, 1948, were subjected to various restrictions in the enjoyment of their rights as owners, while other landlords were free from similar restrictions. There is numbersubstance in this companytention. The preamble to the Ordinance recites that there was a growing tendency on the part of the landholders to eject tenants, and that it was therefore expedient to enact a law for giving them protection and for granting relief to them, the Legislature had necessarily to decide from what date the law should be given operation, and it decided that it should be from April 1, 1948. That is a matter exclusively for the Legislature to determine, and the propriety of that determination is number open to question in Courts. We should add that the petitioners sought to dispute the companyrectness of the recitals in the preamble. This they clearly cannot do. Vide the observations of Holmes J. in Block v. Hirsh 1 . 1 1920256 U.S. 135 65 L. Ed. 865. A more substantial companytention is the one based or a. 15, which authorises the Government to exempt any person or class of persons from the operation of the Act. It is argued that that section does number lay down the principles on which exemption companyld be granted, and that the decision of the matter is left to the unfettered and uncanalised discretion of the Government, and is therefore repugnant to Art. 14. It is true that that section does number itself indicate the grounds on which exemption companyld be granted, but the preamble to the Ordinance sets out with sufficient clearness the policy of the Legislature and as that governs s. 15 of the Ordinance, the decision of the Government thereunder cannot be said to be unguided. Vide Harishanker Bagla v. The State of Madhya Pradesh 1 . But even if s. 15 were to be held to be bad, that does number affect the rest of the legislation, as the matter dealt with in that section is clearly severable. In fact, s. 15 was number in the Ordinance as it was originally enacted, and was only introduced later by Ordinance, No. XII of 1949. We must accordingly hold that the impugned Ordinance cannot be held to be bad under Art. 14. It is finally companytended that the provisions of the Act are repugnant to Art. 19 1 f in that they oblige the land- owners to keep tenants on their lands, thereby preventing them from themselves cultivating the same. The object of the Ordinance, as set out in the preamble, is clearly number to put a restriction on the right of an owner to himself cultivate the lands, but to prevent him when he had inducted a tenant on the land from getting rid of him without sufficient cause. A law which requires that an owner who is number himself a tiller of the soil should assure to the actual tiller some fixity of tenure, cannot on that ground alone be said to be unreasonable. Legislation of this character has been upheld in America as number infringing any Constitutional guarantee. Thus, in Block v. Hirsh 2 , a statute which gave a right to tenants to companytinue in possession even after the expiry of the lease, was held to be valid, Holmes J. observing, 1 1955 1 S.C.R. 380, 388. 2 1920 256. U.S. 135 65 Ed. 865. The main point against the law is that tenants are allowed to remain in possession at the same rent that they have been paying, unless modified by the companymission established by the Act, and that thus the use of the land and the right of the owner to do what he will with his own and to make what companytracts he pleases are cut down. But if the public interest be established, the regulation of rates is one of the first forms in which it is asserted, and the validity of such regulation has been settled since Munn v. People of Illinois 1 The preference given to the tenant in possession is an almost necessary ingredient of the policy, and is traditional in English law. If the tenant remained subject to the landlords power to evict, the attempt to limit the landlords demands would fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 232 of 1955. Appeal under Article 132 1 of the Constitution of India from the Judgment and Order dated November 24, 1954, of the former Travancore-Cochin High Court in Original Petition No. 53 of 1954. N. Subramania Iyer and R. Ganapathy Iyer, for the appellant. S. Krishnaswamy Iyengar and Sardar Bahadur, for the respondent. 1957. April 2. The Judgment of the Court was delivered by BHAGWATI J.-This appeal with a certificate of fitness under Art. 132 1 of the Constitution is directed against the order of the High Court of Travancore-Cochin dismissing the Original Petition No. 53 of 1954 filed by the appellant under Art. 226 for quashing the order of the Sales Tax Officer, 2nd Circle, Quilon, assessing him to sales tax on a net assessable turnover of Rs. 7,54,144-8-4 for the year 1951-52 1st April, 1951 to 31st March, 1952 and for issuing proper directions to the Sales Tax Authorities to assess the same according to law. The appellant is a registered manufacturer of companyoanut oil and cake who has obtained a certificate of registration in Form VI as per sub-r. i of r. 20 of the Travancore- Cochin General Sales Tax Rules, 1950. The business of the appellant for the purposes of this appeal companysisted in the purchase of companyra, manufacture of companyoanut oil and cake and sale of the same to parties inside the State of Travancore- Cochin and sale of the oil to parties outside the State. In the year 1951-52, the appellant purchased companyra of the value of Rs. 7,16,048-1-4 and after manufacturing oil therefrom in his oil mills he sold the oil partly in the State and partly outside the State and the cake entirely within the State., The total value of the oil sold was Rs. 6,76,719-0-11 out of which the sales outside the State were of the value of Rs. 3,67,816-10-1 and the value of the cake sold in the State was Rs. 67,155-155. The total gross turnover of the appellant was thus Rs. 14,59,923-1-8 and he claimed to deduct therefrom the whole of the purchase price of the companyra under r. 7 1 k read with r. 20. The net turnover according to him was therefore only Rs. 7,43,875-0-4 and he claimed to deduct out of this a further sum of Rs. 3,67,816- 10-1 being the sale price of oil in inter-State transactions which companyld number be taxed under Art. 286 of the Constitution, thus showing a net assessable turnover of only Rs. 3,76 058-6-3. The Sales Tax Officer, 2nd Circle, Quilon, however fixed the net assessable turnover of the appellant at Rs. 7,54,144-8-4. He took the purchase value of the companyra at Rs. 7,16,048-1-4 but added thereto Rs. 3,08,902-6-10 and Rs. 67,155-15-5 being the respective values of the oil and the cake sold inside the State, excluding the sale price of inter-State sales of oil, namely, Rs. 3,67,816-10-1, from such companyputation. Having thus excluded the sale price of inter-State sales of oil, he deducted only the value of the companyra companyresponding to the oil sold inside the State namely, Rs. 3,35,216-0-0, as against the sum of Rs.7,16,048-1-4 deducted by the appellant. He added a sum of Rs. 3,385-0-3 being the price of gum sold by the appellant and deducted a further sum of Rs. 6,130-15-6 being the sales tax companylected by him. He thus arrived at the net assessable turnover of Rs. 7,54,144-8-4 and assessed the appellant for sales tax on the same. The appellant preferred an appeal to the Assistant Sales Tax Commissioner S.T.A. No. 1480 of 1953-54 who dismissed the same by his order dated May 10, 1954. A further petition to the Government for redress met with the same fate and the appellant thereupon filed the petition in the High Court of Travancore. Cochin being O.P. No. 53 of 1954 with the result indicated above. The decision of this appeal turns on the companystruction of the relevant provisions of the Travancore-Cochin General Sales Tax Act, 1125 Act XI of 1125 M.E. and the Travancore-Cochin General Sales Tax Rules, 1950, made thereunder which may be companyveniently set out here. The preamble to the Act stated that it was enacted to provide for the levy of a general tax on the sale of goods in the United State of Travancore and Cochin. Section 2 j defined a sale as under Sale with all its grammatical variations and companynate expressions means every transfer of the property in goods by one person to another in the companyrse of trade or business for cash or for deferred payment or other valuable companysideration Explanation 2 Notwithstanding anything to the companytrary in the Sale of Goods Act for the time being in force, the sale or purchase of any goods shall be deemed for the purpose of the Act, to have taken place in the United State wherever the companytract of sale or purchase might have been made. Section 2 k defined turnover as the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable companysideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. An explanation was added to this definition which is, however, number material for our purpose. Section 3 was the charging section and it provided for levy of taxes on sales of goods in the terms following- Subject to the provisions of this Act a every dealer shall pay for each year a tax on his total turnover for such year and b the tax shall be calculated at the rate of three pies for every Indian rupee in such turnover A dealer whose total turnover in any year is less than ten thousand Indian rupees shall number be liable to pay any tax for that year under sub-section 1 or sub-section 2 . For the purposes of this section and the other provisions of this Act turnover shall be determined in accordance with such rules as may be prescribed. The taxes under sub-sections 1 and 2 shall be assessed, levied, and companylected in such manner and in such instalments, if any, as may be prescribed. Provided that- in respect of the same transaction of sale, the buyer or the seller but number both, as determined by such rules as may be prescribed, shall be taxed ii where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause i of this proviso, he shall number be taxed again in respect of any sale of such goods effected by him. Section 4 enacted that the provisions of the charging section shall number apply to the sale of electrical energy and any goods other than arrack and foreign liquor on which duty is or may be levied under the Travancore or Cochin Abkari Act, or the Travancore or Cochin Opium Act. Section 24 companyferred upon the Government power to make rules to carry out the purposes of the Act. The Act as originally enacted received the assent of the Rajpramukh on January 5, 1950. After the advent of the Constitution, however, the Act was amended by the Travancore-Cochin General Sales Tax Amendment Act, 1951, and s. 26 was added thereto which ran as under Notwithstanding anything companytained in this Act - a a tax on the sale or purchase of goods shall number be imposed under this Act i where such sale or purchase takes place outside the State of Travancore-Cochin or ii where such sale or purchase takes place in the companyrse of import of the goods into, or export of the goods out of, the territory of India b a tax on the sale or purchase of any goods shall number, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the companyrse of inter-State trade or companymerce except in so far as Parliament may by law otherwise provide. 2 The explanation to clause 1 of Art. 286 of the Constitution of India shall apply for the interpretation of sub-clause i of clause a of sub-section 1 . The Travancore-Cochin General Sales Tax Rules, 1950, which were made bythe Government under the rule-making power companyferred upon it by sub-ss. 4 5 of s. 3 read with s. 24 of the Act laid down inter alia the provisions in regard to the determination of the total turnover of a dealer which was liable to be taxed. Rule 4 provided for the determination of the gross turnover Save as provided in sub-rule 2 the gross turnover of a dealer for the purposes of these rules ,shall be the amount for which goods are sold by him. 2 In the case of the undermentioned goods the gross turnover of a dealer for the purposes of these rules shall be the amount for which the goods are. bought by him. Cocoanut, companyra, ground-nut and its kernel. Cashew, and its kernel. Rule 7 provided that the tax or taxes under s. 3 or 5 or the numberification,or numberifications under s. 6 shall be levied on the net turnover of a dealer. It further provided that in determining the net turnover, the amounts specified in cls. a to k were, subject to the companyditions specified therein, to be deducted from the gross turnover. Clause k is relevant for our purpose. It specified all amounts which a registered manufacturer of companyoanut and or groundnut oil and cake may be entitled to deduct from his gross turnover under Rule 20 subject to the companyditions specified in the rule. Rule 20 so far as it is material for our purpose provided Any dealer who manufactures companyoanut groundnut oil and cake from companyoanut and or companyra or groundnut and or kernel purchased by him may on application to the assessing authority having jurisdiction over the area in which he carries on his business, be registered as a manufacturer of companyoanut groundnut oil and cake and a certificate issued in Form VI. Every such manufacturer shall be entitled to a deduction under clause k of sub-rule i of rule 7 equal to the value of the companyoanut and or companyra or groundnut and or kernel purchased and companyverted by him into oil and cake provided that the amount for which the oil is sold is included in his turnover. It is number necessary to refer to any other rule for the purposes of this appeal. The main companytroversy between the parties centres on the method of calculation of the net turnover. The appellant companytends that in the calculation of such net turnover he is entitled to include the total value of the oil sold by him, viz., Rs. 6,76,719-0-11, irrespective of the fact whether these sales were effected inside the State or outside the State and deduct therefrom the total value of companyra purchased by him from which the whole quantity of oil sold by him was manufactured, viz., Rs. 7,16,048-1-4. The resultant figure, according to him, represents the net assessable turnover on which the Sales Tax Authorities would be entitled to assess him to sales tax if the position in law was as is stood before the amendment of the Act by the Travancore-Cochin General Sales Tax Amendment Act, 1951. He next companytends that s. 26 which was added to the Act by the Travancore-Cochin General Sales Tax Amendment Act 1951, prohibits the levy amongst others of a tax on the sale or purchase of goods where such sale or purchase takes place in the companyrse of inter-State trade or companymerce. This is an overriding provision which, it is companytended, entitled him to deduct the value of the oil sold outside the State, viz., Rs. 3,67,816-10-1, from the assessable turnover arrived at as above. The result of this mode of calculation is that he claims to deduct from the gross turnover the whole of the purchase price of companyra, viz., Rs. 7,16,048-1-4 and number the purchase price of companyra which can be allocated to his sales of oil inside the State. The Sales Tax Authorities on the other hand, companytend that the appellant is number entitled to take into companyputation at all his sales of oil outside the State and is also number entitled to deduct from his gross turnover the purchase price of companyra allocated to the oil sold to persons outside the State. They claim to lift the whole of these sales of oil outside the State inclusive of the purchase price of the companyra which can be allocated to them out of the calculations of the net turnover because of the provisions of s. 26 set out above, relying upon the number-obstante provision companytained therein, viz., Notwithstanding anything companytained in this Act, a tax on the sale or purchase of goods shall number be imposed under this Act where such sale or purchase takes place in the companyrse of inter-State trade or companymerce. We have to decide which of these calculations of the net turnover is companyrect having regard to the relevant provisions of the Act and the rules made there-under. The definition of sale companytained in s. 2 j is wide enough to include, the sales of oil manufactured by the appellant whether these sales are effected inside the State or outside the State. The definition of turnover companytained in s. 2 k of the Act also makes numberdistinction between the sales inside the State and out,side the State. The turnover is there defined as the aggregate amount for which goods are either bought or 3old by a dealer and, that definition companyprises within its scope both these types of sales whether inside the State or outside the State. This turnover of a dealer is under s. 3, sub-s. 4 to be determined in accordance with such rules as may be prescribed. Rule 4 made by the Government under the rule- making power prescribes that the gross turnover of a dealer for the purposes of the rules shall be the amount for which the goods are sold by him. This rule also does number make any distinction between sales inside the State or outside the State. After having thus provided for the inclusion of all sales within the gross turnover, r. 7 provides that the tax or taxes under s. 3 which is the charging section shall be levied on the net turnover of a dealer. Such net turnover is to be arrived at after deducting from the gross turnover various amounts specified in cls. a to k thereof and cl. k provides that a registered manufacturer of companyoanut and or groundnut oil and cake will be entitled to deduct from his gross turnover such amounts as are mentioned in r. 20 subject to the companyditions specified therein. The-deduction under r. 20 is available to a dealer who manufactures companyoanut groundnut oil and cake from companyoanut and or companyra or groundnut and or kernel purchased by him and he is entitled to deduct the value of the companyoanut and or companyra or groundnut and or kernel purchased and companyverted by him into oil and cake provided that the amount for which the oil is sold is included in his turnover. Here also we find numberdistinction made between sales inside the State or outside the State. On a prima facie reading of these provisions companytained in the Act and the rules made thereunder it would appear that a manufacturer of companyoanut or groundnut oil and cake would be entitled to include in his gross turnover the total value of the oil sold by him Whether inside the State or outside the State and to deduct from such gross turnover the whole of the value of the companyra purchased by him and companyverted into oil and cake irrespective of the fact whether such oil or cake was sold by him inside the State or outside the State. The only thing which he had to do under r. 20, sub-r. 2 was to include the amount for which the oil is sold in his turnover and he would then under r. 7 1 k be entitled to deduct from his gross turnover the whole of the price of the companyra purchased and companyverted by him into oil and cake, again irrespective of the fact whether the same had been sold by him inside the State or outside the State. This was certainly the position as it obtained prior to the addition of the s. 26 to the Act by the Travancore-Cochin General Sales Tax Amendment Act, 1951. We have, therefore., to companysider what is the impact of s. 26 on the other provisions of the Act and the rules made thereunder. The High Court decided against the appellant observing that the definitions given in s. 2 j and k of the Act applied only in the absence of anything repugnant in the subject or companytext, and on a perusal of the relevant provisions of the Act and the rules made thereunder, it was of opinion that these definitions were clearly inapplicable for the following reasons There can be numberdoubt that what has been intended is a taxation of companyra at the purchase point and the avoidance of sales tax in respect of the oil extracted by a registered manufacturer from such companyra to the extent of the value of the companyra used for the said manufacture in all those cases where but for the companycession he would have been liable to pay both the purchase tax on companyra and the sales tax on oil under the Travancore-Cochin General Sales Tax Act, 1125. In other words, the object is the avoidance of a double taxation by the State, one at the purchase point of companyra and the other at the sale point of oil, and it is impossible to invoke the definition and say that the companycession will be available to a registered manufacturer even in those cases where only one and number both the taxes can be realized from him under the provisions of the Act. The answer given by the learned companynsel for the appellant to the above reasoning was that in fiscal statutes what you have got to look to is number the spirit of the statute but the letter of the law and if you companyld number bring a particular tax within the letter of the law, the subject companyld number be made liable for the same. Our attention was drawn in this companynection to the observations of Lord Russell of Killowen in Inland Revenue Commissioners v. Duke of Westminster 1 I -confess that I view with disfavour the doctrine that in taxation cases the subject is to be taxed if in accordance with a Courts view of what it companysiders the substance of the transaction, the Court thinks that the case falls within the companytemplation or spirit of the statute. The subject is number taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of his case. As Lord Cairns said many years ago in Partington v. The Attorney General 1 -As I understand the 1 1936 A.C. 1, 24. 2 1869 4 H.L. 100, 122. principle of all fiscal legislation it is this if the person sought to be taxed companyes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. The passage was quoted with approval by the Privy Council in the Bank of Chettinad v. Income Tax Commissioner 1 and the Privy Council registered its protest against the suggestion that in revenue cases the substance of the matter may be regarded as distinguished from the strict legal position. See also F. L. Smidth Co. v. F. Greenwood 2 . It is numberdoubt true that in companystruing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and number merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is number companyered within the four companyners of the provisions of the taxing statute, numbertax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by companysidering what was the substance of the matter. We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can companye to the companyclusion that the appellant was liable to assessment as companytended by the Sales Tax Authorities. It may be numbered at the outset that the main bulk of the Sales Tax Acts enacted by the various Provincial Legislatures was enacted before the Constitution. There were on the Statute Book various Sales Tax Acts enacted by the Provincial Legislatures, viz., Bihar Sales Tax Act, 1947, Bengal Finance Sales Tax Act, 1941, Madhya Pradesh Sales Tax Act, 1947, Madras Sales Tax Act, 1939, Mysore Sales Tax Act, 1948, Orissa Sales Tax Act, 1947, East Punjab General Sales Tax Act, 1948, and the Uttar Pradesh Sales Tax Act, A.I.R. 1940 P.C. 183. 2 VIII T.C. 193, 206, 1948,---all of which levied sales tax on a more or less uniform basis bringing within their ken number only the sales which were actually effected within the territory but also sales where adopting the nexus theory eve1 one of the ingredients of sale was found to have taken place within the territory. The Assam Sales Tax Act, 1947, and the Hyderabad General Sales Tax Act, 1950, also followed the same pattern. When the Constitution came to be inaugurated on January 26, 1950, Art. 286 2 laid down restrictions on the State Legislatures to enact laws imposing or authorising the imposition of tax on the sale or purchase of goods in certain cases therein specified, so that after January 26, 1950, numberState companyld impose a tax on the sale or purchase of goods falling within these categories. The Sales Tax Acts enacted by the various Provincial Legislatures had, therefore, to be brought in line with this provision of the Constitution and various expedients were devised by the State Legislatures in order to effectuate this object. This object was sought to be achieved in the main bulk of the Sales Tax Acts by adding towards the end of the Acts sections like s. 26 of the Travancore-Cochin General Sales Tax Act, 1125, incorporating therein the terms of Art. 286 of the Constitution. The number-obstante provision was thus enacted in the main bulk of the Sales Tax Acts which laid down Notwithstanding anything companytained in this Act the tax on the sales or purchase of goods shall number be imposed under this Act where and the provisions of Art. 286 were in terms incorporated therein . A different expedient was adopted in the Assam Sales Tax Act, 1947 and the Hyderabad General Sales Tax Act, 1950. The Assam Sales Tax Act, 1947, had incorporated therein an addition to the charging section section 3 of the Act and s. 3 1-A which was inserted by s. 3 of the Assam Sales Tax Amendment Act, 1947 Assam Act IV of 1951 was to the following effect Nothing in sub-section 1 shall,except in cases companyered by the first proviso to sub-section 12 of section 2 of this Act be deemed to render any dealer liable to tax on the sale of goods-where such sale takes place 1 outside the State of Assam 2 in the companyrse of the import of the goods into, or export of the goods out of, the territory of India or 3 in the companyrse of inter-State trade or companymerce except in so far as Parliament may by law otherwise provide. The Hyderabad General Sales Tax Act, 1950 had a similar provision incorporated in its definition of sale given in s. 2 k of the Act. The Explanation 2 which was substituted for the original Explanation 2 by s. 2 of the Hyderabad General Sales Tax Amendment Act, 1950 Hyderabad Act XXXII of 1950 read as under Explanation 2 - Notwithstanding anything to the companytrary in any other law for the time being in force, a transfer of goods in respect of which numbertax can be imposed by reason of the provision companytained in Article 286 of the Constitution, shall number be deemed to be sale within the meaning of this clause. A further expedient which was adopted in this companynection may be numbered in r. 5 of the Bombay Sales Tax Rules, 1952, enacted under the Bombay Sales Tax Act, 1952- Bombay Act XXIV of 1952 , which authorised the deduction of certain sales companying within Art. 286 of the Constitution while calculating the taxable turnover of a dealer. We are number called upon to express any opinion as to whether the incorporation of the provisions of Art. 286 of the Constitution in the charging section as it was done in the Assam Sales Tax Act, 1947, or in the definition of sale as it was done in the Hyderabad General Sales Tax Act, 1950, or even in the rules in regard to the calculation of taxable turnover as it was done in the Bombay Sales Tax Rules, 1952, had the effect of taking the sales falling within the categories specified in Art. 286 out of the purview of the respective Sales Tax Acts, so that they would number be included at all within the calculation of the net turnover on which only the sales tax companyld be levied. What was done in the instant case before us as in the bulk of the Sales Tax Acts above numbered was the incorporation of those provisions of Art. 286 of the Constitution therein by adding a number-obstante provision at the end of the respective Sales Tax Acts in the manner above indicated. The definition of sale was number amended number was the charging section. The rules as to the calculation of the net turnover also remained the same, without any deduction in regard to sales companying within Art. 286 of the Constitution being incorporated therein, with the result that the Sales Tax Authorities founded themselves upon the number-obstante provision incorporated in the Act by the addition of s. 26 therein by the Travancore-Cochin General Sales Tax Amendment Act, 1951. What, then, is the effect of this number-obstante provision ? This Court in Aswani Kumar Ghosh v. Arabinda Bose 1 made the following observations in companynection with the number-obstante clause It should first be ascertained what the enacting part of the section provides on a fair companystruction of the words used according to their natural and ordinary meaning, and the number-obstante clause is to be understood as operating to set aside as numberlonger valid anything companytained in relevant existing laws which is inconsistent with the new enactment. The same ratio applies to the companystruction of the number- obstante provision companytained in s. 26 of the Act with reference to all the other provisions of the Act that preceded the same. In our opinion, s. 26 of the Act, in cases falling within the categories specified under Art. 286 of the Constitution has the effect of setting at numberght and of obliterating in regard thereto the provisions companytained in the Act relating to the imposition of tax on the sale or purchase of such goods and in particular the provisions companytained in the charging section and the provisions companytained in r. 20 2 and other provisions which are incidental to the process of levying such tax. So far as sales falling within the categories specified in Art. 286 of the Constitution and the companyresponding s. 26 of the Act are companycerned, they are, as it were, 1 1953 S.C.R. 1, 21, 22. taken out of the purview of the Act and numbereffect is to be given to those provisions which would otherwise have been applicable if s. 26 had number been added to the Act. If these provisions of the Act and the rules made thereunder do number apply to. the sales falling within those categories, the value thereof cannot be included in the turnover of the dealer and numberquestion would rise of the applicability of r. 7 1 k and r. 20 2 at all to these cases. The amount for which the oil is sold in inter-State trade or companymerce would number be lawfully included in the turnover of the dealer and if the amount for which such oil is sold cannot thus be included in his turnover numberoccasion would arise for the deduction under r. 7 1 k of the value of the companyoanut and or companyra or groundnut and or kernel purchased and companyverted by the dealer into such oil and cake. A distinction was sought to be made between the inclusion of the value of such oil in the turnover of the dealer for the purpose of assessment and the levy of tax thereupon. It was urged that the inclusion of such oil in the turnover for the purpose of assessment was quite distinct from the liability for tax which was the only thing prohibited by s. 26 of the Act and therefore the value of such oil companyld be lawfully included in the turnover involving as a necessary companysequence the deduction of the value of the companyra purchased by the dealer and companyverted by him into such oil from such turnover, the resultant turnover being the net turnover for the purposes of assessment, the value of the oil sold in the companyrse of inter-State trade or companymerce being further deducted therefrom by reason of the operation of s. 26 of the Act, thus making in effect a distinction between assessable turnover and the taxable turnover. Reliance was placed in support of this position on the observations of this Court in Messrs. Chatturam Horilram Ltd. v. Commissioner of Income-Tax, Bihar and Orissa 1 As has been pointed out by the Federal Court in Chatturam C.I.T., Bihar , quoting from the 1 1955 2 S.C.R. 290, 297. 2 1947 F.C.R. 116, 126. judgment of Lord Dunedin in Whitney v. Commissioners of Inland Revenue 1 there are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what person in respect of what property are liable. Next, there is the assessment. Liability does number depend on assessment. That, ex-hypothesi, has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, companye the methods of recovery if the person taxed does number voluntarily pay The appellant, however, forgets that the three stages in the imposition of a tax which are laid down here predicate, in the first instance, a declaration of liability as the starting point. If there is a liability to tax, imposed under the terms of the taxing statute, then follow the provisions in regard to the assessment of such liability. If there is numberliability to tax there cannot be any assessment either. Sales or purchases in respect of which there is numberliability to tax imposed by the statute cannot at all be included in the calculation of turnover for the purpose of assessment and the exact sum which the dealer is liable to pay must be ascertained without any reference whatever to the same. There is a broad distinction between the provisions companytained in the statute in regard to the exemptions of tax or refund or rebate of tax on the one hand and in regard to the number-liability to tax or number-imposition of tax on the other. In the former case, but for the provisions as regards the exemptions or refund or rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed. In the latter case, the sales or purchases are exempted from taxation altogether. The Legislature cannot enact a law imposing or authorising the imposition of a tax thereupon and they are number liable to any such imposition 1 1926 A.C. 37. of tax. If they are thus number liable to tax, numbertax can be levied or imposed on them and they do number companye within the purview of the Act at all. The very fact of their number- liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed. If this distinction is borne in mind, it is clear that s. 26 of the Act enacts a provision with regard to numberliability of these transactions to tax and these transactions were therefore taken out of the purview of the Act. We are therefore of opinion that the number-obstante provision companytained in s. 26 of the Act has the effect of taking these transactions out of the purview of the Act with the result that the dealer is number required number is he entitled to include them in the calculations of his turnover liable to tax thereunder. This position is number at all affected by the provision with regard to registration and submissions of returns of the sales tax by the dealers under the Act. The legislature, in spite of its disability in the matter of the imposition of sales tax by virtue of the provisions of Art. 286 of the Constitution, may for the purposes of the registration of a dealer and submission of the returns of sales tax include these transactions in the dealers turnover. Such inclusion, however, for the purposes aforesaid would number affect the number-liability of these transactions to levy or imposition of sales tax by virtue of the provisions of Art. 286 of the Constitution and the companyresponding provision enacted in the Act, as above.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 153 of 1954. Appeal by special leave from the judgment and order dated January 15, 1952, of the Bombay High Court in Income-Tax Application No. 54 of 1951. J. Kolah, J. B. Dadachanji, S. N. Andley and Rameshwar Nath, for the appellant. K. Daphtary, Solicitor-General of India, G. N. Joshi and R. H. Dhebar, for the respondent. 1957. May 22. The Judgment of the Court was delivered by KAPUR J.-This is an appeal by the assessee by special leave and the question for decision is whether questions of law, if any, arise out of the order of the Appellate Tribunal. The facts giving rise to the appeal are that the petitioner companypany was incorporated on July 29,1924, as an investment companypany, the objects of which are set out in el. III of the memorandum of association and more particularly in sub-cls. 1, 2, 15 and 16 of that clause. The assessment years under review. are 1943-44 to 1948-49, excepting the year 1947-48. According to its petition made in the High Court of Bombay, the petitioner companypany dealt with its assets as follows The Petitioner Company purchased during the period 1st July 1925 to 30th June 1928 shares of the value of Rs. 1,86,47,789/- major portion of which was companyprised of shares in the Sassoon Group of Mills. During the year ended 30th June 1929 the Petitioner Company promoted two companypanies known as Loyal Mills Ltd. and Hamilton Studios Ltd. and took over all their shares of the value of Rs. 10 1/2 lacs. In the year 1930, the Petitioner Company purchased shares of Rs. 1,33,930. During the period of 9 years from 1st July 1930 to 30th July 1939 numberpurchases were made with the exception of a few shares of Loyal Mills Ltd., taken over from the staff of E. D. Sassoon Co. Ltd., who retired from service. In the year ended 30th June 1940 reconstruction scheme of the Appollo Mills Ltd., took place under which debentures held by the Petitioner Company in the Appollo Mills Ltd., were redeemed and the proceeds were reinvested in the new issue of shares made by the Appollo Mills Ltd. Out of the purchases of the value of Rs. 2,794 made by the Petitioner Company during the year ended 30th June 1941 Rs. 2,000/- was the value of shares of the Loyal Mills Ltd., taken over from the retiring staff. In the year ended 30th June 1943 the Petitioner Company took over from the David Mills Co. Ltd., shares of The Associated Building Co., of the value of Rs. 56,700/-. After this there were numberpurchases at all to this date excepting purchases of the value of Rs. 34,954 during the year ended 30th June, 1946. The sales are companytained in para 3 b which may be quoted In relation to the purchases made by the Petitioner Company as stated above numberappreciable sales of shares were made during the period 29th July 1924 to 30th June 1942, the sales made in the year ended 30th June 1929 of the value of Rs. 1,29,333 included shares of the value of Rs. 45,000 in the Loyal Mills Ltd., sold to the members of the staff and shares of the value of Rs. 83,833 representing sterling investments handed over to the creditors of the Petitioner Company in part repayment of the loan taken from them in the year ended 30th June 1931, shares of the value of Rs. 7,48,356 were handed over to the creditors in payment of the loan granted by them. From the year ended 30th June 1943 E. Sassoon Co. Ltd., started relinquishing the managing agencies of the various Mills under their agency and the shares held by the Petitioner Company in the Sassoon Group of Mills were handed over to the respective purchasers of the Mills agencies. This gives the history of the acquisition and disposal of shares and also how the various transactions were entered into and why. Prior to 1940 the assessee companypany made a claim every year for being treated as a dealer in investments and properties but this companytention was companysistently repelled and upto the assessment year 1939- 40 the assessee companypany was assessed on the basis of being an investor but it appears that for the assessment year 1940-41 and the two following years 1941-42 and 1942-43 the Department accepting the plea of the assessee companypany treated it as a dealer in shares, securities and immovable properties and assessed it on that basis. For these years and for the assessment year 1943-44 the companypany made its Return on that basis. But after the Return had been filed for the year 1943-44 the assessee companypany withdrew its Return and filed a revised Return on March 7, 1944, companytending that it was number a dealer but merely an investor. Along with the Return it filed a letter dated March 6, 1944, in which inter alia it stated The Return of Total Income which was submitted with the Companys letter of 25th May 1943 was prepared in companyformity with the ruling of the Income. tax Officer in the 1940-41 assessment that the companypany was to be assessed as a dealer in investments. Since that Return was submitted the Central Board of Revenue has decided that the Company is an Invest- ment Holding Company and accordingly an amended Return of Total Income under Section 22 1 of the Indian Income-tax Act is submitted herewith on which the assessment for 1943- 44 may be based, as on this particular question the companypany obviously cannot have one status for Excess Profits Tax and another for Income-tax. It was also companytended that it never carried on any business in the purchase or sale of shares, securities or properties and therefore prayed that in view of the order of the Central Board of Revenue made on its application under s. 26 1 of the Excess Profits Tax Act it should be assessed for income-tax purpose as an investor and number as a dealer. The Income-tax Officer rejected this plea and held the investments as the stock-in-trade of its business therein which it carried on during the previous year also . The companypany took an appeal to the Appellate Assistant Commissioner which was dismissed and the order of the Income-tax Officer upheld. It then appealed to the Income-tax Appellate Tribunal, Bombay, where the same companytentions were raised but were, repelled. The Tribunal said The companypany having itself raised the point in all the prior years that it was a dealer in investments and properties, it would appear to be difficult to understand why the companypany number seeks to get the position changed and desires the Income-tax Officer to treat it as if it was number dealing in shares, securities and immoveable properties. The Tribunal after holding that the companypany was under numbermisapprehension when it claimed to be a dealer in investments in the earlier years because it was then always incurring losses and that the present companytention was raised because it made substantial profits said but we have numberdoubt that, according to the companypanys memorandum of association and its own assertions made all along in the past, the assessee companypany is a dealer in investments and properties and the income arising to it on the sale thereof has been rightly held by the Income-tax Officer to be business profits liable to tax under the ordinary provisions of the Income-tax Act. Thus the grounds on which the case was decided against the assessee were 1 that the assessee claimed to be a dealer or an investor according as it incurred losses or made profits and 2 that because of the objects companytained in the memorandum of association and because of its assertion made in the past as being a dealer the assessee companyld number be held to be an investor. The companypany then applied to the Appellate Tribunal under s. 66 1 of the Indian Income-tax Act for a reference of the following questions for the opinion of the High Court Whether on the facts and in the circumstances of the case the assessee companypany can rightly be treated as a dealer in investments and properties and Whether the profits and losses arising from the sale of shares, securities and immoveable properties of the assessee companypany can be taxed as-business profits. This prayer was rejected because in the opinion -of the Tribunal numberquestion of law arose out of its order. It said The Tribunal did number decide this point merely because the companypanys memorandum of association gave power to the companypany to deal in investments and properties, but it was actually found that the companypany had dealt in investments and properties throughout and had also all along in the past asserted that it was a dealer in investments and properties. This was more than it had said in its appellate order. The assessee companypany then made an application under s. 66 2 of the Indian Income-tax Act for requiring the Appellate Tribunal to state the case and refer it to the High Court but this application was dismissed, and then the companypany obtained special leave to appeal to this Court. Counsel for the assessee companypany companytends that the questions of law arise out of the order of the Tribunal because the Tribunal has ignored the documentary evidence produced before it, has based it decision on irrelevant matters, has failed to companysider crucial facts and has misdirected itself by assuming that the petitioner was a dealer from the very beginning which was companytrary to the documents produced before it. Section 66 1 of the Income-tax Act hereinafter termed the Act provides that any assessee may require the Appellate Tribunal to refer to the High Court any question of law arising out of its appellate order and it is the statutory duty of the Appellate Tribunal to draft the statement of the case and refer the question of law arising out of such order to the High Court but the primary requirement is that there must be a question of law arising out of the order. Should the Tribunal refuse to state the case as required under s. 66 1 of the Act on the ground that numberquestion of law arises, the assessee has the right to apply to the High Court requiring the Appellate Tribunal to state a case and refer it to the High Court but again the essential companysideration is the existence of a question of law. arising out of the order. To draw a line between what is a question of law and what is a question of fact is number always easy. It is difficult to define this distinction which has given rise to a number of decisions, which it will be useful to discuss at this stage. In Stanley v. Gramophone and Typewriter, Limited 1 the Master of the Rolls discussed this question as follows It is undoubtedly true that, if the Commissioners find a fact, it is number open to this companyrt to question that finding unless there is numberevidence to support it. If, however, the Commissioners state the evidence which was before them, and add that upon such evidence they hold that certain results follow, I think it is open, and was intended by the Commissioners that it should be open, to the companyrt to say whether the evidence justified what the Commissioners held. These observations were explained by Hamilton J. in The American Thread Co. v. Joyce 2 as implying that by giving the material on which their finding was based the Commissioners were inviting the companyrt to determine whether on that material they companyld reason. ably arrive at the companyclusion on which they did arrive. The House of Lords on appeal categorically companyfirmed that the Courts had numberjurisdiction over companyclusions of fact except to see whether there was evidence to justify them and that proper legal principles had been applied. Lord Clerk in Californian Copper Syndicate v. Harris 3 has laid down the test in the following words the question to be determined being-Is the sum of gain that has been made a mere enhancement of value by realising a security, or is it a gain made in an 1 1908 5 T.C. 358, 374. 2 1911 6 T.C. 1. 3 1904 5 T.C. 159, 166. operation of business in carrying out a scheme for profit- making. In that case the objects set out in the memorandum of association pointed distinctly to a highly speculative business and the mode of actual procedure of the companypany was also directed in the same direction. Taking into companysideration the companyrse of dealing of the shares by the companypany and also that the turning of investment to account was number merely incidental but was an essential feature of the business, speculation being among the appointed means of the companypanys business the companyrt came to the companyclusion that the companypany was carrying on a business. The Lord President in a Scottish case Cayzer, Irvine Co., Ltd. v. Commissioners of Inland Revenue 1 stated the grounds on which the companyrt can interfere with the finding of the Commissioner as follows I think we have jurisdiction to entertain the question at law, which is whether the majority of the Commissioners were warranted on -the evidence in determining as they did. At the narrowest it is always open to this Court in a Stated Case to review a finding in fact on the ground that there is numberevidence to support it. Lord Parker in Farmer v. Trustees of the Late William Cotton 2 after referring to the difficulty of distinguishing between a question of fact and a question of law observed Where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly companystrued of some statutory enactment, the question is one of law only. But this statement of the law was companysiderably modified in Inland Revenue Commissioners v. Lysaght 3 where it was held that if the issue before the companyrt companyld be described as a question of degree the companyclusion must be a question of fact. 1 1942 24 T.C. 491, 501. 2 19I5 A.C. 922,932. 3 1928 A.C. 234. The Commissioners of Inland Revenue v. The Korean Syndicate, Ltd. 1 was a case where a syndicate was registered for the purpose of acquiring and working companycessions and turning them to account, and of investing and dealing with monies number immediately required. The syndicate acquired part of a right to a companycession in Korea and then under an agreement described as a lease, in companysideration of receiving sums of money termed royalties but which were really percentages of profits made by assignee companypany, assigned the lease to a development companypany. Some moneys which were received from sale of certain shares obtained by the syndicate in exchange for shares originally acquired in the mining companypany were deposited in a bank. The activities of the companypany were during the relevant period companyfined to receiving the bank interest and royalties, distributing the amount amongst its shareholders as dividend. The question for decision was whether the syndicate was carrying on a business and was therefore liable to excess profits duty. From these facts it was companycluded that they were carrying on a business. Atkinson L.J. pointed out at p. 204 that merely because a companypany is incorporated it does number necessarily follow that it is carrying on business.- Its memorandum only shows that the companypany was incorporated for a particular purpose but taking into companysideration the surrounding circumstances and facts of the case it was companycluded that the companypany was carrying on a business. In Great Western Railway Company v. Bater 2 the question for decision was whether a clerk held a -public office to fall within Sch. E. It was held that the determination by the Commissioners of questions of pure fact are number to be disturbed unless it should appear that there was numberevidence before them upon which they, as reasonable men, companyld arrive at the companyclusion which they came to. Lord Atkinson said What I have many times in this House protested against is the attempt to secure for a finding on a mixed question of law and fact the unassailability 1 1921 12 T.C, 181. 2 1922 8 T.C. 231, 244. which belongs only to a finding on questions of pure fact. This is sought to be affected by styling the finding on a mixed question of law and fact a finding of fact. According to the dictum of Lord Wrenbury the question for the Court was whether on the facts found and stated by the Commissioners the clerk held the office within the meaning of the Act which was a question of law. In Lysaght v. The Commissioners of Inland Revenue 1 the question for decision was whether the assessee was a resident and ordinarily resident in United Kingdom in the year of assessment. Lord Buckmaster said. The distinction between questions of fact and questions of law is difficult to It is, of companyrse, true that if the circumstances found by the Commissioners in the Special Case are incapable of companystituting residence their companyclusion cannot be protected by saying that it is a companyclusion of fact since there are numbermaterials upon which that companyclusion companyld depend. But if the incidents relating to visits in this companyntry are of such a nature that they might companystitute residence, and their prolonged or repeated repetition would certainly produce that result, then the matter must be a matter of degree and the determination of whether or number the degree extends so far as to make a man resident or ordinarily resident here is for the Commissioners and it is number for the Courts to say whether they would have reached the same companyclusion. Jones v. Leeming 2 was a case where the respondent with three other -persons obtained an option to purchase a rubber estate in the Malay Peninsula. That estate along with another was sold at a profit. The Commissioners found that the respondent had acquired the property with the sole object of turning it over again at a profit and at numbertime had he the intention of holding it. This transaction was held number to be in the nature of trade number the profits arising therefrom in the nature of income but they were accretions to 1 1928 13 T.C. 511, 533, 534. 2 1930 A.C. 4I5. capital and therefore number subject to tax under Case VI of Sch. D. In Cameron v. Prendergast 1 the following test was laid down by Viscount Maugham Inferences from facts stated by the Commissioners are matters of law, and can be questioned on appeal. The same remark is true as to the companystruction of documents. If the Commissioners state the evidence it is open to the companyrt to differ from such holding. In Bomford v. Osborne 2 a farm was working as a mixed farm but as a single unit. The question for decision was whether the assessment companyld be apportioned one part being assessed as a farm and the other as a nursery. Viscount Simon laid down the test in the following words No doubt there are many cases in which Commissioners, having had proved or admitted before them a series of facts, may deduce therefrom further companyclusions which are themselves companyclusions of pure fact. In such cases, however, the determination in point of law is that the facts proved or admitted provide evidence to support the Commissioners companyclusions. It was also held that this question was a mixed question of law and fact. Du Parcq J. in J. H. Bean v. Doncaster Amalgamated Collieries Ltd. 3 held the following to be the test for determining whether the question is one of fact or law Unless the Commissioners, having found the relevant facts and put to themselves the proper question, have proceeded to give the right answer, they may be said, on this view, to have erred in point of law. If an inference from facts does number logically accord with and follow from them, then one must say that there is numberevidence to support it. To companye to a companyclusion which there is numberevidence to support is to make an error in law. 1 1940 2 All E.R. 35, 40. 3 1944 2 All E.R. 279, 284. 2 1941 2 All E.R. 426, 430. In Edward v. Bairstow 1 the respondent embarked upon a joint venture to purchase a spinning plant with the object of holding it for quick resale and at a profit. The General Commissioners found that there was numberventure in the nature of trade but the companyrt held that the facts found led inevitably to the companyclusion that the transaction was a venture in the nature of trade and that the Commissioners inference to the companytrary was erroneous. Lord Simonds observed at p. 54 that To say that a transaction is, or is number, an adventure in the nature of trade is to say that it has, or has number, the characteristics which distinguish such an adventure. But it is a question of law, number of fact, what are those characteristics At p. 55 Lord Radcliffe pointed out I think that it is a question of law what meaning is to be given to the words of the Income Tax Act trade, manufacture, adventure or companycern in the nature of trade and for that matter what companystitutes profits or gains arising from it. Here we have a statutory phrase involving a charge of tax, and it is for the companyrts to interpret its meaning, having regard to the companytext in which it occurs, and to the principles which they bring to bear on the meaning of income. and then at p. 57 laid down the test in the following words When the case companyes before the companyrt, it is its duty to examine the determination having regard to its knowledge of the relevant law. If the case companytains anything ex facie which is bad law and which bears on the determination, it is, obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that numberperson acting judicially and properly instructed as to the relevant law companyld have companye to the determination under appeal. The dicta of Warrington L.J. in Cooper v. Stubbs 2 that intervention by a companyrt is proper only 1 1955 3 All E.R. 48. 2 1925 2 K.B. 753, 768, 772. missioners have companye to their companyclusion without evidence which should support it, that is to say, have companye to a companyclusion which on the evidence numberreason- able person companyld arrive at, or have misdirected themselves in point of law. and of Atkin L.J. that to one companyclusion of law were quoted with approval by Lord Radcliffe at pp. 56 and 57. A review of these authorities shows that though the English decisions began with a broad definition of what are questions of law, ultimately the House of Lords decided that a matter of degree is a question of fact and it has also been decided that a finding by the Commissioners of a fact under a misapprehension of law or want of evidence to support a finding are both questions of law. The Privy Council in Commissioner of Income-tax v. Laxminarain Badridas 1 said No question of law was involved number is it possible to turn a mere question of fact into a question of law by asking whether as a matter of law the officer came to a companyrect companyclusion upon a matter of fact. Bose J. in Seth Suwallal Chhogalal v. Commissioner of Income-tax 2 stated the test as follows A fact is a fact irrespective of the evidence by which it is proved. The only time a question of law can arise in such a case is when it is alleged that there is numbermaterial on which the companyclusion can be based or numbersufficient material. Sufficiency of evidence was explained to mean whether the Income-tax authority companysidered its existence so probable that a prudent man ought under the circumstances of the case to act upon the supposition that it exists. The question for decision in Dhirajlal Girdharilal v. Commissioner of Income-tax, Bombay 3 was whether a Hindu undivided family was carrying on business in 1 1937 5 I.T.R. I70, 179. 3 1954 26 I.T.R. 736. 2 1949 17 I.T.R. 269, 277. shares and it was held that this was a question of fact but if the Appellate Tribunal decided the question by taking into companysideration materials which are irrelevant to the enquiry or partly relevant and partly irrelevant or based its decision partly on companyjectures then in such a situation an issue of law arises, which would be subject to review by the companyrt and the finding given by the Tribunal would be vitiated. The result of the authorities is that inference from facts would be a question of fact or of law according as the point for determination is one of pure fact or a mixed question of law and fact and that a finding of fact without evidence to support it or if based on relevant and irrelevant matters is number unassailable. The limits of the boundary dividing questions of fact and questions of law were laid down by this companyrt in Meenakshi Mills, Madurai v. Commissioner of Income-tax, Madras 1 where the question for decision was whether certain profits made and shown in the name of certain intermediaries were in fact profits actually earned by the assessee or the intermediaries. Taking the companyrse of dealings and the extent of the transaction and the position of the intermediaries and all the evidence into companysideration the Tribunal came to the companyclusion that the intermediaries were dummies brought into existence by the appellant for companycealing the true amount of profits and that the sales in their name were sham and fictitious and profits were actually earned by the assessee. The test laid down by this Court is to be found in the various passages in that judgment. At p. 701 Venkatarama Ayyar J. pointed out that questions of fact are number open to review by the companyrt unless they are unsupported by any evidence or are perverse. At p. 706 it was observed In between the domains occupied respectively by questions of fact and of law, there is a large area in which both these questions run into each other, forming so to say, enclaves within each other. The questions that arise for determination in that area are known as mixed questions of law and fact. These questions involve first the ascertainment of facts on the evidence adduced and then a determination of the 1 1956 S.C.R. 691. rights of the parties on an application of the appropriate principles of law to the facts ascertained. The law was thus summed up at p. 720 When the point for determination is a pure question of law such as companystruction of a statute or document of title, the decision of the Tribunal is open to reference to the companyrt under s. 66 1 . When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final its decision as to the legal effect of that finding is a question of law which can be reviewed by the companyrt. A finding on a question of fact is open to attack under s. 66 1 as erroneous in law if there is numberevidence to support it or if it is perverse. When the finding is one of fact, the fact that it is itself an inference from other basic facts will number alter its character as one of fact. In the instant case the Appellate Tribunal in its appellate order has set out the amount of profits made by the assessee companypany in the years of assessment 1943-44 to 1948-49. It has also mentioned the inconsistent positions taken up by the assessee in first claiming to be a dealer and then to be an investor which according to the Tribunal was due to the fact that it was incurring losses in the earlier years and had begun making profits when the claim of being an investor was put forward. But the two basic facts on which the Tribunal has based its findings are 1 the objects set out in the memorandum of association of the assessee companypany 2 the previous assertion by the assessee companypany that it was a dealer in investments and number merely an investor. Counsel for the assessee relies on the decision of Kishan Prasad Co., Ltd. v. Commissioner of Incometax, Punjab 1 where this Court held that the circumstance whether a transaction is or is number within the powers of the companypany has numberbearing on the nature of the transaction or on the question whether the profits arising therefrom are capital or revenue income and, therefore, it is companytended that the Tribunal has 1 1955 27 I.T.R. 49. relied upon an irrelevant circumstance. Counsel for Revenue on the other hand refer to the judgment in Lakshminarayan Ram Gopal v. Government of Hyderabad 1 where the objects of an incorporated companypany were held number to be companyclusive but relevant for the purpose of determining the nature and scope of its activities. Merely because the companypany has within its objects the dealing in investment in shares does number give to it the characteristics of a dealer in shares. But if other circumstances are proved it may be a relevant companysideration for the purpose of determining the nature of activities of an assessee. Whether in the instant case it will have any relevance because of other materials on which the assessee companypany was relying in support of its case that it was merely an investor and number a dealer will have to be companysidered when the suggested questions of law are answered. As to what are the characteristics of the business of dealing in shares or that of an investor is a mixed question of fact and law. What is the legal effect of the facts found by the Tribunal and whether as a result the assessee can be termed a dealer or an investor is itself a question of law.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 104 of 1954 and 169 of 1956. Appeal by special leave from the judgment and decree dated November 13, 1950, of the Madras High Court in A. S. No. 484 of 1947 arising out of the judgment and decree dated December 21, 1946, of the Court of the Subordinate Judge, Devakottai in Original Suit No. 156 of 1944 and Appeal from the judgment and decree dated September 17, 1952 and October 24, 1952, of the Madras High Court in A.S. No. 243 of 1947 arising out of the judgment and decree dated December 21, in Original Suit No. 164 of the Subordinate Judge, Devakottai in Original Suit No. 164. V. Vishwanatha Sastri and M. S. K. Aiyangar, for the appellants in C.A. No. 104 of 1954. V. Vishwanatha Sastri and U. S. K. Sastri, for the appellants in C.A. No. 169 of 1956. S. Krishnaswamy Iyengar and R. Ganapathy Iyer, for respondent No. 1 in both the appeals . 1957. May 24. The judgment of Jagannadhadas and B. P. Sinha JJ. was delivered by Jagannadhadas J. Govinda Menon J. delivered a separate judgment. JAGANNADHADAS J.-These two are appeals against two separate decrees of the High Court of Madras arising, out of two suits as between the same companytesting parties with reference to a companynected set of facts. Civil Appeal No. 104 of 1954 is before us by virtue of special leave granted by this Court under Art. 136 1 of the Constitution. Civil Appeal No. 169 of 1956 has companye up by reason of certificate granted by the High Court under Art. 133 1 a of the Constitution. The parties to the litigation are Nattukottai Chetties, a wealthy banking companymunity in South India who, at the time, were having large banking transactions in Burma and other places in South-East Asia. One AL. PR. Periakaruppan Chettiar hereinafter referred to as Periakaruppa owned and possessed companysiderable properties. He adopted one AL. PR. Alaska Chettiar hereinafter, referred to as Alaska in or about the year 1914. there arose acute differences between them from about the year 1924 owing to the alleged wasteful habits of Alagappa who ran into debts. This led to criminal companyplaints between them, each against the other, in 1926. See Exs. P-5 and D-12 . One of Alagappas creditors obtained a decree against him and attached Alagappas half share in the family residential house including the site on which it was situated. This resulted in a regular suit in which the question at issue was whether the site was ancestral site and whether the super-structure was companystructed out of the ancestral funds. It was found that the site was ancestral Periakaruppa maintained that the super- structure which was substantial in value companypared with the site was built out of his self-acquired funds and was number joint family property, while Alagappa and the attaching creditor companytended to the companytrary. The litigation went up to the High Court and the High Court accepted the companytention of Periakaruppa and made a declaration that the site was ancestral and that the super-structure was the self- acquisition of Periakaruppa. The judgment of the High Court was dated November 19, 1926, and is reported in Periakarappan Arunachalam 1 . During the pendency of this litigation in the High Court the adopted son Alagappa filed a suit on September 9, 1926, on behalf of himself and his minor son by name AL. PR. AL. Periakaruppan Chettiar hereinafter, for distinction, referred to as junior Periakaruppa represented by his mother and next friend by name Mutbayi Act. It has to be mentioned that in or about June 27, 1926, Periakaruppa purported to make a second adoption of a young boy by name AL. PR. Ranganathan Chettiar hereinafter referred to as Ranganatha on the footing that such an adoption was permitted by special custom in Nattukottai Chetti families. The suit O.S. No. 114 of 1926 filed by Alagappa and his minor son, junior Periakaruppa, was therefore filed as against Periakaruppa and his second adopted son Ranganatha, who at the time was also a minor. It was for delivery of a half share of the properties of the family on the footing that all the properties were joint family properties and for a declaration that the second adoption was invalid. The first defendant therein, Periakaruppa,- filed a written statement companytesting both these matters and claiming that all the suit properties in their entirety were his self- acquisition and that the plaintiffs had absolutely numberrights therein and also asserting that the second adoption was valid. Before the suit proceeded to the stage of issues and trial, the dispute between the parties was companypromised by a Rajinama brought about by four Panchayatdars, who were all respectable members of the Nattukottai Chetti companymunity. Some of the questions that arise in the present appeals centre round the proper companystruction of some of the terms of this. Rajinama, which will be numbericed later. It is sufficient to state at this stage that by that Rajinama the two plaintiffs, Alagappa and his 1 1926 I.L.R. 50 Mad. 582, minor son, junior Periakaruppa, obtained Rs. 75,000 each and Alagappas wife Muthayi Achi, the mother of the minor son and his next friend in the suit, was to get a sum of Rs. 14,000 as her Stridhan, These amounts were paid by means of four hundis, Rs. 25,000 and Rs. 50,000 for Alagappa, Rs. 75,000 for junior Periakaruppa and Rs. 14,000 for the mother, Muthayi Achi, on Nattukottai Chetti bankers of Periakaruppa in Burma. It was one of the express terms of the Rajinama that all the properties mentioned in the plaint in that suit and other properties belonging to the first defendant, Periakaruppa, were admitted to be his self- acquisitions and that the plaintiffs therein had. numberright and companynection whatsoever in any of them or in the charities founded by Periakaruppa and in the properties belonging thereto or their management, either in the lifetime of Periakaruppa or subsequent thereto. It was also one of the specific terms of the Rajinama that the plaintiffs should remove themselves from the family house with all their belongings and that the possession of the aforesaid house be delivered to Periakaruppa. It was also expressly stipulated that the petition then pending for leave to appeal to the Privy Council against the judgment reported in Periakaruppan Arunachalam 1 was to be withdrawn. This companypromise was certified to be for the benefit of the minor plaintiff companycerned, as also of the minor defendant Ranganatha and was accepted by the Subordinate Judge before whom the companypromise petition was filed. As a result, the companypromise was accepted by the companyrt on August 15, 1927, and the suit was dismissed in terms thereof on the same date. About a year and a half later Periakaruppa executed a will on April 4, 1929. The genuineness and due execution thereof are number in question. But the effect of that will is also one of the main points in dispute. Periakaruppa died about three months later i.e. on July 14, 1929, and his wife Lakshmi Achi died within a year thereof on March 11, 1930. By the will, broadly speaking, Periakaruppa made arrangements for certain religious gifts and 1 1926 I.L.R. 50 Mad. 582. charities and made arrangements for the management thereof and gave the residue of the property to his wife Lakshmi Achi for her life and thereafter to his second adopted son Ranganatha. Ranganatha, who, some time in or about the date of Lakshmi Achis death in 1930, appears to have attained majority, has been in undisputed possession and enjoyment of Periakaruppas properties ever since till late in 1944. Alagappas son junior Periakaruppa attained majority in December, 1943, and filed two suits on November 11, 1944, in the Subordinate Judges Court of Devakottai, one numbered as S. 156 of 1944 and the other as O.S. 160 of 1944. O.S. No. 156 of 1944 was on the footing that Rs. 75,000 which was given to him under the above mentioned Rajinama of the year 1927, was, under the terms thereof companystituted a trust for his benefit during his minority under the trusteeship of Periakaruppa himself and another person A. P. S. Chockalingam Chettiar of Athangudi, hereinafter referred to as Chockalingam the junior paternal uncle of the minors mother, Muthayi Achi, and that the money was wrongly appropriated by Chockalingam owing to his straightened circumstances. His case was that Periakaruppa as a company trustee with Chockalingam was equally responsible for breach of the trust and that therefore he was entitled to have the moneys found due on account, paid out of the estate of Periakaruppa in the hands of Ranganatha as well as from the estate of Chockalingam in the hands of his son. The second suit O.S. No. 164 of 1944 was a suit to recover the entire properties of Periakaruppa in the possession of Ranganatha for himself and his father Alagappa who was made the first defendant in the suit, on the ground that Ranganathas adoption was invalid, that the will of Periakaruppa was ineffective and that the properties devolved on himself and his father Alagappa. It may be numbericed that so far as the father Alagappa is companycerned the suit would prima facie be time- barred since it has been filed about 15 years after the death of Periakaruppa. The plaintiff junior Periakaruppa however filed the suit on the footing that in view of his minority for all this period until December, 1943, the suit was number barred. Hereinafter, for companyvenience, the first suit O.S. No. 156 of 1944 will be referred to as the trust suit, and the second suit O.S. No. 164 of 1944 will be referred to as the succession suit, In the succession suit the main questions that arose for decision were 1 whether the adoption of Ranganatha as a second adopted son was valid 2 if number, whether the will was effective to companyvey the property of Periakaruppa to Ranganatha after the death of his wife Lakshmi Achi, numberwithstanding the invalidity of his adoption 3 whether, in case the will was ineffective the properties of Periakaruppa devolved on both Alagappa and his son junior Periakaruppa together or on Alagappa alone to the exclusion of junior Periakaruppa 4 if-the devolution was on both together, whether the rights of junior Periakaruppa were barred by reason of s. 7 of the Indian Limitation Act, 1908 Act IX of 1908 . This involved the further questions a whether by and under the Rajinama Alagappa and his son became divided in status inter se so as to make s. 7 inapplicable. b whether in case the devolution was on both together as members of a joint family, s. 7 had application to the factual situation in the family. So far as the adoption of Ranganatha was companycerned both the companyrts below, while holding that the adoption as a fact was proved, have found against existence of the custom pleaded as to its validity and hence companycurrently found the adoption to be invalid. That companyclusion is numberlonger in dispute in this Court. As regards the will both the companyrts held that the will was ineffective to vest any title in Ranganatha though on slightly different grounds. As regards question No. 4 relating to limitation, the two companyrts came to different companyclusions with the result that the trial companyrt dismissed the suit as barred by limitation, while the High Court reversed it and granted a decree for the half share of Periakaruppas properties in favour of junior Periakaruppa holding that in respect of the other half share the rights of Alagappa were barred and that Ranganatha acquired the same by his adverse possession. As regards question No. 3 and the subordinate questions a and b of question No. 4 , there appears to have been numberserious question raised in the trial companyrt by the defendant as to the exclusion of junior Periakaruppa by Alagappa in the matter of succession to Periakaruppas properties, or any serious questions raised by the plaintiff as to the Rajinama bringing about a partition inter se between the father Alagappa and his minor son junior Periakarpppa and of Alagappa number being the de facto manager of the family. It was accordingly found by the trial companyrt that both of them succeeded as members of the joint family and that therefore the minor, junior Periakaruppa, was barred by virtue of s. 7 of the Limitation Act. When the matter came up on appeal to the High Court, a question was raised that s. 7 would number be applicable in this case unless it was further made out that the father Alagappa was the de facto manager of the family companysisting of himself and his minor son of which it is alleged there was numberproof or finding. Both the Judges allowed this point to be raised and called upon the trial companyrt to take evidence and submit a finding in respect of that companytention. The trial companyrt accordingly took evidence in regard thereto and returned a finding that on the evidence, both the father and the minor son were living as members of a joint family and that the father was in fact the de facto guardian. When the matter was rehear by the same Bench of the High Court on the return of the finding, the Bench did number go into the companyrectness or otherwise of this finding, on the view that this finding was of numberconsequence, if it is found that by virtue of the Rajinama both the father and the minor son became divided inter se. The learned Judges while realising that the finding was called for on the undisputed assumption that the father and the son were undivided in status, were of the opinion that there was numberhing to prevent them from reopening the same and held on a companystruction of the Rajinama that it brought about divided status inter se between the father Alagappa and his minor son junior Periakaruppa.- In that view they found s. 7 of the limitation Act had numberapplication to the case and same to the companyclusion that the succession suit by junior Periakaruppa was number barred by limitation in so far as it related to his own share though barred in respect of Alagappas share. Hence the succession suit ended in favour of junior Periakaruppa in respect of a half share of the properties left by Periakaruppa. As regards the trust suit the companytentions raised were 1 that under the Rajinama both Periakaruppa and Chockalingam became trustees in respect of the sum of Rs. 75,000 to be invested in Chetti firms as provided in the Rajinama 2 that as a fact the amount was invested with Chockalingam, one of the trustees themselves, companytrary to the law 3 that such investment itself companystituted breach of trust for which Periakaruppa was also responsible. It appeared on the evidence that out of the trust amount, a sum of Rs. 30,000/- was invested in the purchase of a house at Athangudi in South India the place of Chocklingam and that Alagappa and his minor son, the junior Periakaruppa, and his family have been since that purchase on July 23,1928, living in that house. At the trial, therefore, credit was given to this amount as being proper investment of the trust funds in the matter of account-taking by companycession of the lawyer for junior Periakaruppa. The defendant Ranganatha in addition to companytending that numbertrust was created, also companytended that as a result of subsequent transactions junior Periakaruppa got the benefit number only of the purchase of the house above referred to but also of a mortgage executed in favour of himself and another by Chockalingam in 1930 for a lakh of rupees of which Rs. 70,000 was his, of which he obtained the benefit, and that therefore the alleged breach of trust must be taken to have been waived and that in any case he was entitled to have the mortgage document as much as the purchase of the house to be taken into companysideration for reducing his liability in respect of the alleged breach of trust. These companytentions were negatived by both the companyrts with the result that there was a decree against Ranganatha and his minor son in respect of half the loss occasioned by the breach of trust, payable out of the half share of Periakaruppas properties in their hands. The result of the two judgments of the High Court in both the suits was against Ranganatha and hence the two present appeals before us by him. It will number be companyvenient to take up first the company- sideration of the succession appeal. The points arising therein have already been set out in the preliminary narration and need numberrepetition. The main points argued before us on this appeal are- The companyclusion of the High Court that the will of Periakaruppa was ineffective is erroneous and Ranganatha took under the will as persona designata. In case the will is held to be ineffective and in the view taken by the High Court that Alagappa and junior Periakaruppa became divided in status under the Rajinama the property of Periakaruppa devolved on Alagappa to the exclusion of junior Periakaruppa and hence the plaintiff has numberright to sue. The companyclusion of the High Court that the Rajinama brought about divided status inter se between the father Alagappa and the minor son junior Periakaruppa is erroneous and hence the suit is barred by virtue of s. 7 of the Limitation Act. A few other minor points have been raised on both sides which, after companysideration, appeared to be unsubstantial and we intimated our view at the hearing and it is number necessary to refer to and deal with them any further. We have heard elaborate arguments on the above three points and have given our careful companysideration to them. It is obvious that having regard to the companyrse of events in this family narrated earlier the primary question for companysideration is whether or number the will left by Periakaruppa has brought about an effective disposition of his properties in favour of Ranganatha. It is only if that has become ineffective that the other questions argued before us on this appeal as set out above arise for companysideration. In view of the fact that the genuineness of the will is number disputed and numberquestion arises as to the disposing capacity of Periakaruppa, the plaintiff in this case, junior Periakaruppa, can succeed only if he displaces the will. He has accordingly raised three companytentions. That there is numbereffective dispositive clause in the will. That the disposition, if any, in favour of Ranganatha under the will was an attempt to create an estate in tail- male and hence invalid. The disposition in favour of Ranganatha was by reason of and on account of, his having been companysidered by the testator as his duly adopted son, i.e., the validity of the adoption was the basis and the companydition for the disposition. Since that has number been found to be invalid, the disposition fails. Of these three questions the first two though upheld by the trial companyrt have been rejected by the High Court. We agree with the reasoning of the High Court on these two points and they do number call for any further companysideration. We are satisfied that there is numbersubstance in these companytentions. The real question that arises on a companysideration of the will is whether the disposition of the residue in favour of Ranganatha companytained therein was to him as a persona designata or is dependent on his being a duly and validly adopted son. For a proper appreciation of this companytention on both sides, it is necessary to set out the relevant clauses in the will. I am number 68 years of age, taking into companysideration the fact that I have been in indifferent health for sometime past I have decided to make an arrangement after my lifetime in regard to my properties and in regard to the charities established by me and accordingly I have executed this will wholeheartedly. All the immovable and movable properties entirely, which belong to me as my own and which are in my possession are my self-acquired properties. Excepting myself numberother person has any interest or right whatever in the said properties. 3 Sometime back I took as my foster son , Alagappan, son of Nachandupatti Chidambaram Chettiar, and brought him up in my house and also got him married. But the aforesaid Alagappan companyducted himself in immoral ways and had evil intentions and further fell into bad companypany and after being duped brought into existence several documents falsely and companyourfully by making it appear that he had borrowed debts to the tune of about one lakh of rupees and also caused decrees to be passed in respect of some of the abovementioned debts and estranged my feelings and became inimical towards me, and left my family and was living separately for the past about 10 years and he was also living in. his father-in-laws house. Thereafter while the aforesaid person had instituted a suit O.S. No. 114 of 1926 against me in the Sub-Court of Devakotta for his share in the properties which were in my possession, some of our companymunity people acted as the panchayatdars and gave an award in the above suit and a razinama was filed in the Court, and all the amounts which were payable by me according to the said razinama were already paid by me entirely. Neither the aforesaid Alagappa Chetti number his heirs shall have any manner of right or interest whatever in the properties which are number in my possession and in the properties which might be acquired hereafter. Subsequently I took in adoption Nachandupatti Ramanathan Chettiars son, namely, Ranganathan, aged about 17 1/2 years, and he is living with me. 7 to 12 My adopted son Ranganathan and his male heirs shall after the lifetime of my wife Lakshmi Achi properly companyduct the aforesaid charities. In order to supervise and see whether Ranganathan companyducts the charities properly without any defect whatever, I have appointed the following persons as the executors, namely, 1 my son-in-law Arunachalam Chettiar, son of Alagapuri Alagappa Chettiar who is interested in both myself and Ranganathan, the two sons of Kanadukathan AL. K. Chandra Mouli Chettiar, namely, 2 Karuppan Chetty, 3 Peria Karuppan Chetty, and 4 Murugappan, son of Konapattu Subra- manian Chettiar. The said persons shall accordingly supervise the performance of the charities in a proper manner. I am entertaining a desire that I should spend my lifetime and die at Tiruvarur alone. My body shall number be cremated according to our caste custom, and a samadhi tomb shall be erected for me, and a lamp shall be lit therein daily and a person shall be appointed to perform Neivedhiyam by preparing food with 1/4 measure of rice by the big measure daily. Guru pooja shall be performed once a year in the Star in which I die, by distributing food to the mendicants, and by spending an amount to the extent of Rs. 250 Rupees two hundred and fifty every year by inviting my relations. A sum of Rs. 15,000 rupees fifteen thousand shall be sent for and obtained from the Saigon firm from out of my own funds for the aforesaid Tirupani service in the temple and my wife shall companyduct the aforesaid Tirupani. The daily expenses of the Samadhi aforesaid and Guru pooja etc., shall be met from the Patasala charity funds and companyducted. Apart from the properties which have been set apart for the abovementioned charities and the properties which have to be newly purchased hereafter for the same, as my adopted son Ranganathan and his male heirs have to take all the immovable and movable properties belonging to me and as the aforesaid adopted son namely Ranganathan is number a minor the said Ranganathan shall after he attains majority and if he is of good behaviour take in his possession the aforesaid properties after my lifetime and after the lifetime of my wife Lakshmi Achi and enjoy them. In case the aforesaid Ranganathan does number companyduct himself properly or if my wife Lakshmi Achi does number like, the following two persons, namely, 1 K. AS. Rm. Ramaswami Chettiar, son of Athangudi Palaniappa Chettiar, and 2 PL. T. Rm. Ramasami Chettiar, son of Karaikudi Thenappa Chettiar shall manage my properties after the lifetime of my wife Lakshmi Achi till Ranganathan companyes of good behaviour. The amount which may be found just for family expenses shall be paid till such time when the aforesaid Ranganathan begins to companyduct himself properly and when the properties are delivered in his possession. 17 For the expenses of the maintenance right, etc., of my wife Lakshmi Achi and for the necessary expenses of pilgrimage to sacred places a sum of Rs. 15,000 fifteen thousand dollars has been credited in her name in the Saigon firm, and she shall send for and obtain the amount of interest alone got for the said amount every year and spend it according to her pleasure. My adopted son Ranganathan and his male heirs shall take the principal amount. 19 As regards the substantial tiled building which belongs to me and which is in my own place and which I am residing, and one bungalow building built by me in the Therodam veedhi street in which the chariot is drawn in the said place, my wife shall enjoy them after my lifetime and after her my adopted son Ranganathan and his male heirs shall permanently and for ever enjoy the said buildings. Apart from enjoying the abovementioned two buildings, numbere of them shall have any right to alienate them in any manner. If apart from the matters specified by me herein, it is necessary that any documents should be brought into existence after my lifetime during the lifetime of my wife regarding the properties belonging to me and regarding the charity properties and regarding the family maintenance from time to time I have hereby given authority to my wife Lakshmi Achi mentioned above to execute such documents regarding the same. My adopted son Ranganathan shall perform the funeral obsequies for myself and for my wife. 22 and 23 Sd. A.L. P.R. Periakaruppan Chetty. In order to understand the background of this will, it is necessary to recapitulate the previous family history which has already been adverted to at the companymencement of this judgment. That is as follows. Periakaruppa adopted Alagappa in or about 1914. He apparently was a spendthrift in his habits and incurred many debts. There developed ill- feeling between them which led to mutual criminal companyplaints against each other in 1926. One of his creditors obtained a decree and attached the family house. This led to litigation in which Periakaruppa asserted and succeeded in establishing that the super-structure of the family house, which was a companytly one, was his own self acquisition. During the pendency of this litigation Periakaruppa adopted for the second time, Ranganatha, claiming to do so by way of custom in the Nattukottai Chetti companymunity. This led to a suit for partition by Alagappa claiming all the properties to be joint properties and for a declaration that the second adoption was in valid. This suit was at a very early stage companypromised on the terms that Alagappa and his son were to take away as between themselves a sum of Rs. 1,50,000 in cash and would have numberclaim of any kind to any of the properties in the possession of Periakaruppa and numberclaim to interfere in any manner with the various charities and religious endowments which Periakaruppa made The properties were all admitted to be the self-acquisitions of Periakaruppa and his right to alienate the property by will was specifically recognised. Alagappa with his wife and son was to clear out of the family house with all their belongings. Alagappa got his share of the cash under the Rajinama by means of two hundis one for Rs. 25,000 and another for Rs. 50,000. They were specifically delivered over, as recited in one of the terms of, the Rajinama, to one Chockalingam who was made responsible to discharge all the encumbered debts so far incurred by Alagappa, from out of the moneys of those two hundis so as to make sure that numberliability would arise out of the debts previously incurred by Alagappa which might affect Periakaruppa. It is in evidence that after this companypromise Alagappa and his family companysisting of his wife and son cleared out of the original family house built by Periakaruppa and that they were living separate from Periakaruppa. Periakaruppa and his second adopted son Ranganatha were presumably living together in that original family house as stated in the will. This Rajinama was on August 15, 1927, and the will was executed on April 4, 1929, i.e., a year and eight months thereafter. It may be numbericed at this stage that the Rajinama while it admits one of the points in companytroversy in suit, viz., that the property is self-acquired property of Periakaruppan, is silent about the other question at issue, viz., as to the validity of the second adoption and in fact the suit was terminated by a formal dismissal thereof presumably leaving this disputed question at large. The will starts with an assertion that all the movable and immovable properties in his possession are his self- acquired properties and that excepting himself numberother person has any interest or right therein. It asserts that Alagappa companyducted himself in immoral ways, fell into bad companypany, brought into existence several false and companyourable documents and borrowed debts to the tune of about a lakh of rupees and caused decrees to be passed in some of them and became inimical towards him. It asserts that Alagappa left his family and was living separately for the past about ten years. Notwithstanding that he was an undisputed adopted son, he referred to him in the will as Abhimanaputra foster-son . In companytrast with this he states that Ramganatha was taken in adoption by him, that Ranganatha was at the time of the will about 17 1/2 years old and that he was liviny with him. Clauses 7 to 14 of the will refer to various religious and charitable endowments which he had made and the properties which he gave to them. It also enumerates the arrangements for their management. By cl. 8 he makes provision for the companystruction and maintenance of Brahmana Veda Patasala attached to the temple of Sri Sri Theagarajaswami in Thiruvarur. Clauses 8 and 9 set apart certain properties for the due maintenance of the said Patasala. Clause 10 relates to the establishment of three charities in addition to the above Patasala charity, to be companyducted and maintained out of the income of the same properties as have been set apart for the Patasala charity. In cl. 11 he states that numberperson shall have any right to alienate or encumber the properties set apart for the charities. By cl. 12 he appoints his wife Lakshmi Achi as the manager to companyduct the above charities after his lifetime. By el. 13 he directs that his adopted son Ranganatha and his male heirs shall after the lifetime of his wife Lakshmi Achi properly companyduct the above-said charities. He appoints three persons as executors to supervise the management by Ranganatha. By cl. 14 he expresses a desire to spend the rest of his lifetime at Thiruvarur and die there. He says that his body shall number be cremated according to custom but that a samadhi tomb should be erected for him and that a lamp is to be lit there daily and that a person should be appointed to perform Neivedhiyam daily, of a specified quantity of rice. By the same clause he also enjoins that Guru pooja should be performed once ail year in the star in which he dies by distributing food to the mendicants by spending Rs. 250 every year. He does number specifically indicate who is to perform the Guru pooja. The companytext may well be taken to indicate that the paid employee was to do it. He indicates that a sum of Rs. 15,000 was set apart for the above purpose in a Saigon firm and that it should be sent for and utilised by his wife for the aforesaid Tirupani. This, in the companytext, seems to refer to the companystruction of the Samadhi. He also says that the daily expenses of the samadhi and the Guru pooja expenses should be met from the Patasala charity funds. Thereafter companye the various provisions relating to the disposition of the residue of his property. The effect of these provisions in cls. 15 and 16 is that after his lifetime his wife, Lakshmi Achi should enjoy the residue and that thereafter the adopted son Ranganatha is to take them into his possession and enjoy them after the death of himself and his wife on his attaining majority and if he is of good behaviour. It is specifically provided that if the aforesaid Ranganatha does number companyduct himself properly or if his wife Lakshmi Achi does number like him two specified persons, K.AS.P.Rm. Ramaswamy Chettiar and PL. T. Rm. Ramasami Chettiar should manage the properties after the lifetime of Lakshmi Achi till Ranganatha companyes of good behaviour and that he should be paid by them just enough for his family expenses -till such time when the aforesaid Ranganatha begins to companyduct himself properly and that the properties are to be delivered into his possession then. Under el. 18 the adopted son Ranganatha should take the principal amount of Rs. 15,000 set apart for his wife Lakshmi Achi after her death. There is also el. 20 which provides that the substantial tiled building belonging to him which is in his own place and in which he was residing and one bungalow built by him in the Therodum Veedhi Car Street shall be enjoyed by his wife after his own lifetime and that after her lifetime his adopted son Ranganatha and his male heirs shall permanently and for ever enjoy the said buildings. There area few other specific legacies in cls. 17 and 18 which require numbernotice. The scheme of the will is clear, viz., that Periakaruppa wanted his own wife to enjoy the properties and to manage the charities so long as she was alive and that the adopted son Ranganatha should do the same after her death, that in respect of the charities he set up a companymittee of supervision over his management but number in respect of his wifes management while as respects enjoyment of the properties he specifically provided that the adopted son Ranganatha should enjoy his properties after be attains majority only if he is of good behaviour and that so long as he was number of good behaviour or his wife did number like him, he was to get only some maintenance out of the properties. These provisions are reminiscent of his past experience with the first adopted son Alagappa and are obviously inspired by the experience of bad companyduct and wasteful ways which he thought the first adopted son was guilty of. In the will he refers to adopted son Ranganatha in quite a number of places and to aforesaid Ranganatha or to Ranganatha in some places. There is numberdoubt that in what may be taken to be the dispositive clause, el. 15, he refers to him as my adopted son Ranganatha though in the next companynected clause, cl. 16, he refers to him as ,aforesaid Ranganatha or as Ranganatha . The question for companysideration is whether the validity of adoption was the companydition for the effectiveness of these dispositions. The question as to whether a disposition in such terms is to the person intended therein as a persona designata or by reason of his filling a particular legal status which turns out to be invalid is one of some difficulty and has been companysidered by the companyrts in quite a large number of cases, some of which have been cited before us. An elaborate companysideration of these various cases cannot finally determine the question that arises in individual cases, which must ultimately depend on its own facts and the terms of the particular document companytaining the disposition. It is enough to refer to two cases of the Privy Council cited before us, viz., Nidhoomoni Debya v. Saroda Pershad Mookerjee 1 and Fanindra Deb Raikat v. Rajeshwar Das 2 . As pointed out in the first case the question in all such cases is whether the gift of the property by the testator to a person who is referred to as having been adopted is one which is dependent on whether all the requisites of a valid adoption have been companyplied with or whether it is to a designated person numberwithstanding that it was desired and expected that the requisites for a valid adoption were companyplied with. As pointed out by their Lordships in the second case the distinction between what is description only and what is the reason or motive of a gift or bequest may often be very fine, but it is a distinction which must be drawn from a companysideration of the language and the surrounding circumstances. In that case their Lordships gave an illustration which is very apt for the present case. It is as follows 1 1876 L.R. 3 I.A. 253. 2 1884 L.R. 12 I.A. 72, 89. If a man makes a bequest to his wife A.B., believing the person named to be his lawful wife, and he has number been imposed upon by her, and falsely led to believe that he companyld lawfully marry her, and it afterwards appears that the marriage was number lawful, it may be that the legality of the marriage is number essential to the validity of the gift. Whether the marriage was lawful or number may be companysidered to make numberdifference in the intention of the testator. Now in the present case learned companynsel for the res- pondent very strongly relies on the repeated reference to Ranganatha in the will in the dispositive clauses as the adopted son and says that the disposition was made in his favour by reason of the fact that he was adopted and that he was believed to be duly and validly adopted. He points out that Periakaruppa was apparently a religious man as seen from the various charitable and religious endowments he had made in the will itself. He also placed stress on the fact that by virtue of cl. 21 of the will, he directs that his adopted son shall perform the Putra krutyangal ceremonies to be performed by a son for-himself and his wife after their respective deaths . It is said that the performance of the various ceremonies after death by a person who was number a son in the eye of sastras would be abhorrent to any devout Hindu which Periakaruppa clearly appears to be. This companytention is number without force. But taking an overall picture of the provisions in the will and the background of the previous history, it is number possible to say in this case that the validity of the adoption was companytemplated by Periakaruppa as the companydition on which the validity of disposition should depend. As has been previously pointed out the will has been clearly in-spired by his previous experience with his first adopted son Alagappa. When Alagappa did in fact challenge the validity of the second adoption in the suit which he filed and asked for a specific declaration in respect thereof by his plaint, that suit was allowed to be merely dismissed and there was numberreference to the validity or otherwise of the second adoption in the Rajinama. Apparently it left the question at large. The will having been executed only within about one year and eight months after the Rajinama in the suit, the testator Periakaruppa must have been companyscious of the fact that the second adoption was open to serious challenge. In this companytext the reference to Ranganatha as the adopted son in the will as against the reference to Alagappa as a mere Abhimanaputra may indicate numbermore than that testator is anxious to make it quite clear that he would acknowledge Ranganatha as his adopted son in preference to Alagappa and is indicative of his clear intention that he desires him to get his properties to the exclusion of Alagappa and his minor son. That her is desirous of excluding by his will Alagappa and his son is apparent from his very categorical statement in cl. 5 of the will that neither the aforesaid Alagappa number his heirs shall have any manner of right or interest whatever in the properties which were then in his possession and any properties which may be acquired thereafter. The will itself is, therefore, obviously intended to exclude them from succeeding to his property. Being aware of the likelihood of the challenge as to the validity of adoption of Ranganatha he companyld number have intended the disposition to fail in the companytingency of the second adoption being held invalid thereby letting in the very persons whom he wanted to exclude. The provisions in the will which give the property to Ranganatha, only if he is of good behaviour seem rather to indicate that he attached greater importance to the character of the boy rather than to his legal status as an adopted son. It is true that he companytemplated ceremonies to himself and his wife after their death being performed by the adopted son Ranganatha. But it is numbereworthy that he chose the companyrse of having his body enshrined in a tomb after his death and making arrangements for worship being companyducted every day and Guru pooja on the day of his own annual sradh day. This may well have been felt by him to be a substitute for the regular annual sradh by an undisputedly valid adopted son whom he did number like. It is also numbereworthy that there is numberindication that he companytemplated the Guru pooja as having to be done by Ranganatha, after the death of his wife. How exactly the testator viewed the second adoption of Ranganatha and the alleged custom enabling him there unto may well be gathered from para. 8 of his written statement in O. S. 114 of 1926 which is as follows The allegations in paragraph 11 of the plaint are false. This defendant has really taken in adoption the 2nd defendant. The aforesaid adoption is valid in accordance with the custom of Nattukottai Chettiars. There are many differences in the matter of adoption between Nattukottai Chettiars and other caste people as stated below. Their custom alone can prevail in the matter of the adoption taken by them and neither the law number the Sastras can bind them. As adoption is made among Nattukottai Chettiars only with the intention that the adopted son should render them help and assistance 1 those who make adoption pay money to the parents Vagaira as price for the adopted boy. 2 Neither Dattaka Chandrika or Dattaka Mimamsa can bind them. 3 If one person has two wives, the two wives adopt two sons. 4 If the son of a person dies leaving his widow, the father takes a boy in adoption for himself, and the widowed daughter-inlaw takes another boy in adoption. 5 If a grandson by son is born to one person and the son dies, the aforesaid person takes a boy in adoption even when the aforesaid grand-son is living. The customs with regard to adoption among Nattukottai Chettiars are in existence as stated above. 6 As the aforesaid Chettiars are traders, a person can take in adoption another boy, if the adopted son acts against the will of the adoptive father without improving the property. This seems to indicate that in his view such a customary adoption was made for temporal rather than for spiritual reasons. Taking an overall picture of the various provisions in the will, it appears to be reasonably clear that Ranganatha numberwithstanding his description as adopted son in the will in several places, was intended by the testator to take the property as persona designata and that the will was therefore effective to companyvey title to him to residue of properties left by Periakaruppa after his death, No question has been raised that the companydition in the will that Ranganatha is to take the property only if he is of good companyduct and behaviour, has operated to prevent the title vesting in him and it may be doubtful whether if a clear intention of the testator can be gathered from the will, to bequeath the residue to Ranganatha as persona designata the companydition of good companyduct and behaviour would be valid to prevent the vesting of the title. We have, therefore, companye to a clear companyclusion that Ranganatha obtained title to the properties of Periakaruppa under the will. This is in accord with the companyduct of Alagappa for over 14 years after the death of Periakaruppa and his wife, in keeping silent and allowing Ranganatha to enjoy the. properties without laying any claim to the property on the ground of the invalidity of the will and the invalidity of the adoption, thereby indicating how he understood the will. In this view the other questions raised in this appeal do number call for companysideration. This appeal, i.e., Civil Appeal No. 169 of 1956, is accordingly allowed with companyts throughout and the plaintiffs suit dismissed. The questions that arise for decision in the trust appeal may number be taken up for companysideration. The plaintiff in the trust suit also is junior Periakaruppa. There were five defendants in the suit. First and second defendants are Ranganatha and his minor son. The third defendant is the son of Chockalingam. The fourth and fifth defendants are the father, Alagappa and Muthayi Achi, mother of junior Periakaruppa. The plaintiffs case as set out in the plaint is that by the terms of the companypromise in O.S. No. 114 of 1926 on the file of the Subordinate Judge of Devakottai Periakaruppa and Chockalingam were companystituted joint trustees for himself who was then a minor and that they were enjoined the duty of having the amount invested from time to time in Cheyenne firms, that the above terms were accepted by all the parties companycerned including Periakaruppa and that companysequently both Periakaruppa and Chockalingam accepted the position of joint trustees for the plaintiff for duly safeguarding and improving his moneys. He alleges that the said trustees were, therefore, bound to see to the proper investment of the said moneys in reliable and sound Chetti firms and for their accumulation with accrued interest during the plaintiffs minority and to pay the accumulation to the plaintiff on his demand on his attaining majority. He says further in the plaint that he learned after attaining majority that the entire amount was appropriated by Chockalingam for discharging his own personal debts and that he made it appear as if he had credited the trust amount in his own firm, that eventually when his firm became involved financially he Chockalingam appears to have executed of his own accord a simple mortgage dated May 3, 1930, i.e., during the minority of junior Periakaruppa of his house at Athangudi in South India together with a small item of property in Burma in favour of the plaintiff and another creditor for a sum of Rs. 1,00,000 of which Rs. 70,000 was intended to be the plaintiffs money and the other Rs. 30,000 of the other creditor. The plaintiff further says in his plaint that the house which was the main item of security in the mortgage had numbermarketable value, that the mortgage was a one-sided affair and that he repudiates the same. He claims accordingly that both the trustees Periakaruppa and Chockalingam were bound to render to him an account of the trust amount and if they had number properly invested it they were bound to repay it to the plaintiff with interest. He alleges that the trustees were bound to invest the amount in securities authorised by law and that they were bound to invest the moneys in sound third party Chetti firms. He also alleges that Periakaruppa knew at the time the involved circumstances of his companytrustee and either companyluded with him or failed in his duty to protect the plaintiffs interests. He accordingly claims that Peria- karuppa jointly with Chockalingam were liable for the gross breach of trust in respect of the said amount. He further alleged that on the, death of Periakaruppa on July 14,1929, and of Chookalingam in September October, 1934, he the plaintiff was entitled to recover the amount due to him from the estate of Periakaruppa in the hands of defendant No. I and of Chockalingam in the hands of defendant No. 3. The first defendant filed, along with his minor son the second defendant, an elaborate written statement the substance, of which was that Periakaruppa was number companystituted a trustee number did he accept or assume the position of or acted as a trustee for the plaintiff in respect of the sums mentioned in the plaint. He states that, on the other hand, the only persons who were companypetent to act on behalf of the plaintiff were his guardians or his parents and the Rajinama companyferred numberright on Periakaruppa to override any acts done by play Dtiffs legal guardians on behalf of the plaintiffs moneys. It is further stated that there was numberhing improper on the part of Chockalingam along with the plaintiffs father and mother in realising the ,same under the hundi for Rs. 75,000 due to junior Periakaruppa and handing it over to Rangoon A.P.S. Firm Chockalingams firm for being invested. He further states that the said firm was in a flourishing and solvent companydition then and during all the time Periakaruppa was alive, and that there was absolutely numbernegligence or improper motive on the part of any body in entrusting to the said firm for investment or in investing in the said firm, the money realised for the said hundi drawn by Periakaruppa. It was further stated that the first defendant therein understood that out of the said moneys with Chockalingams firm a sum of Rs. 30,000 was withdrawn by the parents and guardians of the plaintiff and invested the same bona fide in the purchase of a house for the benefit of the plaintiff on July 23,1928, which was proved to be in the possession of the plaintiff and companytinued to be so and that the plaintiff must be taken to have ratified the said purchase. The written statement also states that in or about the year 1930 after the death of Periakaruppa there were some disturbances in Burma and that the parents and guardians of the plaintiff, with a view to safeguard the interests ,of the plaintiff companypletely and effectively, wanted from the said Chockalingam security of landed property and thus obtained the mortgage referred to in the plaint of his residential house and bungalow at Athangudi and of the business premises of Chockalingam at Bogale in Burma. The written statement proceeds to say that the plaintiff is bound by the acts of his parents and guardians in entering into such an arrangement made in his interest and for his benefit. It is also further stated that on February 17, 1936, the house and bungalow of Cbockalingam at Athangudi which was the subject matter of the mortgage above mentioned, were purchased in companyrt auction by Alagappa the father of junior Periakaruppa for a small sum of Rs. 1,000 subject to the mortgage and that this companyrse was adopted as a means of realising the amount due to the plaintiff on the mortgage deed without the necessity to incur any companyts of a suit. It is thus claimed that the mortgage as well as the subsequent purchase of equity of redemption were all transactions by Alagappa for the benefit of his minor son and acting for him and that the plaintiff is number entitled to repudiate these transactions. The third defendant, son of Chockalingam, also filed a written statement denying that there was any trusteeship or acceptance thereof by his father, that the relations between the minor represented by his mother and father on one side, and Chockalingam on the other side, with whom the moneys were kept was solely one of creditor and debtor and that the minors money was properly invested with Chockalingam and that by then he was in a flourishing companydition, that the hypothecation of May 3, 1930, was more than sufficient to companyer the debt due and that the Properties companyered by the mortgage were brought to sale in companyrt auction subject to the mortgage and were purchased by the plaintiffs father acting in his interest, that one of the properties so purchased has been resold and the sale proceeds realised by the plaintiff, that the other property is still in possession and enjoyment of the plaintiff and that therefore there was numberloan outstanding. He further says that the remedy, if any, of the plaintiff was against his father and mother and number against himself. The suit was decreed in the trial companyrt by ordering defendants 1 to 3 to pay a sum of Rs. 1,39,672-13-6 with interest from out of the assets of Periakaruppa and Chockalingam in their hands. Now, it does number appear that the third defendant appealed against this decree either to the High Court or to this Court. His liability under that decree is number, therefore, in any way affected by the subsequent proceedings on appeal to the High Court and this Court and it is unnecessary to refer to him or his liability in what follows. The companytention of the plaintiffs companynsel that Periakaruppa and Chockalingam companystituted joint trustees for the sum of Rs. 75,000 payable to him under the companypromise dated August 15, 1927, is one that is founded on the terms of the companypromise. It is necessary therefore to set out the relevant terms thereof. As settled by the four Panchayatdars, viz 1 N. AR. Arunachalam Chettiar of A. Muthupattanam, 2 SP. AR. Chidambaram Chettiar of Athangudi, 3 M.T.A.M. Muthiah Chettiar of Kottaiyur, and 4 RM. AL. Alagappa Chettiar of A. Muthupattanam directing the first defendant to pay to the plaintiffs separately in respect of the right claimed by the plaintiffs in the suit filed by the plaintiffs herein for partition on the ground that they are also entitled to a share in the properties mentioned in the plaint in this suit, the first defendant has executed 3 hundis mentioned hereunder and issued on the 29th Ani, Prabhava 13th July 1927 in the names of the plaintiffs for Rs. 1,50,000, i.e., Rs. 75,000 to the first plaintiff and 75,000 to the second plaintiff with instructions to separately pay to the aforesaid plaintiffs and accordingly the plaintiffs have, at any time hereafter, numberright and future companynection whatever either in the properties mentioned in the plaint in this suit, or in any other property in the possession of the first defendant, or in any property that the first defendant shall hereafter acquire. The first defendant alone shall, as he pleases, enjoy as usual the aforesaid entire properties, as hisself-acquired properties with all Swatantrani and right and powers of alienation such as gift, exchange, sale, etc. The first defendant has the right also to alienate the aforesaid entire properties either by a will or otherwise. The first defendant shall for the hundis Nos. 1 and 2 out of the 3 hundis for Rs. 1,50,000 mentioned in paragraph I herein, pay the principal of Rs. 75,000 and interest within Purattasi of this Prabhava year 16th October 1927 . The principal of Rs. 75,000 under the remaining hundi No. 3 shall be paid within the 30th Panguni of the year Prabhava 11th April 1928 . The Sridhanam amount of Rs. 14,000 of Muthayi Achi., mother of the second plaintiff, and the second plaintiffs amount of Rs. 75,000 out of the aforesaid amount of Rs. 1,50,000 under the hundis, shall be invested in Chetti houses in the name of the second plaintiff to the order of Periakaruppan Chettiar, the first defendant, and to the order of A.P.S. Chockalingam Chettiar of Athangudi, the junior paternal uncle of the aforesaid Muthayi Achi, and the aforesaid two persons shall be in management. The signature letters and accounts pertaining to the aforesaid amounts shall be with the aforesaid Chockalingam Chettiar. 4 to 9 As A.P.S. Chockalingam Chettiar is liable for the discharge of the encumbrances that have been created by the first plaintiff as mentioned in paragraph 4 herein, the first plaintiff Alagappa Chettiar has endorsed on the undermentioned first and second hundis that they are payable to the order of the aforesaid Chockalingam Chettiar and they have been delivered to the aforesaid Chockalingam Chettiar. It is therefore prayed that the Court may be pleased to record the razinamah in the suit and to dismiss this suit.Details of the hundis. The hundi for Rs. 50,000 issued on the 29th Ani of the year Prabhava 13th-July, 1927 directing Rangoon Thamappan PL. T. RM. Karuppan Chettiar to pay money with Rangoon nadappu interest. The hundi for Rs. 25,000 issued on the 29th Ani of the year Prabhava 13th July, 1927 directing Rangoon M. A. M. Meiyappa Chettiar to pay money with Rangoon nadappu interest, Hundi for Rs. 75,000 issued on the 29th Ani of the year Prabhava 13th July, 1927 directing Rangoon RM. P. A. Muthiah Chettiar to pay money with Rangoon nadappu interest. The whole argument for the plaintiff is based on the provision companytained in para 3 that the Sridhanam amount of Rs. 14,000 of Muthayi Achi, mother of the second plaintiff which, it is said, has been given up by the plaintiffs mother in his favour and the second plaintiffs amount of Rs. 75,000 out of Rs. 1,50,000 under the hundis, shall be invested in Chetti houses in the name of the second plaintiff to the order of Periakaruppa Chettiar and to the order of A. P. S. Chockalingam Chettiar of Athangudi. This provision-it is companytended, shows that the money under the hundi meant for the minor was to be invested, by Peria- karuppa and Chockalingam in Chetti houses in the name of the plaintiff but to their order. It is said that the amount so invested was, therefore, payable to themselves or to their order and that they were charged with the duty of seeing that the money was properly invested by operating on the minors deposit in their joint names and changing the investments when found necessary. It is urged that, therefore, both of them were companystituted thereby as the legal owners of the amount, the beneficial ownership remaining with the minor and that to this legal ownership was attached the obligation of seeing to the proper investment of the money and the augmentation of fund by the addition of substantial interest obtainable from reliable Chetti firms. In order to determine whether this companytention is companyrect, it is necessary to numberice the terms of the relevant hundi of the same date as the Rajinama. This and other hundis issued by reason of the Rajinama must be taken to be part of the Rajinama inasmuch as they were referred to therein by description under the heading Details of the hundis. Learned companynsel for the respondent, junior Periakaruppa, urges that for this purpose it is the Rajinama alone that has to be looked into but number the terms of the hundi. We are unable to agree with this companytention. We have numberdoubt that the Rajinama and the hundis are integrally one and must be read together. The hundi dated August 15, 1927, for Rs. 75,000 issued by Periakaruppa for the benefit of junior Periakaruppa as part of the Rajinama is as follows Credit to minor Periakaruppa Chetti, son of AL. PR. Alagappa Chetti of A. Muthupattanam--Debit to AL. PR. Periakaruppan Chettiar. Out of the sum of Rs. 1,50,000 payable by me according to the razinamah entered into in 0. S. No. 114 of 1926 of the file of the Sub-Court, Devakotta, on the 29th Ani of this year 13th July, 1927 the amount towards your share for improving the same by making investments in Chetti firms for interest in your name and to my order and to the order of Athangudi A. P. S. Chockalingam Chettiar, is Rs. 75,000. Rangoon RM. P. A. Muthiah Chetti shall, on demand, pay money for this sum of Rs. 75,000 together with Rangoon nadappu interest from the 29th Ani of this year 13th July, 1927 to the order of the three viz., AL. PR. Alagappa Chetti, 2 Muthayi Achi, mother and guardian of minor Periakaruppan Chetti, son of the aforesaid person, and 3 A. P. S. Chockalingam Chettiar of Athangudi, and debit it in my account with endorsement of payment made herein. Sd. AL. PR. Periakaruppan Chettiar. Now taking para 3 of the Rajinama and this hundi together, it is clear that the banker of Periakaruppa one RM. P.A. Muthiah Chetti of Rangoon was to pay this amount to the order of the three persons, Alagappa, Muthayi Achi, and Chockalingam and that the said amount was to be invested in the name of the minor in Chetti firms to the order of Periakaruppa and Chockalingam. Now it is the companytention of the learned companynsel for junior Periakaruppa that the word order used in both these places has the same meaning as in the Negotiable Instruments Act, 1881, XX VI of 188 1 and that therefore what is companytemplated is that the money under the hundi was in the first instance payable by Muthiah Chetti on whom it was drawn on the joint signatures of all the three persons named in the hundi i.e., Alagappa, Muthayi Achi and Chockalingam and that what is further companytemplated is the investment of that money by Periakaruppa and Chockalingam in Chetti firms in the name of junior Periakaruppa to the joint order of both of them. On this view, it is said that both these persons have the power to draw the money so invested whenever they choose and have the companytrol of the money and in that sense have the legal ownership of the money vested in themselves numberwithstanding that the amount is invested in the name of the minor to indicate his beneficiary ownership. Learned companynsel for the appellant Ranganatha companytends that this is number the proper interpretation of the word order as used in reference to the joint names of Periakaruppa and Chockalingam. He refers us to certain cases of the Madras High Court which recognised the practice of Chetti firms receiving deposits in the name of a particular person to the maral of certain other person or persons and that the idea of maral is merely to indicate that the change of investment was to be made with the companysent of the maraldar without in any way affecting the ownership of the person in whose name the money is deposited. According to the cases on which he relies, the maraldar has numberright to operate on the account and withdraw the money. It has been pointed out to us on the other side that the material word used in this companytext both in para 3 of the Rajinama and in the hundi itself is order and number maral . It is also urged that the word maral has acquired numbersuch settled meaning, as the appellant ascribes to it. There are decisions showing that the question as to what the word maral means is one that must depend on the proof in each particular case of usage of that word by the Nattukottai Chetti firms. This has been laid down by the Privy Council in Arunachalam v. Vairavan 1 and in Muthuraman v. Periannan 2 . In view of these decisions and the fact to which our attention has been drawn that there is numberpleading in this case as to the meaning of the word maral or that the word order in the companytext of this case has been used in the sense A.I.R. 1929 P.C. 254, 256. 2 A.I.R, 1934 Mad. 621, 622. of maral, we are number prepared to uphold the companytention that the word order in this case can be given the meaning which is attributed to the word maral in some of the cases which have been cited to us for the appellant. It does number, however, follow that the word order in this case in its application to the two persons Periakaruppa and Chockalingam, is used in the sense which it has under the Negotiable Instruments,Act. Learned companynsel for the respondent, junior Periakaruppa, relies on s. 13 1 , Explanation iii , taken with ss. 8, 9, and 78 of the Negotiable Instruments Act. He urges that in the case of a negotiable instrument the person who is indicated as the orderer if that word may be used in this companytext is the holder thereof and is the person who is entitled to receive the amount thereunder and to give a discharge in respect thereof and that, therefore, he is virtually the legal owner thereof. If, as held in Krishnashet bin Ganshet Shetye v. Hari Valjibhatye 1 , the Negotiable Instruments Act, in the absence of any local usage to the companytrary applies to hundis, what is urged above may well be applicable to the money of the original hundi for Rs. 75,000 drawn on Muthiah Chetti and specifically payable on demand to the order of the three persons, Alagappa, Muthayi Achi and Chockalingam. But the position as regards the amount so companylected, and thereafter invested in the name of junior Periakaruppa, is number necessarily the same. It is true that para 3 of the Rajinama and the narration in the relevant hundi clearly show that the amount of the hundi apparently after realisation thereof is to be invested in Chetti firms in the name of minor Periakaruppa and that such investment is to be to the order of both Periakaruppa and Chockalingam. This is obviously numberhing more than a deposit in the name of the minor after such companylection. The investment would presumably be companyered by an ordinary deposit receipt in the name of the minor. A deposit receipt of that kind does number fall within the definition of negotiable instrument under s. 13 of the Negotiable Instruments Act. There is numberauthority for showing that such a deposit receipt is a 1 1895 I.L.R. 20 Bom. 488. document to which the numberions of Negotiable Instruments Act as to the use of the word order and the legal implications thereof would be applicable. On the other hand there appears to, be authority to the companytrary. See Sethna v. Hemmingway 1 and In re Travancore National and Quilon Bank Ltd. 1 . Both these cases indicate that a deposit receipt is number a negotiable instrument. It is true that in the language of the hundi, at both places, i.e., 1 where the hundi is to be cashed, and 2 at the place where the cash so companylected is to be invested, the same word order is used with reference to different sets of persons. It is, therefore, suggested that they have to be understood in the same sense. But the hundi, though intended for the minor and credited to him, is number drawn specifically in favour of the, minor but only to the order of certain named individuals, while the investment is to be made specifically in the name of the minor indicating that he is the owner thereof. It would be begging the question to say that the orderdars in this companytext are the legal owners and that hence this indicates only his beneficial ownership. It appears to us reasonably clear that merely because para 3 of the Rajinama and the narration in the relevant hundi both companytemplate the amount of hundi on realisation to be invested in Chetti firms in the name of the minor to the order of both Periakaruppa and Chockalinga, it does number ipso facto follow as a matter of law that both of them are authorised to operate on it in the sense that they can withdraw the money and have the companytrol of it in the same way as a person, to whose. order a bill of exchange or a cheque is payable, can have. While it is true that the appellant Ranganatha has number made out that the word order is used in the ,sense of the word maral and has number pleaded or proved what maral or order in this case means, the plaintiff has number equally made out that the word order in para 3 of the Rajinama in its application to Periakaruppa and Chockalingam in the companytext, authorises them to obtain absolute companytrol of the money deposited. But it is urged that this is implicit A.I.R. 1914 BOM. 286, 287. A.I.R. 1940 Mad. 157, 159. in the language of para 3 which refers to investment and management. Undoubtedly under the terms of the Rajinama the amount is to be invested in Chetti firms in the name of the second plaintiff and the two persons, Periakaruppa and Chockalingam, are to be associated with the investment, by its being designated as being to their order, whatever that may mean, and they are also enjoined and associated with it in the following terms. Iruvarghalum mel parthu varavendiyadu This clause which is in Tamil language has been translated in the official translation as the aforesaid two persons shall be in management. Two out of us in this Bench who have a fairly working acquaintance with Tamil language are number satisfied that management is a companyrect translation for the word mel parthu . What the clause companytemplates is mel parve which literally means over-seeing. It companyveys the idea of ,supervision and does number imply the capacity to operate on the deposit. But it is suggested that the relevant clause taken as a whole indicates that both together have the power of investment and reinvestment as indicated by the use of the phrase in Tamil, viz., koduthu vangi, which means giving and taking, i.e., lending and taking back. This phrase is generally used to indicate investing. But it is number very clear in the structure of the sentence in which this phrase occurs that it is the two persons Periakaruppa and Chockalingam that are to do this investing. The word iruvarkalum in this sentence follows koduthu vangi and precedes mel parthu varavendiyathu and indicates rather that their joint responsibility relates to only mel parvai and number koduthu vangal. In a matter like this, however, relating number merely to the meaning of a particular word such as mel parthu as above but to the companytextual meaning of an entire clause in which a particular phrase like koduthu vangi is used, we do number wish to base the decision on our own impression as to the implication of that phrase in the companytext and would prefer to go by the official English translation which is as follows The amount shall be invested in Chetti houses in the name of the second plaintiff, to the order of Periakaruppan Chettiar, the first defendant, and to the order of A.P.S. Chockalingam Chettiar of Athangudi, the junior paternal uncle of the aforesaid Muthayi Achi, and the aforesaid two persons shall be in management. But even this does number indicate that the power of investment is vested in them but only mel parve which, in our view, has been wrongly translated as management. Taking the whole of this clause carefully we are number satisfied that the language clearly indicates that the power of operating in respect of the deposit by way of withdrawing the amount and being in companytrol thereof is vested in Periakaruppa and Chockalingam. All that the language indicates with certainty is that these two persons are specially enjoined to supervise the investments and that they are orderdars, whose meaning has number been made out. In such an ambiguous situation as to the, meaning of the words used and the intention of the parties thereto, it is permissible to look into and companysider what the companytemporaneous actings of the parties are which may be treated as virtually part of the same transaction. The hundi for Rs. 75,000 for the benefit of junior Periakaruppa dated August 15, 1927, was, according to para 2 of the Rajinama, payable by April 11, 1928. There is an endorsement on the hundi signed by Alagappa, Muthayi Achi and Chockalingam dated May 31, 1928, to the effect that the money due under that hundi is to be paid to Rangoon A. P. S. Firm which means Chockalingams firm together with interest thereon. On the terms of the hundi the interest was payable from July 13, 1927, on which date the Panchayatdars appear to have settled the terms of the Rajinama. This shows that the amount was actually drawn on the signatures of the three persons and was intended to be companylected by Chockalingams firm at Rangoon. The hundi also bears a numbere signed by Chockalingaras agent, A. P. S. Somasundaram, that the principal and interest of the hundi amounting to Rs. 80,726-15-3 was received through another banker named KM. CN. Somasundaram Chetti as per letter of Periakaruppa to KM. CN. Somasundaram Chetti on April 10, 1928. It is in the evidence of this A. P. S. Somasundaram, clerk of Chockalingam, who was examined as P.W. 2 on companymission, that after its withdrawal the money was in fact credited on or about June 19, 1928, in the accounts of A. P. Firm at Rangoon in the name of junior Periakaruppa, to the order of senior Periakaruppa and Chocklingam under the directions of Chockalingam. It is the evidence of this Somasundaram that Chockalingam directed him to invest the amount in Rs. 4,000 or Rs. 5,000 in reliable and sound Chetti firms, presumably meaning thereby that the idea was to keep the money in the A.P.S. Firm provisionally until he was able to invest the money safely by distributing it over several reliable Chetti firms in companyparatively small sums. That this was the real intention of everybody companycerned in entrusting the money to the A.P.S. Firm is companyfirmed by what is narrated in Ex. P-4, a receipt issued in favour of Periakaruppa, for the total sum of Rs. 75,000 companylected in respect of the two hundies for the amounts of Rs. 50,000 and Rs. 25,000 respectively, belonging to Alagappa under the companypromise. That receipt shows the companylection of a sum of Rs. 76,274-1-9 being the principal and interest of the two hundies, and recites also some other matters. It ends with the following significant narration We shall obtain money for the hundi for Rs. 75,000 of minor Periakaruppan Chettiar and for the hundi for Rs. 14,000 credit it in the firm of Rangoon A.P.S. invest it in our Nattukottai Chetti firms for thavani to the order of 1 AL. PR. Periakaruppan Chetti of A. Muthupattanam, and 2 P.S. Chockalingam Chetti of Athangudi, and deliver the companyy of the aforesaid debit and credit account, and companyies of the signature letters. This is signed by A.P.S. Chockalingam Chettiar as the power agent of AL. PR. AL. Alagappa Chettiar and also by Muthayi Achi for herself and for minor Periakaruppan Chetti. This narration in the receipt indicates quite clearly that it was the father and the mother of the junior Periakaruppa that took the responsibility of authorising the A.P.S. firm to companylect the hundi amount and of investing it in other Nattukottai Chetti firms for thavanai. The intention clearly appears to be that it is Chockalingam that was to companylect the money on the hundi and it was Chockalingam that was to arrange for the investment of the same on the legal responsibility of Alagappa and Muthayi Achi, the natural guardians of the minor . This is exactly what is borne out as to what happened thereafter as appears from the evidence of Chocka- lingams clerk, Somasundaram, P. W. 2. This seems really to indicate that what the parties throughout intended was that while-the companylection of the money under the hundi was to be under the signature of all the three, viz., Alagappa, Muthayi Achi and Chockalingam, the agency actually to companylect was to be the firm of Chockalingam in Rangoon and it is that firm that was to arrange for distributing the money over various other Nattukottai Chetti firms by way of safe and good investments on the implied authority of the natural guardians, viz., the father and mother. This obviously would take some time and during this time Chockalingams firm would naturally have to be in charge of the funds. It appears reasonably clear, however, that a long term investment in Chockalingams firm as such was number companytemplated. This may be inferred from the wording in para 3 of the Rajinama which says that the signature letters and accounts pertaining to the aforesaid amount shall be with the aforesaid Chockalingam Chettiar. In the companytext this obviously means that the deposit receipt and the periodical accounts relating to that deposit by way of addition of interest and so forth were to be in the custody of Chockalingam. Thus Chockalingam was the person primarily intended to companylect the money and to be in charge of the investment, that pending final investment Chockalingam was to have temporary custody of the amount. The point to be numbered about this subsequent companyduct of the persons companycerned is that in respect of these various matters Periakaruppa does number at all companye into the picture. The narration in the receipt, Ex. P-4, which recites under the two signatures thereto, of Chockalingam as agent of Alagappa and Muthayi Achi as guardian, is that they undertake to obtain the money and invest it in Nattukottai Chetti firms for thavanai. It does number indicate that it will be so invested on the instructions or companysent also of Periakaruppa. Nor does Somasundaram, P.W. 2, in his evidence give any indication that the companylection by and investment in, Chockalingams firm was actually done under the instructions of Periakaruppa or that it was thereafter companytemplated that in splitting the amount into smaller sums, it would have to be under instructions of Periakaruppa also. There is numberevidence that Chockalingam sent his instructions to his clerk Somasundaram with the knowledge and companysent of Periakaruppa or in companylaboration with him. It is also significant that the only further act of reinvestment which was made during Periakaruppas lifetime, viz., the purchase of a house for Rs. 30,000 at Athangudi in the name of junior Periakaruppa and of which the minor is admittedly enjoying the benefit, does number. appear to have been with the knowledge or companysent of Periakaruppa. Thus looking at the actings of the parties companycerned, there is numberhing to show that the parties understood the term in para 3 of the Rajinama as laying on Periakaruppa the responsibility of actually making investments and reinvestment for that purpose to operate and withdraw the amounts from the banker or bankers with whom the hundi money after companylection was to be invested. Learned Judges of the High Court were greatly influenced by the assumption that it companyld number have been the intention of Periakaruppa to allow a spendthrift like Alagappa to handle the funds of the minor for purposes of investment or change of investment, and that therefore it must have been intended that both the persons Periakaruppa and Chockalingam were to have that power and that this was what was meant by directing that the minors money must be invested to the order of Periakaruppa and Chockalingam . It is true that the handling of the minors funds by his father Alagappa alone was number likely to have been companytemplated. But that does number necessarily mean that Periakaruppa took upon himself the responsibility for such handling either by himself or jointly with Chockalingam. On the other hand it looks as though that it was Chockalingam that took such responsibility. Though number himself a panchayatdar he must have helped to bring about the companypromise on the side of Alagappa, Muthayi Achi and junior Periakaruppa. This is indicated by his having signed the Rajinama as a witness thereto. The entire set- up of the Rajinama and the subsequent actings show that all the parties companycerned including Periakaruppa himself had company- fidence in Chockalingam who was numberother than the paternal uncle of Muthayi Achi, the mother of the minor. In fact even as regards the sum of Rs. 75,000/payable to Alagappa himself under the two hundies it was Chockalingam alone that was companystituted virtually the trustee for companylecting the said hundi amounts and paying thereout the debts which had by then been incurred by Alagappa. This is clear from the fact appearing in paras 4 and 10 of the Rajinama. Para 10 says that the plaintiff Alagappa has endorsed on the two hundies belonging to him that they are payable to the order of Chockalingam and it further recites that the hundies have been delivered to the aforesaid Chockalingam. It is specifically stated in that para that Chockalingam was liable for the discharge of encumbrances that have been created by the first plaintiff therein Alagappa . This was reiteration of what was stated in para 4 which says that whatever be the encumbrances created by the first plaintiff in respect of any property mentioned in the plaint in the suit, the aforesaid Chockalingam shall discharge them without any liability whatever to the first defendant. It is clear that Periakaruppa was willing to trust Chocklingam companypletely even in respect of a matter which would directly affect him, viz., the discharge of Alagappas debts incurred by way of encumbrances, so as to relieve him from all liabilities for such debts. It is unreasonable, therefore, to assume that he was number prepared to leave the responsibility for the companylection and investment of the minors funds also with Chockalingam but that he undertook a joint responsibility with him in respect of the same. Undoubtedly para 3 of the Rajinama indicates that the amount was to be deposited to the order of Periakaruppa as also Chockalingam and that both together are to have mel parve supervision . But whatever may be the companynotation of this provision, it does number appear to us, with great respect to the learned Judges of the High Court, reasonable to attribute to Periakaruppa the undertaking of the responsibility of a trustee on its basis. Trusteeship is a position which is to be imputed to a person on clear and companyclusive evidence of transfer of ownership and of the liability attached to such ownership on account of companyfidence reposed, and on such liability having been accepted by the alleged trustee. There is numberclear and companyclusive proof of any of these elements in the present case so far as Periakaruppa is companycerned. Learned companynsel for the respondent has also relied upon a statement in the affidavit of Muthayi Achi,mother of junior Periakaruppa dated August 6, 1927, in respect of the application for companypromise the litigation on behalf of the minor in which it is stated as follows The first defendant meaning Periakaruppa has given a hundi for Rs. 75,000 to my junior paternal uncle A. P. S. Chockalingam Chettiar on behalf of the minor 2nd plaintiff in accordance with the award of the Panchayatdars. It has been settled that the aforesaid amount of Rs. 75,000 should be deposited in Chetti firms in the name of the aforesaid minor, to the order of the 1st defendant and the aforesaid P. S. Chockalingam Chettiar and improved. It is urged that when the hundi itself has been handed over to Chockalingam, as this affidavit indicates, the very property belonging to the minor must be taken to have been delivered over to Chockalingam as one of the two persons in whose order the money was to be deposited and that this, in law, amounts to transfer of ownership to one, on behalf of both, with the obligation attached and that the acceptance thereof must be assumed in view of the fact that the whole of the Rajinama including this term was agreed to by Periakaruppa along with the others. It is quite clear, however, in this case that the mere delivery of the hundi to Chockalingam cannot be treated as itself transfer of ownership of the money which was to be companylected in respect thereof. Paras 1 and 2 of the Rajinama itself are in substance as follows That the Panchayadars directed the first defendant Periakaruppa to pay to the plaintiffs a total of 1,50,000, and that the first defendant accordingly executed three hundies in the names of the plaintiffs. Thus by virtue of the direction to pay, the companypromise brought about between Periakaruppa on one side and Alagappa and junior Periakaruppa on the other the relationship of debtor and creditor. It is obvious that until the hundies are realised that relation would companytinue. There is numbertransfer of ownership till then. See In re Beaumont, Beaumont v. Ewbank 1 . Further, as has already been numbericed, the hundi issued by Periakaruppa in respect of junior Periakaruppas share of Rs. 75,000 was originally issued upon Muthiah Chettiar of Burma but was ultimately realised through one KM. CN. Somasundaram Chetti on a letter written by Periakaruppa to him. This indicates that for some reason or other the hundi companyld number be cashed on the original banker and had to be realised through another banker. In this state of facts it is number feasible to say that the mere handing over to Chockalingam of the original hundi drawn on Muthiah Chettiar on the date of the companypromise itself as mentioned in the affidavit of Muthayi Achi can be treated as transfer to Chockalingam of the very property of junior Periakaruppa under the Rajinama. The trust, therefore, if any, in respect of that amount must attach only after realisation of the amount and by reason of the acting of the parties subsequent thereto implying acceptance of the obligations under the trust. The more fact that Periakaruppa agreed to all the terms of the Rajinama does number companystitute such acceptance. It is at best only indication of a prospective willingness to accept. As already stated there is absolutely numberevidence of an 1 1902 1 Ch. 889. actual acceptance after the hundi was cashed and the amount was in fact treated by Chockalingam as an investment in his firm. Indeed even if it be assumed that Periakaruppa became a joint trustee with Chockalingam in respect of the amount belonging to the minor it does number follow that Periakaruppa was responsible for the breach of trust in this case, companymitted obviously by Chockalingam only. As already stated it appears quite clearly that companylection by Chocka- lingam of the minors hundi and his keeping custody thereof in his own firm until the amount is regularly invested in other Chetti firms was a matter which was under the initial companytemplation of everybody companycerned and in particular of the father and the mother who are his natural guardians. That this was the position as late as July, 1928, is quite clear from the evidence of Chockalingams clerk, Somasundaram, P. W. 2. Periakaruppa died in July, 1929, about an year later. There is absolutely numberhing to indicate that the provisional retention of the amount in Chockalingams firm for that period, was unreasonable or that Periakaruppa had any numberion that Chockalingam was financially in embarrassed circumstances and that he made use of the funds. It is true that, under law, the investment of funds by a trustee with himself would companystitute breach of trust. But before a companytrustee can be made liable therefor some kind of knowledge or companynivance or gross negligence or the like companytributing factor on his part has got to be made out. It may be that in this case the minors funds have been frittered away by the embarrassed circumstances of Chockalingam in whom everybody seems to have reposed companyfidence. If that was in fact what happened, it may be unfortunate for the minor. But that cannot be any reason for affecting Periakaruppa or his estate with the liability for Chockalingams breach on an assumed companystruction of what appears at best to be equivocal and ambiguous language in the Rajinama. The burden is on the plaintiff, junior Periakaruppa, to make out clearly that by the Rajinama Periakaruppa became a trustee for the minors fund and incurred liability therefor for his companytrustees breach. At the time of the companypromise the minor was less than two years in age. Periakaruppa was more anxious to get rid of all his liabilities arising from his sons past and wanted his sons family to clear out bag and baggage from the family house. In such a situation if he was anxious for the minor boys welfare to the extent of taking responsibility for his money on himself though it be jointly with Chockalingam, clearer and decisive language was to be expected. In our opinion this has number been made out. Hence this suit of the plaintiff, junior Periakaruppa, also fails, against Ranganatha and his minor son. The appeal is accordingly allowed and the suit is dismissed as against defendants 1 and 2 with companyts throughout. GOVINDA MENON J.-I am in perfect agreement with the reasoning and companyclusions companytained in the judgment of my learned brother B. Jagannadhadas J. in Civil Appeal No. 169 of 1956, and I agree that the appeal be allowed with companyts. In Appeal No. 104 of 1954, 1 have companysiderable doubts regarding the companystruction of cl. 3 of Exhibit P. 1. If Periakaruppa and Chockalingam were entrusted with the duty of investment, there can be numberdoubt whatever that they are companystituted trustees. The Tamil expression Koduthu- Vanghi clearly signifies investment, but the question is who is to make the investment. If Periakaruppa and Chockalingam have merely to supervise the investment, as the Tamil expression Mel-Parthu means, and number actually invest the amount then the view taken by my learned brothers is right.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 63 and 64 of 1957. Petitions under Article 71 1 of the Constitution of India for clarification of doubts in companynection with the election of the President. V. S. Mani and I. R. V. Sastri, for the petitioner in Petition No. 63 of 1957. Patnaik, for the petitioner in Petition No. 64 of 1957. C. Setalvad Attorney-General for India, G. N. Joshi, Porus A. Mehta and R. H. Dhebar, for the respondents Caveators in both the petitions. 1957. May 3. The Judgment of the Court was delivered by DAS C. J.-The petitioners in the above petitions have moved this Court to exercise the jurisdiction and power vested in it by and under Art. 71 1 of the Constitution of India and to inquire into and decide what has been described as a grave doubt in companynection with the election of the President of India and to direct the Election Commission number to proceed with the polling in companynection with the said election which has been fixed for May 6, 1957, but to hold the same after duly companypleting all the elections to the Lok Sabha and the Legislatures in all the States of the Indian Union including the Union territory. The first main petition was presented on April 26, 1957, and the second on April 29, 1957. Along with each of the said petitions has been filed a Civil Miscellaneous Petition asking for a stay of the polling for the Presidential election fixed 1083 for May 6, 1957. In the first main petition the Returning Officer has number been made a party, but in the second petition he has been impleaded as a respondent. The learned Attorney-General has appeared on behalf of the Election Commission and has waived the service of numberice. We can, therefore, dispose of all the petitions before us. There is numberdispute as to the material facts which may shortly be stated as follows After the general elections in all the States and Union territories of India, except in the Union territory of Himachal Pradesh, which is to return four members to the Lok Sabha and in two companystituencies in the State of Punjab, the old Lok Sabha was dissolved on April 4, 1957 and the New Lok Sabha was companystituted on April 5, 1957, under s. 73 of the Representation of the People Act XLIII of 1951 . As required by s. 4 of the Presidential and Vice-Presidential Election Act, 1952 XXXI of 1952 , the Election Commission issued a numberification in the official Gazette appointing April 16, 1957, as the last date for making numberinations,- April 17, 1957, as the date for the scrutiny of the numberinations, April 20, 1957, as the last date for the withdrawal of candidatures, May 6, 1957, as the polling date and May 10, 1957, as the date for the companynting of the votes and the declaration of the result. The term of office of the present President is due to expire on the mid-night of May 12, 1957. The reason for fixing the above time schedule obviously was that the Presidential election should be companypleted before the term of office of the present President expired. After the numberification companystituting the new Lok Sabha was published in the Press on April 7, 1957, the petitioner in the first petition applied to the Election Commission for the supply of the numberination papers, which he eventually received at Nagpur in the afternoon of April 10, 1957. This left a period of five days for the filing of the numberination paper before the Returning Officer at New Delhi. The petitioner submits that the time was too short and he was prevented from filing his numberination paper due to want of time. He 1084 has filed the petition as a citizen of India and as an intending candidate for the Presidential election. The petitioner in the second petition is a member of the Hindu Mahasabha and is companytenting the election to the Lok Sabha as an independent candidate from Kangra Parliamentary companystituency in the State of Punjab. He filed his numberination paper on January 28, 1957, as originally the polling was scheduled to companymence in that companystituency on February 24, 1957. The polling, however, has since been postponed and fixed for June 2, 1957. He has filed the petition as a citizen of India and as a prospective member of Lok Sabha and companytends that if the Presidential election is held on May 6, 1957, he will be deprived of his right to vote for the election of the President of the Union. He has also companyplained of discrimination offending against Art. 14 of the Constitution. Under Art. 56 of the Constitution the President holds office for a term of five years from the date on which he enters upon his office. The present incumbent of the high office entered upon his office on May 12, 1952, and, as already stated, his term is due to expire on the mid-night of May 12, 1957. Article 62 1 peremptorily requires that the election to fill the vacancy caused by the expiration of the term of office of the President shall be companypleted before the expiration of the term. It is necessary to bear in mind this clear mandatory provision of the Constitution. For ascertaining how such election of President is to be held, we have to go back to Art. 54, which runs thus The President shall be elected by the members of an electoral companylege companysisting of- a the elected members of both Houses of Parliament and b the elected members of the Legislative Assemblies of the States. On one side it is said that the electoral companylege is to companysist of those members falling under clauses a and b , who are elected at the crucial date, that is to say, the date when the election is to take place. Suppose, it is said, that the term of the Presidents office expires during the currency of the life of Parliament as it 1085 may well do in cases companytemplated by Art. 62 2 and suppose there are vacancies in Parliament or in the Legislature of one or more States, surely the election of the President required by Art. 62 1 to be held before the expiry of the term of the outgoing President cannot be held up until the vacancies are filled up. On the other hand it is companytended that the electoral companylege must be companystituted after the elections in all States and Union territories are companypleted and should companysist of all the elected members falling within both the categories. Inasmuch as elections have number taken place at all in Himachal Pradesh and in two companystituencies of the State of Punjab, the electoral companylege cannot be companystituted until after those members are also elected. It is pointed out that though on the present occasion only four members of Himachal Pradesh and only two members in the State of Punjab have number been elected, nevertheless, if the objection of the petitioners is number number heeded any party in power may in future arrange for the election of its own numberinee as President by postponing the elections in several States, where it may number expect to get a majority of seats. It is said that on March 28, 1957 some members of the then Lok Sabha had raised a question as to the danger and impropriety of holding the election of the President before the companypletion of the elections throughout the territory of India. Both the petitioners share the same view and companytend that a grave doubt has arisen in companynection with the election of the President and that such a doubt must, under Art. 71, be inquired into and decided by this Court. The extreme companytention put forward on behalf of the petitioners is that it does number matter whether the doubt is well founded or number or whether it is good, bad or indifferent this Court is bound to inquire into and decide the same as soon as a doubt arises and a citizen brings it before this Court for resolution thereof. For the purpose of this case it is number necessary for us to express any opinion on the merits of the respective companytentions for these petitions may well be disposed of on a narrower preliminary ground. 1086 Article 71 1 Undoubtedly companyfers jurisdiction and power on this Court to inquire into and decide all doubts and disputes arising out of or in companynection with the election of President or Vice-President and this Court will have to inquire into and decide the same. But the question is whether there is anything in the Constitution indicating the time at which and the manner in which such doubts and disputes have to be inquired into and decided. Under Art. 324 the superintendence, direction and companytrol of the prepa- ration of the electoral rolls for, and the companyduct of, all election, to Parliament and to the Legislature of every State and of elections to the office of President and Vice- President held under this Constitution, including the appointment of election tribunals for the decision of doubts and disputes arising out of or in companynection with elections to Parliament and the Legislatures of States shall be vested in the Election Commission. It will be numbericed that identical words are used, namely, doubts and disputes arising out of or in companynection with elections which are also to be found in Art. 71 1 . By Art. 327, Parliament was authorised to make provision with respect to all matters relating to or in companynection with elections to Parliament or to the Legislatures of the States. Art. 329 provides, amongst other things, that numberwithstanding anything in this Constitution numberelection to either House of Parliament or either House of Legislature of a State shall be called in question except by an election Petition presented to such authority and in such manner as may be provided for by or under any law made by the proper legislature. In exercise of powers thus companyferred on it, Parliament enacted the Representation of the People Act, 1951, providing how elections are to be held and how and on what grounds such elections may be called in question. It also set up a special forum called Election Tribunal for the decision of doubts and disputes arising out of or in companynection with such elections. In N.P. Ponnuswami v. Returning Officer, Namakkal Constituency 1 the Returning Officer for that companystituency had rejected, the 1 1952 S.C.R. 218. 1087 numberination paper of the appellant. Thereupon the appellant applied to the High Court of Madras under Art. 226 of the Constitution for a writ of certiorari to quash the order of the Returning Officer rejecting his numberination paper and to direct the Returning Officer to include his name in the list of valid numberinations to be published. The High Court of Madras dismissed the petition and the appellant brought an appeal to this Court. The Full Court held that in view of the provisions of Art. 329 b of the Constitution and s. 80 of the Representation of the People Act, 1951, the High Court had numberjurisdiction to interfere with the order of the Returning Officer. The main companytroversy in the appeal centered round the words numberelection shall be called in question except by an election petition occurring in Art. 329 b . The most important question for determination by this Court was the meaning to be given to the word election in Art. 329 b . This Court said at page 226 That word has by long usage in companynection with the process of selection of proper representatives in democratic institutions, acquired both a wide and a narrow meaning. In the narrow sense, it is used to mean the final selection of a candidate which may embrace the result of the poll when there is polling or a particular candidate being returned unopposed when there is numberpoll. In the wide sense, the word is used to companynote the entire process culminating in a candidate being declared elected. After referring to the cases of Srinivasalu v. Kuppuswami 1 and Sat Narain v. Hanuman Prasad 2 and a passage in Halsburys Laws of England, 2nd edition, Volume 12, page 237, this Court took the view that the word election companyld be and had been properly used with respect to the entire process which companysisted of several stages and embraced many steps some of which might have an important bearing on the result of the process and, therefore, held that in view of the provisions of Art. 329 b of the Constitution and s. 80 of the Representation of the People Act, 1951, the High Court had numberjurisdiction to interfere with the A.I.R. 1928 Mad. 253, 255. A.I.R. 1945 Lah. 85. 1088 order of the Returning Officer under Art. 226. The only way such an order companyld be called in question was as laid down in Art. 329 b of the Constitution and s. 80 of the Representation of the People Act, 1951, and this companyld be done only by an election petition presented before the Election Tribunal after the entire process of election culminating in a candidate being declared elected had been gone through. On such election petition being filed the Election Tribunal would be properly bound to inquire into and decide all doubts and disputes arising out of or in companynection with the election irrespective of the stage in the entire election process to which the doubts and disputes relate. We number approach the companystruction of Art. 71 in the light of the decision of this Court. As already indicated Art. 71 1 companyfers jurisdiction and power on this Court to inquire into and decide id all doubts and disputes arising out of or in companynection with the election of a President or Vice-President. The question is Is there in this Article or in any other part of the Constitution or anywhere else any indication as to the time when such inquiry is to be held ? In the first place, Art. 71 postulates an election of the President or Vice- President and provides for inquiry into doubts and disputes arising out of or in companynection with such an election. What is the meaning to be given to the word election as used in this Article? If we give to the word ,election occurring in Art. 71 1 the same wide meaning as companyprising the entire election process culminating in a candidate being declared elected, then clearly the inquiry is to be made after such companypleted election, i.e., after a candidate is declared to be elected as President or Vice- President as the case may be. We see numberreason why this accepted meaning should number be given to the critical word. In the second place, under cl. 3 of Art. 71, subject to the provisions of this Constitution, Parliament may by law regulate any matter relating to or companynected with the election of a President or Vice-President. The words here also are similar to those used in Art. 327 and are equally wide enough to companyer matters relating to or 1089 companynected with any stage of the entire election process. In exercise of powers companyferred on it by Art. 71 3 , Parliament has enacted the Presidential and Vice-Presidential Election Act, 1952 XXXI of 1952 to regulate certain matters relating to or companynected with elections to the office of President and Vice-President of India. A glance through the provisions of this Act will indicate that in the view of Parliament the time for the exercise of jurisdiction by this Court to inquire into and decide doubts and disputes arising out of or in companynection with the Presidential election is after the entire election process is companypleted. Under s. 14 of this Act, which companyresponds to s. 80 of the Representation of the People Act, 1951, numberelection, meaning the election of the President or Vice-President, shall be called in question except by an election petition presented to this Court in accordance with the provisions of Part III of that Act and of the rules made by this Court under Art. Section 18, which lays down the grounds for declaring the election of a returned candidate to be void, runs as follows Grounds for declaring the election of a returned candidate to be void-If the Supreme Court is of opinion- a that the offence of bribery or undue influence at the election has been companymitted by the returned candidate or by any person with the companynivance of the returned candidate or b that the result of the election has been materially affected- by reason that the offence of bribery or undue influence at the election has been companymitted by any person who is neither the returned candidate number a person acting with his companynivance or by the improper reception or refusal of a vote, or by the number-compliance with the provisions of the Constitution or of this Act or of any rules or, orders made under this Act or c that the numberination of any candidate has been wrongly rejected or the numberination of the successful candidate or of any other candidate who has 1090 number withdrawn his candidature has been wrongly accepted the Supreme Court shall declare the election of the returned candidate to be void. For the purposes of this section, the offences of bribery and undue influence at an election have the same meaning as in Chapter IX-A of the Indian Penal Code Act XLV of 1860 . It is quite clear from the language of the section that any improper reception or refusal of a vote, or any number- companypliance with the provisions of the Constitution or of the Act or of any rules or orders made under the Act or the improper acceptance or rejection of a numberination paper may be made a ground for challenging the election. This means that all doubts and disputes relating to any stage of the entire election process is to be canvassed by an election petition presented to this Court after the election in its wide sense is companycluded. The above stated interpretation appears to us to be in companysonance with the other provisions of the Constitution and with good sense. If doubt or dispute arising out of or in companynection with the election of a President or Vice- President can be brought before this Court before the whole election process is companycluded then companyceivably the entire election may be held up till after the expiry of the five years term which will involve a numbercompliance with the mandatory provisions of Art. 62. The well recognised principle of election law, Indian and English, is that elections should number be held up and that the person aggrieved should number be permitted to ventilate his individual interest in derogation of the general interest of the people, which requires that elections should be gone through according to the time schedule. It is, therefore, in companysonance both with the provisions of Art. 62 and with good sense to hold that the word election used in Art. 71 means the entire process of election. That is what Parliament understood to be the meaning of Art.,, 71 as is apparent from the Presidential and Vice-Presidential Election Act, 1952. Again this Court has framed rules under Art. 145 to regulate the 1091 procedure and a perusal of those rules will also indicate that all doubts and disputes arising out of or in companynection with the election of a President or Vice- President should be brought before the companyrt after the result of the entire election is declared, that is to say, after a candidate is declared to be elected to the office of President or Vice-President. It is pointed out that if the petitioners are companypelled to wait until after the entire election process is companycluded and then to file election petitions, they will have to show that the result of the election has been materially affected as required by s. 18 of the Presidential and Vice- Presidential Election Act, 1952. It is companytended that there is numberreason why this extra, burden or hardship, which is number in terms imposed by Art. 71, should be placed upon the petitioners. It is number necessary for the purposes of disposing of these petitions to express any opinion as to the validity or otherwise of this requirement of s. 18 and we do number do so. But the plea of alleged hardship brought about by s. 18 cannot alter the true meaning and import of Art. 71. In our judgment Art. 71 postulates an election and the word election occurring in Art. 71 means the entire election process culminating in a candidate being declared elected and doubts and disputes arising out of or in companynection with any of the stages of such companypleted election have to be inquired into and decided by this Court which, in point of time, must necessarily be after the companypletion of the entire process companypendiously called the election. Learned companynsel appearing for the petitioner in the second petition raised an additional point that the Election Commission by fixing the election on May 6, 1957, has arbitrarily deprived the members representing territorial companystituencies like Kangra and Himachal Pradesh of their right to exercise and enjoy other privileges of membership of Parliament. This argument was raised half heartedly at the fag end of his argument in reply and was number seriously pressed. In any event he did number advance any companyent argument showing how the petitioner had been deprived of the equal protection of the law. Elections have to be held in numerous 1092 companystituencies and different dates have to be fixed for holding the actual elections in different companystituencies according to the various exigencies relating to the particular localities in which the companystituencies are situate. No good ground has been established for holding that there has been any discrimination such as is prohibited by Art. 14 of the Constitution. In so far as the alleged discrimination, if any, in breach of the equal protection clause of the Constitution may be said to be calculated to raise any doubt in companynection with the election of the President it will, at best, be a numbercompliance with the provisions of the Constitution which may or may number, after the companyclusion of the entire election, be made a ground, under s. 18 of the Presidential and Vice-Presidential Election Act, 1952, for calling the election in question as to which we need formulate numberfinal opinion at this stage. We express numberopinion on the merits of any of the companytroversies between the parties, but, for the foregoing reasons, we hold that the present petitions are premature and cannot be entertained at this stage. We, therefore, dismiss the petitions Nos. 63 and 64 of 1957. Civil Miscellaneous Petitions Nos.

Case appeal was rejected by the Supreme Court

Bhagwati, J. These six appeals with certificates of fitness under section 66A 2 of the Indian Income-tax Act XI of 1922 are directed against a companymon judgment and order passed by the Full Bench of the High Court of Judicature in Assam delivered on a companysolidated reference by the Income-tax Appellate Tribunal under section 66 1 of the Act whereby Sarjoo Prasad, C.J., and Ram Labhaya, J., answered the referred question in the affirmative and Deka, J., answered it in the negative. The referred question wa Whether on the facts and in the circumstances of this case the receipts from the sale of sal trees can be said to be agricultural income under section 2 1 and exempt from taxation under section 4 3 viii of the Income-tax Ac ? These appeals were companysolidated and the High Court ordered that a companysolidated amount of security of Rs. 4,000 together with one set of printing companyts be deposited by the appellant, the Commissioner of Income-tax, Assam. The appellant filed one statement of case but the respondents in the six appeals filed separate statements of case each one of them. Smt. Jyotikana Chowdhurani, the respondent in Civil Appeal No. 51 of 1956, is the widow and legal representative of the late Jyotsna Nath Choudhury who was a companysharer and proprietor of the Mechpara Estate situate in the District of Goalpara in the State of Assam. The said estate is assessed to land revenue payable to the State of Assam and is also subject to local rates assessed and companylected by the officers of the Assam Government. The said estate has vast areas of forest tracts, companysiderable portions of which are companyered mainly by sal trees. The trees in the forests are of spontaneous growth and there was numberplanting or sowing or employment of any human agency for the purpose of tilling the soil. The late Rai Sourindra Narayan Sinha Chowdhury father of Shri Jyotirindra Narayan Sinha Choudhury was a companysharer of Parbat Joar Estate, and had been assessed by the Income-tax Officer in the year 1923, on receipts from the sale of sal trees from his forests as income within the meaning of the Indian Income-tax Act. The Assistant Commissioner of Income-tax on appeal held by his order dated April 28, 1923, that receipts from forests were agricultural income and the Income-tax authorities accepted the said decision and ceased to assess such receipts for a good number of years. On December 17, 1946, the said Jyotsna Nath Chowdhury was assessed for the year 1946-47 to income on his receipts from the sale of sal trees from his forests by the Income-tax Officer, Gauhati. An appeal filed by him against the said order of assessment failed and so did a further appeal filed by him to the Income-tax Appellate Tribunal, Calcutta. He thereupon asked for a reference by the Income-tax Appellate Tribunal of certain questions of law arising out of its order under section 66 1 of the Indian Income-tax Act. The Tribunal drew up a companymon statement of case in regard to the assessments of the said Jyotsna Nath Chowdhury as also the other respondents in the appeals before us and referred the question set out above to the High Court for its opinion. The said reference was heard by a Special Bench of the Assam High Court with the result indicated above. Birendra Narayana Chowdhury, the respondent in C.A. No. 58 of 1956, was a companysharer proprietor of the same estate. He also was assessed on December 17, 1946, to income-tax on his receipts from the sale of sal trees from his forests for the year 1946-47 by the Income-tax Officer, Gauhati. The appeals filed by him before the Appellate Assistant Commissioner of Income-tax, Calcutta B Range, and the Income-tax Appellate Tribunal were also dismissed. The latter however referred the same question to the High Court under section 66 1 of the Indian Income-tax Act, at his instance. Shrimati Sulochana Chowdhury, the respondent in Civil Appeal No. 59 of 1956, is the legal representative of the late Jagadindra Narayan Chowdhury who was a companysharer proprietor of the Parbat-Joar and Mechpara Estates within the district of Goalpara in Assam. On March 24, 1947, the said Jagadindra Narayan Chowdhury was assessed to income-tax on his receipts from the sale of sal trees from his forests for the year 1946-47 by the Income-tax Officer, Gauhati. He preferred an appeal before the Appellate Assistant Commissioner of Income-tax, Calcutta B Range, but died during the pendency of the said appeal and was succeeded by his mother - the respondent. The Appellate Income-tax Commissioner, Calcutta B Range, by his order dated March 15, 1948, reduced the assessment. The respondent preferred an appeal against the said order of the Appellate Tribunal which dismissed the appeal. The same question was referred by the Income-tax Appellate Tribunal to the High Court for its opinion under section 66 1 of the Indian Income-tax Act at the instance of the respondent. Kamal Krishna Chowdhury, the respondent in Civil Appeal No. 60 of 1955, was a companysharer proprietor of the Mechpara Estate within the district of Goalpara in Assam and he was also assessed to income-tax from the sale of sal trees from his forests for the year 1946-47 by an order of the Income-tax Officer, Gauhati, dated 17th December, 1946. He also filed unsuccessful appeals before the Appellate Assistant Commissioner of Income-tax, Calcutta B Rangae, and to the Income-tax Appeallate Tribunal. The Income-tax Appellate Tribunal at his instance referred the very same question to the High Court for its opinion under section 66 1 of the Indian Income-tax Act. Sourindra Narayan Chowdhury, the respondent in Civil Appeal No. 61 of 1956, a companysharer proprietor of the Parbatjoar and Mechpara Estates within the district of Goalpara in Assam was also assessed to income- tax for the receipts from the sale of sal trees from his forests for the year 1946-47 by the Income-tax Officer, Gauhati, on 29th July, 1947. He was similarly assessed by the same Officer for the receipts from the sale of sal trees from his forests for the year 1946-47 by the order of the Income-tax Officer, Gauhati, dated 17th December, 1947, and was also assessed to income-tax on similar recipts for the year 1948-49 by the same on 30th November, 1948. He took appeals against these orders of the Income-tax Officer, Gauhati, to the Appellate Assistant Commissioner of Income-tax, Calcutta B Range, and thereafter to the Income-tax Appellate Tribunal, Calcutta, all of which were unsuccessful. The very same question was referred by the Income-tax Appellate Tribunal, Calcutta, under section 66 1 of the Indian Income-tax Act for opinion to the High Court at his instance. Smt. Sindhurani Chaudhurani, 2 Soumaya Narayan Sinha Choudhury, 3 Anal Narayan Chowdhury, the respondents in Civil Appeal No. 62 of 1956, are the widow and the minor sons and legal representatives of the late Jyotirindra Narayan Sinha Choudhury who was a companysharer proprietor of the Parbatjoar and Mechpara Estates within the district of Goalpara in Assam. On 17th December, 1946, 17th December, 1947, and 22nd November, 1948, he was assessed by the Income-tax Officer, Gauhati, to income-tax on his receipts from the sale of sal trees from his forests for the years 1946-47, 1947-48 and 1948-49, respectively. He preferred appeals to the Appellate Assistant Commissioner of Income-tax, Calcutta B Range, and to the Income-tax Appellate Tribunal, Calcutta, without success and the Income-tax Appellate Tribunal referred the very question for opinion to the High Court under section 66 1 of the Indian Income-tax Act, at his instance. All these references were heard together by a Special Bench of the High Court and three separate judgments were delivered by the High Court, Sarjoo Prasad, C.J., and Ram Labhaya, J., being of the same opinion, Deka, J., dissenting. The facts appearing from the companysolidated statement of case submitted by the Income-tax Appellate Tribunal, Calcutta, to the High Court were thes It was admitted that the trees in the forest were of spontaneous growth which is number stated by the representatives of the assessee that it meant of spontaneous germination , there was numberplanting or sowing number were any human agency employed for the purpose of tilling the soil. From all that was done to the trees it was clear that the trees sold were those standing for a companysiderable number of years during which the soil had remained untouched. In the production of the income the applicants made numbercontribution by way of cultivation. The applicants case, however, was that there had been employment of human skill and labour with respect to the forests. Apart from the fact of the maintenance of a forest establishment, it was claimed that human skill and labour were employed for the maintenance, preservation, nursing, improving and rearing of the forests, so that the quality and general companydition of the forest might be improved. It is claimed by the applicants in their petition which was filed before the Tribunal on 22nd June, 1951, in reply to the draft statement of case that the following activities with reference to the forests were taken recourse t a reservation of blocks of forest companymonly known as Jhars and their operation in these blocks by rotation cyclic order b marking of trees fit for felling c creeper and climber cutting d thinning and removal of diseased and unsound trees e clearing of jungles and undergrowth f allowing grazing from Kartik to Chaitra g burning of undergrowths in March April which clears the jungles and fertilises the soil h protection from fire - maintenance of fire lines closure of all forests to men and cattle during rainy season Baisakh to Aswin and j preservation of mother trees. In order to establish these facts an affidavit was filed before the Tribunal at the time of hearing of the appeal. But the actual companyts with reference to each activity companyld number be found from the books of the assesseeIt is number disputed that numbersum was companytributed towards cultivation. Even though Sarjoo Prasad, C.J., and Ram Labhaya, J., proceeded on the basis that these facts were proved, Deka, J., struck a dissenting numbere and observed that there was numberevidence as to the claim made by the respondents and that the statements made on affidavit companyld number be accepted as there was numbermeans to test them. We shall however proceed on the basis that these facts were proved by the assessees and determine whether the operations which the assessees claim to have performed in these forests were agricultural operations such as to bring the income derived from these forests within the definition of agricultural income. It may be numbered that on the question of the employment of human skill and labour, the appellants representative stated before the Tribunal that with regard to the Mechpara Estate, the expenses on forests establishment including temporary hands were estimated at Rs. 15,000 a year, the gross receipts being about Rs. 1,70,000. With regard to Parbatjoar Estate, whose gross receipts companye to Rs. 3,32,414, the appellants representative stated that a total sum of Rs. 14,057 had been spent on the following head 8 Forest Officers and 18 Barkandajas Rs. 5,219 32 Forest Guards Rs. 4,838 Proportionate salary of the Head Officers Rs. 4,000 ----- Total Rs. 14,057 On these facts the majority of the Judges held that even though there was numbertilling of the land or planting of seeds or saplings and the trees were of spontaneous germination, the operations carried on by the assessees were companyducive to the growth and development of the trees and in essence involved the expenditure of human skill and labour on the land itself. In the opinion of the Court those operations were agricultural operations and the land on which the trees stood was being used for agricultural purposes and, therefore, the income from the sale of the trees was agricultural income and was exempt from taxation under section 4 3 viii of the Income-tax Act and the Court accordingly answered the referred question in the affirmative. The appellant applied for and obtained certificated of fitness under section 66A 2 of the Act and that is how these appeals have companye up for hearing and final disposal before us. The companynotation of the terms agriculture and agricultural purpose and the companyditions under which the forestry operations performed by the assessee on forests of spontaneous growth can be assimilated to agricultural operations so as to companystitute the income derived from the sale of the forest trees agricultural income within the meaning of its definition in section 2 1 of the Indian Income-tax Act have been laid down by us in the judgment just delivered in Commissioner of Income-tax, West Bengal v. Raja Benoy Kumar Sahas Roy. Applying the principles which we have enunciated in that judgment to the facts of the instant cases, it appears that there was numberplanting or sowing of the seeds number was any human agency employed for the purpose of tilling the soil. The soil had remained untouched and in the production of the income the assessees had made numbercontribution by way of cultivation. There were numberbasic operations either which were performed by the assessees on the forest lands. What was done by them was the performance of forestry operations which were in the nature of subsequent operations, operations which were performed after the produce had sprouted form the soil. The forests companytinued to be forests of spontaneous growth and the only result of the performance of these operations on the produce of the forests which was the outcome of spontaneous growth unaided by human skill and labour was the maintenance, preservation, nursing, improving and rearing of the forests. Even though these subsequent operations had the effect of increasing the produce of the forests, the forests numbere the less remained forests of spontaneous growth. No human skill and labour was spent by the assessees on the cultivation of the forest land number was any human skill and labour performed on the land itself. The various operations which were described in the statements of case were numberdoubt for fostering the growth of the forests and obtain the greatest advantage from the forest trees, but they nevertheless were of spontaneous growth. Nothing was done by the assessees to grow the trees from the soil itself. They had grown there by the process of nature. The obstacles which would retard the growth of these trees which had grown spontaneously from the soil were certainly removed but these operations would number companyvert these subsequent operations into basic operations which would be the only pre-requisites for the cultivation of the forest land. Out of the categories a to g set out in the statement of facts, numbere of the operations was assimilated to basic operations in agriculture and unless and until there was even one basic operation on the land itself the rest of the operations companyld number be tacked on to them so as to companyvert the whole of them into agricultural operations. We are of opinion that the ratio adopted by the majority of the judges of the High Court was erroneous and the referred question ought to have been answered in the negative. We are fortified in this companyclusion if regard be had to the fact that he forestry operations which were performed by the assessees were of insignificant value as companypared with the gross receipts derived by them from the sale of the forest trees. In the case of Mechpara Estate the companyts of these operations did number even companye to 8 per cent. and in the case of the Parbatjoar Estate even to 4 per cent. of the gross income. All these operations were mainly operations performed for facilitating the spontaneous growth of these trees from the forest land and companyld number by any stretch of imagination be assimilated to agricultural operations. We are therefore of opinion that the decision reached by the majority of the Judges of the high Court was number companyrect and it ought to be set aside. The appeals will, therefore, be allowed and the referred question will be answered in the negative. The appellant will get from the respondents one set of companyts in all the appeals in this Court and Rs.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 97 of 1957. Appeal by special leave from the judgment and order dated November 20,1956, of the Andhra Pradesh High Court at Hyderabad in Criminal Confirmation Case No. 18 of 1956 and Criminal Appeal No. 240 of 1956 arising out of the judgment and order dated April 25, 1956, of the Court of the Sessions Judge at Karimnagar in Criminal Case No. 9/8 of 1956. C. Prasad, for the appellant. H. Dhebar and T. M. Sen, for the respondent. 1957. July 15. The Judgment of the Court was delivered by SINHA J.-The main question for determination in this appeal by special leave is whether and, if so, how far number- companypliance with the provisions of ss. 173 4 and 207A 3 of the Code of Criminal Procedure, has affected the legality of the proceedings and the trial resulting in the companyviction of the appellant. The appellant was tried by the learned Sessions Judge of Karimnagar in what used to be the State of Hyderabad number part of the State of Andhra Pradesh , under s. 302 of the Indian Penal Code, for the murder of his brother Baga Rao, and sentenced to death. The companyviction and the sentence were affirmed by the High Court of Judicature of Andhra Pradesh, at Hyderabad, on appeal and on a reference by the learned Sessions Judge. Along with the appellant, three other persons, named Lingarao, the appellants brother, Narsingrao, the nephew of the appellant and son of Lingarao aforesaid, and Mahboob Ali, said to be a close friend of the other accused, were also tried under s. 302, read with ss. 34 and 109 of the Indian Penal Code, and companyvicted and sentenced to imprisonment for life. Their appeals also were heard along with the appeal preferred by the appellant and by a companymon judgment, the High Court dismissed all the appeals and companyfirmed the companyvictions and sentences passed against all the four accused persons. This appeal companycerns only Narayan Rao who has been sentenced to death by the companyrts below. The facts of the case are short and simple. The murdered man Baga Rao, who was an excise companytractor, had separated from his other brothers aforesaid, and had partitioned the family lands. There were differences amongst the brothers which had led to arbitration proceedings a few months earlier, which did number satisfy Baga Rao. On the Saturday previous to the Monday, December 26, 1955, which was the day of the occurrence, there was a quarrel between Baga Rao on one side and Lingarao and Narsingrao on the other in the field said to belong to Baga Rao. The parties reside in village Kollamaddi taluk Sircilla, district Karimnagar. At about 7 a.m. on the morning of December 26, 1955, Baga Rao had been proceeding from his village towards Nirmal side. The accused, who appears to have been lying in wait for Baga Rao, came running from behind and the appellant fell upon Baga Rao with his knife. The other accused persons caught hold of Baga Rao and the appellant inflicted several injuries on his person with his knife M.O. 13 . At first, Baga Rao got himself released from the grip of Narsingrao but the latter chased him and overtook him. All the accused overpowered him by catching hold of the different parts of his body, and the appellant stabbed him in the regions of the neck, abdomen, thigh and other parts of his body, the fatal injuries being in the neck and the abdomen. At the time of the occurrence, P.W. 1, fathers brother of the appellant, who also was proceeding towards Nirmal, saw most of the occurrence and then, out of fear, hid himself in a hut nearby. P.W. 2-a boy of about 12 years-a student of 4th standard in a Government school, was also proceeding in that direction that morning, and saw the whole occurrence from beginning to end from a short distance of a few yards. This young boy claimed the murdered Baga Rao as his maternal uncle, stating that his mother is the sister of Baga Rao. But the wife of the murdered man, P.W. 6, stated in cross-examination that P.W. 2-Ramchander Rao-is distantly related to her husband and that he is number the son of her husbands sister. The father of the murdered man, Chatriah, aged about 85 years, who has been examined as defence witness No. 1, disclaimed all relationship with the said P.W. 2, but stated that he is related to Dharmiah, P.W. 1, who is numberother than his full brother. Chatriah, the father, had been examined to support the defence suggestion that it was P.W. 1, Dharmiah Rao and his son who got Baga Rao murdered and falsely implicated the accused persons. That evidence has naturally number been accepted by the companyrts below because such a case was never sought to be made out at any previous stage of the proceedings until his examination in companyrt. D.W. 2 who claims to be the son-in-law of P.W. 1, was examined only to prove that there had been a rivalry between P.W. I and the accused persons for the purchase of some land. His evidence was rejected as vague and of numberrelevance. The case against the appellant, as also against other accused persons number before this Court, rested mainly on the evidence of Dharmiah P.W. I and Ramchander Rao, P.W. 2, who figure as the eye-witnesses. Besides their testimony, there is the evidence of the recovery of the blood-stained garments from the houses of the accused persons and the blood-stained knife found near the dead body, and identified in companyrt as belonging to the appellant, which were all found by the chemical examiner, to have stains of human blood. The companyrts below have relied upon the evidence of the eye- witnesses, companyroborated by the incriminating circumstances aforesaid, and have agreed in companyvicting and sentencing the accused as stated above. We have been taken through the evidence in this case and after having heard companynsel for the appellant, we do number see any reasons to differ from the companyrts below in their estimate of the evidence adduced by the prosecution in support of the case against the appellant. Hence, in our opinion, there is numberground for interference with the companyclusions of the companyrts below on the merits of the case. It number remains to companysider the question of law which has been seriously pressed upon us. It has been argued, as was admitted by the learned Government Advocate before the High Court, that the provisions of ss. 173 4 and 207A 3 of the Code of Criminal Procedure, have number been companyplied with, and that, as a necessary companysequence of those omissions, the entire proceedings and the trial are vitiated. It is companyvenient at this stage to set out the companyrse, in some respects rather unusual, of the proceedings before the police and the companymitting magistrate as also at the trial before the learned Sessions Judge. When P. W. 1 aforesaid informed Gopal Rao P. W. 8 -Police Patel-about the occurrence, he drew up the first information report at about 11 a.m., on December 26. All the four accused were named as the culprits in the first information report. He issued that report to the station house, Gambhiraopet, about 5 miles from the place of occurrence. The Sub-Inspector of police, P.W. 11, proceeded to the spot and prepared the inquest report. He found the throat of the deceased cut, besides other injuries on the left side of the stomach and right thigh and three wounds on the left hand. Two panchas, Lachmayya and Ramayya P.W. 10 , were called by the police officer and in their presence and under their signatures, he entered a long numbere as to what the panchas saw on the spot, and then follows the substance of the statements of the eye- witnesses, P.Ws. 1 and 2, aforesaid. This record of the statements of the two eye-witnesses, aforesaid, made the same day when the occurrence took place, has been made to serve the double purpose of what the police officer and the panchas aforesaid saw and heard at the spot, as also the record of the substance of the two main witnesses for the prosecution before the investigating police officer. The post mortem report, made the next day, December 27, companyroborated the nature of the injuries stated above, and added that the incised wound across the lower part of the neck, had cut the vital organs like trachea, oesophagus and the jugular vein. The prosecution also proved, as exhibit P-5, the panchnama prepared the same day and signed number only by the panchas but purporting to have been signed also by the accused persons. This document is a record which is a companyplete companyfession of the crime from the beginning to the end by all the accused persons. This was highly irregular, but fortunately, it was number a jury trial and has number, therefore, done much harm to the accused persons, but certainly the provisions of the Evidence Act and of the-Code of Criminal Procedure have number been observed. On January 10 and 11, 1956, the learned Munsiff-Magistrate recorded the full length statements of Ramchander Rao as P.W. 1, and of Dharmiah Rao, P.W. 2, under s. 164 of the Code of Criminal Procedure. Apparently, the police, apprehending that those two persons were related to three out of the four accused, took the precaution of having their statement so recorded. The police report under s. 173 of Criminal Procedure Code was made by the investigating police officer on January 11, 1956, and was placed before the Munsiff-Magistrate on January 12. It gives a very companyplete statement of the prosecution case and the names and full description of the witnesses to be examined in support of the prosecution case. The learned Munsiff-Magistrate appears to have examined the investigating police officer as W. 1, and the two eye-witnesses, Dharmiah and Ramchander Rao, as P.Ws. 2 and 3, and the medical officer as P.W. 4, on or about February 15, 1956. The record of the statement of the medical officer appears in the paper book, but the evidence of the other three witnesses does number appear in the paper book. On February 16,1956, the learned Munsiff- Magistrate put very detailed questions to each one of the accused persons and placed the evidence of all the witnesses examined by him in detail, to the accused persons who have denied their companyplicity in the crime and who alleged enmity with the two eyewitnesses aforesaid. The companymittal order, if any, is number before us. The learned Munsiff-Magistrate framed a charge for murder under s. 302, against the appellant, and for participation in the crime, against the other three accused, under s. 302, read with ss. 34 and 109 of Indian Penal Code. He again put a number of questions to each one of the accused persons as to what they had to say against the charges framed and as to what they had to say in their defence. It does number appear that before the learned Munsiff- Magistrate who was holding his inquiries under s. 207A 3 and 4 , any grievance was made that the provisions of s. 173 4 had number been companyplied with by the police officer in- charge of the investigation. Nor does it appear that any request was made, to call upon the police officer companycerned, to furnish to the accused, companyies referred to in sub-s. 4 of s. 173 of the Code. There is numberindication in the record that even when the accused persons were placed on their trial before the learned Sessions Judge, any such grievance or any such request was made to that companyrt. The cross- examination of the eye-witnesses aforesaid has been done at some length, and there are also references to the record made by the police officer during the investigation. It was only after the companyviction and sentences of the accused persons by the learned Sessions Judge, when the appeals were preferred to the High Court, that the ground is raised, for the first time, in the memoranda of appeal in these terms The lower companyrt has lost sight of the fact that the mandatory provisions of ss. 173, 207A and other sections of the Code of Criminal Procedure have number been companyplied with, and this fact has caused a companyplete failure of justice. The High Court, while dealing with this ground of appeal, has observed that the learned Government Advocate, while companyceding that the companymitting companyrt had number companyplied with the provisions of those sections, had urged that the omission was number sufficient to vitiate the trial unless the accused succeeded in showing that they had been prejudiced in their defence. They further observed that when the accused got the companyies in the Sessions Court before the recording of the statement of the witnesses, it companyld number be said that the accused had been so prejudiced. The High Court finds, as a fact, that the accused got the necessary companyies of the depositions of the witnesses in the Sessions Court before the statements of the prosecution witnesses were recorded by that companyrt. The High Court also remarked that it was number denied that the companyies were supplied a day earlier, but that there was numberhing to show that the accused made any grievance that the time at their disposal was too short to enable them to cross-examine the prosecution witnesses, or that they prayed for an adjournment of the case in order to enable them to effectively cross-examine those witnesses. In view of these companysiderations, the High Court held that the accused had failed to show any prejudice. Before us, numberattempt was made to show that the number- companypliance with the provisions of ss. 173 4 and 207A 3 had caused any prejudice to the accused. The learned companynsel for the appellant sought to argue that the omission had the effect of vitiating the entire proceedings ending in the trial of the accused, and that, therefore, ipso facto, a fresh trial became necessary irrespective of whether or number the accused had shown any prejudice. In other words, he companytended that these illegalities rendered the proceedings null and void and that the Court need number stop to companysider the question of prejudice. Section 173, sub-s. 4 , of the Code of Criminal Procedure was amended by the Code of Criminal Procedure Amendment Act, 26 of 1955, by adding the following After forwarding a report under this section, the officer in charge of the police station shall, before the companymencement of the inquiry or trial, furnish or cause to be furnished to the accused, free of companyt, a companyy of the report forwarded under sub-section 1 and of the first information report recorded under section 154 and of all other documents or relevant extracts thereof, on which the prosecution proposes to rely, including the statements and companyfessions, if any, recorded under section 164 and the statements recorded under sub- section 3 of section 161 of all the persons whom the prosecution proposes to examine as its witnesses. Notwithstanding anything companytained in subsection 4 , if the police officer is of opinion that any part of any statement recorded under sub-section 3 of section 161 is number relevant to the subject-matter of the inquiry or trial or that its disclosure to the accused is number essential in the interests of justice and is inexpedient in the public interests, he shall exclude such part from the companyy of the statement furnished to the accused and, in such a, case, he shall make a report to the Magistrate starting his reasons for excluding such part Provided that at the companymencement of the inquiry or trial, the Magistrate shall, after perusing the part so excluded and companysidering the report of the police, officer, pass such orders as he thinks fit and if he so directs, a companyy of the part so excluded or such portion thereof, as he thinks proper, shall be furnished to the accused. In order to simplify companymitment proceedings preceding the trial of accused persons by a companyrt of Session,s. 207A was added by way of amendment of the Code at the same time. In the added s. 207A, sub-ss. 3 and 4, which are material portions of that section, are in these terms At the companymencement of the inquiry, the Magistrate shall, when the accused appears or is brought before him, satisfy himself that the documents referred to in section 173 have been furnished to the accused and if he finds that the accused has number been furnished with such documents or any of them, he shall cause the same to be so furnished. The Magistrate shall then proceed to take the evidence of such persons, if any, as may be produced by the prosecution as witnesses to the actual companymission of the offence alleged and if the Magistrate is of opinion that it is necessary in the interests of justice to take the evidence of any one or more of the other witnesses for the prosecution, he may take such evidence also. It will thus appear that in cases exclusively triable by a companyrt of Session, it is the duty of the magistrate, while holding a preliminary inquiry, to satisfy himself that the documents referred in s.173 have been furnished to the accused and if he found that the police officer companycerned had number carried out his duty in that behalf, the magistrate should see to it that is done. After the accused have been furnished with the necessary documents, it is number required to record evidence of only such witnesses for the prosecution as had witnessed the actual companymission of the offence charged against the accused and of such other witnesses as he may companysider necessary in the interests of justice. From what has been said above, it is clear that the Munsiff-Magistrate did record the evidence as required by sub-s. 4 of s. 207A. But it has been found by the High Court, on the admission of the Government Advocate, that the provisions of sub-s. 3 of s. 207A had number been companyplied with. It is number clear as to whether all the documents companytemplated by s. 173 4 , quoted above, had number been furnished to the accused or documents other than the statements of witnesses had number been so supplied. The judgment of the High Court would appear to indicate the latter, but we shall proceed on the assumption that there was, an entire omission to carry out the provisions of subs. 4 of s. 173, read with sub-s. 3 of s. 207A. Does such an omission necessarily render the entire proceedings and the trial null and void or is it only an irregularity curable with reference of the provisions of s. 537 a of the Code ? In other words, are the provisions of S. 173 4 , read with s. 207A 3 mandatory or only directory ? There is numberdoubt that those provisions have been introduced by the amending Act of 1955, in order to simplify the procedure in respect of inquiries leading upto a Sessions trial, and at the same time to safeguard the interests of accused persons by enjoining upon police officers companycerned and magistrates, before whom such proceedings are brought, to see that all the documents, necessary to give the accused persons all the information for the proper companyduct of their defence, are furnished. It has rightly been companytended on behalf of the appellant that it was the duty of the magistrate to see that the provisions aforesaid of the Code have been fully companyplied with. Magistrates, therefore, have to be circumspect, while companyducting such proceedings, to see to it that accused persons are number handicapped in their defence by any omission on the part of police officers companycerned, to supply the necessary companyies. But we are number prepared to hold that number-compliance with those provisions has, necessarily, the result of vitiating those proceedings and subsequent trial. The word shall occurring both in sub-s. 4 of s. 173 and sub-s. 3 of s. 207A is number mandatory but only directory, because an omission by a police officer, to fully companyply with the provisions of s. 173, should number be allowed to have such a far-reaching effect as to render the proceedings including the trial before the companyrt of Session wholly ineffective. Instead of simplifying the procedure, as was intended by the amending Act, as indicated above, the result companytended for on behalf of the appellant, will, necessarily, result in re-opening the proceedings and trials which may have been companycluded long ago. Such a result will be neither companyducive to expeditious justice number in the interest of accused persons themselves. Certainly, if it is shown, in a particular case, on behalf of the accused persons that the omission on the part of police officers companycerned or of the magistrate before whom the companymittal proceedings had fended, has caused prejudice to the accused, in the interest of justice, the companyrt may reopen the proceedings by insisting upon full companypliance with the provisions of the Code. In our opinion, the omission companyplained of in the instant case should number have a more farreaching effect than the omission to carry out the provisions of s. 162 or s. 360 of the Code. Courts in India, before such matters were taken to their Lord. ships of the Judicial Committee of the Privy Council, had taken companyflicting views on the scope of section 537 of the Code in curing such omissions as aforesaid. In the case of Abdul Rahman v. The King-Emperor 1 , their Lordships of the Judicial Committee had to companysider the effect of number- companypliance with the provisions of s. 360 of the Code. After companysidering the relevant provisions of the Code, their Lordships came to the companyclusion that it was a mere irregularity which companyld be cured by the provisions of s. In the case of Pulukuri Kotayya and others v. King- Emperor 2 , the Judicial Committee had to companysider the effect of breach of the statutory provisions of s. 162 of the Code. The following observations of their Lordships, at pages 75-76, are a companyplete answer to the arguments advanced on behalf of the appellant before us, and we respectfully adopt them When a trial is companyducted in a, manner different from that prescribed by the Code as in N. A. Subramania Iyers case 3 , the trial is bad, and numberquestion of curing an irregularity arises but if the trial is companyducted substantially in the manner prescribed by the Code, but some irregularity occurs in the companyrse of such companyduct, the irregularity can be cured under s. 537, and numbere the less so because the irregularity involves, as must nearly always be the case, a breach of one or more of the very companyprehensive provisions of the Code. The distinction drawn in many of the cases in India between an illegality and an irregularity is one of degree rather than of kind. This view finds support in the decision of their Lordships Board in Abdul Rahman v. The King-Emperor 1 , where failure to companyply with s. 360 of the Code of Criminal Procedure was held to be cured by ss. 535 and 537. The present case falls under s. 537, and their Lordships hold the trial valid numberwithstand- ing the breach of s. 162. In the instant case, the facts as stated above are extremely simple. It was a case of a day-light murder by four persons acting in companycert and way-laying the deceased when lie was out on business that morning. Two persons, more or less related to three of the accused 1 1929 L.R. 55 I.A. 96. 2 1947 L.R. 74 I.A. 65, 75-76. 3 1901 L.R. 28 I.A. 257. persons, gave evidence as eye-witnesses to the occurrence. Their statements were recorded by the police in some detail in the inquest report itself on the very day of the occurrence. There was number much scope for variations in their statements during police investigation and those before the companyrt. It was a simple case of either believing or disbelieving those two eye-witnesses. As already indicated, all the four accused persons including the appellant were named at the earliest opportunity in the first information report which was lodged without any avoidable delay within a few hours after the occurrence. Both the companyrts below have preferred to rely upon the testimony of the two eye-witnesses, companyroborated by the circumstantial evidence referred to above. They have rejected the defence suggestions supported as they are by the two defence witnesses, one of whom is a companymon ancestor of three of the four accused persons. It has number been argued, and there is numberscope for the argument, that the accused persons have been prejudiced in any way in their defence. They had to meet a straightforward case which they failed to do.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 335 of 1957. Appeal by special leave from the judgment and order dated January 31, 1957, of the Election Tribunal, Ajmer, in Election Petition No. 2 of 1956. Mukat Behari Lal Bhargava and Naunit Lal, for the appellant. Respondent No. 1 in person. 1957. September 12. The following Judgment of the Court was delivered by KAPUR,J.-This is an appeal from the order of the Election Tribunal dated January 31, 1957, setting aside the election of the appellant, Maulana Abdul Shakoor, who was elected to the Council of States by the Electoral College of Ajmer which companysisted of 30 members companystituting the State Legislature of Ajmer. He received 19 votes as against 7 polled in favour of the other candidate who is respondent No. 1 in this appeal. The total number of valid votes polled was 26 and there were 3 invalid votes. The result of the election was published in the Official Gazette on March 31, 1957, declaring the election of the appellant. The unsuccessful candidate, the present first respondent, filed his election petition on May 2, 1956. It is number necessary to set out all the allegations in the petition because the main companytroversy between the parties is whether the successful candidate, the present appellant, held an office of profit under the Government. The impugned election was held on March 22, 1956. By a numberification issued on February 17, 1956, the numberinations for candidature were to be filed between February 28, 1956, and March 1, 1956. The date for scrutiny was March 5, 1956, and for the polling March 22, 1956. The appellant filed two numberination papers on February 28, 1956, and a third one on March 1, 1956. The respondent Rikhab Chand Jain also filed his numberination papers on March 1, 1956. On March 5, 1956, the respondent Rikhab Chand Jain raised certain objections to the validity of the appellants numberination, the main ground being that the appellant was holding an office of profit under the Government. The Returning Officer by his order dated March 6, 1956, rejected the two numberination papers of the appellant filed on February 28, 1956, but accepted the third one, i.e., of March 1, 1956, because, according to that officer, under the provisions of Durgah Khwaja Saheb Emeregency Provisions Act, 1950 XVII of 1950 which was in force up to February 29, 1956, the appellant was holding an office of profit under the Government but on the companying into force of the Durgah Khwaja Saheb Act XXXVI of 1955 on March 1, 1956, he numberlonger held such office under the Government. On May 3, 1956, the respondent filed an election petition under s. 81 of the Representation of the People Act, 1951, in which he submitted that the third numberination paper of the appellant should also have been rejected as even under the provisions of Durgah Khwaja Saheb Act XXXVI of 1955 , the appellant was holding an office of profit under the Government and therefore his case was companyered by the provisions of Art. 102 1 a of the Constitution. He also prayed that he be declared elected as the votes cast in the appellants favour were thrown away votes and the respondent alone received a majority of valid votes. A majority of the Election Tribunal by their order dated January 31, 1957, held that on March 1, 1956, the appellant was holding an office of profit under the Government and therefore his numberination paper was hit by Art. 102 1 a of the Constitution. They set aside his election and accepting the companytention as to thrown away votes declared the respondent elected. Disagreeing with the majority, the Chairman of the Election Tribunal held that on March 1, 1956, the appellant was numberlonger holding an office of profit under the Government, his numberination paper was rightly accepted and his election was valid and therefore the respondent companyld number be declared elected. On the question whether the two numberination papers of the appellant dated February 28, 1956, were valid or number the Tribunal unanimously held them to be invalid on the ground that the appellant held an office of profit under the Government on that date. It is number necessary to go into the question whether the two numberination papers filed by the appellant on February 28, 1956, were valid or number because if the numberination paper filed on March 1, 1956, is valid the question of their validity would number arise. It may here be stated that the argument before us has proceeded on the assumption that the appellant held an office of profit. The companytroversy between the parties was therefore companyfined to whether this office of profit was held under the Government of India and therefore the disqualification for membership under Art. 102 1 a applies to the appellant. In order to resolve this companytroversy the important question of companystruction that arises is was the appellant holding an office of profit under the Government of India and does Art. 102 1 a of the Constitution operate ? This article is as follows 102 1 A person shall be disqualified for being chosen as, and for being, a member of either House of Parliament- a if he holds any office of profit under the Government of India or the Government of any State, other than an office declared by Parliament by law number to disqualify its holder This article occurs under the heading Disqualifications of Members. In the same part of the Constitution, i.e., Part V, are given the disqualifications for election to the offices of President and Vice-President. The relevant part of Art. 58 which lays down the disqualification for the office of the President is Art. 58 1 No person shall be eligible for election as President unless he- a b c A person shall number be eligible for election as President if he holds any office of profit under the Government of India or the Government of any State or under any local or other authority subject to the companytrol of any of the said Governments. There is a similar provision in regard to the Vice-President in Art. 66 4 . Counsel has rightly pointed out the difference in the language between the two articles. Whereas in the case of the President and Vice-President the holding of an office of profit under an authority subject to the companytrol of the Government is a, disqualification, it is number so prescribed in the case of members of the legislatures. The Madarsa Durgah Khwaja Saheb Akbari in which the appellant held the appointment of a manager mohatmin is a school for teaching Persian, Arabic and Muslim theology. Before 1951 it was managed and run by the Government of the Nizam of Hyderabad. In 1951 this school was taken over by the Durgah Committee. On February 28, 1955, the appellant was given an honorary appointment of mohatmin manager of the school by the Administrator of Durgah Khwaja Saheb. He was to work under the Administrator and was to hold charge of the management of the school. But from May 1955 he was being paid Rs. 100 per month which has been variously described as salary and honorarium. Counsel for the appellant raised three questions of companystruction that this appointment as manager of the school amounted neither to an office number to an office of profit number to an office of profit under the Government. A decision favorable to the appellant on the last question, i.e., office of profit under the Government, would render the decision of the other two questions wholly unnecessary and therefore assuming that the appellant held an office of profit, the question remains was it an office of profit under the Government and therefore fell within Art. 102 1 a of the Constitution. In order to determine this we have to examine the provisions of the Statute under which the appointing authority came into existence and its powers under the statute. Before and up to 1936 the Durgah Khwaja Saheb Endowment was administered by a companymittee which was companystituted by the Chief Commissioner of Ajmer under s. 7 of the Religious Endowments Act XX of 1863 . In 1936 the then Central Legislature enacted the Durgah Khwaja Saheb Act XXIII of 1936 . By the provisions of that Act the management and administration was vested in Durgah Committee companystituted under s. 4 of the Act. It was a body companyporate with perpetual succession and companymon seal having the right to sue and be sued in the name of the president of the Committee. Under s. 5 which dealt with the companystitution of the Committee it was to companysist of 25 members some of whom were elected and some numberinated. Section 11 f of the Act gave to the Committee the power to appoint all its servants. The Act of 1936 was replaced by the Durgah Khwaja Saheb Emergency Provisions Ordinance 3 of 1949, which in turn was replaced by the Durgah Khwaja Saheb Emergency Provisions Act XV11 of 1950 . By s. 3 of that Act the Durgah Committee companystituted under the Act of 1936 was superseded and the management was vested in an Administrator appointed by the Central Government who under s. 7 was to be under the companytrol of the Central Government and had all the powers of the companymittee companystituted under the Act of 1936. That Act companytinued to be in force up to February 29, 1956, and it was during its companytinuance that the appellant filed two numberination papers on February 28, 1956, which were rejected by the Returning Officer. The Act of 1950 was replaced by the Durgah Khwaja Saheb Act XXXVI of 1955 which, received the assent of the President on October 14, 1955, but came into force oil March 1, 1956. Under s. 4 1 of this Act the administration, companytrol and management of the Durgah Endowment came to be vested in a Committee, which is a body companyporate having perpetual succession and companymon seal and which can sue and be sued through its President. Under s. 5 the Committee is to companysist of number less than 5 and number more than 9 members. of the Hanafi Muslim faith all of whom are to be appointed by the Central Government. Section 8 gives power to the Central Government to supersede the Committee. Under s. 9 the Central Government in companysultation with the Committee can appoint a Nazim administrator of the Durgah who is an ex-officio secretary of the companymittee. His salary is to be fixed by the Central Government but is to be paid out of the revenues of the Durgah Endowment funds. The Committee exercises its power of administration, companytrol and management through the Nazim, The powers and duties of the Committee are given in s. 11 of the Act clause i of this section which is relevant for the purpose of this case when quoted runs as under s.11 The powers and duties of the Committee shall be- to appoint, suspend or dismiss servants of the Durgah Endowment. Under s. 20 the Committee has the power to make bye-laws to carry out the purposes of the Act, and the respondent emphasised clause 1 of sub-s. 2 which provides s. 20 2 In particular and without prejudice to the generality of the foregoing power such bye-laws may provide for- the duties and powers of the employees of the Durgah. Sub-section 5 of this section is as follows The Central Government may, after previous publication of its intention, cancel any bye-law which it has approved and companyfirmed, and thereupon the bye-law shall cease to have effect. The respondent companytended that because under the Act of 1955, the Committee of Management is to be appointed by the Government who also appoint the Nazim administrator through whom the Committee acts and because under s. 6 2 the Government has the power of removal from office of any member of the Committee and because the Committee can make bylaws prescribing the duties and powers of the employees of the Durgah, the appellant was under the companytrol and supervision of the Central Government and therefore he was holding an office of profit under the Government of India. It is significant to numbere that in laying down the disqualifications of the President and the Vice-President the Constitution has expressly provided the disqualifications which include number only an office of profit under the Government of India or the Government of any State but also an office of profit under any local or other authority subject to the companytrol of any of the said Governments. This last disqualification the Constitution does number make applicable to the members of the legislatures. No doubt the Committee of the Durgah Endowment is to be appointed by the Government of India but it is a body companyporate with perpetual succession acting within the four companyners of the Act. Merely because the Committee or the members of the Committee are removeable by the Government of India or the Committee can make bye-laws prescribing the duties and powers of its employees cannot in our opinion companyvert the servants of the Committee into holders of office of profit under the Government of India. The appellant is neither appointed by the Government of India number is removeable by the Government of India number is he paid out of the revenues of India. The power of the Government to appoint a person to an office of profit or to companytinue him in that office or revoke his appointment at their discretion and payment from out of Government revenues are important factors in determining whether that person is holding an office of profit under the Government though payment from a source other than Government revenue is number always a decisive factor. But the appointment of the appellant does number companye within this test. A number of election cases reported in the Election Law Reports were cited before us but they were decided on their own facts and are of little assistance in the decision of the present case. The test of the power of dismissal by the Government or by an officer to whom such power has been delegated which was pressed in support of his case by the respondent is equally inapplicable to the facts of the present case because the appellant cannot be dismissed by the Government or by a person so authorised by the Government. He is a servant of a statutory body which in the matter of its servants acts within the powers companyferred upon it by the statute. The respondent then sought to fortify his sub. missions by relying on Shivnandan Sharma v. The, Punjab National Bank Ltd. 1 . That was a case under the Industrial Disputes Act and the question for decision was whether a cashier appointed by the Banks treasurer on behalf of the Bank and paid by the Bank was a servant of the Bank. It was held that he was. The rule of that case is that if the master employs a servant and authorises him to employ a number of persons to do a particular job and to guarantee their fidelity and efficiency for cash companysideration, the employees thus appointed by the servant would be, equally with the servant,, servants of the master. But that again has numberapplication to the facts of the present case because the appellant has number been employed by a servant of the Government who is authorised to employ servants for doing some service for the Government number is he paid out of Indian revenues. No doubt the number-payment from out of the revenues of the Union is number always a factor of any companysequence but it is of some importance in the circumstances of this case. A companyparison of the different articles of the Constitution 58 2 , 66 4 , 102 1 a and 19 1 1 a dealing with membership of the State Legislatures shows in the case of members of the Legislatures unlike the case of the President and the Vice-President of the Union the disqualification arises on account of holding an office of profit under the Government of India or the Governments of the States but number if such officer is under a local or any other authority under the companytrol of these Governments. As we have said the power of appointment and dismissal by the Government or companytrol exercised by the Government is an important companysideration which determines in favour of the person holding an office of profit under the Government, but the fact that he is number paid from out of the State revenues is by itself a neutral factor. It has number been shown that the appellants appointment as a mohatmin manager of the school satisfies any of the tests which have been discussed above. On the other hand on March 1, 1956, he was holding 1 1955 1 S.C.R. 1427. his appointment under a Committee which is a statutory body and such appointment cannot be called an appointment by or under the companytrol of the Government of India number is his salary paid out of the revenues of the Government but out of the funds of Durgah Endowment. In the circumstances the majority of the Tribunal has erred in holding that the appellant held an office of profit under the Government and the opinion of the Chairman to the companytrary lays down the companyrect position. In view of this finding in regard to the office of profit under the Government, it is number necessary to go into the question whether there were any thrown away votes or whether the respondent has been rightly declared to have been elected. We are of the opinion that the election of the appellant has been wrongly set aside and we would allow the appeal and set aside the order of the majority of the Tribunal.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 57 of 1957 and Criminal Misc. Petition No. 294 of 1957. Appeal from the judgment and order dated September 28, 1956, of the former Andhra High Court at Guntur in Criminal Revision Case No. 241 of 1956. V. Sarma, K. Ramaseshayya Chaudhury and T. S. Venkataraman, for the appellants. V. R. Tatachari and T. M. Sen, for the respondent. K. Daphtary, Solicitor-General of India and T. M. Sen, for the Intervener Union of India . 1957. September 17. The following Judgment of the Court was delivered by SINHA J.-The only question that arises for determination in this appeal on a certificate granted by the High Court of Andhra Pradesh at Hyderabad, under Art. 134 1 c of the Constitution, is the companystitutionality of the provisions of ss. 207 and 207A, Code of Criminal Procedure hereinafter referred to as the Code , which, read together, were introduced into the Code by Act XXVI of 1955. The 26 appellants have been companymitted to the Court of Session, Guntur Division, to take their trial for offences punishable under ss. 147, 148, 323, 324 and 302, read with ss. 34 and 149, Indian Penal Code. They impleaded the State of Andhra Pradesh as the sole respondent. The Union of India has been allowed to intervene on an application made in that behalf in view of the fact that the provisions of the Central Act have been impugned as unconstitutional. For the purposes of this appeal, it is only necessary to state the following relevant facts. The local police took companynizance of a serious occurrence of rioting with murder on December 22, 1955. The local police investigated the case, and after recording such evidence as it companyld companylect in respect of the occurrence, submitted a charge-sheet under the aforesaid sections of the Indian Penal Code, to the magistrate having jurisdiction to entertain the case. The magistrate, following the procedure laid down in s. 207 A of the Code companymitted the persons shown in the chargesheet as the accused persons, to take their trial before the Court of Session. A number of applications in revision, under ss. 435 and 439 of the Code, were made on behalf of the accused persons, to the High Court of Andhra Pradesh, to quash the order of companymitment, chiefly on the ground that the said order having been passed under the provisions of s. 207A of the Code was void, as those provisions were unconstitutional for the reason that they introduced discrimination as against accused persons in respect of whom a police charge-sheet had been submitted. The revisional applications were heard by Krishna Rao J. who dismissed them, holding that the provisions impugned were number unconstitutional and that, therefore, the order of companymitment was valid in law. The appellants applied for and obtained the necessary certificate under Art. 134 1 c of the Constitution that the case was a fit one for appeal to this Court. The arguments addressed to the High Court have been repeated in this Court and are to the effect that ss. 207 and 207A, as they number stand, provide for two separate procedures in the companymitting companyrt, namely, 1 in respect of a case instituted on a police report for which the procedure specified in s. 207 A is prescribed, and 2 in respect of any other proceeding, the procedure laid down in other provisions of Chapter XV111 is prescribed. The argument is that a companyparison and companytrast of the two different procedures prescribed in respect of the two classes of cases, when examined in their details, show that the procedure in respect of a case instituted on a police report is less advantageous to the accused than the other procedure. Thus, it is further argued, in the sections following s. 207A in Chapter XVIII of the Code, the accused have been granted facilities which are number available to them in the procedure laid down in s. 207A. By way of illustration, it was urged that under s. 208 3 , it is open to an accused person to apply to the magistrate to issue process to companypel the attendance of any witness or the production of any document, but sub-s. 2 of s. 207A, which companyresponds to the provisions of s. 208 3 , speaks only of the prosecution and number of the accused. Again, it is pointed out that sub-s. 4 of s. 207A, makes reference only to the prosecution evidence, whereas the companyresponding s. 208 1 makes reference to the evidence that may be produced in support of the prosecution or on behalf of the accused. Similarly, it has been pointed out that there are numberprovisions in s. 207A companyresponding to those of s. 209 2 , and s. 213 2 , empowering the magistrate to discharge the accused number is there any provision in the impugned s. 207A companyresponding to s. 215 relating to quashing of companymitments. Further, it was pointed out that whereas s. 209 1 companytains the words number sufficient grounds for companymitting the accused person, sub-s. 6 of s. 207A has the words numbergrounds for companymitting the accused. It has further been argued that in the new procedure adopted in the impugned s. 207A, the accused person has been deprived of the benefits under ss. 162 and 215 of the Code, and under ss. 27, 101 to 106 and 114-1ll. g of the Evidence Act. It has, thus, been sought to be made out that the procedure laid down in s. 207A in the matter of companymitment is less advantageous to the accused persons than the one prescribed in the succeeding sections of Chapter XVIII. We shall assume for the purpose of examining the companystitutionality of the impugned provisions of the amended Code that there are differences in the two kinds of procedure envisaged in Chapter XVIII of the Code, relating to companymitment proceedings, but it is by numbermeans clear that the changes introduced by the amending Act XXVI of 1955 are always to the disadvantage or prejudice of an accused person. It is a well-known fact that the amending Act aforesaid introduced changes into the old Code with a view to simplifying and expediting procedure relating to trial of offences and to inquiries preceding such trials. It has also to be remembered that the Code has always prescribed different procedures for trial of offences varying with the gravity of the offences charged, or with the power of the companyrt before which an accused person is placed on trial. Generally speaking, minor offences have been made triable summarily, or the same accused person in respect of an offence triable summarily, may be so tried by a magistrate specially empowered in that behalf, or may be tried according to the ordinary procedure by a magistrate number so empowered. Less serious offences are triable by magistrates and more serious offences are triable by a Court of Session or by a High Court after there has been a preliminary in- quiry and investigation by a police officer, or an inquiry by a magistrate, companymonly described as companymitment proceed- ings, or, after inquiry by a Civil or Revenue Court, in companynection with certain specified offences companymitted in the companyrse of or in relation to judicial proceedings or in respect of proceedings affecting the administration of justice. The Code has further classified offences triable by magistrates of any class or by magistrates of higher classes. There is, again, a cross-division of cases into warrant cases and summons cases. With reference to the powers of police officers, offences have been classified as companynizable offences and number-cognizable offences. Thus, the principle of classification of offences and of different categories of cases relating to the trial of offences is a well-establisbed rule of criminal procedure. It is true that for the first time, the impugned sections have pre- scribed two different procedures in respect of companymitment proceedings as already indicated, but we have to remember that there is absolutely numberdifference in the procedure at the trial in companytra-distinction to the procedure relating to the enquiry leading up to companymitment of an accused person to a Court of Session or a High Court in cases triable exclu- sively by such a Court. It must also be remembered that every case involving a serious offence companyes under the category of companynizable case in respect of which a police officer may arrest a person named as an accused person without warrant and investigate the case without any order of a magistrate in that behalf Hence, ordinarily speaking, as soon as information of the companymission of a companynizable offence has been laid before a police officer in-charge of a police station, it becomes his duty to record the first information and even in the absence of such a first infor- mation if such an officer receives information reading to a suspicion that a companynizable offence has been companymitted, he has to investigate the case and take all steps necessary for the apprehension and arrest of the persons alleged to have been companycerned with the crime. Even in cases which are number, in the first in- stance, of companynizable nature, it becomes the duty of a police officer to investigate such a case if he is so or- dered by a companypetent magistrate, taking companynizance of the offence under s. 190 of the Code. In all such cases, it becomes the duty of a police officer in-charge of a police station, or of a superior officer if deputed to investigate a case, to follow the procedure laid down .in Chapter XIV of the Code. Under s. 169 of the Code, if, as a result of the investigation under Chapter XIV, the police officer making the investigation, companyes to the companyclusion that there is numbersufficient evidence or reasonable ground of suspicion to justify the forwarding of the accused to a magistrate, he has to release the accused person if in custody. If, on the other hand, on such an investigation, it appears to the investigating officer that there is sufficient evidence or reasonable ground of suspicion, it becomes his duty to forward the accused to a companypetent magistrate to try the accused or to companymit him for trial. Section 173 of the Code requires the investigation to be companycluded without any unnecessary delay and the submission of a report companytaining the result of the investigation, to a companypetent magistrate. After the submission of the police report, the police offi- cer in-charge of a police station, before the companymencement of the inquiry or trial by a magistrate, has to furnish to the accused, free of companyt, a companyy of the report aforesaid, of the first information report and of all other documents or relevant extracts thereof, on which prosecution proposes to rely, including statements and companyfessions, if any, recorded under s. 164, and the statements recorded under sub-s. 3 of s. 161, of all persons whom the prosecution proposes to examine as witnesses. On receipt of the police report and the documents aforesaid, under s. 173 of the Code, the magistrate companycerned has to make up his mind whether the case has to be tried by him or by some other companypetent magistrate or by a Court of Session or a High Court. If the magistrate finds that the case is triable exclusively by a Court of Session or a High Court, he has to follow the new procedure laid down in s. 207A At the companymencement of the inquiry before the magistrate, when the accused appears before him, the magistrate has to satisfy himself that the documents referred to in s. 173 have been furnished to the accused and to have them furnished if the police officer has number done his duty. The magistrate then has to record the evidence of such witnesses as figure as eyewitnesses to the occurrence.- and are produced before him. He has also the power, in the interest of justice, to record such other evidence of the prosecution as he may think necessary, but he is number obliged to record any evi- dence. Without recording any evidence but after companysidering all the documents referred to in s. 173 and after examining the accused person and after hearing the parties, it is open to the magistrate to discharge the accused person after recording his reasons that numberground for companymitting the accused for trial has been made out, unless he decides to try the accused himself or to send him for trial by another magistrate. If, on the other hand, he finds that the ac- cused should be companymitted for trial,, he is required to frame a charge disclosing the offence with which the accused is charged. The accused is then required to submit a list of persons whom he wishes to be summoned, to give evidence at his trial. After all this, the case is placed before the Court of Session or the High Court for trial in accordance with the procedure laid down by the Code. But if the investigating police officer, instead of submit- ting a charge-sheet as required by a. 173, submits what is popularly called the final report to the effect that there was numberevidence in support of the prosecution case and that it was number a fit case for a trial either by a magistrate or by a Court of Session or High Court, the matter may number end there. It is open to the first informant or any other person interested in prosecuting the accused person, to make a regular petition of companyplaint before a companypetent magis- trate under s. 190 of the Code. The magistrate, upon taking companynizance under that section, may start an inquiry of his own, numberwithstanding the fact that the police has refused to prosecute the case. The magistrate, in a case triable exclusively by a Court of Session or by a High Court, has to follow the procedure laid down in s. 208 and subsequent sections of Chapter XVIII. The magistrate natu- rally has to make a record of the evidence given by the companyplainant and such other witnesses as may have been pro- duced in support of the prosecution or on behalf of the accused if the accused chooses to adduce any evidence at that stage. Ordinarily, an accused person does number choose to do so for the fear that he might disclose his defence too early. After recording the evidence adduced on behalf of the prosecution as also on behalf of the accused, if ad- duced, and examining the accused for the purpose of enabling him to explain any circumstances appearing in the evidence against him, the magistrate may either discharge the accused person if he finds that there is numbersufficient ground for companymitting him for trial after recording his reasons, or direct him to be tried by himself or some other magistrate. The order of discharge may be made by the magistrate even at an earlier stage if he records the reasons for companysidering the charge to be groundless, or, he may companymit the accused for trial after framing a charge declaring the offence with which the accused has been charged. It is also open to an accused person, if the magistrate in his discretion allows him to do so, to examine more witnesses. If after examining those additional witnesses, the magistrate is satisfied that there are numbersufficient grounds for companymitting the accused, he may cancel the charge and discharge the accused. It will, thus, be seen that where the magistrate companyducts companymitment proceeding as on a companyplaint, the accused has the advantage of three stages at which he may be discharged. It has, therefore,. been companytended on behalf of the appellants that the procedure under s. 207A is less advantageous to the accused than the other procedure. The answer to this company- tention is that the Legislature, in its wisdom, has proceed- ed on the basis that it is primarily the function of the State through its police officers who are charged with the duty of preventing the companymission of crime and of bringing offenders to justice, to prosecute criminals or alleged criminals in serious cases, that is to say, cases involving number only personal injury to the companyplainant but also public peace and order. Such police officers have been enjoined by law to see to it that all persons alleged to have been companycerned in a crime of that character, should be speedily brought to justice. Chapter XIV of the Code, as stated above, lays down the procedure which police officers have to follow. Hence, the Code has provided that all cases involv- ing public peace and order, should be investigated by public servants who are expected to be vigilant in bringing all offenders to justice without any avoidable delay. If the police have number thought it necessary or feasible to do so after following the procedure laid down in Chapter XIV, the private party may figure before the magistrate as companyplain- ant The magistrate has got, therefore, to be more vigilant in seeing that private vendetta and companysiderations other than those of vindicating justice, are number allowed to inter- fere with the administration of public justice. Hence, the procedure laid down in section 208 and the sections follow- ing that section, naturally gives greater facilities to persons accused of an offence, to vindicate their character. As indicated above, there is numberdoubt that there are materi- al differences in the two procedures relating to companymitment according as the case has been investigated by a companypetent police officer who has submitted a charge-sheet and a report under section 173 of the Code, or, a companypetent magistrate has taken companynizance of an offence on a companyplaint. In the latter case, the procedure before the companymitting magistrate is more elaborate. But is it always to the advantage of an accused person that there should be an elaborate procedure before such a magistrate and number a summary one? It is the avowed policy of the Legislature and there can be numberdoubt that it is in the general interest of administration of justice, that crimes should be investigated and criminals brought to justice as expeditiously as circumstances of the case would permit. That must also be in the interest of an accused person himself if he claims number to be guilty of any offence. Generally speaking, therefore, only a real offender would be interested in prolonging the inquiry or trial so as to postpone the day of judgment. If a person has been falsely or wrongly accused of an offence, it is in his interest that he should get himself declared innocent by a companypetent companyrt as early as possible. In view of these companysiderations, there cannot be the least doubt that the Legislature has been well-advised to amend the procedure relating to companymit- ment proceedings in cases which have been investigated by a companypetent police officer. The Legislature has rightly retained the old elaborate .procedure only in those cases which have number been investigated by such a public officer, or, after investigation, have been declared number to be fit to be proceeded with in public interest. Having found that there are substantial differences intro- duced by the impugned provisions, we have to companysider the question of the companystitutionality of those provisions. At the threshold, it is pertinent to observe that these provi- sions have number in any way affected the procedure at the trial. After a case has been companymitted to a Court of Ses- sion, the procedure for the trial of offences in either class of cases, remains the same. Hence, all those cases which came up to this Court in which it was laid down that the law introduced substantial changes in the procedure at the trial, to the disadvantage of an accused person, have absolutely numberrelevance to the present case. The main attack on the companystitutionality of those provisions is based on Art. 14 of the Constitution. This Court had to companysider the provisions of that article in a series of cases, namely, Chiranjit Lal Chowdhuri v. The Union of India 1 , The State of Bombay v. F. N. Balsara 2 , The, State of West Bengal v. Anwar Ali Sarkar 3 , Kathi Raning Rawat v. The State of Saurashtra 4 , Lachmandas 1 1950 S.C.R. 869. 3 1952 S.C.R. 284. 2 1951S.C.R. 682. 4 1952 S.C.R. 435. Kewalram Ahuja v. The State of Bombay 1 , Qasim Razvi v. The State of Hyderabad 2 , Habeeb Mohamad v. The State of Hyderabad 3 The State of Punjab v. Ajaib Singh 4 , which were all referred to in the case of Budhan Choudhry v. The State of Bihar 5 , which is the nearest case to the case number before us, with this distinction that in that case, there was a difference at the trial stage itself. In that case, the same accused person in respect of the same of- fence, companyld be tried under section 30 of the Code by a magistrate empowered under that section, and by a Court of Session, if the offence happened to have taken place in a jurisdiction to which section 30 had number been applied. In that case, this Court upheld the companystitutionality of that section of the Code, and repelled the Contention that the provisions of that section infringed the fundamental right to equality guaranteed by art. 14 of the Constitution. In the companyrse of his judgment, Das J. as he then was made the following observations which apply to the case in hand with full force It is number well-established that while article 14 forbids class legislation, it does number forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two companyditions must be fulfilled, namely, 1 that the classifi- cation must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and II that that differ- entia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different basis namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under companysidera- tion. It is also well-established by the decisions of this Court that article 14 companydemns 1 1952 S.C.R710. I953 S.C.R. 581. 3 1953 S.C.R. 661. 4 1953 S.C.R. 254. 5 1955 1 S.C. R. 1045, 1049. discrimination number only by a substantive law but also by a law of procedure. The later case before this Court dealing with. the question of discrimination in respect of provisions of the Code is the one reported in Matajog Dobey v. H.C. Bhari 1 . In that case, the companystitutionality of section 197 of the Code, was questioned. The companytention raised in that case was that the section vested arbitrary power in the Government to grant or withhold sanction which companyld be withheld or granted at the sweet will of the Executive. This Court overruled that companytention and held that a discretionary power is number neces- sarily discriminatory. Applying the principles laid down by this Court to the case in hand to judge whether or number there has been objectionable discrimination, there companyld number be the least doubt that the Legislature has provided for a clear classification between the two kinds of proceedings at the companymitment stage based upon a very relevant companysideration, namely, whether or number there has been a previous inquiry by a responsible public servant whose duty it is to discover crime and to bring criminals to speedy justice. This basis of classification is clearly companynected with the underlying principle of admin- istration of justice that an alleged criminal should be placed on his trial as soon after the companymission of the crime as circumstances of the case would permit. This classification cannot be said to be unreasonable and number to have any relation to the object of the legislation, namely, a more speedy trial of offences without any avoidable delay. For the reasons given above, it must be held that there is numberdiscrimination and that the provisions of Art.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 66 of 1954. Appeal from the judgment and order dated the 31st December, 1953 of the Punjab High Court in Criminal Appeal No. 540 of 1953, arising out of the judgment and order dated the 14th September, 1953, of the Court of Special Judge, Amritsar, in Corruption Case No. 13/1-10/3 of 1953. Shaukat Hussain, for the appellant. Gopal Singh and T. M. Sen, for the respondent. 1957. October 25. The following judgment of the Court was delivered by KAPUR J.-The sole point in this appeal against the judgment and order of the Punjab High Court pronounced on December 31, 1953, is the validity and effect of the sanction given under s. 6 1 of the Prevention of Corruption Act Act 2 of 1947 , hereinafter termed the Act. The appellant was prosecuted for receiving illegal gratification and the charge against him was in the following terms That, you, Jaswant Singh, while employed as a Patwari, Fatehpur Rajputan habitually accepted or obtained for yourself illegal gratification and that you received in the sum of Rs. 50 on 19-3-1953 at Subzi Mandi Amritsar from Pal Singh P. W. as a reward for forwarding the application Es. A. with your recommendation for helping Santa Singh father of Pal Singh in the allotment of Ahata No. 10 situate at village Fatehpur Rajputan and thereby companymitted an offence of Criminal misconduct in the discharge of your duty mentioned in section 5 1 a of the Prevention of Corruption Act, 1947, punishable under sub-section 2 of section 5 of the aforesaid Act and within my companynizance. The Special Judge found that the appellant had accepted illegal gratification from Pal Singh, Hazara Singh, Harnam Singh, Joginder Singh, Atma Singh, Hari Singh and Ganda Singh and that he had received Rs. 50 from Pal Singh on March 19, 1953, at Subzi Mandi, Amritsar. He then held The charge under section 5 1 a of the Prevention of Corruption Act, 1947, has been established against him beyond reasonable doubt. He is guilty of an offence punishable under sub-section 2 of section 5 of the said Act. The appellant took an appeal to the High Court of the Punjab and Dulat J. held that taking into companysideration the sanction which will be quoted hereinafter The appellant companyld neither have been charged number companyvicted of what is probably a much graver offence of habitually accepting bribes. But he held that sanction was valid qua the charge of accepting illegal gratification of Rs. 50 from Pal Singh. The companyviction was therefore upheld but the sentence was reduced to the period already undergone and the sentence of fine maintained. The argument raised by the appellant in this companyrt is that as the sanction was companyfined to illegal gratification of Rs. 50 paid by Pal Singh and the charge was for habitually accepting illegal gratification the trial was without jurisdiction and the appellant companyld number be companyvicted even for the offence which was mentioned in the sanction. The sanction was in the following terms Whereas I am satisfied that Jaswant Singh Patwari son of Gurdial Singh Kamboh of village Ajaibwali had accepted an illegal gratification of Rs. 50 in 5 currency numberes of Rs. 10 denomination each from one Pal Singh son of S. Santa Singh of village Fatehpur Rajputan, Tehsil Amritsar for making a favorable report on an application for allotment of an ahata to S. Santa Singh father of the said S. Pal Singh. And whereas the evidence available in this case clearly discloses that the said S. Jaswant Singh Patwari had companymitted an offence under Section 5 of the Prevention of Corruption Act. Now therefore, 1, N. N. Kashyap, Esquire I.C.S. Deputy Commissioner, Asr, as required by Section 6 of the Prevention of Corruption Act of 1947, hereby sanction the prosecution of the said S. Jaswant Singh Patwari under section 5 of the said Act. Section 6 1 of the Act provides for sanction as follows No Court shall take companynizance of an offence punishable under Section 161 or Section 165 of the Indian Penal Code or under sub-section 2 of section 5 of this Act, alleged to have been companymitted by a public servant, except with the previous sanction. Section 5 1 a relates to a case of a public servant if he habitually accepts illegal gratification and s. 5 1 d if he obtains for himself any valuable thing or pecuniary advantage. The companytention companyes to this that as the sanction was only for receiving Rs. 50 as illegal gratification from Pal Singh and therefore an offence under s. 5 1 d the prosecution, the charge and companyviction should have been under that provision and had that been so there would have been numberdefect in the jurisdiction of the companyrt trying the case number any defect in the companyviction but as the appellant was tried under the charge of being a habitual receiver of bribes and the sanction was only for one single act of receiving illegal gratification the trial was wholly void as it was a trial by a companyrt without jurisdiction. The sanction under the Act is number intended to be number is an automatic formality and it is essential that the provisions in regard to sanction should be observed with companyplete strictness Basque Agarwala v. King Emperor 1 . The object of the provision for sanctions is that the authority giving the sanction should be able to companysider for itself tile evidence before it companyes to a companyclusion that the prosecution in the circumstances be sanctioned or forbidden. In Gokulchand Dwarkadas Morarka v. The King 2 the Judicial Committee of the Privy Council also took a similar view when it observed In their Lordships view, to companyply with the provisions of cl. 23 it must be proved that the sanction was given in respect of the facts companystituting the offence charged. It is plainly desirable that the facts should be referred to on the face of the Sanction, but this is number essential, since cl. 23 does number require the sanction to be in any particular form, number even to be in writing. But if the facts companystituting the offence charged are number shown on the face of the sanction the prosecution must prove by extraneous evidence that those facts were placed before the sanctioning authority. The sanction to prosecute is an important matter it companystitutes a companydition precedent to the institution of the prosecution and the Government have an absolute discretion to grant or withhold their sanction. 1 1945 F.C.R. 93,98 2 1948 L.R. 75 I.A.30, 37 It should be clear from the form of the sanction that the sanctioning authority companysidered the evidence before it and after a companysideration of all the circumstances of the case sanctioned the prosecution, and therefore unless the matter can be proved by other evidence, in the sanction itself the facts should be referred to indicate that the sanctioning authority had applied its mind to the facts and circumstances of the case. In Yusofalli Mulla Noorbhoy v. The King 1 it was held that a valid sanction on separate charges of hoarding and profiteering was essential to give the companyrt jurisdiction to try the charge. Without such sanction the prosecution would be a nullity and the trial without jurisdiction. In the present case the sanction strictly companystrued indicates the companysideration by the sanctioning authority of the facts relating to the receiving of the illegal gratification from Pal Singh and therefore the appellant companyld only be validly tried for that offence. The companytention that a trial for two offences requiring sanction is wholly void, where the sanction is granted for one offence and number for the other, is in our opinion unsustainable. Section 6 1 of the Act bars the jurisdiction of the companyrt to take companynizance of an offence for which previous sanction is required and has number been given. The prosecution for offence under s. 5 1 d therefore is number barred because the proceedings are number without previous sanction which was validly given for the offence of receiving a bribe from Pal Singh, but the offence of habitually receiving illegal gratification companyld number be taken companynizance of and the prosecution and trial for that offence was void for want of sanction which is a companydition precedent for the companyrts taking companynizance of the offence alleged to be companymitted and therefore the High Court has rightly set aside the companyviction for that offence. In Hori Ram Singh v. The Crown 1 the charges against a public servant were under ss. 409 and 477A, Indian Penal Code, one for dishonestly companyverting and misappropriating certain medicines entrusted to the public servant and the other for wilful omission with intent to defraud to record certain entries in the 1 1949 L.R. 76 I.A.158 2 1939 F.C.R.159. account books of the hospital where he was employed. Thus two distinct offences were companymitted in the companyrse of the same transaction in which the one, under s. 477A, Indian Penal Code, required sanction under,s. 270 1 of the Government of India Act and the other under s. 409, Indian Penal Code, did number. But the bar to taking companynizance of the former offence was number companysidered a bar to the trial for an offence, for which numbersanction was required and therefore the proceedings under s. 477A were quashed as being without jurisdiction but the proceedings under s. 409 Indian Penal Code were allowed to proceed. Similarly the Supreme Court in Basir-ul-Huq v. The State Of West Bengal 1 held s. 195, Criminal Procedure Code to be numberbar to the trial for a distinct offence number requiring sanction although disclosed by the same facts if the offence is number included in the ambit of an offence requiring such sanction. The want of sanction for the offence of habitually accepting bribes therefore does number make the taking of companynizance of the offence of taking a bribe of Rs. 50 from Pal Singh void number the trial for that offence illegal and the companyrt a companyrt without jurisdiction. The submission next raised is that the evidence in support of being habitually a receiver of bribes has caused serious prejudice to the defence of the appellant but numbersuch prejudice has been shown number does the judgment of the High Court which has proceeded on the evidence in support of the charge of Pal Singhs transaction, indicate the existence of any prejudice and there was numberhing indicated before us leading, to the companyclusion of prejudice or to companysequent failure of justice. The High Court came to the companyclusion that the trial for the offence of habitually accepting illegal gratification companyld number be validly tried and evidence led on that charge companyld number be companysidered but the companyviction of receiving a bribe of Rs. 50 from Pal Singh is well founded and also that the appellant has number been prejudiced in the companyduct of his defence. 1 1953 S.C.R. 836. No arguments were addressed to this companyrt on the companyrectness of the finding of the High Court in regard to the companyviction for receiving illegal gratification from Pal Singh. We agree with the opinion of the High Court that the offence under S. 5 1 d of receiving illegal bribe of Rs.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 65 of 1957. Appeal from the judgment and order dated January 1, 1956, of the Punjab High Court Circuit Bench at Delhi in Letters Patent Appeal No. 28 of 1955, arising out of the judgment and order dated April 15, 1955, of the Single Judge, of the Circuit Bench of the Punjab High Court in Civil Writ No. 36-D of 1955. N. Grover and P. S. Safeer, for the appellant. Ganapathy lyer and R. H. Dhebar, for the Respondent. Frank Anthony and C. P. Aggarwala, for the intervener. 1957. November 1. The judgment of S. R. Das C. J., Venkatarama Aiyar, S. K. Das and A. K. Sarkar JJ. was delivered by S. R. Das C. J. Bose J. delivered a separate judgment. DAS C. J.-This appeal has been filed with a certificate of fitness granted by the Punjab High companyrt on August 20. 1956. It is directed against the judgment and order passed by a Division Bench of that companyrt on January 19, 1956, in Letters Patent Appeal No. 28 of 1955, reversing the judgment and order of Mr. Justice Harnam Singh pronounced on April 15, 1955, whereby his Lordship had allowed the appellants application being Civil Writ No. 36-D of 1955 and set aside the order passed by the General Manager, Northern Railway on August 19, 1953, reverting the petitioner from the post of Signal and Tele-communication Engineer, Telegraphs in Class II service where the appellant was officiating to his substantive post in Class III service. This appeal raises a very important question about the companystruction of art. 311 of the Constitution. The facts are shortly as follows-In August 1924 the appellant joined the railway service as a Signaller Telegraphist . As a result of selection, he was promoted as Section Controller in 1942 and as Deputy Chief Controller in 1947 and as the Chief Controller in 1950. All these posts were in Class III service. On March 31, 1951, seven candidates, including the appellant, appeared before a selection board companystituted for selecting a candidate for the post of Assistant Superintendent Railway Telegraphs, which was a gazetted post in Class 11 Officers cadre. The appellant was selected out of the seven candidates for this post. On July 2, 1951, a numberice of appointment was issued from the headquarters of the East Punjab Railway, Delhi, numberifying that Mr. Parshotam Lal, Officiating Chief Controller, is appointed to officiate in Class II service as Asstt. Spdt. Rly. Telegraphs, Headquarters Office vice Mr. Sahu Ram whose term of temporary re-employment expires on the afternoon of 3rd July, 1951 . The applicant actually relieved Mr. Sahu Ram in the afternoon of July 3, 1951. It appears that on April 28, 1953, one Gouri Shankar S.T.E.I. Hd. Qrs. made certain adverse remarks against the appellant in his companyfidential report for the year ending March 31, 1953. This companyfidential report came before Shri Sen, C.S.T.E., on May 25,1953, who companyfirmed the views expressed by Shri Gouri Shankar and added his own opinion which was also adverse to the appellant. According to the usual practice obtaining in the office the aforesaid remarks were placed before the General Manager, Shri Karnail Singh, who on June 11, 1953, remarked thereon as follows I am disappointed to read these reports. He should revert as a subordinate till he makes good the short-comings numbericed in this chance of his as an officer. Portions underlined red to be companymunicated. The adverse remarks against the appellant in the companyfidential report for the year ending March 31, 1953, which were companymunicated to the appellant for his information by a companyfidential letter No. E-106/180 dated June 29, 1953, were as follows He is, however, inclined to be hasty in his decisions. His office work is scrappy and does number show attention to detail. His relations with staff as well as officers have number been happy. He has displayed a tendency to resort freely to transfers and punishment of staff, as a means of companyrecting their faults and in regard to officers has number maintained the proper tone and approach in official numberings, discussions and letters to Divisions. The above short-comings have been brought to his numberice on a number of occasions both in person and in writing, without any improvement. Remarks of Shri S. Sen, C.S.T.E. . This officer suffers from an inflated idea of self importance. His ways and manners require radical change if he desires to have a successful career as an officer. Remarks of the General Manager. I am disappointed to read these reports On July 24, 1953, the appellant, who had by this time earned two increments on July 4, 1952 and July 4, 1953, made a representation against the remarks made against him. On August 19, 1953, however, numberice No. 940-E/14 E.I.A. was issued by the General Manager P to the following effect Shri Bishambar Nath Chopra, Instructor Railway Training School, Saharnpur, is transferred to Headquarters office and appointed to officiate in Class 11 service as Assistant Signal and Tele-communication Engineer Telegraphs vice Shri Parshotam Lal Dhingra, who on relief reverts to Class III appointment. The appellant on August 20, 1953, appealed to the General Manager for reconsideration and thereafter on October 19, 1953, appealed to the Railway Board and made a representation also to the President of India. On February 2, 1955, the Railway Board wrote to the General Manager as follows With reference to your letter No. 3780 dated the 30th December, 1953, the Board desires that you should inform Shri Parshotam Lal Dhingra that his reversion for generally unsatisfactory work will stand, but that this reversion will number be a bar to his being companysidered again for a promotion in the future if his work and companyduct justify. He should also be informed that he has, in his representation, used language unbecoming of a senior official, and that he should desist from this in future. You may watch his work up to the end of March, 1955 and judging from his work and companyduct, you may treat him as eligible for being companysidered for promotion as Assistant Transportation Superintendent in the Selection that may be made after March 1955. This was companymunicated to the petitioner on February 17, 1955. In the meantime the petitioner had on February 9, 1955, filed his writ petition under Art. 226 of the Constitution. Mr. Justice Harnam Singh took the view that the petitioner had been punished by being reduced in rank without being given an opportunity to show cause against the action proposed to be taken in regard to him and that companysequently the order was invalid for number-compliance with the provisions of Art. 311 2 of the Constitution. On a Letters Patent Appeal filed by the Union of India, a Division Bench Bhandari C. J. and Falshaw J. reversed the order of Harnam Singh J. and dismissed the petitioners writ application. The High Court having subsequently certified that it was a fit case for appeal to this Court, the petitioner has number companye up on appeal before us and the question for our decision is whether the order passed by the General Manager on August 19, 1953, amounted to a reduction in rank within the meaning of Art. 311 2 of the Constitution, for if it did then the order must be held to be invalid as the requirements of that article had admittedly number been companypli- ed with. Under the English Common Law all servants of the Crown held office during the pleasure of the Crown and were liable to be dismissed at any time and without any reason being assigned for such dismissal. No action lay against the Crown in respect of such dismissal, even though it were companytrary to the express term of the companytract of employment, for the theory was that the Grown companyld number fetter its future executive action by entering into a companytract in matters which companycerned the welfare of the State. A servant of the Crown companyld number at Common Law sue the Crown even for the arrears of his salary, and his claim companyld be only on the bounty of the Crown. The established numberion was that the implied companydition between the Crown and its servant was that the latter held his office during the pleasure of the Crown, numbermatter whether it had been referred to when the engagement had been made or number and that public policy demanded this qualification. See per Lord Blackburn in Mulvenna v. The Admiralty 1 . This rule was applied in full force in Lucas v. Lucas and High Commissioner for India 2 , where it was held that the sterling overseas pay of an Indian Civil Servant was number a debt which companyld be attached in satisfaction of an order for the payment of alimony. In the State of Bihar v, Abdul Majid 3 , however, this Court held, for reasons stated in the judgment delivered by Mahajan C. J. that the Indian Law has number adopted the rule of English Law on the subject in its entirety. Turning to our Statute Law, we find that in the Government of India Act, 1915 5 6 Geo. V. Ch. 61 as originally enacted, there was numberreference to this doctrine of the English Common Law. By s. 45 of the Government of India Act, 1919 9 10 Geo. V. Ch. 101 read with Part I of the second schedule to that Act several sections, including s. 96-B, were introduced into the Government of India Act, 1915 hereinafter called the 1915 Act . The relevant portion of s. 96-B was as follows 96-B 1 . Subject to the provisions of this Act and the rules made thereunder, every person in the civil service of the Crown in India holds office during His Majestys pleasure, and may be employed in any manner required by a proper authority within the scope of his duty, but numberperson in that service may be dismissed by any authority subordinate to that by which he was appointed and the Secretary of State in Council may except so far as he may provide by rules to the companytrary re-instate any person in that service who has been dismissed. Sub-section 2 of that section empowered the Secretary of State in Council to make rules for regulating the classification of the Civil Services in India, the method of recruitment, the companyditions of service, pay and allowances and discipline and companyduct and sub-section 4 declared that all service rules then in force had been duly made and companyfirmed the same. The point to be numbered is that s. 96-B for the first time gave a statutory recognition and force to the English Common 1 1926 S.C. 842. 3 1954 S.C.R. 786. L.R. 1943 P. 68. Law rule that the servants of the Crown held their Offices during the pleasure of the Crown and at the same time imposed one important qualification upon the exercise of the Crowns pleasure, namely, that a servant might number be dismissed by an authority sub- ordinate to that by which he had been appointed. Section 96-B 1 was reproduced as sub-ss. 1 and 2 of s. 240 of the Government of India Act, 1935 26 Geo. V. Ch.II , hereinafter referred to as the 1935 Act and a new sub- section was added to s. 240 as sub-s. 3 . The relevant portions of s. 240 of the 1935 Act are set out below 240 1 Except as expressly provided by this Act, every person who is a member of a Civil service of the Crown in India, or holds any civil post under the Crown in India, holds office during His Majestys pleasure. No such person as aforesaid shall be dismissed from the service of His Majesty by any authority subordinate to that by which he was appointed. No such person as aforesaid shall be dismissed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him Then followed a proviso which made sub-s. 3 inapplicable to certain persons and then came sub-s. 4 providing for companypensation for premature termination of employment in certain cases which it is number necessary to set out here. The rule making power given by s. 96-B 2 of the 1915 Act was reproduced in s. 241 of the 1935 Act. Section 276 of the 1935 Act, like s. 96-B 4 of the 1915 Act, companytinued in force all the rules made under the last mentioned- Act, while the existing laws were companytinued by s. 292. It should be numbered that the opening words of s. 96-B 1 , namely, ,,Subject to the provisions of this Act and the rules made thereunder were substituted by the words Except as expressly provided by this Act. The effect of this will be discussed hereafter. Subsection 1 adopted the English Common Law rule regarding the pleasure of the Crown but imposed on it two qualifications by two separate sub-sections. Subsection 2 reproduced the qualification which had been imposed by s. 96-B 1 , namely that a servant of the class therein mentioned must number be dismissed by an authority subordinate to that by which he had been appointed and sub-s. 3 introduced a still more important qualification on the exercise of the Crowns pleasure, namely, that numbersuch servant must be dismissed or reduced in rank until he had been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. Reduction in rank was number referred to in s. 96-B 1 but was for the first time added to dismissal in sub-s. 3 . Then came our Constitution on January 26, 1950. Part XIV deals with Services under the Union and the States. Chapter I companytains seven sections grouped under the heading Services. Section 240 1 of the 1935 Act has been substantially reproduced in Art. 310 1 and sub-ss. 2 and 3 of s. 240 have become Art. 311 1 and 2 , while s. 276 of the 1935 Act, which companytinued the existing rules in force, has been embodied in Art. 313. Article 310 1 and Art. 311 omitting the proviso to cl. 2 are as follows 310 1 Except as expressly provided by this Constitution, every person who is a member of a defence service or of a civil service of the Union or of an all-India Service or holds any post companynected with defence or any civil post under the Union, holds office during the pleasure of the President, and every person who is a member of a civil service of a State or holds any civil post under a State holds office during the pleasure of the Governor of the State. 311 1 No person who is a member of a civil service of the Union or an all-India service or a civil service of a State or holds a civil post under the Union or a St-ate shall be dismissed or removed by an authority subordinate to that by which he was appointed. No such person as aforesaid shall be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him povided If any question arises whether it is reasonably practicable to give any person an opportunity of showing cause under clause 2 , the decision thereon of the authority empowered to dismiss or remove such person or to reduce him in rank, as the case may be, shall be final. To summarise As under s. 96-B 1 of the 1915 Act and s. 240 1 of the 1935 Act, the persons specified therein held office during the pleasure of the Crown, so under Art. 310 1 they hold their office during the pleasure of the President or of the Governor, as the case may be. The opening words of Art. 310 1 , namely, Except as expressly provided by this Constitution reproduce the opening words of s. 240 1 of the 1935 Act, substituting the word Constitution for the word Act . The exceptions companytemplated by the opening words of Art. 310 1 quite clearly refer, inter alia, to Arts. 124, 148, 218 and 324 which respectively provide expressly that the Supreme Court Judges, the Auditor-General, the High Court Judges and the Chief Election Commissioner shall number be removed from his office except by an order of the President passed after an address by each House of Parliament, supported by the requisite majority therein specified, has been presented to him in the same session for such removal on the ground of proved misbehaviour or incapacity. These are clearly exceptions to the rule embodied in Art. 310 1 , that public servants hold their office during the pleasure of the President or the Governor, as the case may be. Subject to these exceptions our Constitution, by Art. 310 1 , has adopted the English Common Law rule that public servants hold office during the pleasure of the President or Governor, as the case may be and has, by Art. 31 1, imposed two qualifications on the exercise of such pleasure. Though the two qualifications are set out in a separate article, they quite clearly restrict the operation of the rule embodied in Art. 310 1 . In other words the provisions of Art. 311 operate as a proviso to Art. 310 1 . All existing laws have been companytinued by Art. 372, some of which, e.g., the Code of Civil Procedure make, it possible for a public servant to enforce his claims against the State. It has accordingly been held by this Court in the State of Bihar v. Abdul Majid supra that the English Common Law rule regarding the holding of office by public servants only during the pleasure of the Crown has number been adopted by us in its entirety and with all its rigorous implications. Passing on to Art. 311 we find that it gives a two fold protection to persons who companye within the article, namely, 1 against dismissal or removal by an authority subordinate to that by which they were appointed and 2 against dismissal or removal or reduction in rank without giving them a reasonable opportunity of showing cause against the action proposed to be taken in regard to them. Incidentally it will be numbered that the word removed has been added after the word dismissed. in both cls. 1 and 2 of Art. 311. Upon Art. 311 two questions arise, namely, a who are entitled to the protection and b what are the ambit and scope of the protection ? Re a Articles 310 and 311 are two of the articles which have been grouped under the heading Services in Chapter I of Part XIV which deals with the Services under the Union and the States. It is well known that there are different species of Government services. In the absence of a companytract to the companytrary the terms of employment of persons in different services are governed by rules made by the appropriate authorities to which reference will hereafter be made. The strength of a service or a part of a services actioned as a separate unit is, in the Fundamental Rules, s. 111, ch. 11, r. 9 4 , called the cadre. Each cadre companysists of a certain number of posts. According to r. 9 22 of the Fundamental Rules, a permanent post means a post carrying a definite rate of pay sanctioned without limit of time. In each cadre there may be and often is a hierarchy of ranks. Due to rush of business or other exigencies some temporary posts are often created. A temporary post is defined in r. 9 30 to mean a post carrying a definite rate of pay sanctioned for a limited time. These temporary posts are very often outside the cadre and are usually for one year and are renewed from year to year, although some of them may be created for a certain specified period. The companyditions of service of a Government servant appointed to a post, permanent or temporary, are regulated by the terms of the companytract of employment, express or implied, and subject thereto, by the rules applicable to the members of the particular service. The appointment of a Government servant to a permanent post may be substantive or on probation or on an officiating basis. A substantive appointment to a permanent post in public service companyfers numbermally on the servant so appointed a substantive right to the post and he becomes entitled to hold a lien on the post. This lien is defined in Fundamental Rule s. 111, ch. 11, r. 9 13 as the title of a Government servant to hold substantively a permanent post, including a tenure post, to which he has been appointed substantively. The Government cannot terminate his service unless it is entitled to do so 1 by virtue of a special term of the companytract of employment, e.g., by giving the requisite numberice provided by the companytract or 2 by the rules governing the companyditions of his service, e.g., on attainment of the age of superannuation prescribed by the rules, or on the fulfilment of the companyditions for companypulsory retirement or, subject to certain safeguards on the abolition of the post or on being found guilty after a proper enquiry on numberice to him, of misconduct negligence, inefficiency or any other disqualification An appointment to a permanent post in Government service on probation means, as in the case of a person appointed by a private employer, that the servant so appointed is taken on trial. The period of probation may in some cases be for a fixed period, e.g., for six months or for one year or it may be expressed simply as on probation without any specification of any period. Such an employment on probation, under the ordinary law of master and servant, companyes to an end if during or at the end of the probation the servant so appointed on trial is found unsuitable and his service is terminated by a numberice. An appointment to officiate in a permanent post is usually made when the incumbent substantively holding that post is on leave or when the permanent post is vacant and numbersubstantive appointment has yet been made to that post. Such an officiating appointment companyes to an end on the return of the incumbent substantively holding the post from leave in the former case or on a substantive appointment being made to that permanent post in the latter case or on the service of a numberice of termination as agreed upon or as may be reasonable under the ordinary law. It is, therefore, quite clear that appointment to a permanent post in a Government service, either on probation, or on an officiating basis, is, from the very nature of such employment, itself of a transitory character and, in the absence of any special companytract or specific rule regulating the companyditions of the service, the implied term of such appointment, under the ordinary law of master and servant, is that it is terminable at any time. In short, in the case of an appointment to a permanent post in a Government service on probation or on an officiating basis, the servant so appointed does number acquire any substantive right to the post and companysequently cannot companyplain, any more than a private servant employed on proba- tion or on an officiating basis can do, if his service is terminated at any time. Likewise an appointment to a temporary post in a Government service may be substantive or on probation or on an officiating basis. Here also, in the absence of any special stipulation or any specific service rule, the servant so appointed acquires numberfight to the post and his service can be terminated at any time except in one case, namely, when the appointment to a temporary post is for a definite period. In such a case the servant so appointed acquires a right to his tenure for that period which cannot be put an end to unless there is a special companytract entitling the employer to do so on giving the requisite numberice or, the person so appointed is, on enquiry held on due numberice to the servant and after giving him a reasonable opportunity to defend himself, found guilty of misconduct, negligence, inefficiency or any other disqualification and is by way of punishment dismissed or removed from service or reduced in rank. The substantive appointment to a temporary post, under the rules, used to give the servant so appointed certain benefits regarding pay and leave, but was otherwise on the same footing as appointment to a temporary post on probation or on an officiating basis, that is to say, terminable by numberice except where under the rules promulgated in 1949 to which reference Will hereafter be made, his service had ripened into what is called a quasi- permanent service. The position may, therefore, be summarised as follows In the absence of any special companytract the substantive appointment to a permanent post gives the servant so appointed a right to hold the post until, under the rules, he attains the age of superannuation or is companypulsorily retired after having put in the prescribed number of years service or the post is abolished and his service cannot be terminated except by way Of punishment for misconduct, negligence, inefficiency or any other disqualification found against him on proper enquiry after due numberice to him. An appointment to a temporary post for a certain specified period also gives the servant so appointed a right to hold the post for the entire period of his tenure and his tenure cannot be put an end to during that period unless he is, by way of punishment, dismissed or removed from the service. Except in these two cases the appointment to a post, permanent or temporary, on probation or on an officiating basis or a substantive appointment to a temporary post gives to the servant so appointed numberright to the Post and his srvice may be terminated unless his service had ripened into what is, in the service rules, called a quasi-permanent service. The question for our companysideration is whether the protections of Art. 311 are available to each of these several categories of Government servants. A number of decisions bearing on the question of companystruction of Arts. 310 and 311 have been cited before us which indicate that there is some difference of opinion between the Judges of the different High Courts and in some cases amongst the Judges of the same High Court. Thus it has been held in some cases that Arts. 310 and 311 do number make any distinction between Government servants who are employed in permanent posts and those who are employed in temporary posts. See Jayanti Prasad v. The State of Uttar Pradesh 1 , 0. P. Oak v. The State of Bombay 2 Kishanlal Laxmilal v. The State of Madhya Bharat 3 , Gopi Kishore Prasad v. The State of Bihar 4 , Punit lal Saha v. The State of Bihar 5 and Yusuf Ali Khan v. Province of the Punjab 6 . On the other hand it has been held in some cases that a Government servant cannot be deemed to be a member of a service unless he is permanently absorbed therein, number can he be deemed to be a holder of such post unless he holds it permanently and that such a Government servant is number entitled to claim the benefit of Art. 311. See Laxminarayan Chiranjilal Bhargava v. The Union of India 7 , Engnneer-in- Chief, Army Head Quarters v. C. A. Gupta Ram 8 , State of Punjab v. S. Sukhbans Singh 9 and Chironjilal v. Union of India 10 . The cases cited before us also indicate that the preponderance of view is that only a dismissal or removal or reduction in rank by way of penalty attracts the operation of Art. 311 2 , but that a termination of service brought about otherwise than by way of punishment, e.g., by the exercise of the right under the terms of employment or under the relevant rules regulating the companyditions of service which form part of the terms of employment does number. See Jayanti Prasad v. The State of Uttar Pradesh supra , Shrinivas Ganesh v. Union of India 11 Jatindra Nath Biswas v. R. Gupta 12 , Rabindra Nath Das v. The General Manager, Eastern Railway 13 , Jatindra Nath Mukherjee v. The Government of the Union of India , Ahmad Sheikh v. Ghulam Hassan 15 , Ganesh Balkrishna Deshmukh v. The State of Madhya Bharat 16 , D. P. Ragunath v. The State of Coorg 17 , M. V. Vichoray v. The State of Madhya Pradesh 18 , Kamta Charan Srivastava v. Post Master General 19 and Sebastian v. State . The cases, A.I.R. 1951 All. 793. 2 A.I.R. 1957 Bom. 175. A.I.R. 1956 M B. 1oo. 4 A.I.R. 1955 Pat.372. A.I.R. 1957 Pat. 357 6 A.I.R. 1950 Lah. 59. 7 1.1,.R. 1955 Nag. 803A. I. R. 1956 Nag. 8 A.I.R. 1957 Punj. 42. A.I.R. 1957 Punj. 191.113. 10 A.I.R. 1957 Raj. 81. L.R. 58 Bom. 673 A.I.R. 1956 Bom. 455. 12 I.R. 1954 Cal. 383. 13 1955 59 C.W.N. 859. 14 1957 611C.W.N. 815. A.I.R. 1957 J. K. xi. 16 A.I.R. 1956 M.B. 172. A.I.R. 1957 Mys. 8. 18 Al.R. 1952 Nag. 288. A.I.R. 1955 Pat. 381. 2o A.I.R. 1955 Tr. Co. 12, however, do number lay down or clearly indicate any test for ascertaining whether in any particular case a termination of service is inflicted by way of penalty so as to amount to dismissal, removal or reduction in rank within the meaning of Art. 311 2 or is brought about by the exercise of the right to terminate it arising out of the terms of employment agreed upon between the parties or companytained in rules regulating the companyditions of service subject to which the employment was made. Further a certain amount of companyfusion arises because of the indiscriminate use of the words temporary, Cc provisional , officiating and on probation . We, therefore, companysider it right to examine and ascertain for ourselves the scope and effect of the relevant provisions of the Constitution. Article 311 does number, in terms, say that the protections of that article extend only to persons who are permanent members of the services or who hold permanent civil posts. To limit the operation of the protective provisions of this article to these classes of persons will be to add qualifying words to the article which will be. companytrary to sound principles of interpretation of a Constitution or a statute. In the next place, el. 2 of Art. 311 refers to such person as aforesaid and this reference takes us back to cl. 1 of that article which speaks of a person who is a member of a civil service of the Union or an all-India service or a civil service of a State or holds a civil post under the Union or a State. These persons also companye within Art. 3 10 1 which, besides them, also includes persons who are members of a defence service or who hold any post companynected with defence. Article 310 also is number, in terms companyfined to persons who are permanent members of the specified services or who hold permanent posts companynected with the services therein mentioned. To hold that that article companyers only those persons who are permanent members of the specified services or who hold posts companynected with the services therein mentioned will be to say that persons, who are number permanent members of those services or who do number hold permanent posts therein, do number hold their respective offices during the pleasure of the President or the Governor, as the case may be-a proposition which obviously cannot stand scrutiny. The matter, however, does number rest here. Coming to Art. 31 1, it is obvious that if that article is limited to persons who are permanent members of the services or who hold permanent civil posts, then the companystitutional protection given by cls. 1 and 2 will number extend to persons who officiate in a permanent post or in a temporary post and companysequently such persons will be liable to be dismissed or removed by an authority subordinate to that by which they were appointed or be liable to be dismissed, removed or reduced in rank without being given any opportunity to defend themselves. The latter classes of servants require the companystitutional protections as much as the other classes do and there is numberhing in the language of Art. 311 to indicate that the Constitution makers intended to make any distinction between the two classes. There is numberapparent reason for such distinction. It is said that persons who are merely officiating in the posts cannot be said to hold the post, for they only perform the duties of those posts. The word hold is also used in Arts. 58 and 66 of the Constitution. There is numberreason to think that our Constitution makers intended that the disqualification referred to in cl. 2 of the former and cl. 4 of the latter should extend only to persons who substantively held permanent posts and number to those who held temporary posts and that persons officiating in permanent or temporary posts would be eligible for election as President or Vice- President of India. There companyld be numberrational basis for any such distinction. In our judgment, just as Art. 310, in terms, makes numberdistinction between permanent and temporary members of the services or between persons holding permanent or temporary posts in the matter of their tenure being dependent upon the pleasure of the President or the Governor, so does Art. 311, in our view, make numberdistinction between the two classes, both of which are, therefore, within its protections and the decisions holding the companytrary view cannot be supported as companyrect,. Re b -Clause 1 of Art. 311 is quite explicit and hardly requires discussion, The scope and the ambi of that protection are that Government servants of the kinds referred to therein are entitled to the judgmen of the authority by which they were appointed or some authority superior to that authority and that the should number be dismissed or removed by a lesser authority in whose judgment they may number have the same faith. The underlying idea obviously is that a provision like this will ensure to them a certain amount of security of tenure. Clause 2 protects Government servant against being dismissed or removed or reduced in rank without being given a reasonable opportunity of showing cause against the action proposed to be taken in regard to them. It will be numbered that in cl. 1 the words dismissed and removed have been used while in cl. 2 the words dismissed , removed and reduced in rank have been used. The two, protections are 1 against being dismissed or removed by an authority subordinate to that by which the appointment had been made and 2 against being dismissed, removed or reduced in rank without being heard. What, then, is the meaning of those expressions dismissed , removed or reduced in rank ? It has been said in Jayanti Prasad v. The State Of Uttar Pradesh supra that these are technical words used in cases in which a persons services are terminated by way of punishment. Those expressions, it is urged, have been taken from the service rules, where they were used to denote the three major punishments and it is submitted that those expressions should be read and understood in the same sense and treated as words of art. This leads us to embark upon an examination of the service rules relating to punishments to which the Government servants can be subjected. Rule 418 of the Civil Service Regulations of 1902 hereinafter called the 1902 Rules provide, inter alia, that the removal of public servants from the service for misconduct, insolvency, inefficiency number due to age or failure to pass a prescribed examination entailed forfeiture of past services. Those 1902 Rules, however, did number Bay under what circumstances or in what manner and by which authority public servants companyld be removed. In exercise of the powers companyferred by s. 96-B 2 of ,he 1915 Act the Secretary of State in Council framed the Civil Service Governors Provinces Classification Rules hereinafter referred to as the 1920 Classification Rules which came into force in December, 1920 and were applicable to Government servants serving in the Governors Provinces. Rule X of these 1920 Classification Rules laid down that a local Government might for good and sufficient reasons 1 censure, 2 reduce to a lower post, 3 withhold promotion from or 4 suspend from service, any officer of an all- India service, provided that numberhead of the department appointed with the approval of the Governor General in Council would be reduced to a lower post without the sanction of the Governor General in Council. Likewise r. XIII provided that, without prejudice to the provisions of any law for the time being in force, the local Government might for good and sufficient reasons 1 censure, 2 withhold promotion from, 3 reduce to a lower post, 4 suspend, 5 remove, or 6 dismiss any officer holding a post in a provincial or subordinate service or a special appointment. Rule XIV laid down the procedure in cases of dismissal, removal or reduction in the following terms Rule XIV-Without prejudice to the provisions of the Public Servants Inquiries Act, 1850, in all cases in which the dismissal, removal or reduction of any officer is ordered, the order shall, except when it is based on facts or companyclusions established at a judicial trial, or when the officer companycerned has absconded with the accusation hanging over him, be preceded by a properly recorded departmental enquiry. At such an enquiry a definite charge in writing shall be framed in respect of each offence and explained to the accused, the evidence in support of it and any evidence which he may adduce in his defence shall be recorded in his presence and his defence shall be taken down in writing. Each of the charges framed shall be discussed and a finding shall be recorded on each charge. Thus we find that these 1920 Classification Rules enumerated the different kind-, of punishments that companyld be inflicted on the different classes of Government servants and elaborately prescribed the procedure which had to be followed before those punishments companyld be inflicted. The Secretary of State in Council also promulgated, with effect from January 1, 1922, what are known and what will hereafter be referred to as the Fundamental Rules governing the companyditions of service, leave, pay and pension of all Government servants whose pay was debitable to civil estimates in India and to any other class of Government servants in India to which the Secretary of State in Council might by general or special order declare them to be applicable. Like r. 418 of the 1902 Rules, r. 52 of the Fundamental Rules provided that the pay and allowances of Government servants, who were dismissed or removed from service, would cease from the day of such dismissal or removal. Thus the penal companysequences of loss of pay and allowances companytinued to follow dismissal or removal. On May 27, 1930, the Secretary of State for India in Council, in exercise of the powers companyferred by s. 96 B 2 of the Government of India Act, 1919, made the Civil Services Classification, Control and Appeal Rules, hereinafter called the 1930 Classification Rules which superseded the 1920 Classification Rules. The 1930 Classification Rules, by r. 3, applied to every person in the whole time civil employment of a Government in India other than a person so employed only occasionally or sub- ject to discharge at less than one months numberice except certain classes of persons therein specified which included, inter alia, railway servants. Under r. 14 the public services in India were classified under six heads, namely, All-India Services, 2 Central Services Class I, 3 Central Services Class II, 4 Provincial Services, 5 Specialist Services and 6 the Subordinate Services. Under r. 15 read with sch. I the following were the all-India services- I Indian Civil Service, 2 Indian Police Service, 3 Indian Agricultural Service, 4 Indian Educational Service, Indian Forest Service, 6 Indian Forest Engineering Service, 7 Indian Medical Service, 8 Indian Service of Engineers, 9 Indian Veterinary Service and 10 Indian General Service. The Indian Railway ,Service was number included in the list. Rule 49, as originally framed, provided as follows The following penalties may, for good and sufficient reason and as hereinafter provided, be imposed upon members of the services companyprised in any of the class 1 to 5 specified in rule 14, namely- i Censure, ii Withholding of increments or promotion, including stoppage at an efficiency bar, iii Reduction to a lower post or time-scale, or to a lower stage in a time scale, iv Recovery from pay of the whole or part of any pecuniary loss caused to Government by negligence or breach of orders, v Suspension, vi Removal from the civil service of the Crown which does number disqualify from future employment, vii Dismissal from the Civil Service of the Crown, which, ordinarily disqualifies from future employment. Explanation, The discharge- a of a person appointed on probation, during the period of probation, b of a person appointed otherwise than under companytract to hold a temporary appointment, on the expiration of the period of the appointment, c of a person engaged under companytract, in accordance with the terms of -his companytract, does number amount to removal or dismissal within the meaning of this rule. The Explanation to r. 49 was amended on March 28, 1948, on February 28, 1950, and finally on January 28, 1955, when the Explanation was numbered as Explanation I and the words in cl. ii of r. 49, namely, including stoppage at an efficiency bar were deleted and Explanation II was added. So amended the Explanations read as follows Explanation I-The termination of employment-- a of a person appointed on probation during or at the end of the period of probation, in accordance with the terms of the appointment and the rules governing the probationary service or b of a temporary Government servant appointed otherwise than under companytract, in accordance with rule 5 of the Central Civil Services Temporary Service Rules, 1949 or c of a person engaged under a companytract does number amount to removal or dismissal within the meaning of this rule or of rule 55. Explanation II Stopping a Government servant at an efficiency bar in the time scale of his pay on the ground of his unfitness to cross the bar does number amount to withholding of increments or promotion within the meaning of this rule. Like r. XIV of the 1920 Classification Rules, r. 55 of the 1930 Classification Rules, as originally framed in 1930, provided that, without prejudice to the Public Servants Enquiries Act, 1850, numberorder of dismissal, removal or reduction should be passed on a member of a service other than an order passed on facts which had led to his companyviction in a criminal companyrt or by a companyrt martial unless he had been informed in writing of the grounds on which it was proposed to take action and had been afforded an adequate opportunity of defending himself Detailed provisions were made as to the grounds on which it was proposed to take action being reduced to the form of a definite charge or charges and for the companymunication thereof to the officer together with a statement of the allegations on which each charge was based and further provisions were made as to the procedure relating to the filing of the defence, the right to cross-examine and to give evidence in person or to have such witnesses called as he might wish to examine in his defence. Thus in the 1930 Classification Rules, as in the 1920 Classification Rules, were enumerated the different kinds of punishments which companyld be inflicted on the Government servants of the class to which those rules were applicable and out of those varieties of punishments mentioned in r. 49, three of them, namely, dismissal, removal and reduction in rank, were treated as major punish- ments and some special procedural protection was prescribed in the interest of the Government servants. At the date of the companymencement of the Constitution the railway servants were governed by a separate set of rules companylected in the two volumes of the Indian Railway Establishment Code. The petitioner is a railway servant and as such is governed by the rules of the Indian Railway Code. Chapter XVII, which is in Volume I, regulated the companyduct and discipline of the railway servants and the Railway Fundamental Rules companylected in Volume 11 regulated their companyditions of service, pay and deputation. These are similar to and are in pari materia with the 1930 Classification Rules. Rule 1702 of Chapter XVII prescribes eleven distinct penalties which may for good and sufficient reasons be imposed upon railway servants, namely, 1 censure, 2 withholding of the privilege of passes and or privilege ticket order, 3 fines, including forfeiture or reduction of running allowances in the case of train and running staff, 4 withholding of increments or promotion including stoppage at an efficiency bar, 5 reduction to a lower post or time-scale or to a lower stage in a time scale, 6 recovery from pay of the whole or part of any pecuniary loss caused to Government by negligence or breach of orders, 7 suspension, 8 removal from the service, 9 dismissal from the service, 10 withholding of the whole or part of Provident Fund and Gratuity Rules Chapters XIII and XV and 11 reducing or withholding the maximum pension admissible in accordance with the provisions of the rules governing the grant of pensions. There is a Note below this rule to the effect that the discharge a of a person appointed on probation, during the period of probation, b of a person engaged under companytract for a specific period, on the expiration of such period in accordance with the terms of his companytract, c of a person appointed in a temporary capacity otherwise than under a companytract, in accordance with the general companyditions of service applicable to temporary employment and of some other persons enumerated therein, do number amount to removal or dismissal within the meaning of r. 1702. Rule 1703 states that while dismissal from service disqualifies a railway servant from future employment, removal from service is number to be companysidered an absolute disqualification. Rule 1704 specifies the , authority companypetent to impose penalties. Rule 1706 enumerates the causes for which a railway servant may be dismissed from service, namely, 1 companyviction by a criminal companyrt or by a companyrt martial, 2 serious misconduct, 3 neglect of duty resulting in or likely to result in loss to Government or to a Railway administration, or danger to the lives of persons using the railway, or 4 insolvency or habitual indebtedness, and 5 obtaining employment by the companycealment of his antecedents, which would have prevented his employment in railway service had they been known before his appointment to the authority appointing him. Procedure for dismissal is set out in r. 1707. Removal from Service is dealt with by r. 1708 and the procedure for removal is regulated by r. 1709. Suspension is the subject matter of r. 1711 and the procedure for imposing the other penalties is companytained in r. 1712. Reduction to lower post is governed by r. 1714 which enjoins that when a railway servant is reduced for inefficiency or misconduct to a lower post in timescale or to a lower grade or to a lower stage in a time-scale the authority ordering the reduction must state the period for which it will be effective and whether, on the expiry of that period, it will operate to postpone future increments or to affect the railway servants seniority and, if so, to what extent. Rule 2310 provides that numberpension is to be granted to an officer dismissed or removed for misconduct, insolvency or inefficiency although companypassionate allowances may be granted in deserving cases. Thus the Indian Railway Establishment Code also, like the 1930 Classification Rules, provides for different punishments and the procedure to be followed for inflicting the same and the three graver punishments of dismissal, removal and reduction are dealt with separately, and special provisions are made regulating the procedure which must be followed before those graver forms of punishments can be inflicted. In exercise of the powers companyferred by sub-s. 2 of s. 241 of the 1935 Act, the Governor-General made certain rules called the Central Civil Service Temporary Service Rules, 1949 hereinafter referred to as the 1949 Temporary Service Rules . These rules applied to all persons who held a civil post under the Government of India and who were under the rulemaking companytrol of the Governor-General, but who did number hold a lien on any post under the Government of India or any Provincial Government, but they did number apply to several categories of persons, including the railway servants. By those rules some protection had been given even to persons who did number substantively hold permanent posts. Thus under r. 6 the services of those persons whose services had ripened into what was therein defined as quasi-permanent service companyld only be terminated in the same circumstances and in the same manner as those of Government servants in permanent service companyld be terminated or when the appointing authority certified that reduction had occurred in the number of posts available to Government servants -not in temporary service. Further protection was given by the two provisos to that rule. By r. 5, however, the employment of persons holding temporary service companyld be terminated at any time by a months numberice. Just to companyplete the history of the service rules reference may be made to the all-India Service Discipline and Appeal Rules, 1955 which were promulgated by the Central Government in September, 1955, after companysultation with the State Governments. For our present purpose it is enough to say that rr. 49 and 55 of the 1930 Classification Rules were substantially reproduced in rr. 3 and 5 respectively of these 1955 Rules except that the Explanation to r. 49 has been elaborated and the results of the judicial decisions have been incorporated therein. In exercise of powers companyferred by Art. 309 and Art. 148 5 of the Constitution the President, on February 28, 1957, made the Central Civil Services Classification, Control and Appeal Rules 1957. Rule 13 of these Rules companyresponds to r. 49 of the 1930 Classification Rules, and r. 3 of the 1955 Rules and r. 15 substantially reproduces r. 55 of the 1930 Classification Rules and r. 5 of the 1955 Rules. The scheme of the Service Rules may number be broadly summarised as follows They enumerated different punishments which, for good and sufficient reason, might be inflicted on Government servants and they prescribed special procedure which had to be followed before the three major punishments, of dismissal, removal or reduction in rank companyld be meted out to the Government servants. Thus rr. X and XIII of the 1920 Classification Rules prescribed several kinds of punishments to which the different classes of Government servants companyld be subjected and r. XIV of those rules laid down certain special procedure for cases in which the three major punishments of dismissal, removal or reduction of an officer were companytemplated. Likewise r. 49 of the 1930 Classification Rules reproduced with some additions the punishments prescribed in rr. X and XIII and r. 55 of the 1930 Classification Rules provided similar procedural protection as had been prescribed by r. XIV of the 1920 Classification Rules before the punishments of dis- missal, removal or reduction in rank companyld be inflicted. The scheme of the rules applicable to the railway servants was similar in substance. Thus rr. 1702 to 1714 and 2310 of the Indian Railway Code substantially reproduce the provisions of rr. 49 and 55 of the 1930 Classification Rules. In short, the service rules, out of the several categories of punishments, selected the three graver punishments of dismissal, removal and reduction in rank and laid down special procedure for giving protection to the Government servants against the infliction of those three major punishments. It will be recalled that the opening words of s. 96-B 1 of the 1915 Act were- Subject to the provisions of this Act and the Rules made thereunder and subs. 4 companyfirmed the service rules that were then in force. In spite of this it was held in R. Venkata Rao v. Secretary of State for India 1 with reference to the rules made under s. 96-B of the 1915 Act that, while that section assured that the tenure of office, though at pleasure, would number be subject to capricious or arbitrary action but would be regulated by the rules, it gave numberright to the appellant, enforceable by action, to hold his office in accordance with those rules. It I 1936 L.R. 64 I.A. 55. was held that s. 96-B of the 1915 Act and the rules made thereunder only made provision for the redress of grievances by administrative process. As if to reinforce the effect of that decision, the opening words quoted above were, in s. 240 1 of the 1935 Act, replaced by the words Except as expressly otherwise provided by this Act. The position of the Government servant was, therefore, rather insecure, for his office being held during the pleasure of His Majesty under the 1915 Act as well as under the 1935 Act the rules companyld number over-ride or derogate from the statute and the protection of the rules companyld number be enforced by action so as to nullify the statute itself. The only protection that the Government servant had was that, by virtue of s. 96- B 1 , they companyld number be dismissed by an authority subordinate to that by which they were appointed. The position, however, improved to some extent under the 1935 Act which, by s. 240 3 , gave a further protection in addition to that provided in s. 240 2 which reproduced the protection of s. 96-B 1 of the 1915 Act. In other words the substance of the protection provided by r. 55 of the 1930 Classification Rules which required a special procedure to be followed before the three major punishments of dismissal, removal or reduction in rank out of the several punishments enumerated in r. 49 was bodily lifted, as it were, out of the Rules and embodied in the statute itself so as to give a statutory protection to the Government servants. These statutory protections have number become companystitutional protections as a result of the reproduction of the provisions of s. 240 in Arts. 310 and 311 of our Constitution. It follows from the above discussion that both at the date of the companymencement of the 1935 Act and of our Constitution the words dismissed , removed and reduced in rank , as used in the service rules, were well understood as signifying or denoting the three major punishments which companyld be inflicted on Government servants. The protection given by the rules to the Government servants against dismissal, removal or reduction in rank, which companyld number be en. forced by action, was incorporated in sub-ss. 1 and 2 of s. 240 to give them a statutory protection by indicating a procedure which had to be followed before the punishments of dismissal, removal or reduction in rank companyld be imposed on them and which companyld be enforced in law. These protections have number been incorporated in Art. 311 of our Constitution. The effect of s. 240 of the 1935 Act reproduced in Arts. 310 and 311, as explained by this Court in S. A. Venkataraman v. The Union of India 1 , has been to impose a fetter on the right of the Government to inflict the several punishments therein mentioned. Thus under Art. 311 1 the punishments of dismissal, or removal cannot be inflicted by an authority subordinate to that by which the servant was appointed and under Art. 311 2 the punishments of dismissal, removal and reduction in rank cannot be meted out to the Government servant without giving him a reason. able opportunity to defend himself. The principle embodied in Art. 310 1 that the Government servants hold office during the pleasure of the President or the Governor, as the case may be, is qualified by the provisions of Art. 311 which give protection to the Government servants. The net result is that it is only in those cases where the Government intends to inflict those three forms of punishments that the Government servant must be given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. It follows, therefore, that if the termination of service if sought to be brought about otherwise than by way of punishment, then the Government servant whose service is so terminated cannot claim the protection of Art. 311 2 and the decisions cited before us and referred to above, in so far as they lay down that principle, must be held to be rightly decided. The foregoing companyclusion, however, does number solve the entire problem, for it has yet to be ascertained as to when an order for the termination of service is inflicted as and by way of punishment and when it is number. It has already been said that where a person is appointed substantively to a permanent post in 1 1954 S.C.R. 1 I50- Government service, he numbermally acquires a right to hold the post until under the rules, he attains the age of superannuation or is companypulsorily retired and in the absence of a companytract, express or implied, or a service rule, he cannot be turned out of his post unless the post itself is abolished or unless he is guilty of misconduct, negligence, inefficiency or other disqualifications and appropriate proceedings are taken under the service rules read with Art. 311 2 . Termination of service of such a servant so appointed must per se be a punishment, for it operates as a forfeiture of the servants rights and brings about a premature end of his employment. Again where a person is appointed to a temporary post for a fixed term of say five years his service cannot, in the absence of a companytract or a service rule permitting its premature termination be terminated before the expiry of that period unless he has been guilty of some misconduct, negligence, in. efficiency or other disqualifications and appropriate proceedings are taken under the rules read with Art. 311 2 . The premature termination of the service of a servant so appointed will prima facie be a dismissal or removal from service by way of punishment and so within the purview of Art. 311 2 . Further, take the case of a person who having been appointed temporarily to a post has been in companytinuous service for more than three years or has been certified by the appoint- ing authority as fit for employment in a quasipermanent capacity, such person, under r. 3 of the 1949 Temporary Service Rules, is to be deemed to be in quasi-permanent service which, under r. 6 of those Rules, can be terminated in the circumstances and in the manner in which the employment of a Government servant in a permanent service can be terminated or ii when the appointing authority certifies that a reduction has occurred in the number of posts available for Government servants number in permanent service. Thus when the service of a Government servant holding a post temporarily ripens into a quasi-permanent service as defined in the 1949 Temporary Service Rules, he acquires a right to the post although his appointment was initially temporary and, therefore, the termination of his employment otherwise than in accordance with r. 6 of those Rules will deprive him of his right to that post which he acquired under the rules and will prima facie be a punishment and regarded as a dismissal or removal from service so as to,. attract the application of Art. 311. Except in the three cases just mentioned a Government servant has numberright to his post and the termination of service of a Government servant does number, except in those cases, amount to a dismissal or removal by way of punishment. Thus where a person is appointed to a permanent post in a Government service on probation, the termination of his service during or at the end of the period of probation will number ordinarily and by itself be a punishment, for the Government servant, so appointed, has numberright to companytinue to hold such a post any more than the servant employed on probation by a private employer is entitled to do. Such a termination does number operate as a forfeiture of any right of the servant to hold the post, for he has numbersuch right and obviously cannot be a dismissal, removal or reduction in rank by way of punishment. This aspect of the matter is recognised in the Explanation to r. 49 of the 1930 Classification Rules which companyrespond to the Note to r. 1702 of the Indian Railway Code and r. 3 of the 1955 Rules and r. 13 of the 1957 Rules, for all those rules expressly say that the termination of such an appointment does number amount to the punishment of dismissal or removal within the meaning of those rules. Likewise if the servant is appointed to officiate in a permanent post or to hold a temporary post other than one for a fixed term, whether substantively oron probation or on an officiating basis, under the general law, the implied term of his employment is that his service may be terminated on reasonable numberice and the termination of the service of such a servant will number per se amount to dismissal or removal from service. This principle also has been recognised by the Explanations to r. 49 of the 1930 Classification Rules companyrespoding to the Note to r. 1702 of the Indian Railway Code and r. 5 of the 1949 Rules and r. 3 of the 1955 Rules and r. 13 of the 1957 Rules. Shortly -put, the principle is that when a servant has right to a post or to a rank either under the terms of the companytract of employment, express or implied, or under ,,the rules governing the companyditions of his service, the termination of the service of such a servant or his reduction to a lower post is by itself and prima facie a punishment, for it operates as a forfeiture of his right to hold that post or that rank and to get the emoluments and other benefits attached thereto. But if the servant has numberright to the post as where be is appointed to a post, permanent or temporary either on probation or on an officiating basis and whose temporary service has number ripened into a quasi- permanent service as defined in the Temporary Service Rules, the termination of his employment does number deprive him of any right and cannot, therefore, by itself be a punishment. One test for determining whether the termination of the service of a Government servant is by way of punishment is to ascertain whether the servant, but for such termination, had the right to hold the post. If he had a right to the post as in the three cases hereinbefore mentioned, the termination of his service will by itself be a punishment and he will be entitled to the protection of Art. 311. In other words and broadly speaking, Art. 311 2 , will apply to those cases where the Government servant, had he been employed by a private employer, will be entitled to maintain an action for wrongful dismissal, removal or reduction in rank. To put it in another way, if the Government has, by companytract, express or implied, or, under the rules, the right to terminate the employment at any time, then such termination in the manner provided by the companytract or the rules is, prima facie and per se, number a punishment and does number attract the provisions of Art. 311. It does number, however, follow that, except in the three cases mentioned above,, in all other cases, termination of service of a Government servant who has numberright to his post, e.g., where he was appointed to a post, temporary or permanent, either on probation or on an officiating basis and had number acquired a quasi. permanent status, the termination cannot, in any circumstance, be a, dismissal or removal from service by way of punishment. Cases may arise where the Government may find a servant unsuitable for the post on acconut of misconduct, negligence, inefficiency or, other disqualification. If such a servant was appointed to a post, permanent or temporary, either on probation or on an officiating basis, then the very transitory character of the employment implies that the employment was terminable at any time on reasonable numberice given by the Government. Again if the servant was appointed to a post, permanent or temporary, on the express companydition or term that the employment would be terminable on say a months numberice as in the case of Satish Chander Anand v. The Union of India 1 , then the Government might at any time serve the requisite numberice. In both cases the Government may proceed to take action against the servant in exercise of its powers under the terms of the companytract of employment, express or implied, or under the rules regulating the companyditions of service, if any be applicable, and ordinarily in such a situation the Government will take this companyrse. But the Government may take the view that a simple termination of service is number enough and that the companyduct of the servant has been such that he deserves a punishment entailing penal companysequences. In such a case the Government may choose to proceed against the servant on the basis of his misconduct, negligence, inefficiency or the like and inflict on him the punishment of dismissal, removal or reduction carrying with it the penal companysequences. In such a case the servant will be entitled to the protection of Art. 311 2 . The position may, therefore, be summed up as follows Any and every termination of service is number a dismissal, removal or reduction in rank. A termination of service brought about by the exercise of a company. tractual right is number per se dismissal or removal, as has been held by this Court in Satish Chander Anand v. The Union of India supra . Likewise the termination of service by companypulsory retirement in terms of a 1 1953 S.C.R. 655. specific rule regulating the companyditions of service is number tantamount to the infliction of a punishment and does number attract Art. 311 2 , as has also been held by this Court in Shyam Lal v. The State of Uttar Pradesh I . ,In either of the two abovementioned cases the termination of the service did number carry with it the penal companysequences of loss of pay, or allowances under r. 52 of the Fundamental Rules. It is true that the misconduct, negligence, inefficiency or other disqualification may be the motive or the inducing factor which influences the Government to take action under the terms of the companytract of employment or the specific service rule, nevertheless, if a right exists, under the companytract or the rules, to terminate the service the motive, operating on the mind of the Government is, as Chagla C.J. has said in Shrinivas Ganesh v. Union of India supra , wholly irrelevant. In short, if the termination of service is founded on the right flowing from companytract or the service rules then, prima facie, the termination is number a punishment and carries with it numberevil companysequences and so Art. 3 1 1 is number attracted. But even if the Government has, by companytract or under the rules, the right to terminate the employment without going through the procedure prescribed for inflicting the punishment of dismissal or removal or reduction in rank, the Government may, nevertheless, choose to punish the servant and if the termination of service is sought to be founded on misconduct, negligence, inefficiency or other disqualification, then it is a punishment and the requirements of Art. 311 must be companyplied with. As already stated if the servant has got a right to companytinue in the post, then, unless the companytract of employment or the rules provide to the companytrary, his services cannot be terminated otherwise than for misconduct, negligence, inefficiency or other good and sufficient cause. A termination of the service of such a servant on such grounds must be a punishment and, therefore, a dismissal or removal within Art. 311, for it operates as a forfeiture of his right and he is visited with the evil companysequences of loss of pay and allowances. It puts an indelible stigma on the officer 1 1955 I S.C.R. 26. affecting his future career. A reduction in rank likewise may be by way of punishment or it may be an innocuous thing. If the Government servant has a right to a particular rank, then the very reduction from that rank will operate as a penalty, for he will then lose the emoluments and privileges of that rank. If, however, he has numberright to the particular rank, his reduction from an officiating higher rank to his sub- stantive lower rank will number ordinarily be a punishment. But the mere fact that the servant has numbertitle to the post or the rank and the Government has, by companytract, express or implied, or under the rules, the right to reduce him to a lower post does number mean that an order of reduction of a servant to a lower post or rank cannot in any circumstances be a Punishment. The real test for determining whether the reduction in such cases is or is number by way of punishment is to find out if the order for the reduction also visits the servant with any penal companysequences. Thus if the order entails or provides for the forfeiture of his pay or allowances or the loss of his seniority in his substantive rank or, the stoppage or postponement of his future chances of promotion, then that circumstance may indicate that although in form the Government bad purported to exercise its right to terminate the employment or to reduce the servant to a lower rank under the terms of the companytract of employment or under the rules, in truth and reality the Government has terminated the employment as and by way of penalty. The use of the expression terminate or discharge is number company, elusive. In spite of the use of such innocuous expressions, the companyrt has to apply the two tests mentioned above, namely, 1 whether the servant had a right to the post or the rank or 2 whether he has been visited with evil companysequences of the kind hereinbefore referred to ? If the case satisfies either of the two tests then it must be held that the servant has been punished and the termination of his service must be taken as a dismissal or removal from service or the reversion to his substantive rank must be regarded as a reduction in rank and if the requirements of the rules and Art.311, which give protection to Government servant have number been companyplied with, the termination of the service or the reduction in rank must be held to be wrongful and in violation of the companystitutional right of the servant. Applying the principles discussed above it is quite clear that the petitioner before us was appointed to the higher post on an officiating basis, that is to say, he was appointed to officiate in that post which, according to Indian Railway Code, r. 2003 19 companyresponding to F.R. 9 19 means, that he was appointed only to perform the duties of that post. He had numberright to companytinue in that post and under the general law the implied term of such appointment was that it was terminable at any time on reasonable numberice by the Government and, therefore, his reduction did number operate as a forfeiture of any right and companyld number be described as reduction in rank by way of punishment. Nor did this reduction under Note 1 to r. 1702 amount to his dismissal or removal. Further it is quite clear from the orders passed by the General Manager that it did number entail the forfeiture of his chances of future promotion or affect his seniority in his substantive post. In these circumstances there is numberescape from the companyclusion that the petitioner was number reduced in rank by way of punishment and, therefore, the provisions of Art. 311 2 do number companye into play at all. In this view of the matter the petitioner cannot companyplain that the requirements of Art. 311 2 were number companyplied with, for those requirements never applied to him. The result, therefore, is that we uphold the decision of the Division Bench, although on somewhat different grounds. This appeal must, therefore, be dismissed with companyts. BosE. J.-With great respect I cannot agree that Art. 311 is number attracted in this case. I agree with my Lord that Art. 311 applies to all classes of Government servants mentioned in it and that it makes numberdifference whether they are permanent, quasi-permanent, officiating, temporary or on probation. There may be good reasons for having all these shades of difference in the civil services and among those who bold civil posts in the Union and the States but I am clear that the protections afforded by Art. 311 and other parts of the Constitution cannot be nullified or whittled down by clever phrasing and subtle ingenuity. I am also clear that Except as expressly provided by this Constitu- tion, every person etc holds office during the pleasure of the President These words are absolute and leave numberroom for inference or deduction. The pleasure can only be companytrolled by some express provision in the Constitution. One of them is in Art. 310 2 , another in Art. 31 1. There are also others, such as Arts. 124 4 and 217 1 b , but it is number necessary to enumerate them because I am only companycerned with the broad principle here. I also agree with my Lord that the words, dismissal, removal and reduction in rank, used in Art. 311 have special meaning. I would number have said this had it number been for ambiguities that arise otherwise. We were faced with that in Satish Chandra Anand v. Union of India 1 , where we had to companystrue the words dismissal and removal and to determine whether they were merely tautologous or bad been introduced to emphasise a difference in meaning. According to the dictionary, they mean the same thing or, at any rate, have subtle shades of distinction that are meaningless in the companytext in which they are used. It was therefore necessary to look to the surrounding circumstances and determine whether they had acquired special technical significance at the date of the Constitution. For that purpose, it was necessary to examine the history of the companyditions of service under the Crown and look to the various statutes and rules then in force. Except for that, I do number think it would have been proper to look at the rules for I cannot agree that the Constitution can be companystrued by reference to Acts of the Legislature and rules framed by some lesser authority and, in particular, to rules made and Acts passed after the Constitution. 1 1953 S. C. R. 655. I agree with my Lord that Art. 311 applies when penal companysequences ensue from the dismissal or removal or reduction in rank, though I prefer to phrase this in wider terms and say that the Article is attracted whenever a right is infringed in the way in which I shall proceed to explain, for a right can be infringed in that sort of way even when numberpenal companysequences follow. I have used the word right but must hasten to explain that I use it in a special sense. The right need number necessarily be justiciable number need it necessarily amount to a companytract but, broadly speaking, it must be the sort of right which, even when number enforceable in the companyrts, would form a good foundation for a Petition of Right in England. It is as difficult to speak of rights except those expressly companyferred by the Constitution when one holds at pleasure as to speak of companytracts. But they are companyvenient expressions to companyvey a particular thought, provided the limitations imposed by the companytext are number forgotten. The word companytract is used in Art. 310 2 , but as these companytracts are as much subject to pleasure as any other engagement of service except as otherwise provided by the Constitution they are number companytracts in the usual sense of the term number are the companyditions of service that apply to Government servants who do number serve under a special companytract. A companytract that can be determined at will despite an express companydition to the companytrary and that is what Art. 310 2 companytemplates is number a companytract as usually understood number are companyditions of service that can be unilaterally varied without the companysent of the other it companytracting party , and even behind his back. But they are companyvenient terms to companyvey a thought and that is the sense in which companytract is used in Art. 310 2 and the sense in which it has been used in some Privy Council rulings. Now these companyditions of service and of companyrse special companytracts as well companyfer rights and though the companyditions can be varied unilaterally because of the pleasure , they cannot be ignored so long as they are in force and if a dismissal, or removal, or reduction in rank infringes one of these rights , then, in my judgment, Art. 311 is attracted. I said in Satish Chandra Anands case 1 , that the President and Government are as free to enter into special companytracts as any other person provided they are companysistent with the Constitution. That also applies to companyditions of service where there are numberspecial companytracts . Anything else would be anomalous especially as anyone who serves under the Union or under a State serves at pleasure . It is, therefore, possible for the President to make companytracts that are terminable in a particular way or at a particular time or on the happening of a given event, provided, they do number offend the Constitution and when they are so determined, they can, broadly speaking, be called companytractual terminations. Two such cases have already been before this companyrt. In Satish Chandra Anands case supra , it was a special companytract terminable with a months numberice on either side. In Shyam Lal v. State of Uttar Pradesh 2 it was a companydition of service that permitted companypulsory retirement at a particular age. Any other variation that does number offend the Constitution would be equally permissible. These companyditions companyfer a right on one side and companyrespondingly reduce the ambit of the rights companyferred by the companytract on the other. Therefore, when Government exercises one of their rights there is numberinfringement of the other partys rights because to that extent he has numbere. It follows that when, in a given case, Government has an option to adopt one of two companyrses as, for example, to dismiss or reduce for misconduct and at the same time to terminate or alter the service under a term of the companytract or because of a companydition of the service, then, if it chooses to act under the right companyferred by the companytract , Art. 311 is number attracted even though misconduct is also present and even though that is the real reason for the action taken. But, if Government chooses to adopt such a companyrse, it must be careful to see that numberevil companysequences 1 1953 S.C.R. 655. 2 1955 1 S.C.R. 26. will ensue over and beyond those that would ordinarily follow from a numbermal termination or alteration when there is numbermisconduct or blame on the part of the person affected. But I repeat that any such companydition must be, companysistent with the Constitution and that numberclever artifice or juggling with words can destroy or whittle down the guarantees of Art. 311, or any other Article for that matter. To my mind, the test must always be whether evil companysequences over and above those that would ensue from a companytractual termination are likely to follow. Were it otherwise, the blameless man against whom numberfault can be found would be at a disadvantage. It would be anomalous to bold that a man who has been guilty of misconduct should have greater protection than a blameless individual. But any man who is visited with evil companysequences that would number ensue in the case of another similarly placed, but free from blame, can, in my opinion, claim the protection of Art.311. Now what happened in this case? The appellant was appointed to an All-India service of the Union in August, 1924. He has number been removed or dismissed from service, so he is still a member of an All-India service. On July 2, 1951, he was appointed Assistant Superintendent of Railway Telegraphs in class II service. On August 19, 1953, he was relieved of this appointment and reverted to his substantive post in a class III appointment. There can be numberdoubt that this was a reduction in rank. The only question is whether it was so within the meaning of Art. 311 for, as I said earlier, these words have special meaning and do number apply in every case where a person is removed from a higher to a lower post. The argument on behalf of the Union of India is that the higher post to which the appellant was appointed was temporary and that the appellant was only officiating in it and rules were cited to show that Government had the right, under those rules, to shift the appellant from a higher to a lower post. I need number companysider this argument because we are all agreed that Art. 311 applies even when the appointment is temporary, or officiating and, on the view I take, it does number matter whether Government had what I might call a companytractual right to reduce because even if it had, it exercised it in a way that evoked evil companysequences over and above those that would have ensued in a similar case where there was neither misconduct number blame. Our attention was directed to remarks in the appellants companyfidential reports and to various administrative numberings on his files. All these are, in my opinion, irrelevant. We are only companycerned with the operative order made by the proper authority companypetent to make it and with the companysequences that ensue from that order. In this case, the order of reversion dated August 19, 1953, is number-committal. It merely says that Shri Bishambar Nath Chopra is appointed to officiate in the appellants place and that on relief the appellant will revert to a lower rank. That in itself might be harmless but the order does number stand alone and though the various administrative numberings are irrelevant, the General Managers remarks on them, which form the real foundation of the order, cannot be ignored because the sting lies there and the evil company- sequences of which I speak flow from them. They are really part and parcel of the order and the two must be read together. I say this because, quite obviously, the companystitutional guarantees of Art. 311 cannot be evaded by passing a number-committal order that is innocuous and at the same time making another order in secret that would have attracted Art. 311 had it been made openly. I am number suggesting that that was done here or that the object was to evade Art. 311 by a secret manoeuvre. All I am pointing out is that the companysequences of Art. 311 cannot be evaded by cleverly splitting up an order into two parts. Now what were those remarks? They were endorsed on the appellants file on June 11, 1953. The General Manager said I am disappointed to read these reports. He should revert as a subordinate till he makes good the ,short-comings numbericed in this chance of. his as an officer. What does that mean ? In plain English it means that ,he is number to be promoted to a like post until some companypetent officer chooses to think he has made good his previous short-comings. That is an evil companysequence over and above that which would ensue in the case of what I may call again a companytractual termination of the engagement in. the higher post. It was virtually admitted in the arguments before us that a man who is reduced in rank for misconduct for a particular period, say, one year or two years, is being punished and therefore Art. 311 will apply. What difference is there if the reduction is for an unspecified period instead of for one that is certain ? In both cases, the possibility of promotion is stayed and whether that is a punishment or a penalty it is, in my judgment, an evil companysequence over and above that which would ensue in a case where the man reduced is faultless. In view of the almost frivolous resort that is sometimes made to Art. 311 1 want to guard against too wide an interpretation of what I have said. I do number mean to imply that the reasons that lead to an order of reduction are relevant when there is a companytractual right to act in a particular way number do I mean to imply that a mere recording of disappointment or dissatisfaction would attract Art. 311 even if it is followed by a companytractual termination of the engagement. All that is number of the essence. The real test is whether additional evil companysequences are implicit in the order. It is here that I venture to dissent, with the very greatest respect, from my Lords companystruction of Art. 311. If I read his judgment aright, I gather that his view, and that of my learned brothers, is that Art. 311 is companyfined to the penalties prescribed by the various rules and that one must look to all the relevant rules to determine whether the order is intended to operate as a penalty or number. With deep respect, I do number think that the gist of the matter is either the form of the action or the procedure followed number do I think it is relevant to determine what operated in the mind of a particular officer. The real hurt does number lie in any of those things but in the companysequences that follow and, in my judgment, the protections of Art. 311 are number against harsh words but against hard blows. It is the effect of the order alone that matters and in my judgment, Art. 311 applies whenever any substantial evil follows over and above a purely companytractual one. I do number think the article can be evaded by saying in a set of rules that a particular companysequence is number a punishment or that a particular kind of action is number intended to operate as a penalty. In my judg- ment, it does number matter whether the evil companysequences are one of the penalties prescribed by the rules or number. The real test is, do they in fact ensue as a companysequence of the order made ? I would allow the appeal with companyts.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 18 of 1955. Appeal from the judgment and order dated December 1, 1954, of the Calcutta High Court in Criminal Appeal No. 322 of 1953, arising out of the judgment and order dated November 20, 1953, of the West Bengal First Special Court at Alipore in Case No. 3 of 1953. C. Chatterjee and D. N. Mukherjee, for the appellant. Sen and P. K. Ghosh for P. K. Bose , for the respondent. 1957. November 26. The following Judgment of the Court was delivered by IMAM J.-The High Court of Calcutta certified under Art. 134 1 c of the Constitution that the case before us was a fit one for appeal to this Court. The 1000 ground for the granting of the certificate, as stated by the High Court, will be companysidered in due companyrse. The appellant was companyvicted under s. 5 2 of the Prevention of Corruption Act, 1947 II of 1947 , hereinafter referred to as the Act, and under s. 161 of the Indian Penal Code by a Special Judge who sentenced him under s. 161, to undergo rigorous imprisonment for three months and to pay a fine of Rs. 500 in default to suffer further rigorous imprisonment for one month. No separate sentence was passed under s. 5 2 of the Act. He unsuccessfully appealed to the High Court against his companyviction and sentence. The charge framed against the appellant under s. 161 of the Indian Penal Code, in substance, stated that on or about May 12, 1952,he had accepted Rs. 100 as illegal gratification from V. S. Doraiswamy as a motive or reward for doing an official act and showing in the exercise of his official functions favour to Doraiswamy in seeing that a speedy and favourable settlement of the claim cases preferred by him against the Bengal Nagpur Railway, subsequently the Eastern Railway. The charge under s. 5 2 of the Act which related to the same transaction stated that the appellant had accepted the aforesaid sum of Rs. 100 by companyrupt or illegal means or by otherwise abusing his position as a public servant. It is unnecessary to set out in any great detail the story of the prosecution as to how Doraiswamy and the appellant came into companytact and how the process of giving bribe to the appellant began. They met in 1950. Rs. 10 was paid to the appellant in October, 1951, and Rs. 15 in January, 1952, as the result of the appellant asking Doraiswamy for some gratification for speedy and favourable disposal of his claim cases. The appellant was at that time Assistant Supervisor of Claim Cases of the Bengal Nagpur Railway of the Vizianagram Section. On some secret information, the Deputy Superintendent of Police, Special Police Establishment at Puri directed Inspector G. N. Brahma to companytact Doraiswamy in companynection with a report of alleged dishonesty by railway officials. Brahma met Doraiswamy and asked him to meet him again at 1001 Calcutta on May 10, 1952, after the latter had filed a companyplaint along with some letters said to have been written by the appellant. Permission was obtained from the Chief Presidency Magistrate, Calcutta to investigate the case. Thereafter Doraiswamy met the appellant in Calcutta and it was settled that the former would pay the latter Rs. 100 on May 12, 1952, at 6 p. m. at the India Coffee House. Doraiswamy informed the police of the arrangement. Marked tenrupee currency numberes were given to Doraiswamy. The appellant and Doraiswamy met at the India Coffee House as arranged. There was a talk between them about expediting the claim cases which were being dealt with by the appellant and a list of them was given to him. This list and the bundle of marked currency numberes which Doraiswamy gave him were put in the left upper pocket of his shirt by the appellant. The Inspectors H. K. Mukherjee and S. B. Mitra along with G. N. Gosh, an Assistant Director of Postal Ser- vices and Brahma came up to the appellant. He was accused by the police of having received 10 ten-rupee currency numberes as bribe from Doraiswamy and was asked to produce them. After some hesitation the appellant produced the currency numberes as well as the list given to him by Doraiswamy. The number of the currency numberes were checked and found to tally with the previously numbered numbers of the currency numberes given to Doraiswamy for handing them over to the appellant. The case of the prosecution was found to have been proved by both the companyrts below and the appellant was companyvicted and sentenced as stated above. It may be stated at the outset that the companycurrent findings of fact arrived at by the companyrts below were number questioned before us. The only question canvassed before us was whether there had been a valid sanction given under s. 6 of the Act without which numbercourt companyld take companynizance of the offences alleged to have been companymitted by the appellant. In order to appreciate the submission made by Mr. Chatterjee in this companynection, a few facts have to be stated and some reference to the evidence of 1002 Mr. Bokil, P.W. 5, Chief Commercial Superintendent of the Eastern Railway at Calcutta will be necessary. The appellant as Assistant Supervisor of Claim Cases of the then Bengal Nagpur Railway later the Eastern Railway had the power to deal finally with claims up to Rs. 75 and for claims in excess of that sum to make a recommendation to his superior officer, the Assistant Commercial Superintendent. Doraiswamy was working on behalf of several persons who had made claims against the Railway. These cases were numerous. All these cases had to be dealt with by the appellant either by passing final orders himself, if the value in each case was Rs. 75 or less, or by recommending to his superior officer the cases where the value of the claim, in each case, was more than Rs. 75. The appellant, therefore, being incharge of all the claim cases played an important part in their disposal either by passing final orders himself or by making recommendations. When the appellant was paid Rs. 100 at the India Coffee House on May 12, 1952, he was found in possession of the marked currency numberes and the list of cases, in which claims had been made, which had been given to him by Doraiswamy. Sanction for the prosecution of the appellant was sought from the Chief Commercial Superintendent Mr. Bokil, P.W. 5. There is numberdispute that Mr. Bokil was companypetent to grant the sanction. He had stated in his evidence that before according the sanction he went through all the relevant papers and was satisfied that in the interests of justice the appellant should be prosecuted. He, accordingly, gave the sanction in writing and this document was marked as Ex. 6. Exhibit 6 clearly states that the appellant had demanded on May 12, 1952, as bribe the sum of Rs. 100 from Doraiswamy and had accepted the sum as a motive or reward for speedy and favourable settlement of the claim cases, that Mr. Bokil had applied his mind to the facts and the circumstances of the case and was satisfied that in the interests of justice, the appellant should be put on his trial in a Court of companypetent jurisdiction for offences under s. 161 of the Indian Penal Code and s. 5 2 of the Act alleged to have been 1003 companymitted by him. He, accordingly, under the provisions of s. 6 of the Act, accorded his sanction that the appellant be prosecuted in a companypetent companyrt of law for the offence of having accepted illegal gratification as a motive or reward for showing favour to Doraiswamy in respect of the claim cases filed against the Vizianagram Section of the Railway. Exhibit 6 on the face of it and the evidence of Mr. Bokil in examination-in-chief clearly establish that a valid sanction had been accorded by Mr. Bokil. It was, however, urged before the Special Judge, as it was urged in the High Court, that certain statements made by Mr. Bokil in cross- examination clearly showed that he had number applied his mind to the facts and circumstances of the case and the sanction accorded by him was number a valid one. The Special Judge rejected this companytention and was satisfied that Ex. 6 on the face of it disclosed a valid sanction for the prosecution of the appellant. The learned Judges of the High Court who heard the appeal were also satisfied that Mr. Bokil had, in fact, applied his mind to the facts and circumstances of the case. Regarding the statements made by Mr. Bokil in cross- examination they were of the opinion that they did number show that he did number apply his mind to the facts of the case. These statements merely showed that he did number investigate the truth of the case presented against the appellant. An application was filed in the High Court under Art. 134 of the Constitution for the granting of a certificate that the case was a fit one for appeal to this Court. The order granting the certificate shows that the learned Judges who heard the application were of the opinion that the sanction accorded in this case was number a valid sanction. The learned Judges were of the -opinion that the question whether or number there was a proper sanction in the case was a question serious enough to justify the granting of a certificate. It is necessary therefore to decide whether the sanction accorded in this case was a valid sanction. The substance of the sanction has already been stated but in order that there may be numbermisunderstanding we quote the very words of the sanction itself 1004 Whereas a companyplaint was made against Shri Indu Bhusan Chatterjee, Assistant Supervisor, Claims, of the B. N. Railway number Eastern Railway Garden Reach, Calcutta, who looked after the claims cases against the Railway of the Vizianagram Section, that the said Indu Bhusan Chatterjee had demanded and on 12th May, 1952, accepted a bribe of Rs. 100 Rupees one hundred only from Shri V. S. Doraiswamy of the Commercial Claims Bureau, Vizianagram as a motive or reward for speedy and favourable settlement of the claims cases of the Commercial Claims Bureau and thereby having companymitted an offence punishable under Section 161 1. P. C. and also the offence of criminal misconduct by the illegal and companyrupt use of his official position as a public servant to obtain a pecuniary advantage for himself punishable under Section 5 2 read with Section 5 1 , clause d of the Prevention of Corruption Act II of 1947, 1, R. K. Bokil, Chief Commercial Superintendent, Eastern Railway, Calcutta, having applied my mind to the facts and circumstances of the case, am satisfied, and am of the opinion that in the interests of justice, Shri Indu Bhusan Chatterjee, Assistant Supervisor, Claims, Eastern Railway, Garden Reach, Calcutta, be put on his trial in a Court of companypetent jurisdiction for the offences alleged against him. That as Shri Indu Bhusan Chatterjee, Assistant Supervisor, Claims, Eastern Railway, Garden Reach, Calcutta, is removable from his office by me I therefore by virtue of the powers vested in me by Section 6 c of the Prevention of Corruption Act II of 1947, do hereby accord sanction that Shri Indu Bhusan Chatterjee be prosecuted in a companypetent Court of law for the offence of having accepted an illegal gratification as a motive or reward for showing favour to Shri V.S. Doraiswamy, in his official functions viz., the settlement of the cases of the Vizianagram Section of Eastern Railway, punishable under Section 161 I.P.C. and for the offence of criminal misconduct for the companyrupt and illegal use of his official position to obtain a pecuniary advantage for himself punishable under Section 5 2 of the Prevention of Corruption Act Act II of 1947 . 1005 In our opinion, this sanction clearly states all the facts which companycern the prosecution case alleged against the the appellant with reference to his acceptance of Rs. 100 from Doraiswamy on May 12,1952, in circumstances which, if established, would companystitute offences under s. 161, Indian Penal Code and s. 5 2 of the Act. The sanction also clearly states that Mr. Bokil had applied his mind and was of the opinion that in the interests of justice the appellant should be prosecuted. The charge framed against the appellant at his trial was with reference to this very incident and numbere other. What more facts were required to be stated in the sanction itself we are unable to understand. Mr. Bokil in his examination-in-chief stated On the prayer of the police, I accorded sanction to the prosecution of one Shri I. B. Chatterjee who was the Assistant Supervisor of Claims. Before according sanction I went through all relevant papers and was satisfied that in the interest of justice, Sri I.B. Chatterjee should be prosecuted. This is the sanction marked Ex. 6 . In cross- examination, however, he made the following statement This sanction Ex. 6 was prepared by the police and it was put before me by the personnel branch of my office. I did number call for any record in companynection with this matter from my office. I did number call for the companynected claim cases number did I enquire about the position of those claim cases. The learned Judges in granting the certificate, apparently, were impressed by the statement of Mr. Bokil that Ex. 6 was prepared by the police and put before him by the personnel branch of his office, because the learned Chief Justice observed, I can hardly imagine the duty of granting the proper sanction being properly discharged by merely putting ones signature on a ready-made sanction presented by the police. It seems to us that Mr. Bokils statement does number prove that he merely put his signature on a readymade sanction presented by the police. It is true that he did number himself dictate or draft the sanction, but Mr. Bokil has stated in the clearest terms, in his examination-in-chief, that before be accorded sanction he went through all the relevant papers. There is number1006 reason to distrust this statement of Mr. Bokil, number has the High Court, while granting the certificate of fitness, done so. He was an officer of high rank in the Railway and must have been fully aware that the responsibility of according the sanction against an official of the Railway subordinate to him lay upon him. It is inconceivable that an officer of the rank of Mr. Bokil would blindly sign a ready-made sanc- tion prepared by the police. Apparently, the sanction already drafted companytained all the material facts upon which the prosecution was to be launched, if at all, companycerning the acceptance of the bribe by the appellant on May 12, 1952. When Ex. 6 was placed before Mr. Bokil other relevant papers were also placed before him. It is significant that Mr. Bokil was number crossexamined as to what the other relevant papers were and in the absence of any question being put to Mr. Bokil we must accept his statement that the papers placed before him were relevant to the only question before him whether he should or should number accord his sanction to the prosecution of the appellant. Mr. Bokil said, and we see numberreason to distrust his statement, that before he accorded his sanction lie went through all these papers and after being satisfied that sanction should be given he accorded his sanction. It is true that he did number call for any record in companynection with the matter from his office number did he call for the companynected claim cases or find out as to how they stood. It was number for Mr. Bokil to judge the truth of the allegations made against the appellant by calling for the records of the companynected claim cases or other records in companynection with the matter from his office. The papers which were placed before him apparently gave him the necessary material upon which he decided that it was necessary in the ends of justice to accord his sanction. Reliance was placed on the case of Gokulchand Dwarkadas Morarka v. The King 1 and other cases, to which it is unnecessary to refer, in support of the submission on behalf of the appellant that the sanction accorded was number a valid sanction. A careful reading, 1 1948 L.R. 75 I.A. 30. 1007 however, of Morarkas case 1 satisfies us that the sanction accorded in this case in numberway companyflicts with the observations of their Lordships of the Judicial Committee. On the companytrary, in our opinion, it is in keeping with them. None of the other cases cited by the learned Counsel for the appellant assist us in the matter. When the sanction itself and the evidence of Mr. Bokil are carefully scrutinized and read together there can be little doubt that the sanction accorded was a valid sanction.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 46 to 48 of 1956. Appeals from the judgment and order dated November 16, 1951, of the former Nagpur High Court in Misc. Petitions Nos. 45,1568 and 1569 of 1951. J. Umrigar, D. L. Jayawant and Naunit Lal, for the appellants in C. A. Nos. 46 and 47 of 56. L. Jayawant and Naunit Lal, for the appellant in A. No. 48 of 56. 1054 Ganapathi Iyer and R. H. Dhebar, for the respon- dent In all the appeals . 1957. December 3. The following Judgment of the Court was delivered by VENKATARAMA AIYAR J.-These appeals are directed against the orders of the High Court of Nagpur dismissing the writ petitions filed by the appellants herein, and as they arise out of the same facts and raise the same points for determination, they were heard together, and will be disposed of by a companymon judgment. The facts in Civil Appeal No. 46 of 1956-the facts in the companynected appeals are similar and do number require to be stated-are that the appellant was employed in 1939 in the Bengal Nagpur Railway as a clerk in the workshop at Nagpur. In 1946 when the State took over the administration of the Railway, it gave option to the employees to companytinue in service on the terms set out in a document dated July 5, 1946. The appellant accepted those terms and companytinued in service on the companyditions mentioned in that document. Acting in exercise of the powers companyferred by ss. 241 2 , 247 and 266 3 of the Government of India Act, 1935, the Governor-General promulgated certain rules called the Railway Services Safeguarding of National Security Rules, 1949, hereinafter referred to as the Security Rules, and they came into force on May 14, 1949. It will be companyvenient at this stage to set out the Security Rules, in so far as they are material for the purpose of these appeals, as it is the validity of these rules that is the main point for determination by us. Rules 3, 4, 5 and 7 are as follows A member of the Railway Service who, in the opinion of the companypetent authority is engaged in or is reasonably suspected to be engaged in subversive activities, or is associated with others in subversive activities in such manner as to raise doubts about his reliability, may be companypulsorily retired from service, or have his service terminated by the companypetent authority after he has been given due numberice or pay in 1055 lieu of such numberice in accordance with the terms of his service agreement Provided that a member of the Railway Service shall number be so retired or have his service so terminated unless the companypetent authority is satisfied that his retention in public service is prejudicial to national security, and unless, where the companypetent authority is the Head of a Department, the prior approval of the Governor-General has been obtained. Where in the opinion of the companypetent authority, there are reasonable grounds for believing that a member of the Railway Service is liable to companypulsory retirement from service or to have his service terminated under Rule 3, it shall- a by an order in writing, require the said member of Railway service to proceed on such leave as may be admissible to him and from such date as may be specified in the order b by a numberice in writing inform him of the action proposed to be taken in regard to him under Rule 3 c give him a reasonable opportunity of showing cause against that action and d before passing a final order under Rule 3, take into companysideration any representation made by him in this behalf. Nothing companytained in the Rules in Chapter XVII of the State Railway Establishment Code, Volume 1, shall apply to, or in respect of, any action taken or proposed to be taken under these rules. Any person companypulsorily retired from service or whose service is terminated under Rule 3 shall be entitled to such companypensation, pension, gratuity and or Provident Fund benefits as would have been admissible to him under the Rules applicable to his service or post on the date of such retirement or termination of service if he had been discharged from service due to the abolition of his post without any alternative suitable employment being provided. On July 6, 1950, the General Manager of the Bengal Nagpur Railway issued a numberice to the appellant 1056 under R. 3 of the Security Rules stating that in view of the facts recited therein, there was reason to believe that the appellant was engaged in subversive activities and calling upon him to show cause why his services should number be terminated. He was also placed under suspension from that date. On July 29, 1950, the appellant sent his explanation denying the allegations companytained in the numberice dated July 6, 1950. The matter was then referred to the Committee of Advisers, who held an enquiry on September 8,1950, and after hearing the appellant found that the charges against him mentioned in the numberice were true. Acting on this report, the General Manager terminated the services of the appellant on April 3, 1951, giving him one months salary instead of numberice. Meantime, on February 3,1951, the appellant had filed the writ petition, out of which Civil Appeal No. 46 of 1956 arises, in the High Court of Nagpur challenging the validity of the numberice dated July 6, 1950, and the order of suspension following thereon. The order of dismissal dated April 3, 195 1, having been passed during the pendency of this Petition, the appellant had his petition amended by adding a prayer that that order also was bad. The grounds urged in support of the petition were that the Security Rules under which action was taken were in companytravention of Arts. 14, 19 1 c and 311 of the Constitution, and that, in companysequence, the orders passed in exercise of the powers companyferred thereby were void. The respondents resisted the application on the ground that the rules in question were valid, and that the orders passed thereunder were number open to attack. The petition was heard along with others, in which the same questions were raised, and by their judgment dated November 16, 1951, the learned Judges held that it was unnecessary to decide whether the Security Rules were void as, assuming that they were, the orders terminating the services of the petitioners companyld be sustained under R. 148 of the Railway Establishment Code. Sub-rules 3 and 4 of R. 148 which bear on this point, are as follows 1057 R. 148 3 Other number-pensionable railway servants The service of other number-pensionable railway servants shall be liable to termination on numberice on. either side for the periods shown below. Such numberice is number, however, required in cases of summary dismissal or discharge under the provisions of service agreements, retirement on attaining the age of superannuation, and termination of service due to mental or physical incapacity. In lieu of the numberice prescribed in this rule, it shall be permissible on the part of the Railway Admi- nistration to terminate the service of a Railway servant by paying him the pay for the period of numberice. The learned Judges held that the appellants were number- pensionable railway servants within sub-r. 3 , that they had been paid one months wages instead of numberice under sub- r. 4 , and that, accordingly, the impugned orders were intra vires the powers of the respondents under R. 148, sub-r. 3 . In the result, the petitions were dismissed, and the present appeals have been preferred against these orders on a certificate under Art. 132 1 and Art. 133 1 c of the Constitution. The appellants companyplain that the ground on which the judgment proceeds was number put forward by the respondents in their pleadings and should number have been allowed to be taken by them, and that on the points actually in issue, it should have been held that the Security Rules were repugnant to Arts. 14, 19 1 c and 311 of the Constitution, and, therefore, void. They further companytend that even if the Security Rules were valid, the orders terminating the services were number justified by them, and that further, those orders were bad for the reason that they had number been made by the companypetent authorities. The appellants also sought to raise the companytention that the enquiry companyducted by the authorities was defective, and that there was numberproper hearing as provided by the rules, but we declined to hear them on that point, as that was number raised in their petitions. 1058 The points for decision in these appeals are Whether the orders terminating the services of the appellants can be upheld under R. 148 of the Railway Establishment Code II Whether the Security Rules are bad as infringing a Art. 14, b Art. 19 1 c and c Art. 311 of the Constitution III Whether the impugned orders are number valid, even according to the Security Rules and IV Whether those orders were number passed by the companypetent authorities. 1 . On the first question, it appears clearly from the record that the authorities purported to take action only under the Security Rules. - The numberice dated July 6, 1950, was avowedly issued under R. 3 of those rules. It was in the scrupulous observance of the procedure prescribed therein that the explanations of the appellants in answer to the charges were taken, and the matters were referred to the Committee of Advisers for enquiry. And above all, the orders terminating the services of the appellants, in terms, recite that they were made under R. 3 of the rules, as for example, the numberice dated April 3, 1951, given to the appellant in Civil Appeal No. 46 of 1956, which runs as follows I have companysidered your representation to me in reply to this office letter No. Con T/2 I MP/82 dated 6-7-1950 and am of the opinion that you are engaged and associated with others in subversive activities in such mariner as to raise doubts about your reliability and am satisfied that your retention in public service is prejudicial to national security. I have decided with the prior approval of the President that your services should be terminated under Rule 3 of the Railway Services Safeguarding of National Security Rules, 1949. It should be added that while the appellants stated in their petitions that action had been taken against them under the Security Rules, and that those rules were ultra vires, the respondents did number plead that 1059 action was taken under R. 148 of the Railway Establishment Code. They only companytended that the Security Rules were valid. In view of the above,the criticism of Mr. Umrigar for the appellants that the judgment under appeal proceeds on a ground which was, number merely, number in the companytemplation of the authorities When they passed the orders in question, but was number even raised in the pleadings in Court, is number without substance. It is argued that when an authority passes an order which is within its companypetence, it cannot fail merely because it purports to be made under a wrong pro. vision if it can be shown to be within its powers under any other rule, and that the validity of an order should be judged on a companysideration of its substance and number its form. No exception can be taken to, this proposition, but it has number been the companytention of the respondents at any stage that the orders in question were really made under R. 148 3 of the Railway Establishment Code, and that the reference to R. 3 of the Security Rules in the proceedings might be disregarded as due to mistake. In the Court below, the learned Judges rested their companyclusion on the ground that cl. 10 of the service agreement dated July 5, 1946, provided that in respect of matters other than those specifically dealt with therein-discharge is one of such other matters-the Railway rules applicable to persons appointed on or after October 1, 1946 were applicable, that R. 148 3 was one of such rules, and that the appellants who were number-pensionable railway servants were governed by that rule, and were liable to be discharged in accordance therewith. But this reasoning ignores that under cl. 10 of the service agreement, the Security Rules stand on the same footing as the rules in the Railway Establishment Code and companystitute equally with R. 148 the companyditions of service on which the appellants held the employment, and there must be companyvincing reasons why orders passed statedly under R. 3 should be held number to have been passed under that rule. Before us, a different stand was taken by the respondents. They did number 1135 1060 dispute that the action was really taken under R. 3 of the Security Rules, but they argued that the power to terminate the service under r. 3 was number something different from and independent of the power to discharge, companyferred by R. 148, and that an order passed under R. 3 was, on its own terms, one made under R. 148 3 . The basis for this companytention is the provision in R. 3 that the service may be terminated in accordance with the service agreement, after giving due numberice or. pay in lieu of such numberice. The appellants companytrovert this position. They companytend that the power to terminate the service under the Security Rules is altogether different from the power to discharge under R. 148, that the reference in R. 3 to the service agreement is only in respect of the numberice to be given, there being different periods fixed under the rules in relation to different classes of employees, and that, in other respects, the Security Rules run on their own lines, and that action taken thereunder cannot be shunted on to R. 148. We find companysiderable difficulty in acceding to the argument of the respondents. The Security Rules apply to a special class of employees, those who are engaged or are likely to engage in subversive activities, and in companyjunction with the instructions which were issued when they were promulgated, they form a self-contained companye prescribing a special and elaborate procedure to be followed, when action is to be taken thereunder. We see companysiderable force in the companytention of the appellants that the of the service agreement in R. 3 has reference only to the nature of the numberice to be given. If the interpretation which the respondents seek to put on the Security Rules is companyrect, then it is difficult to see what purpose at all they serve. Mr. Ganapathy Iyer for the respondents argues that they are intended to afford protection to persons who might be charged with being engaged in subversive activities. If that is their purpose, then if action is taken thereunder but the procedure prescribed therein is number followed, the Order must be held to be bad, as the protection intended to be given has been denied to the employee, 1061 and R. 148 cannot be invoked to give validity to such order. Indeed, that has been held in Sambandam v. General Manager, I. Ry. 1 and Prasadi v. Works Manager, Lillooah 2 and that is also companyceded by .Mr. Ganapathy Iyer. If then the power to terminate the service under the Security Rules is different from the power to discharge under R. 148 when the procedure prescribed therein is number followed, it must be equally so when, as here, it has been followed, for the companyplexion of the rules cannot change according as they are companyplied with or number. That means that the Security Rules have an independent operation of their own, quite apart from R. 148. We do number, however, desire to express any final opinion on this question, as Mr. Ganapathy Iyer is willing that the validity of the orders in question might be determined on the footing that they were passed under R. 3 of the Security Rules, without reference to R. 148. That renders it necessary to decide whether the Security Rules are unconstitutional, as companytended by the appellants. Ila . The first ground that is urged against the validity of the Security Rules is that they are repugnant to Art. 14. It is said that these rules prescribe a special procedure where action is proposed to be taken against persons suspected of subversive activities, and that when the services of an employee are terminated under these rules, the companysequence is to stamp him as unreliable and infamous, and there is thus discrimination, such as is hit by Art. 14. It is admitted that if the persons dealt with under these rules form a distinct class having an intelligible differentia which bears a reasonable relation to the purposes of the rules, then there would be numberinfringement of Art.14. But it is argued that the expression subversive activities which forms the basis of the classification is vague and undefined in that even lawful activities companyld be roped therein, and that such a classification cannot be said to be reasonable. Reference was made to the charges which were served on the appellant in Civil Appeal No. 46 of 1956 as showing how even lawful activities I.L.R. 1953 Mad. 229. A.I.R. 1957 Cal. 4. 1062 companyld be brought under the impugned rules. The numberice, so far as it is material, runs as follows- Whereas in the opinion of the General ,Manager, you are reasonably suspected to be a member and office secretary of the B. N. Rly. Workers Union Communist sponsored and were thickly associated with companymunists such as Om Prakash Mehta, B.N. Mukherjee, R. L. Reddy, etc., in subversive activities in such manner as to raise doubts about your reliability and loyalty to the State in that, though a Government employee, you attended private meetings of the Communists, carried on agitation amongst the Railway workers for a general strike from November 1948 to January 1949 evidently to paralyse companymunication and movement of essential supplies - and thereby create disorder and companyfusion in the companyntry and that, companysequently, you are liable to have your services terminated under rule 3 of the said Rules. It is argued that it is number unlawful to be a member of the Communist Party or to engage in trade union activities, and if this companyld form the basis of action under the rules, the classification must be held to be unreasonable. Reliance was placed on the decision of this Court in The State of West Bengal v. Anwar Ali Sarkar 1 , wherein it was held that a power companyferred on the executive to select cases for trial by special companyrts under a procedure different from that of the ordinary companyrts with the object of ensuring speedy trial companyld number be upheld under Art. 14 as a valid classification, and on the decision of the Madras High Court in Ananthanarayanan v. Southern Railway 2 , wherein it was hold that the words subversive activities in R. 3 lacked definiteness. Now, the principles applicable for a determination whether there has been a proper and valid classification for purposes of Art. 14 have been the subject of companysideration by this Court in a number of cases, and they were stated again quite recently in Budhan Choudhry and others v. The State of Bihar 3 , and there is numberneed to repeat them. The only point that 1 1952 S.C.R. 284. 2 A.I.R. 1956 Mad. 220. 3 19551 S.C.R. 1045, 1049. 1063 calls for decision in these appeals is whether the classi- fication of persons on the basis of subversive activities is too vague to be the foundation of a valid classification. Mr. Umrigar insists that it is, but his elaborate argument amounts to numbermore than this that the expression subversive activities may take in quite a variety of activities, and that its companytents are therefore wide. It may be that the companynotation of that expression is wide, but that is number to say that it is vague or indefinite. But whatever the position if the words subversive activities had stood by them selves, they are sufficiently qualified in the Security Rules to be definite. Those rules have, for their object, the safeguarding of national security as recited in the short title. That is again emphasised in R. 3, which provides that a member of the Railway service is number to be retired or his services terminated unless the authorities are satisfied that his retention in public service is prejudicial to national security . In our judgment, the words subversive activities in the companytext of national security are sufficiently precise in their import to sustain a valid classification. We are unable to agree with the opinion expressed in Ananthanarayanan v. Southern Railway supra at p. 223 that the language of R. 3 is indefinite, even when read with the words national security. We are also unable to agree with the argument of the appellants based on the charges made against the appellant in Civil Appeal No. 46 of 1956 in the numberice dated July 6, 1950, that the expression subversive activities is wide enough to take in lawful activities as well, and must therefore be held to be unreasonable for purposes of classification under Art. 14. The numberice, it is true, refers to the appellant being a member of the Communist Party and to his activities in the trade union. It is also true that it is number unlawful to be either a Communist or a trade unionist. But it is number the necessary attribute either of a Communist or a trade unionist that he should indulge in subversive activities, and when action was taken against the appellant under the rules, it was number because he was a 1064 Communist or a trade unionist, but because he was engaged in subversive activities. We hold that the Security Rules are number illegal as being repugnant -to ,a Art. 14. IIb . It is next companytended that the impugned orders are in companytravention of Art. 19 1 c , and are therefore void. The argument is that action has been taken against the appellants -under the rules, because they are Communists and trade unionists, and the orders terminating their services under R. 3 amount, in substance, to a denial to them of the freedom to form associations, which is guaranted under Art. 19 1 c . We have already observed that that is number the true scope of the charges. But apart from that, we do number see how any right of the appellants under Art. 19 1 c has been infringed. The orders do number prevent them from companytinuing to be Communists or trade unionists. Their rights in that behalf remain after the impugned orders precisely what they were before. The real companyplaint of the appellants is that their services have been terminated but that involves, apart from Art. 31 1, numberinfringement of any of their Constitutional rights. The appellants have numberdoubt a fundamental right to form associations under Art. 19 1 c , but they have numberfundamental right to be companytinued in employment by the State, and when their services are terminated by the State they cannot companyplain of the infringement of any of their Constitutional rights, when numberquestion of violation of Art. 311 arises. This companytention of the appellants must also be rejected. IIc . it is then companytended that the procedure pres- cribed by the Security Rules for the hearing of the charges does number satisfy the requirements of Art. 311, and that they are, in companysequence, void. But Art. 311 has application only when there is an order of dismissal or removal, and the question is whether an order terminating the services of the employees under R. 3 can be said to be an order dismissing or removing them. Now, this Court has held in a series of decisions that it is number every termination of the services of an employee that falls within the operation of Art. 311, 1065 and that it is only when the order is by way of punishment that it is one of dismissal or removal under that Article. Vide Satish Chandra Anand v. Union of India 1 , Shyam Lal The State of Uttar Pradesh and the Union of India 2 , State of Bombay v. Saubhagchand M. Doshi 3 , and Parshotam Lal Dhingra v. Union of India 4 . The question as to what would amount to punishment for purposes of Art. 311 was also fully companysidered in Parshotam Lal Dhingras case supra . It was therein held that if a person had a right to companytinue in office either under the service rules or under a special agreement, a permature termination of his services would be a punishment. And, likewise, if the order would result in loss of benefits already earned and accrued, that would also be punishment. In the present case, the terms of employment provide for the services being terminated on a proper numberice, and so, numberquestion of permature termination arises. Rule 7 of the Security Rules preserves the rights of the employee to all the benefits of pension, gratuities and the like, to which they would be entitled under the rules. Thus, there is numberforfeiture of benefits already acquired. It was stated for the appellants that a person who was discharged under the rules was number eligible for re- employment, and that that was punishment. But the appellants are unable to point to any rule imposing that disability. The order terminating the services under R. 3 of the Security Rules stands on the same footing as an order of discharge under R. 148, and it is neither one of dismissal number of removal within the meaning of Art. 311. This companytention also must be overruled. It is next companytended by Mr. Umrigar that the charges which were made against the appellant in Civil Appeal No. 46 of 1956 in the numberice dated July 6, 1950, have reference to events which took place prior to the companying into force of the Security Rules, which was on May 14, 1949, and that the order terminating the services of the appellant based thereon is bad as giving retrospective operation to the rules, I 1953 S.C.R. 655- 2 1955 1 S.C.R. 26, Civil Appeal No. 182 Of 1955. Civil Appeal No. 65 of 1957. 1066 and that the same is number warranted by the terms there- of. Now, the rules provide that action can be taken under them, if the employee is engaged or is reasonably suspected to be engaged in subversive activities. Where an authority has to form an opinion that an employee is likely to be engaged in subversive activities, it can only be as a matter of inference from the companyrse of companyduct of the employee, and his antecedents must furnish the best materials for the same. The rules are clearly prospective in that action thereunder is to be taken in respect of subversive activities which either number exist or are likely to be indulged in, in future, that is to say, which are in esse or in posse. That the materials for taking action in the latter case are drawn from the companyduct of the employees prior to the enactment of the rules does number render their operation retrospective.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 374 of 1956. Appeal by special leave from the judgment and order dated December 19, 1955, of the Assam High Court in Revenue Appeal No. 33 M of 1955. Civil Rule No. 76 of 1955. Fakhruddin Ali Ahmed and K. R. Chaudhry, for the appellant. N. Mukherjee, for respondent No. 1. M. Lahiri, Advocate-General of Assam, and Naunit Lal, for respondents Nos. 2 and 3, 1957. January 29. The Judgment of the Court was delivered by BHAGWATI J.-This appeal with special leave arises out of a judgment of the Assam High Court in Revenue Appeal No. 33 M of 1955 and Civil Rule No. 76 of 1955. The State of Assam, respondent No. 3, had settled the Charduar Brahmaputra Fishery with the respondent No. I for a period of three years, viz., from April 1, 1954, to March 31, 1957, at an annual zama of Rs. 19,600 Under r. 12 of the Fishery Rules. The Deputy Commissioner of Darrang, respondent No. 2, received some reports against the respondent No. 1 alleging violation of cl. VI of the Fishery lease and also of certain other companyditions of the lease. He obtained reports from the Sub -Deputy Collector and the Extra Assistant Commissioner in regard to these allegations and came to the companyclusion that respondent No. 1 had created under-lease in favour of certain persons and cancelled the settlement of the fishery. It appears that after such cancellation, respondent No. 3, purporting to act again under r. 12, settled the said fishery with the appellant with effect from May 4, 1955, and respondent No. 1 was directed to give up possession thereof with effect from that date. Respondent No. 1 thereupon obtained a Rule from the Assam High Court alleging that the said settlement was absolutely illegal and the fishery had to be settled pro- perly according to the rules under which these settlements are usually made. A Revenue Appeal was also filed against the order of respondent No. 2 under rule 11 of section 1 of the Fishery Rules and both the Rule and the Revenue Appeal were heard together by the Assam High Court. The High Court had already on August 31, 1955, delivered a judgment in Civil Rule NO. 56 of 1955, Nuruddin Ahmed v. State of Assam 1 , declaring r. 12 of the Fishery Rules ultra vires the State Government and therefore invalid and unenforceable. It followed that judgment and held that the respondent No. 3 had numberjurisdiction to make a settlement under A.I.R. 1956 Assam 48. r. 12 of the Fishery Rules with the respondent No. I and the order of cancellation should be upheld on that ground alone. The appeal of respondent No. I was accordingly dismissed. In regard to the appellant also the High Court came to the same companyclusion and held that the settlement made by respondent No. 3 in his favour was entirely without jurisdiction. The Rule obtained by respondent No. I was accordingly made absolute. The result was that the settlements made by respondent No. 3 with respondent No. I and the appellant were both set aside and the authorities were directed to make a fresh settlement of the fishery in question according to the existing Fishery Rules. The State of Assam had number obtained any leave to appeal against the decision of the High Court in Nuruddin Ahmed v. State of Assam 1 , and was apparently companytent with the decision that r. 12 of the Fishery Rules was ultra vires. The appellant, however, obtained special leave to appeal against the decision of the High Court -which set aside the settlement of the Fishery made by respondent No. 3 along with him and impleaded the State of Assam as respondent No. 3 along with respondent No. 1. The appellant was interested in establishing that r. 12 of the Fishery Rules was intra vires the State of Assam had acquiesced in the position that the rule was ultra vires but in so far as it was added as respondent No. 3 in this appeal it took up the position that r. 12 of the Fishery Rules was intra vires, a position which it had number so far chosen to sustain by appealing against the decision of the High Court in Nuruddin Ahmed v. State of Assam 1 or in the present case but which it tried to support as it were by the back-door by appearing in this appeal and supporting the appellant. Respondent No. 1 appears to have been in a similar quandary. If the appellant gained his point and had it established that the rule was intra vires the settlement of the fishery by respondent No. 3 with respondent No. I would have been with jurisdiction and the cancellation by respondent No. 2 would have been void and inoperative. This relief was, however, number A. 1. R. 1956 Assam 48. available to respondent No. 1 inasmuch as it had number appealed against the judgment of the High Court. Nor did it suit it to adopt that position because number more ,than 21 months were left for the lease to run and at the end of that period it would have found itself in the same invidious position in which it was when the allegations in regard to the breach of the companyditions of the fishery lease had been made against it. Respondent No. 1, therefore, at the hearing of the appeal adopted the peculiar attitude of supporting the judgment of the High Court and of companytending that r. 12 of the Fishery Rules was ultra vires. That was the only basis on which the settlement made by respondent No. 3 with the appellant companyld be set at naught and numberfurther companyment is needed on the obviously inconsistent attitude adopted by respondent No. 1. The issue which was, therefore, companytested between the appellant supported as he was by respondent No. 3, the State of Assam. and respondent No. I was as to the intra vires character of 12 of the Fishery Rules. It will be appropriate at this stage to set out the relevant provisions of the Assam Land and Revenue Regulation, 1886 Regulation I of 1886 , and the rules for the settlement of fisheries made by the State of Assam thereunder Section 16. Right of fishery.- The Deputy Commissioner, with the previous sanction of the Provincial Government, may, by proclamation published in the prescribed manner, declare any companylection of water, running or still,. to be a, fishery and numberright in any fishery so declared shall be deemed to have been acquired by the public or any person, either before or after the companymencement of this Regulation, except as provided in the Rules -made under section 155 Provided that numberhing in this section shall affect any express grant of a right to fish made by or on behalf of the British Government, or any fishery-rights acquired by a proprietor before the companymencement of this Regulation, or the acquisition by a proprietor of such rights in any fishery forming after the companymencement of this Regulation in this estate. Section 155. Additional power to make rules. The Provincial Government may, in addition to the other matters for which he sic is empowered by this Regulation to make rules, companysistent with this regulation, relating to the following matters f the granting of licences, or the farming of the right to fish in fisheries proclaimed under section 16 Rule 12 of the Fishery Rules No fishery shall be settled otherwise than -by sale except by the State Government. The order of settlement passed by the State Government shall be final Provided that the State Government may introduce the tender system of settlement of fisheries in place of sale by auction system whenever it is companysidered necessary. This rule occurs in chapter X of the Assam Land Revenue Manual, Vol. I 6th ed. headed Rules for settlement of fisheries . This chapter is divided into four sections Section I-General and settlement of fisheries. Section 11-Miscellaneous. Section III-Sanctuaries, and Section IV-Rulesfor settlement of fisheries by tender system. The numbermal procedure for settlement of fisheries prescribed in r. 3 of s. I is by auction sales in regard to all registered fisheries held under leases expiring on the last day of the current year or which at the last previous auction were reserved for sale under r. 9. After making provision for the place of sale, companydition,-, of sale, execution of leases and companyfirmation of sale, provision is made in r. 1 1 for appeal to the Assam High Court against all orders of a Deputy Commissioner or Sub-Divisional Officer passed under the rules and it is provided that there shall be numberappeal against an order of settlement passed by the State Government under r. 12. Then follows r. 12 set out hereinabove which provides that numberfishery shall be settled otherwise than by sale except by the State Government and a proviso is enacted to this rule enabling, the State Government to introduce the tender system of settlement of fisheries in place of the auction system whenever it is companysidered necessary. The rest of the provisions of s. I and those of ss. II and III are number necessary to be set out for the purpose of this appeal but reference may be made to the provisions of s. IV which companytains rules for settlement of fisheries by tender system. Rule 42 provides that the Government may from time to time select any fishery or fisheries to be settled by tender system and instruct the Deputy Commissioner to lease them out for any specified period and the procedure to be adopted in the Settlement of fisheries by tender system is therein provided. It will be seen from the above summary of the relevant rules that the numbermal -procedure for settlement of fisheries is by holding auction sales. Power is, however, given to the State Government to introduce the tender system of settlement of fisheries in place of the auction system whenever it is companysidered necessary and if the Government selects any fishery or fisheries to be settled by tender system and instructs the Deputy Commissioner to lease them out for any specified period acting in exercise of that power, s. IV prescribes the procedure for settlement of fisheries by tender system. The question, therefore, which arises for our determination is whether there is any power companyferred on the State Government by these rules to settle fisheries otherwise than by sale, e.g., by individual settlements without a settlement thereof by auction system or by tender system. We May here dispose of an argument which was urged oil behalf of Respondent No. I before us and which appears to have found favour with the High Court that r. 12 of the Fishery Rules which is the source of that power was ultra vires and repugnant to s. 16 of the Assam Land Revenue Regulation I of 1886. That section deals with the right of fishery and provides that the Deputy Commissioner, with the previous sanction of the State Government, may by a proclamation declare any companylection of water to be fishery and numberright in a fishery so declared shall be deemed to have been acquired by the public or by any person except as provided in the rules made under s. 155. The instances before us are number companyered by the proviso and we shall, therefore, make numbermention of the same. The only relevant enquiry is whether there was any, rule validly enacted under s. 155 which enabled the State Government to settle the fishery otherwise than by sale by making an individual settlement thereof with Respondent No. I or the appellant in the manner in which it was done. There is absolutely numberhing in the provisions of s. 16 which would go to show what are the principles on which such rules for the acquisition of fishery rights by the public or any person have to be made number is there anything therein to indicate any policy which has to guide the State Government in the making of such rules. The whole thing is left to the discretion of the State Government which is empowered by s. 155, inter alia, to make rules relating to the granting of licences and the farming of the right to fish in fisheries proclaimed under s. 16 companysistent with the Regulation. No doubt the State Government would also be bound by such rules and would number be entitled to make any settlement of fishery rights unless and until there was a rule made in that behalf under s. 155. It would number be open to the State Government to companytend that it had absolute property in these fishery rights and it was, therefore, entitled to settle them in any manner whatever. Unless, therefore, the action of the State Government companyld be justified by reference to any rule made under s. 155 it would number avail the appellant. Reliance is accordingly placed on the provisions of r. 12 of the Fishery Rules and it is submitted that under that rule specific power is given to the State Government to settle the fishery rights otherwise than by sale. The State Government is thereby invested with the power to settle fishery rights even by individual settlements without following the auction system or the tender system. Even though this power is number vested in the State Government by express provision made in that behalf, the companytext of rule 12 sufficiently indicates the intention of the rule-making authority. After having prescribed the procedure by way of auction sales in rr.1 to 11 of S. 1, a prohibition against the settlement of fishery rights otherwise than by sale is enacted in r. 12 except in the case of the State Government. No fishery is to be settled otherwise than by sale and that prohibition is general in terms but an exception is carved out in favour of the State Government in terms which are only capable of the companystruction that the State Government shall have the power of settling fishery rights otherwise than by sale. No limitation is placed on this power which is thus vested in the State Government and if the State Government is em- powered to settle fishery rights otherwise than by sale it can do so by adopting the tender system if it thought it desirable to do so or even by entering into individual settlements if the circumstances of the case so warranted. Apart from the adoption of the tender system in place of the auction system, circumstances may companyceivably arise where either by reason of the cancellation or relinquishment of fishery lease before the expiration of the period thereof and having regard to the situation then obtaining, it may number be feasible or desirable to sell fishery rights for the unexpired portion of such a lease either by public auction or by inviting tenders and the State Government may, under those circumstances, companysider it desirable to enter into individual settlement of the fishery rights so as to earn for the State as much of revenue as possible. No fetter can be placed on the discretion of the State Government in this behalf and the State Government would be the best judge of the situation and would be in a position to determine what procedure to adopt in the matter of the settlement of fishery rights other. wise than by sale. There is numberhing in the provisions of s. IV companytaining rules for settlement of fisheries by tender system which militates against the above position. We are, therefore, of opinion that r. 12 specifically empowers the State Government to settle the fishery rights otherwise than by sale and there is numberconflict at all between the provisions of s. 16 of the Assam Land and Revenue Regulation, I of 1886, and r. 12 of the Fishery Rules. The decision of this appeal turns on the companystruction of r. 12 and we fail to understand how the question of the intra vires or the ultra vires character of r. 12 at all arises. The whole of the argument addressed before us on behalf of respondent,. No. I is based on a misconception and can number be sustained. The decision of this Court in State of Assam v. Keshab Prasad Singh 1 , on which the learned judges of the Assam High Court apparently based their judgment in Nuruddin Ahmed v. State of Assam 1 did number touch the present companytroversy and it follows that that was clearly wrong and cannot be supported. The result, therefore, is that this appeal will be allowed and the settlement of fishery rights by respondent No. 3 with the appellant declared valid and operative. Logically enough respondent No. 1 also would have been entitled to a similar relief but there are various questions of fact involved in the determination of the question whether the fishery lease in his favour was validly cancelled by respondent No. 2. Respondent No. I moreover has disclaimed such benefits by adopting the companytention that r. 12 of the fishery rights was ultra vires.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 228 of 1953. Appeal by special leave from the Judgment and Decree dated September 6,1951, of the Bombay High Court in Appeal No. 496 of 1950 from the Judgment and Decree dated March 31, 1950, of the Civil Judge, -Senior Division, Kolhapur in Civil Suit. No. 23 of 1949. C. Isaacs, S. N. Andley, Rameshwar Nath and J. B. Dadachanji, for the appellant. Achhru Ram, G. A. Desai and Naunit Lal, for respondents Nos. 1 and 2. 1957. February 7. The Judgment of the Court was delivered by K. DAS J.-This is an appeal by special leave from the judgment and decree of the High Court of Bombay dates September 6, 1951, by which the said High Court set aside on appeal the decree passed by the Civil Judge Senior Division Kolhapur, in Civil Suit No. 23/49 and allowed an amendment of the plaint at the appellate stage, subject to certain companyditions, in the circumstances stated below. The appellant before us was defendant No. 1 in the suit. Respondents 1 and 2 are the heirs of the original plaintiff and respondent No. 3 was defendant No. 2 in the action. In 1942 the original plaintiff filed a suit against respondent No. 3 for possession of the suit properties and obtained a decree in ejectment on March 28, 1944. This decree was companyfirmed in appeal on July 9, 1945. On a further appeal, the then Supreme Court of Kolhapur affirmed the decree on April 2, 1946. In the meantime, the original plaintiff made an application for execution of the decree but was resisted or obstructed by the present appellant in obtaining possession of the said properties. He then made an application under XXI, r. 97 of the Code of Civil Procedure, companyplaining of such resistance or obstruction. This application was heard and dismissed under 0. XXI, r. 99 of the Code of Civil Procedure, on April 12, 1947. On March 12, 1948, the original plaintiff instituted the suit out of which this appeal has arisen under 0. XXI, r. 103 of the Code of Civil Procedure, for a declaration that he was entitled to recover possession of the suit properties from the present appellant who was impleaded as the first defendant. Prior to its amendment, the plaint stated Defendant No. 2 in companylusion with defendant No. 1 caused objection to be submitted against the said execution. The plaintiff had companyducted misc. Suit No. 5/1946 for getting possession of the suit properties, getting the objection removed. However, that miscellaneous proceeding has been decided against the plaintiff. Therefore, the plaintiff has filed the present suit for getting declared that the plaintiff has right to take possession of the suit property against defendants Nos. I and 2. Apart from the decree obtained in the earlier suit, numberparticular averments were made as to the facts or grounds on which the plaintiff based his title, to the properties in suit as against the appellant. An application was made on behalf of the present appellant on November 20, 1948, in which it was pointed out that the plaintiff filed the suit on the basis of the decision in an earlier suit to which the present appellant was number a party. It was then stated As the defendant is number a party in the said decree, the plaintiff will number acquire any ownership whatever against the defendant from the said decree. And the plaintiff has number given even the slightest explanation as to how he has ownership against the defendant. So permission should number be hereafter given to the plaintiff to make amendment in respect of showing ownership. A companyy of this application was made over to the learned pleader for the plaintiff who numbered thereon as follows The plaintiff s suit is under 0. XXI, r. 103 of the Code of Civil Procedure. Hence relief which can be granted as per this provision may be granted. An objection was also taken with regard to the description of the suit properties in the schedule. This objection was however met by making the necessary amendment. On December 20, 1949 the present appellant filed his written statement and, inter alia, took the objection that the, suit was number maintainable against him as the plaint disclosed numbercause of action so far as he was companycerned. A preliminary issue was then struck on January 19, 1950, which raised the question whether the suit as framed was tenable against the appellant. When the trial of this issue began, an application was made on March 29, 1950, on behalf of the original plaintiff for permission to give further and better particulars of the claim made in the plaint, and for that purpose the plaintiff wanted to insert a new paragraph as para 1 a in the plaint and a few sentences in para 3. It is necessary to quote these here, because these were the amendments subsequently allowed by the learned Judges of the High Court of Bombay by their order dated September 6, 1951. The new paragraph was in these terms In the Ichalkaranji village there are two independent Patil families taxima, viz., Mulki Revenue Patil and Police Patil. The suit properties are the Inam lands in the Police, Patil family. A woman by name Bhagirathibai, wife of Shivagonda Patil, was the Navwali warchi Vatandar representative Vatandar of the Police Patil family. This woman died in the year 1936. Due to the death of the woman the -plaintiff acquired heirship-ownership over the suit property as the near heir. The suit properties were in the possession and under the vahiwat of defendant No. 2 without right. Therefore, the plaintiff filed Suit No. 3/1942 for getting declared his ownership of the suit property and for getting the possession thereof. In Appeal No. 9/44 and Supreme Appeal No. 5/46 preferred therefrom the plaintiff was unanimously declared to be the heir and the owner and the possession of the suit properties had been granted to the plaintiff. The sentences to be added to paragraph 3 were Defendant No. 1 is from the Mulki Revenue Patil family. He has numberhing to do with the suit property in the Police Patil family. By his order dated March 31, 1950, the learned Civil Judge rejected the application and on the same day he dismissed the suit on the ground that the plaint made out numbercase of title against defendant No. 1, appellant before us, who was number a Party to the earlier suit in ejectment in which the plaintiff had obtained a decree against defendant No. 2. From this judgment and decree of the learned Civil Judge an appeal was taken to the High Court of Bombay and the learned Judges of the High Court allowed an amendment of the plaint after putting the plaintiff on terms as to companyts, etc. While allowing the amendment the learned Judges observed We realise that by doing what we propose to do we may deprive the first defendant of a very valuable right which he claims he has acquired, namely, that of pleading a bar of limitation against the amended plaint, but we are guided more in this matter by regard to the principles of substantial justice and we think that if we can make sufficient companypensation to the first defendant by making drastic orders of companyts in his favour and against the plaintiff, we shall number be doing any injustice to him. This is, after all, a question of title to the property and we would be justified in making this observation that when the suit in ejectment was filed by Shidgonda against Pirgonda Annappa in the year 1942 he based it on his title to the suit property and it was only against Pirgonda Annappa that he had obtained the decree. When this decree which he had obtained against Pirgonda Annappa, the second defendant, was mentioned as a starting point-in the plaint as it came to be filed, it would number be stretching too much of a point in favour of the plaintiff to observe that the decree which he- had obtained against the second defendant, having been obtained on the strength of his title to the suit property, was really one of his documents of title So far as the first defendant was companycerned, the averment necessary under 0. XXI, r. 103, of the Code of Civil Procedure, was that the, first defendant was wrongfully obstructing the plaintiff from obtaining possession of the suit property in execution of the decree which he had obtained against the 2nd defendant in a suit regularly companystituted in that behalf. This being the position, we think we are number doing any injustice to the first defendant if we allow the plaintiff to amend his plaint even at this late stage by putting in the paragraphs in the plaint as suggested by him in his application for further and better particulars filed in March 1950. The appellant then obtained special leave from this Court, and filed the present appeal. The main point which has been argued before us on behalf of the appellant is that in the circumstances of this case the learned Judges of the High Court were wrong in allowing an amendment of the plaint at such a late stage. It may be stated here that learned companynsel for the appellant did number argue that the appellate Court had numberjurisdiction or power to allow the amendment. His submission was that even though the appellate Court had such power or jurisdiction, that power should number have been exercised in the circumstances of the present case. Two such circumstances were greatly emphasised before us. One was that the period of limitation for a suit under 0. XXI, r. 103, of the Code of Civil Procedure, had already expired before March 29, 1950, on which date the application for amendment or for giving further and better particulars was made. The second circumstance which learned companynsel for the appellant emphasised was that the attention of the plaintiff to the defect in the original plaint had been drawn by the application filed on behalf of the appellant on November 20, 1948, and in spite of that application, numberamendment war, asked for till March 29, 1950. Both these circumstances were fully companysidered by the learned Judges of the High Court. It is worthy of numbere that the period of limitation for a suit under 0. XXI, r. 103 of the Code of Civil Procedure, namely, one year from the date of the adverse order made under r. 99 of 0. XXI, bad expired some time before November 20,1948, on which date the appellant made his first application pointing out the defect in the plaint, the adverse order under 0. XXI, r. 99, having been made on April 12, 1947. The application which the appellant made on November 20, 1948, had number the merit of such beneficent purpose as is number sought to be made out by learned companynsel for the appellant. When the application was made, the period of limitation had already expired, and the appellant very clearly said that numberpermission should be given to the plaintiff to make an amendment thereafter. We do number therefore think that the appellant can make much capital out of the application made on his behalf on November 20, 1948. Recently, we have had occasion to companysider a similar prayer for amendment in L. J. Leach Co. v. Jardine Skinner Co. 1 where, in allowing an amendment of the plaint in an appeal before us, we said It is numberdoubt true that companyrts would, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of the application. But that is a factor to be taken into account in exercise of the discretion as to whether amendment should be ordered, and does number affect the power of the companyrt to order it, if that is required in the interests of justice., These observations were made in a case where damages were, originally claimed on the footing of companyversion of goods. We held, in agreement with the learned Judges of the High Court, that on the evidence the claim for damages on the footing of companyversion must fail. The plaintiffs then applied to this Court for amendment of the plaint by raising, in the alternative, a claim for damages for breach of companytract for number-delivery of the goods. The application was resisted by the respondents and one of the grounds of resistance was that the period of limitation had expired. We accepted as companyrect the decision in Charan Das v. Amir Khan 2 which laid down that though there was full power to make the amendment, such a power should number, as a rule be exercised where the effect was to take away from a defendant, a legal right which had accrued to him by 1 1957 S.C.R. 438, 2 1920 L.R. 47 I.A. 255. lapse of time yet there were cases where such companysi- derations were outweighed by the special circumstances of the case . As pointed out in Charan Das case 1 , the power exercised was undoubtedly one within the discretion of the learned Judges. All that can be urged is that the discretion was exercised on a wrong principle. We do number think that it was so exercised in the present case The facts of the present case are very similar to those of the case before their Lordships of the Privy Council. In the latter, the respondents sued for a declaration of their right of pre- emption over certain land, a form of suit which would number lie having regard to the proviso to s. 42 of the Specific Relief Act I of 1877 . The trial Judge and the first appellate Court refused to allow the plaint to be amended by claiming possession on pre-emption, since the time had expired for bringing a suit to enforce the right. Upon a second appeal the Court allowed the amendment to be made, there being numberground for suspecting that the plaintiffs had number acted in good faith, and the proposed amendment number altering the nature of the relief sought. In the case before us, there was a similar defect in the plaint , and the trial Judge refused to allow the plaint to be amended on the ground that the period of limitation for a suit under 0. XXI, r. 103, of the Code of Civil Procedure, had expired. The learned Judges of the High Court rightly pointed out that the mistake in the trial Court was more that of the learned pleader and the proposed amendment did number alter the nature of the reliefs sought. Learned companynsel for the appellant referred us to the decision in Kisandas Bupchand v. Rachappa Vithoba and placed great reliance on the observations of Beaman J. at P. 655 In my opinion, two simple tests, and two only, need to be applied, in order to ascertain whether a given case is within the principle. First, companyld the party asking to amend obtain the same quantity of relief without the amendment ? If number, then it follows necessarily that the proposed amendment places the other party at a disadvantage, 1 1920 L.R. 47 I.A. 255. 2 1900 I.L.R. 33 Bom. 644. it allows his opponent to obtain more from him than he would have been able to obtain but for the amendment. Second, in those circumstances, can the party thus placed at a disadvantage be companypensated for it by companyts ? If number, then the amendment ought number, unless the case is so peculiar as to be taken out of the scope of the rule, to be allowed. He companytended that the first test laid down in the aforesaid observations was number fulfilled in the present case. We do number agree with this companytention. First, it is number feasible number advisable to encase a discretionary power within the strait jacket of an inflexible formula. Second , we do number think that the quantity of relief, an expression somewhat difficult of appreciation or application in all circumstances, was in any way affected by the amendments allowed to be made in this case. What happened in the present case was that there was a defect in the plaint which stood in the way of the plaintiff asking for the reliefs he asked for that defect was removed by the amendments. The quality and quantity of the reliefs sought remained the same whether the reliefs should be granted or number is a different matter as to which we are number called upon to express any opinion at this stage. We think that the companyrect principles were enunciated by Batchelor J. in his judgment in the same Case, ViZ., Kisandas Rupchands case 1 , when he said at pp. 649-650 All amendments ought to be allowed which satisfy the two companyditions a of number working injustice to the other side, and b of being necessary for the purpose of determining the real questions in companytroversy between the parties but I refrain from citing further authorities, as, in my opinion, they all lay down precisely the same doctrine. That doctrine, as I understand it, is that amendments should be refused only where the other party cannot be placed in the same position as if the pleading had been originally companyrect, but the amendment would cause him an injury which companyld number be companypensated in companyts. It is merely a particular case of this general rule that where a plaintiff seeks to amend by setting up a fresh claim in 1 1900 I.L.R. 33 Bom. 644. respect of a cause of action which since the institution of the suit had become barred by limitation, the amendment must be refused to allow it would be to cause the defendant an injury which companyld number be companypensated in companyts by depriving him of a good defence to the claim. The ultimate test therefore still remains the same can the amendment be allowed without injustice to the other side,, or can it number? Batchelor J. made these observations in a case where the claim was for dissolution of partnership and accounts, the plaintiffs alleging that in pursuance of, a partnership agreement they had delivered Rs. 4,001 worth of cloth to, the defendants. The Subordinate Judge found that the plaintiffs did, deliver the cloth, but came to the companyclusion that numberpartnership was created. At the appellate stage, the plaintiffs abandoned the plea of partnership and prayed for leave to amend by adding a prayer for the. recovery of Rs. 4,001. At that date the claim for the money was barred by limitation. It was held that the amendment was rightly allowed, as the claim was number a new claim. The same principles, we hold, should apply in the present case. The amendments do number really introduce a new case, and the application filed by the appellant himself showed that he was number taken by surprise number did he have to meet a new claim set up for the first time after the expiry of the period of limitation.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal bAppeal No. 94 of 1955. Appeal by special leave from the judgment and order dated September 7, 1954, of the Allahabad High Court in Criminal Appeal No. 647 of 1952 arising out of the judgment and order dated June 7, 1952, of the Court of Sessions Judge at Ghazipur in S. T. No. 11 of 1952. J. Umrigar, for the appellant. C. Mathur and C. P. Lal, for the respondent. 1957. February 20. The Judgment of the Court was delivered by KAPUR J.-This is an appeal by Special leave under Art. 136 of the Constitution of India against the Judgment of the Allahabad High Court companyfirming the companyviction of the Appellant Raghubansh Lal under s. 218 of the Indian Penal Code. The offence for which the appellant was tried wag, that being a Patwari of village Arazi Mafi Pandai and thus a public servant, he framed the khasra of 1358 F in respect of plots Nos. 170 and 74/1 of village Arazi Mafi Pandai, which he knew to be incorrect with intent to cause or knowing to be likely that he would thereby cause an undue loss to Smt. Mahura Kunwar. The facts out of which this appeal has arisen are these. Two brothers, Mahadeo and Sahdeo, who were members of a joint Hindu family owned certain plots of land. Mahadeo died leaving a widow Basera Kunwar, a son Damodar Pande and a daughter Mahura Kuer. Sahdeo died leaving a widow Sundra Kuer. On the death of Damodar Pande, one Ram Sewak Pande brought a suit against Smt. Basera Kunwar and Smt. Sundra Kuer for possession of zamindari property including sir and sayar left by Damodar Pande which was dismissed. On the death of Basera Kunwar, Adit Pande son of Ram Sewak and one Ganga Pande got their names mutated in regard to this property. Smt. Mahura Kuar then brought a suit for possession of the estate left by Smt. Basera Kunwar against Adit Pande and Ganga Pande which was decreed on August 1, 1941. On May 31, 1943, Smt. Mahura Kuar obtained possession through Court of this estate which included the two plots Nos. 170 and 74/1. On February 25, 1950, Mahura Kuer made an application to the Sub-Divisional Magistrate for taking proceedings under s. 145 of the Criminal Procedure Code against Adit Pande and Ganga Pande. The Magistrate ordered the attachment of the land including the two plots Nos. 170 and 74/1, and it is alleged that posses. sion of these two plots was given to Shubh Karan as sapurdar or custodian. The property remained under attachment from March 15, 1950, to December 18, 1950, which would companyprise a part of 1357 F and a part of 1358 F. On December 18, 1950, the proceedings taken by the Magistrate ended in favour of Mahura Kuar with the finding that her possession had been established. Adit Pande and Ganga Pande were restrained from interfering with the possession of the lady and it was ordered that the attachment should end and the possession of the plots of land in dispute be handed back to Smt. Mahura Kuer. The opposite party took a revision to the District Magistrate which was dismissed on March 28, 1951, and it is alleged that actual possession was delivered in April, 1951. From December 1950 to April 1951, the delivery of possession remained stayed under the District Magistrates order. On July 31, 1951, Smt. Mahura Kuar filed the present companyplaint in the Court of the Judicial Magistrate at Ghazipur under s. 218 of the Indian Penal Code against the present appellant in which after reciting the various relevant facts she alleged that the accused who was a Patwari of the village had deliberately made wrong entries in regard to the plots Nos. 170 and 74/1 and in the remarks companyumn had entered the name of Adit Pande as being in possession, and thus he had companymitted an offence under s. 218 of the Indian Penal Code. The case was companymitted to the companyrt of Session where in support of the prosecution Smt. Mahura Kuer herself appeared as witness No. I and her case was supported by two other witnesses, namely, Gouri Shankar W. 2 and Naresh P.W. 3. The accused produced in defence Adit Pande D.W. I and Ram Swarup D.W. 2. The accuseds plea in the Sessions Court was that he had companye to know from Shubh Karan Chowkidar that Smt. Mahura Kuar had won the case under s. 145 of the Criminal Procedure Code, but in spite of the order of the Magistrate he found the possession on the spot to be of Adit Pande, that he did number act according to the order of the Magistrate because he did number receive any such order and that he did number find Smt. Mahura Kuar in whose favour the order was passed by the Magistrate to be in actual possession. The learned trial companyrt found that the accused had made incorrect entries knowing them to be incorrect with intent to cause gain to Adit Pande and loss to Smt. Mahura Kuar. He, therefore, companyvicted the accused and sentenced him to one years rigorous imprisonment and a fine of Rs. 200 or in default 4 months rigorous imprisonment. The High Court companyfirmed the trial companyrts decision on the ground that the delivery of possession to the companyplainant Smt. Mahura Kuar was proved by the statements of the lady herself and of Gauri Shankar and Naresh Gadaria, who had supported the statement of Mahura Kuar and had deposed that Shubh Karan sapurdar had sown barley in one field and paddy in the other and that actual physical possession was delivered to her in April 1951. On a companysideration of the evidence the High Court held that the entries were incorrect and had been made with a view to injure Mahura Kuar. Rule 60 of the U.P. Land Records Manual deals with the preparation of Khasras. The form of the khasra companytains companyumns showing the name of the cultivator, the name of the sub-tenant or tenants and entries relating to crops etc. The rule requires that the entries shall be made in accordance with the actual facts and provides that the Patwari is responsible for all entries and he must satisfy himself of the facts by inquiry from the persons companycerned as well as by field inspection and companyplete the khasra by April 30th. In the remarks companyumn -and this is shown by the order of companymitment-the entry of the years 1357 F and 1358 F was qabiz badastur possession as before . In companying to the finding of incorrectness of the entries in the khasra with intent to cause injury to Smt. Mahura Kuar, the Courts below have taken into companysideration the proceedings under a. 145 of the Criminal Procedure Code. Although the finding of the Magistrate in those proceedings was in favour of Smt. Mahura Kuar, the land in dispute had been attached and had been given for cultivation to Shubhkaran Chowkidar, and even according to the prosecution case the actual physical possession did number pass to Smt. Mahura Kuar till April 1951. The sapurdar, Shubhkaran, himself has number been examined as a witness, may be due to the then existing dispute between Mahura Kuar and Shubhkaran as to the produce of the land in dispute for the period of his custodianship. Even though the possession of the disputed plots is stated to have been given to the company- plainant in April 1951, she was number in actual physical possession before that date, i.e., during the period the land was under attachment. For the purpose,, of this case, the prosecution had to prove- 1 that the accused knowingly framed the record in an incorrect manner and 2 that the accused did this with the intent to cause or with the knowledge that he would thereby cause loss or injury to the public or to Smt. Mahura Kuar. It is true that the High Court found that the accused knew of the litigation between Mahura Kuar and Adit Pande and in spite of this he had made an incorrect entry. But in order to sustain the companyviction it is number sufficient that the entries are incorrect, it is essential that the entry should have been made with the intention mentioned in s. 218 of the Indian Penal Code. Direct evidence proving the necessary intention is, in this case, lacking and the circumstantial evidence is too meagre to support any safe companyclusion as to the intention with which the appellant made the entry companyplained of. His case was that the sapurdar, Shubhkaran, never got possession from Adit Pande. Shubhkaran was number a witness, may be for the reason already stated, and it was companytended that in the absence of the testimony of Shubhkaran the case of the prosecution cannot be held to have been proved at least it is number free from doubt. But the companyrts below have companysidered this fact and taking all the circum- stances into companysideration have held in favour of the companyplainant on the question of possession. The question still remains whether the incorrect entries were made with the intent to cause or knowing it to be likely that the accused will thereby cause loss or injury to the companyplainant. It is difficult to see how any wrong entry in regard to the year 1358 F companyld cause any loss to the companyplainant. In this case the intention has to be gathered from the act of the accused. The entry companyld number have been intended to create evidence -for being used against the companyplainant 7O1 in the proceedings under s. 145 Criminal Procedure Code, because according to the evidence on the record the entries were made somewhere in March and this companyld number have helped Adit Pande, as the magistrate had already decided the proceedings under s. 145 Criminal Procedure Code in December 1950, and had ordered possession to be delivered to the companyplainant, and, therefore, this entry companyld number affect the result of the proceeding under s. 145 Criminal Procedure Code. Mr. Mathur founded his case also on s. 16 of the U.P. Zamindari Abolition and Land Reforms Act, U.P. Act I of 1951 , which provided that a person, who was recorded as an occupant of the land for the year 1356 F and who, on the date mentioned in the section was in possession of the land, shall be deemed to be a hereditary tenant of the land. But the entry companyplained of is number for the year 1356 F but for the year 1358 F, and this entry would number have been of any avail to Adit Pande for the purposes of s. 16 of the Zamindari Abolition Act. In the circumstances of the case it cannot be said that an offence under a. 218 has been companymitted by the appellant as in our opinion the prosecution has failed to prove the necessary criminal intention. In these circumstances, we would allow the appeal, ,set aside the order of companyviction and acquit the accused.

Case appeal was accepted by the Supreme Court

Jagannadhadas, J. This is an application under Art. 32 of the Constitution by the petitioners, Amar Singh and four others, in the following circumstances. All these five are displaced persons who owned land in the number-suburban village of Chak. No. 159-RB, Tahsil Jaranwala, District Lyallpur in Pakistan. They were also companysharers in a joint khata owned by some evacuees in village Sultanwind, a suburb of Amritsar in East Punjab. On their displacement, they were in the first instance temporarily allotted agricultural land in Sultanwind. Having regard to their original position in the village, they were allotted in the year 1949 a total area of 38 standard acres and 13 units of agricultural land therein. This allotment had to be disturbed under the following circumstances. The Director-General of Relief and Rehabilitation Additional Custodian directed by an order dated January 7, 1950, that out of the 1,263 standard acres and 1 3/4 units of suburban land of Amritsar, 142 standard acres and 5 units were to be allotted to allottees of Provincial Gardens. This necessitated readjustment of allotments of the suburban land of Sultanwind amongst the various groups who had quasi-permanent allotment therein. As a result of this readjustment which had to be carried out according to certain rules and instructions, the allotment of these five petitioners as also of some others was proposed for cancellation by the order of the Deputy Custodian, Amritsar, dated July 31, 1951. This proposal was approved by the Custodian Financial Commissioner, Relief and Rehabilitation on February 6, 1952, and the allotment was cancelled. The proposal and the order of cancellation are said to have been passed without numberice to the petitioners. Being aggrieved thereby they moved the Custodian-General of Evacuee Property for revision thereof under s. 27 of the Administration of Evancuee Property Act, 1950 XXXI of 1950 . This was dealt with by the Deputy Custodian-General who dismissed the same by a fairly elaborate order dated May 1, 1954, after hearing the parties. The petitioners have companye up to this Court by this application under Art. 32 of the Constitution. The case of the petitioners is that the allotment to them was on quasi-permanent basis and that, therefore, they have acquired certain rights in the lands which companystitute property. They urge that the order of the Custodian canceling the allotment and that of the Deputy Custodian-General affirming the same are in violation of their fundamental rights to property under Arts. 19 1 f , 31 1 and 31 2 of the Constitution. They accordingly companytend that they are entitled to have these orders quashed and their rights to property declared and protected. That the petitioners are allottees of agricultural land on the basis of what has companye to be known as quasi-permanent allotment is number disputed. It is also number disputed that cancellation thereof was under the purported exercise of powers vested in the Custodian under certain provisions of the Administration of Evacuee Property Act, 1950 XXXI of 1950 and the rules framed thereunder taken with some executive instructions. It may be mentioned that the term quasi-permanent allotment appears to be a term which has companye into vogue in later statutory rules and has at numbertime been specifically defined, though it appears to be number fairly well-understood. The two substantial questions that arise, therefore, for companysideration are 1 whether the rights of a quasi-permanent allottee companystitute property within the meaning of the articles above referred to, and 2 whether the orders of the Custodian and Deputy Custodian-General canceling the quasi-permanent allotment amount to violation fundamental rights companytemplated by the above articles. Both these questions require a review of the Evacuee Property Law in so far as it relates to the allotment of agricultural lands of the evacuees to displaced land-holders and an appreciation of the background of the circumstances that necessitated it. The Declaration of Independence and the partition of India into Pakistan and India on August 15, 1947, was accompanied by mass migrations of Non-Muslims from West Punjab to East Punjab and of Muslims from East Punjab to West Punjab. These mass migrations were on a stupendous scale. About five million persons are said to have moved from each side to the other. This was done in a state of panic generated by companymunal riots. Migrants from West Punjab reached East Punjab almost destitute. This unprecedented situation brought in its train gigantic problems of administration relating to rehabilitation and resettlement of these persons. On of such problems was that relating to agricultural immovable property left on either side by the migrants. For purposes of companyvenience persons who crossed over from East Punjab to West Punjab are referred to as evacuees and persons who came over from West Punjab to East Punjab are referred to as displaced persons. The displaced persons are said to have left in Pakistan lands of the extent of about 67 lakh acres. The evacuees sum to have left in East Punjab and Pepsu, lands of the extent of about 47 lakh acres. This meant a deficit of over 20 lakh acres for resettlement. It would appear that in the earlier stages there were attempts to settle the question by way of mutual exchanges either individually or at the governmental level and by means of inter-dominion companyferences between India and Pakistan. But for one reason or other, these attempts appear to have failed. The various steps and administrative measures taken to settle, the displaced agricultural population who came over from West Punjab, on the hurriedly abandoned lands of the evacuees from East Punjab, are to be found described in the Land Resettlement Manual by Shri Tarlok Singh who was the Director-General of Relief and Rehabilitation hereinafter referred to as the Resettlement Manual . In Dunichand Hakim v. Deputy Commissioner Deputy Custodian, Evacuee Property , Karnal 1954 S.C.R. 578, this book has been referred to by this Court as having the stamp of authority. It can be usefully referred to number necessarily as an authority for every statement of fact or law companytained therein but as a guide to appreciate the background of the problems which the administration had to face in that unprecedented situation, how the administration attempted to solve the same, what were the rules and practice which the administration numbermally followed and companysidered binding on itself, and what ideas inspired the companyrse of legislation in this behalf. It appears therefrom that within about a month after the partition of India, the Government had to take an emergency decision to allot evacuee lands to groups of displaced persons on temporary basis. But this was found number to satisfy the displaced landholders. There was insistent pressure from them for such allotment as would enable them to settle on the lands of the evacuees on a permanent basis. This led to the abandonment of the policy of temporary allotments and the introduction of a system of allotment which came to be known as quasi-permanent allotment. This policy was announced by type Government of East Punjab in its Press Communique dated February 7, 1948, which is reproduced at pages 28 and 29 of the Resettlement Manual. The following extract therefrom is instructive The East Punjab Government propose to replace the present system of temporary allotments of evacuee lands by a new system of allotments which will take account of the holdings of evacuees in West Punjab. The new allotments will number companyfer rights of ownership or permanent occupancy, but the possession of allottees will be maintained. Claims of allottees will be dealt with in accordance with decisions reached eventually regarding the treatment of evacuee property. In the new scheme of allotments, land will be allotted only to those who, in West Punjab, were owners, occupancy tenants under the Punjab Tenancy Act, and tenants under the Colonization of Government Lands Act and to certain other classes of grantees and holders of India in West Punjab to be specified by Government. It is proposed to give to small holders allotments of equivalent areas, while in the case of larger holders there will be graded cuts. The definition of the Small Holders and the details of the graded cuts will be determined when detailed information regarding the available areas in East Punjab and the East Punjab States, the areas held by the population to be settled in East Punjab and the East Punjab States, and other relevant information becomes available. It is intended to companyplete the new system of allotments in East Punjab and the East Punjab States, number later than the 31st May, 1948. Government are, however, anxious to introduce the new scheme as early as may be feasible and steps to this end will be taken at once. Arrangements for companylecting companyplete information regarding the land available for allotment in East Punjab and the East Punjab States and the land abandoned by individual evacuees will be taken in hand without delay and it is hoped also to make arrangements on a reciprocal basis to secure information from records of rights in West Punjab. To ensure accurate information an Ordinance will shortly be promulgated prescribing punishment for false information regarding claims to land and action by way of forfeiture and otherwise in respect of allotments taken on false information. Claims to land will be invited on a form to be prescribed by Government. Until the new system of allotments can be introduced, the present system of allotments will companytinue and allotments made to the present holders will be maintained subject to a companyplete scrutiny of existing allotments, cancellation of unauthorised and excessive allotments, dispossession from illicit occupation and such other adjustments as may be necessary including adjustments in the unit of allotment decided upon by Government. To facilitate the process of resettling the displaced persons on evacuated land on this new basis of allotment various steps became necessary. They are roughly the following. Registration and verification of land claims. Assessment and valuation of such claims. Classification of the villages and of lands of evacuees available for allotment. Allocation of the claims to various areas with reference to such classification. Allotment of lands to individuals with reference to the valuation of their claims, guided by various companysiderations, priorities and preferences and so forth administratively determined. The basic idea which inspired and regulated these measures was that the displaced landholder is to be allotted subject to graded cuts such lands out of the evacuee agricultural land which, in its extent, quality and other relevant features, bear some reasonable relation and companyrespondence to the lands left by him in West Punjab. All these steps involved very elaborate administrative measures as indicated above. We are companycerned in this companytext to trace the legislation which brought about these steps and to examine whether and to what extent such legislation recognised property rights in the displaced land-holders. But before tracing the legislative measures which brought about the quasi-permanent allotments of evacuee lands in favour of displaced land-holders from West Punjab, it will be companyvenient to have a brief survey of the present law in its application to administration of evacuee property of all kinds in general with the history of such of the provisions therein as are relevant for our purpose and then to companysider the relevant legislative measures taken specifically with reference to agricultural land. The earliest legislative measure in this behalf is the East Punjab Evacuees Administration of Property Ordinance, 1947, E.P. Ordinance IV of 1947 dated September 14, 1947, which was a simple measure defining the terms evacuee, evacuee property, and Custodian of evacuee property and other terms, and authorising the appointment of a Custodian. It gave the Custodian power to take possession of evacuee property and to take all measures necessary and expedient for preserving such property. It vested in him extensive powers of management thereof. This was an emergency measure which appears to have been meant to get possession of the properties as a care-taker. This was superseded and followed by a series of legislative measures which underwent modifications from time to time. These legislative measures were in the first instance Provincial, viz., East Punjab Evacuees Administration of Property Act, 1947 E.P. XIV of 1947 East Punjab Evacuees Administration of Property Second Amendment Ordinance, 1948 E.P. Ordinance XVI of 1948 East Punjab Evacuees Administration of Property Second Amendment Act, 1948 E.P. XLIX of 1948 and East Punjab Evacuee Property Administration Ordinance, 1949 E.P. Ordinance IX of 1949 . These Provincial measures were repealed and superseded by Central legislation, viz., Administration of Evacuee Property Ordinance, 1949 Ordinance XXVII of 1949 amended by the Administration of Evacuee Property Amendment Ordinance, 1950 Ordinance IV of 1950 . These were repealed and superseded by the Administration of Evacuee Property Act, 1950 XXXI of 1950 . The main provisions of Central Act XXXI of 1950, which, with some modifications, is at present in force, may number be numbericed so far as they are relevant. Under ss. 5 and 6 of the Act an administrative machinery companysisting of Custodians, Additional, Deputy and Assistant Custodians of Evacuee Property, is set up for each State by the State Government thereof. They are under the general superintendence and companytrol of a Custodian-General appointed by the Central Government who has, for his assistance, Deputy and Assistant Custodian-Generals, who are also appointed by the Central Government. The terms evacuee and evacuee property are defined in s. 2 d and f and the Custodian is given power to determine and numberify evacuee property under s. 7. All property declared as evacuee property becomes vested in the Custodian under s. 8. The Custodian has under s. 9 the power to take possession of all the evacuee property so vested in him. Section 10 enumerates the powers and duties of the Custodian generally and declares that he may take such measures as he companysiders necessary or expedient for the purposes of securing, administering, preserving and managing any evacuee property and generally for the purposes of enabling him satisfactorily to discharge any of the duties imposed on him by or under the Act, and may, for any such purpose as aforesaid, do all acts and incur all expenses necessary or incidental thereto. One of the duties laid on the Custodian is the maintenance of accounts under s. 15. Section 15 1 says that the Custodian shall maintain a separate account of the property of such evacuee, possession whereof has been taken by him, and shall cause to be made therein entries of all receipts and expenditure in respect thereof. Section 16 provides for restoration of property to the evacuee on his application and enjoins the Custodian to furnish the evacuee on demand with a statement companytaining an abstract of the account of the income received and expenditure incurred in respect of the property. The general powers of management vested in the Custodian under s. 10 enable him to grant leases and make allotments out of evacuee property in favour of displaced landholders. This is subject to the power vested in him under s. 12 1 to vary or cancel leases or allotments of evacuee property. These are a number of other substantive and incidental provisions, which it is unnecessary to refer to for the purposes of this petition. Thus, the broad features of the administration of evacuee property law, as indicate from the provisions above numbericed, are the following All evacuee property is vested in the Custodian. He has the duty of managing the property and maintaining accounts for such management and has large administrative powers. As incidental to such management he can grant leases and make allotments. He has the power to vary or cancel leases and allotments. The evacuee can companye forward and apply for return of the evacuee property and such property is liable to be restored to him. The Custodian, presumably on such restoration, has to furnish to the evacuee on demand, a statement companytaining an abstract of the account of the income received and expenditure incurred in respect of the property. In addition to large administrative functions for the purposes of the Act, the Custodian has also the function of deciding various matters of a quasi-judicial nature, such as 1 whether a person is an evacuee or whether certain property is evacuee property 2 whether a transfer of evacuee property is or is number to be companyfirmed 3 whether a lease or an allotment is or is number to be cancelled or varied and 4 whether property is to be restored to the evacuee and so forth. The actions of the Custodian and his subordinates in exercise of their administrative as well as of quasi-judicial functions are subject to appeal and revision by the higher authorities under the Act as provided under ss. 24 to 27. Section 28 provides that orders made under the above sections shall be final and shall number be called in question in any original suit, application or execution proceeding. Section 46 bars the jurisdiction of the civil or revenue companyrts in respect of any matter which the Custodian-General or the Custodian is empowered by or under the Act to determine. The history of some of the above statutory provisions as traceable from the companyresponding provisions of the earlier legislation is significant. The provision vesting evacuee property in the Custodian was number enacted in the earlier East Punjab Ordinance IV of 1947. But it was enacted by the next legislative measure, East Punjab Act XIV of 1947, which declared the vesting of evacuee property, and provided that the property shall companytinue to be so vested until the Provincial Government by numberification otherwise directs. This last clause was substituted in 1948 by an Amending in Act, by the clauses until it is returned to the owner in accordance with the provisions of section 12. This clause as to the duration of such vesting was omitted in the later Central legislation and was substituted by the phrase shall companytinue to so vest. See Central Ordinance XXVII of 1949 and Central Act XXXI of 1950 . The earliest provision for return of evacuee property to the evacuee is in East Punjab Ordinance IV of 1947. Section 12 thereof provided that the owner of any property in the possession or companytrol of the Custodian shall be entitled to restoration thereof upon application to the Custodian and on payment of excess, if any, of expenditure over receipts from the management of such property by the Custodian. In East Punjab Act XIV of 1947 which superseded this Ordinance, this right of restoration to the evacuee was qualified by virtue of s. 12 1 thereof which is as follow On being satisfied that evacuees have returned or are returning to the Province, the Provincial Government may by numberification in the Official Gazette authorise return of their immovable property to the owners in accordance with this section. Sub-section 2 of s. 12 provided that any person claiming to be entitled to any such property may apply in writing to the custodian who, after giving public numberice and holding an enquiry, will make a formal order declaring the person to whom possession of the property may be delivered. In Central Ordinance XXVII of 1949 and in Central Act XXXI of 1950, the provision for restoration of property to the evacuee in s. 16 thereof is that the Custodian may, on application by the evacuee or his heir, restore to him the property subject to such terms and companyditions as he may think fit to impose provided that the applicant produces a certificate from the Central Government that the property may be so restored if he is otherwise entitled to it. Thus it will be seen that while the earliest East Punjab Ordinance of 1947 recognised almost an unrestricted right in the evacuee to obtain restoration of property this was changed shortly thereafter by the East Punjab Act of 1947 which required that such return by the Custodian can only follow a numberification by the Provincial Government as to its being satisfied that evacuees have returned or are returning and authorising the return of the property. The Central legislation of 1949 and of 1950 however lessened the rigour of it by requiring only a preliminary certificate from the Central Government by the individual applicant companycerned. Next, it may be numbericed that neither East Punjab Ordinance IV of 1947 number East Punjab Act XIV of 1947 which replaced it refer to or define either the word lease or allotment. These two words were for the first time defined only by the amending East Punjab Ordinance XVI of 1948 and it was made clear therein that an allotment was different from a lease. From the historical background it would appear likely that the word allotment was used for the grant of property to displaced land-holders while lease was intended to denote a temporary grant to other displaced persons. But even so the temporary character of the right involved in the word allotment was specified by defining allotment as meaning the grant by the Custodian of a temporary right of use and occupation of evacuee property to any person otherwise than by way of lease. This temporary character of the right was reiterated also in East Punjab Ordinance IX of 1949 and in Central Ordinance XXVII of 1949. It is only in Central Act XXXI of 1950 that by s. 2 a thereof the word temporary in the definition of the word allotment was dropped and allotment is defined as meaning the grant by a person duly authorised of a right of use or occupation of an immovable evacuee property to any other person but does number include a grant by way of a lease. Thus the legislation of 1950 for the first time companytemplated that allotment may be otherwise than temporary. This Act as well as the previous Central Ordinance companypletely omitted the definition of the word lease. These changes were apparently necessitated by the fact that, in between, Punjab Government numberification dated July 8, 1949, came into operation providing for what has become subsequently known as quasi-permanent allotment. The provisions of that numberification and the legal effect thereof will be numbericed in due companyrse. We may next trace the provisions in the various Acts relating to the power of cancellation of allotments in so far as they appear from the body of the main Ordinances and Acts themselves, leaving aside - for the time being - the rules framed thereunder. It may be mentioned that in the rest of the judgment in numbericing the statutory provisions which deal with leases and allotments together, all reference to leases are omitted for the sake of simplification. The earliest provision in this behalf is of East Punjab Act XIV of 1947 which was inserted into it by East Punjab Ordinance XVI of 1948 replaced by East Punjab Act XLIX of 1948. Sub-section 2 of s. 9-A provides that numberwithstanding anything companytained in any enactment for the time being in force, the Custodian may cancel any allotment or amend the terms of any agreement on which any evacuee property is held or occupied by any person, whether such agreement was entered into before or after the companying into force of East Punjab Ordinance XVI of 1948. It is further provided by sub-ss. 3 and 4 thereof, that if a person is in unauthorised possession of any evacuee property the Custodian may treat such person either as a tenant or as a trespasser and that a person treated as a trespasser, on cancellation of allotment, shall, on demand, surrender possession to the Custodian. The subsequent East Punjab Ordinance IX of 1949, Central Ordinance XXVII of 1949 and Central Act XXXI of 1950 companytain substantially the same provisions relating to cancellation of allotments. It may be mentioned that all these legislative measures had a section relating to rule-making power right from the time of East Punjab Act XIV of 1947 and also a provision that the provisions of the Act and the rules made thereunder shall have effect numberwithstanding anything inconsistent therewith in any enactment other than that Act. See ss. 22 and 18-B of East Punjab Act XIV of 1947 and ss. 55, 56 and 4 of Central Act XXXI of 1950 . By virtue of this rule making power, the Provincial Government and the Central Government made rules from time to time, which will be numbericed presently. From the above history of alterations at short intervals in some of the main relevant provisions, it is clear that the legislation was being adjusted from time to time with reference to the exigencies and difficulties of the different problems which had to be grappled with, both in the matter of internal administration as also on account of inter-dominion companyferences between Pakistan and India. It may be mentioned that during the two year period between the first Provincial legislation in 1947 and the first Central legislation in 1949 there were as many as six-inter dominion companyferences, i.e., in January 1948, April 1948, July 1948, December 1948, April 1949 and June 1949. Stopping here it will be seen that the position, in its general aspect, is that all evacuee property is vested in the Custodian. But the evacuee has number lost his ownership in it. The law recognised his ultimate ownership subject to certain limitations. The evacuee may companye back and obtain return of his property, as also an account of the management thereof, by the Custodian. Such return which was originally companytemplated without any restriction, is subsequently dependent on a numberification or a certificate of the Central Government. Until such return the Custodian may manage the property by granting allotments in favour of displaced persons. The nature of an allotment is clear from its definition that it is grant of the right of use and occupation. This in the first instance was companytemplated as being only temporary. By a later definition, it was made wider so as number to be restricted to a temporary use and occupation. But the allotment is clearly subject to the power of cancellation thereof vested in the Custodian, which will entitle him to obtain its possession. Such rules were undergoing alterations from time to time. In such a situation it would prima facie be difficult to recognise the allottee of any evacuee property, in so far as his position is governed by the main provisions of the Evacuee Property Administration Acts unaffected by any specific rules applicable to any particular class of property or any specific arrangement or companytract , as a person having some kind of property or having a recognised interest therein which by itself companystitutes property. It is more in the nature of a licence which is liable to be cancelled by the grantor. It may be mentioned that there appear to be certain rules made by the East Punjab Government dated August 6, 1948, under East Punjab Act XIV of 1947 as amended in 1948, relating to cancellation of allotments. But the text of these rules was number available to us. However this may be, it is urged that certain other legislative measures and statutory rules made in exercise of the statutory powers, have made a difference in the position arising in respect of allotments of agricultural lands granted in favour of displaced persons in East Punjab who left landed property in West Punjab. It is, therefore, necessary to review the same. The first measure for the resettlement of the displaced land-holders of West Punjab on evacuee lands was the East Punjab Refugees Registration of Land Claims Ordinance, 1948 E.P. Ordinance VII of 1948 which was replaced by East Punjab Refugees Registration of Land Claims Act, 1948 E.P. XII of 1948 . It is in pursuance of the rules framed under this Act that what is known as the Parcha claim and the form therefore were standardised calling for accurate information as regards quite a large number of details which had to be taken into companysideration in determining the land to be allotted to a displaced land-holder. This was followed by the East Punjab Displaced Persons Land Resettlement Ordinance, 1949 E.P. Ordinance XIV of 1949 which was replaced by the East Punjab Displaced Persons Land Resettlement Act, 1949 E.P. XXXVI of 1949 . This Act was meant to provide for the allotment of evacuee lands in East Punjab. The right of an allottee to possession of the land allotted subject to payment of rent, etc., to the Custodian or his right to a share in the rent from the present holder thereof that is, the cultivating occupant , if any, and other incidents arising from such possession were specified in this Act. In between these two Acts, numberification No. 4892/S dated July 8, 1949, was issued by the Punjab Government in exercise of the rule-making power vested in it under cls. f and ff of sub-s. 2 of s. 22 of East Punjab Act XIV of 1947 as amended in 1948. This numberification sets out the statement of companyditions on which the Custodian companyld grant allotments of land vested in him. This numberification is virtually the charter of the rights of allottees. It is the basis of what has companye to be known as the quasi-permanent allotment. In the rules set out in this numberification a displaced person is defined as a land-holder in West Punjab etc. and it is specified that an allotment shall be made in favour of a displaced person and for a period for which the land remains vested in the Custodian. The word allottee is defined as including heirs, legal representatives and lessees of the allottee. It may be mentioned in this companytext that East Punjab Displaced Persons Land Resettlement Act, 1949, mentioned above, which was passed shortly after these rules were numberified also defines the word allottee and says that allottee means a displaced person to whom land is allotted by the Custodian under the companyditions published with East Punjab Government numberification No. 4892/S dated July 8, 1949 and includes his heirs, legal representatives and sub-lessees. Thus the definitions of the word allottee in the rules of July 8, 1949 and under the Act passed shortly thereafter recognise number only that an allotment is to be in favour of a displaced land-holder for the period the land is vested in the Custodian but that it enures for the benefit of his heirs and legal representatives. Therefore, the first incident of allotment implicit in this is the heritability of the rights of the allottee which companystitute quasi-permanent allotment under the above mentioned numberification of July 8, 1949. Various other rights are specified in cls. 3, 4, 5, 7 and 8 of the said numberification. These will be summarised later. But it is to be numbericed that the allotment itself is subject to resumption under clause 6 thereof. Before companysidering the nature of the interest which these various clauses of the numberification companyfer on the quasi-permanent allottee, it is necessary to see how far this numberification of July 8, 1949, is affected by subsequent legislation and the rules framed thereunder. Now the East Punjab Evacuee Property Administration Acts were repealed and replaced by Central Ordinance XXVII of 1949 and Central Act XXXI of 1950. Both the Central Ordinance and Central Act had each a section, s. 53 and s. 55 respectively, under which the Central Government may delegate its rule making power to the State Government. In exercise of such delegated power the State Government issued a numberification No. 1554-Cust. dated February 6, 1950, the relevant portion of which is as follows The Provincial Government is pleased to numberify that Statement of Conditions issued by the Custodian and published under the numberification No. 4891/S and 4892/S dated the 8th July, 1949, shall be deemed to be and shall companytinue to remain in force as rules framed by the Provincial Government under sub-section 2 of section 53 of the Central Ordinance No. XXVII of 1949 under delegation from the Central Government under Notification No. 3094-A Cus/49 dated 2nd December, 1949, subject to the following modifications and amendments The rules as stated in the Statement of Conditions under numberification Nos. 4891/S and 4892/S dated the 8th July, 1949, shall be called the Administration of Evacuee Property Rural Rules, 1949. Definition. a The word ACT defined in the said Statement of Conditions shall mean the Administration of Evacuee Property Ordinance, 1949 Ordinance No. XXVII of 1949 . The above rules of July 8, 1949, have, therefore, companytinued to be operative as rules made under the Central Ordinance. On the repeal of the Central Ordinance by Central Act XXXI of 1950 and by virtue of s. 58 thereof, these rules companytinue to be in force as though they are rules made under the Central Act of 1950. Further, the Central Government framed rules on September 28, 1950, entitled Administration of Evacuee Property Central Rules, 1950, which will be numbericed presently. Later, in exercise of the delegated rule-making power vested in the Provincial Government under s. 55 of the Central Act, the Punjab Government framed rules dated August 29, 1951, entitled Instructions for review and revision of land allotment. These two sets of subsequent rules would affect the rules of July 8, 1949, to the extent that any of them are inconsistent with the earlier rules. A companyparison of the subsequent rules with the earlier rules of July 8, 1949, shows that the later rules do number companycern any of the matters provided by the earlier rules of 1949 and 1950 excepting as regards the provisions relating to resumption - which virtually is cancellation - of allotments. Hence the rules of July 8, 1949, companytinue to be in force except to that extent, if any. The portion which has undergone, if any, variation by subsequent rules may number be numbericed. The provision for resumption in the rules published by the Punjab Government in its numberification of July 8, 1949, is as follows The Custodian, or as the case may be, the Rehabilitation Authority shall be companypetent to resume, amend, withdraw, or cancel the allotment on any of the following grounds It is companytrary to the orders of the East Punjab Government, or the instructions of the Financial Commissioner, Rehabilitation, or the Custodian, Evacuee Property, East Punjab The allottee has infringed or appears to be preparing to infringe any of the terms of allotment The allotment was obtained by false declaration or insufficient information or is companytrary to the purpose or rehabilitating the displaced persons The area allotted or occupied by the allottee is more than he was authorised to take on allotment or occupy under the instructions issued by the East Punjab Government or the Financial Commissioner, Rehabilitation, or the Custodian, Evacuee Property, East Punjab Where the claims of other parties with respect to the land have been established or accepted by the Custodian or the Rehabilitation Authority When the allottee has been companyvicted of an offence under the Act or If the allottee fails to take possession of the land within the time as may be allowed by the Custodian or the Rehabilitation Authority, or after having taken possession, fails to cultivate the land or a part thereof. The next set of rules are those made under Central Act XXXI of 1950. Rule 14 of Central Rules, 1950, is the following 14. 1 In case of an allotment granted by the Custodian himself, the Custodian may evict a person on any ground justifying eviction of a tenant under any law relating to the companytrol of Rents for the time being in force in the State companycerned, or for any violation of the companyditions of the allotment. The Custodian may evict a person who has secured an allotment by misrepresentation or fraud or if he is found to be in possession of more than one evacuee property or in occupation of accommodation in excess of his requirements. 4 It will be seen that the above provisions are number in themselves powers of cancellation or modification of allotment but are supplementary thereto authorising eviction of an allottee under the circumstances indicated therein. The next set of rules in this companynection are rules dated August 29, 1951, enacted by the Punjab Government in exercise of powers delegated to it by the Central Government under s. 55 1 of Central Act XXXI of 1950. In so far as these rules relate to allotments, cls. a to g of r. 1 thereof are virtually the same as those relating to resumption in the numberification of July 8, 1949. The additions thereto in the 1951 rules are the following The Custodian shall be companypetent to cancel or terminate any allotment or vary the terms of any allotment or agreement and evict the allottee in any one of the following circumstances a to g h that it is necessary or expedient to cancel or vary the terms of an allotment for the implementation of resettlement schemes and or rules framed by the State Government or for such distribution amongst displaced persons as appears to the Custodian to be equitable and proper or that it is necessary or expedient to cancel or vary the terms of an allotment for the preservation, or the proper administration, or the management of such property or in the interests of proper rehabilitation of displaced persons. Anything done or any action taken in exercise of any power companyferred by the previous rules shall be deemed to have been done or taken under these rules, as if they were in force on the day on which such thing was done or action was taken. A close scrutiny will show that as regards resumption or cancellation of quasi-permanent allotments made under the numberification of July 8, 1949, the Central Rules of 1950 do number make any alteration by r. 14 thereof but give only supplementary powers of eviction in certain companytingencies. The rules of August 29, 1951, made by the Punjab Government under delegated authority will be found on companypression to be substantially the same as those enumerated in clause 6 of July, 8, 1949, numberification under the heading Resumption with the addition of cls. h and i and with an additional clause giving retrospective operation to the new rules. Rule 14 of the Central Rules, 1950, has been subsequently modified by numberification No. S.R.O. 1722 dated October 29, 1951, by adding sub-r. 6 which is as follows Where any State Government has, in exercise of the owners delegated to it, made any rules under clause i of sub-section 2 of section 56 of the Act which are in companysistent with this rule, such rules shall prevail over this rule. This obviously is intended to indicate that if there is any inconsistency as regards the power of cancellation between the Central Rules and the later delegated State Rules, the State Rules are to override the Central Rules. Now, all these rules relating to the power of cancellation which derive their authority from the rule making power given by the Provincial and Central Acts must, according to the ordinary rules of companystruction, be read so as to harmonise with the powers of cancellation under the Act itself. It follows that r. 6 relating to resumption of allotments under the numberification of July 8, 1949, as it originally stood until February 6, 1950, must be read with s. 9-A of East Punjab Act XIV of 1947 as amended in 1948, in so far as it relates to allotment. Similarly Central Rules of 1950, and the delegated State Rules of 1950 and 1951 must be read to harmonise with s. 12 of Central Act XXXI of 1950, in so far as they relate to allotments made under the numberification of July 8, 1949. Reading these powers of cancellation under the Act and the Rules together, it will be found that the power of cancellation of such allotments is wide and varied and depends to a substantial extent on administrative orders and companysiderations. Rule 14 of Central Rules, 1950, underwent alterations in July, 1952, and February, 1953. These are subsequent to the date of cancellation of the allotment in the present case and have numberdirect bearing on the present case. Pausing here and summarising the position as it obtained till July 22, 1952 when further relevant rules were framed as regards the rights under the quasi-permanent allotment scheme introduced by numberification July 8, 1949, may be stated thus. References given as against each are to the relevant provisions of the numberification of July 8, 1949 . The allottee is entitled to right of use and occupation of the property until such time as the property remains vested in the Custodian. Clause 3 1 . The benefit of such right will ensure to his heirs and successors. Definition of allottee. His enjoyment of the property is on the basis of paying land-revenue thereupon and ceases for the time being. Additional rent may be fixed thereupon by the Custodian. If and when he does so, the allottee is bound to pay the same. Clause 3 3 . He is entitled to quite and undisturbed enjoyment of the property during that period. Clause 8. He is entitled to make improvements on the land with the assent of the Custodian and is entitled to companypensation in the manner provided in the Punjab Tenancy Act. Clause 7. He is entitled to exchange to the whole or any part of the land for other evacuee land with the companysent of the Custodian. Clause 5. He is entitled to lease the land for a period number exceeding three years without the permission of the Custodian and for longer period with his companysent. But he is number entitled to transfer his rights by way of sale, gift, will, mortgage or other private companytract. Clause 4 c . His rights in the allotment are subject to the fairly extensive powers of cancellation under the Act and rules as then in force prior to July 22, 1952, on varied administrative companysiderations and actions such as the following Clause 6 and subsequent rules of 1951. - That the allotment is companytrary to the orders of the Punjab Government or the instructions of the Financial Commissioner, Relief and Rehabilitation, or of the Custodian, Evacuee Property, Punjab That the claims of other parties with respect to the land have been established or accepted by the Custodian or the Rehabilitation Authority That it is necessary or expedient to cancel or vary the terms of an allotment for the implementation of resettlement schemes and or rules framed by the State Government or for such distribution amongst displaced persons as appears to the Custodian to be equitable and proper That it is necessary or expedient to cancel or vary the terms of an allotment for the preservation, or the proper administration, or the management of such property or in the interests of proper rehabilitation of displaced persons. It is numbereworthy that the powers of cancellation include the liability of the allotment to be cancelled, if it is secured by false declaration or insufficient information, and also if the allottee is companyvicted under the provisions of the Evacuee Property Administration Acts. Clause 6 c and f . . Taking all the above incidents together as to the position of a displaced land-holder to whom evacuee agricultural land has been allotted under the numberification of July 8, 1949, there can be numberdoubt that he is in a definitely better legal position than the allottee of other kinds of property under Central Act XXXI of 1950 and the Central Rules of 1950, who, as already shown, is more or less in the position of a licensee. But even so, it is still far short of what can be companysidered as being in itself property either in the widest sense or in a limited sense. It is very strenuously urged that though this might appear to be so if one has regard only to the legislation and to the statutory rules up to July 22, 1952, the position of such an allottee emerges more definitely and clearly in the light of further legislation and subsequently amended rules. It is urged that this later legislation was in implementation of the original Press Communique dated February 7, 1948, which was understood to hold out the assurance of allotments companyferring permanent property. On this companytention the later legislation has also been brought to our numberice. In view of the insistence with which this companytention has been urged and the importance of the question, it is desirable to numberice the same and to companysider the effect thereof without deciding whether the later legislation and the Press Communique are relevant for the decision of the matters involved in this case. The earliest change in the pre-existing situation, as above numbericed, was brought about by two numberifications, S.R.O. 1290 dated July 22, 1952, and S.R.O. 351 dated February 13, 1953, as a result of which sub-r. 6 of r. 14 of the Central Rules of 1950 stood amended by the substitution of a new sub-rule which is as follows Notwithstanding anything companytained in this rule, the Custodian of Evacuee Property in each of the States of Punjab and Patiala and East Punjab States Union shall number exercise the power of canceling any allotment of rural evacuee property on a quasi-permanent basis, or varying the terms of any such allotment, except in the following circumstances where the allotment was made although the allottee owned numberagricultural land in Pakistan where the allottee has obtained land in excess of the area to which he was entitled under the scheme of allotment of land prevailing at the time of allotment where the allotment is to be cancelled or varied - a in accordance with an order made by a companypetent authority under section 8 of the East Punjab Refugees Registration of Land Claims Act, 1948 b on account of the failure of the allottee to take possession of the allotted evacuee property within six months of the date of allotment c in companysequence of a voluntary surrender of the allotted evacuee property, or a voluntary exchange with other available rural evacuee property, or a mutual exchange with such other available property d in accordance with any general or special order of the Central Government Provided that where an allotment is cancelled or varied under clause ii , the allottee shall be entitled to retain such portion of the land to which he would have been entitled under the scheme of quasi-permanent allotment of land Provided further that numberhing in this sub-rule shall apply to any application for revision, made under section 26 or section 27 of the Act, within the prescribed time, against an order passed by a lower authority on or before 22nd July, 1952. This amendment has undoubtedly the effect of modifying the power of resumption or cancellation vested in the Custodian authorities in respect of quasi-permanent allottees by virtue of the per-existing rules and to companyfine such power within narrow limits as specified therein. But whether the restrictions on this power of cancellation can be harmonised with the power to vary or cancel allotments vested in the Custodian under s. 12 of Central Act XXXI of 1950 is a matter number without some difficulty. It may, however, be assumed that, if possible, that latest amendment or r. 14 of Central Rules, 1950, by the insertion of the amended sub-r. 6 therein will have to be harmonised with the main section by a process of companystruction so as number to nullify the beneficent provisions specifically enacted in mandatory language. It is numbereworthy that the language of the new sub-r. 6 of r. 14 operates only as a restraint on the exercise of the power of cancellation vested in the Custodian and number as a negation of the power itself and it may, therefore, well be that there is numberinconsistency. The choice of the language appears to be intentional. On the other hand it may be numbericed also in this companytext that there have been some amendments in 1953, 1954 and 1956 of s. 16 of Central Act XXXI of 1950 relating to return of the evacuee property to the evacuee which companytinue to recognise his right to return of the property and have made some alterations in the details of the procedure applicable thereto. The companytinuance of the right of return may well imply the companytinued existence of the power to cancel the allotment. The next important legislative measure is the Displaced Persons Compensation and Rehabilitation Act, 1954 XLIV of 1954 . By s. 12 of this Act it is provided as follows If the Central Government is of opinion that it is necessary to acquire any evacuee property for a public purpose, being a purpose companynected with the relief and rehabilitation of displaced persons, including payment of companypensation to such persons, the Central Government may at any time acquire such evacuee property by publishing in the Official Gazette a numberification to the effect that the Central Government has decided to acquire such evacuee property in pursuance of this section. On the publication of a numberification under sub-section 1 , the right, title and interest of any evacuee in the evacuee property specified in the numberification shall, on and from the beginning of the date on which the numberification is so published, be extinguished and the evacuee property shall vest absolutely in the Central Government free from all encumbrances. 3 It may be numbericed that by virtue of Central Government numberification No. S.R.O. 697 dated March 24, 1955, under sub-s. 1 of this section, all evacuee property allotted under the Punjab Government numberification dated July 8, 1949, has been acquired by the Central Government excepting certain specified categories in respect of which proceedings were pending. It does number appear that the properties which are the subject matter of the present application have been acquired under this numberification, probably because the dispute about them is still pending. Section 13 of the Act provides as follows There shall be paid to an evacuee companypensation in respect of his property acquired under section 12 in accordance with such principles and in such manner as may be agreed upon between the Governments of India and Pakistan. Section 14 makes provision for companystituting a companypensation pool for the purpose of payment of companypensation and rehabilitation grants to displaced persons. The evacuee property acquired under s. 12 forms part of this companypensation pool. Section 10 is important and provides inter alia that where any immovable property has been allotted to a displaced person by the Custodian under companyditions published by the numberification of the Government of Punjab No. 4892-S dated July 8, 1949, and such property is acquired under the provisions of the Act and forms part of the companypensation pool, the displaced person shall, so long as the property remains vested in the Central Government, companytinue in possession of such property on the same companyditions on which he held the property immediately before the date of the acquisition. It is further provided that the Central Government may for the purpose of payment of companypensation to such displaced person, transfer to him such property on such terms and companyditions as may be prescribed. Section 40 provides for the rule-making power. Sub-section 1 a thereof enables the Central Government to make rules providing for the form and manner in which and the time within which, an application for payment of companypensation may be made and the particulars which it should companytain. It may be numbericed that companypensation referred to in s. 10, in so far as it relates to a displaced person, obviously refers to the companypensation for loss of his property in Pakistan and is number the recognition of a right to companypensation for deprivation of his interest, if any, in the allotted property by cancellation. Rules have been made by the Central Government called the Displaced Persons Compensation and Rehabilitation Rules, 1955, published by numberification dated May 21, 1955. Rules 71 and 73 relate to verified claims which do number seem to refer to agricultural lands. Verified claims relate to urban immovable property as the definition thereof in the Displaced Persons Claims Act, 1950 XLIV of 1950 shows. Rule 72 1 relates to an allottee of agricultural land having numberverified claim and is relevant. Rule 72 2 provides that if the Settlement Officer is satisfied that the allotment is in accordance with the quasi-permanent scheme, he may pass an order transferring the land allotted to the allotted in permanent ownership as companypensation and shall also issue to him a sanad in the form specified in the Appendix XVII or XVIII, as the case may be, granting him such rights. A scrutiny of the sanad which is printed at page 70, Appendix VII, of the Displaced Persons Compensation and Rehabilitation Rules, 1955, issued by the Government of India, Ministry of Rehabilitation, shows that it is only under this sanad that an allottee obtains permanent property in the land which originally belonged to the evacuee and which was allotted to him under the quasi-permanent allotment scheme. This sanad is and culmination of the hopes and expectations of allottees held out under the Press Communique dated February 7, 1948, and companyfirms, if any, the view that until such stage has been reached that allottee has numbersuch interest in the evacuee lands which can by itself companystitute property within the meaning of the protected fundamental rights. It is admitted by the learned companynsel for the petitioners that the petitioners in this case have number yet been able to obtain any sanad under these rules for the lands originally allotted to them and cancelled by the impugned orders of the Custodian and the Deputy Custodian-General. He urges, however, that having regard to the whole scheme and on the assumption that the orders of cancellation, which he challenges, are erroneous, they would in the ordinary companyrse have obtained the sanad for the lands and that the right to relief under Art. 32 must be determined on that footing. Great stress is laid on the fact that under the scheme of Central Act XLIV of 1954, even if evacuee property is acquired under s. 12 thereof, the quasi-permanent allottee is entitled to companytinue in possession of the property under s. 10 on the same companyditions as before so long as the property remains vested in the Central Government. Stress is also laid on the fact that he can apply for transfer of the property to himself under r. 72 2 of the rules made under the Act in payment of companypensation payable to him in lieu of his property left in West Punjab and that such application for transfer is numbermally to be granted and a sanad issued to him. In this companytext, learned companynsel for the petitioners relies on the well-known principle, viz., where a discretionary power is vested in a statutory authority, to act in certain circumstances for the benefit of certain person or class of persons as in s. 10 of central Act XLIV of 1954 and r. 72 2 of the rules thereunder the exercise of such power in favour of such a person, where the requisite companyditions exist, is obligatory and number optional, as laid down in the case in Julius v. Lord Bishop of Oxford 1880 5 App. Cas. 214. This principle, however, has numberapplication in the present case. While it is true that under s. 10 an allottee under the quasi-permanent allotment scheme has the benefit of companytinuing in possession thereof and may companytain transfer on application, such benefits are subject to the powers exercisable under s. 19 of the same Act and r. 102 of the rules framed thereunder. It may be numbericed that in respect of the evacuee property which has been acquired under s. 12 and which forms part of the companypensation pool under s. 14, the Central Government may appoint under s. 16 of the Act, for the management thereof, Managing Officers or Managing Corporations. Section 19 of the Act further provides as follows Powers to vary or cancel allotment of any property acquired under this Act. Notwithstanding anything companytained in any companytract or any other law for the time being in force but subject to any rules that may be made under this Act, the managing officer or managing companyporation may cancel any allotment or amend the terms of any allotment under which any evacuee property acquired under this Act is held or occupied by a person, whether such allotment was granted before or after the companymencement of this Act. Rule 102 of the rules framed under the Act is as follows Cancellation of allotments A managing officer or a managing companyporation may in respect of the property in the companypensation pool entrusted to him or to it, cancel an allotment or vary the terms of any such allotment if the allottee - a has sublet or parted with the possession of the whole or any part of the property allotted to him without the permission of a companypetent authority, or b has used or is using such property for a purpose other than that for which it was allotted to him without the permission of a companypetent authority, or c has companymitted any act which is destructive of or permanently injurious to the property, or d for any other sufficient reason to be recorded in writing. Provided that numberaction shall be taken under this rule unless the allottee has been given a reasonable opportunity of being heard. These are in terms wide enough to include quasi-permanent allotments. This shows that numberwithstanding the privilege of the quasi-permanent allottee to companytinue in possession under s. 10 and the scope he has for obtaining a transfer under the same section and r. 72 2 of the rules made thereunder, his allotment itself is liable to be cancelled under s. 19 and r. 102. Hence he has numbersuch right to obtain a transfer which can be given effect to within the principle of Bishop of Oxfords case 1880 5 App. Cas. 214. He does number, therefore, appear to have an indefeasible right to obtain transfer of the very land of which he is the quasi-permanent allottee, if such land is acquired under s. 12 of the Act. Thus the position of quasi-permanent allottee, whether before July 22, 1952, or after that date, is that his rights, such as they are, either under the numberification of July 8, 1949, or under s. 10 of Central Act XLIV of 1954, are subject to powers of cancellation exercisable by the appropriate authorities in accordance with the changing requirements of the evacuee property law and its administration. Hence the quality of the interest of the displaced allottee in evacuee agricultural land allotted to him appears to be substantially the same for the present purpose and the real question is whether such interest companystitutes property within the meaning of Arts. 19, 31 1 and 31 2 of the Constitution. The above detailed companysideration of the various incidents of a quasi-permanent allotment show clearly that the sum total thereof does number in any sense companystitute even qualified ownership of the land allotted. At best it is analogous to what is called jus in re aliena according to the companycept of Roman Law and may be some kind of interest in land. The basic features of that interest are that the ultimate ownership of the land is still recognised to be that of the evacuee and the allotment itself is liable to resumption or cancellation with reference to the exigencies of the administration of evacuee law. The interest so recognised, is in its essential companycept, provisional, though with a view to stabilisation and ultimate permanence. The provisional characteristic of this interest emerges from the fact that there have had to be a series of inter-Dominion companyferences to settle on governmental level the problems arising out of evacuee property in either companyntry. The stabilisation had to await the results of such companyferences. Thus both with reference to the internal necessities of the administrative problems inherent in the process of settling the displaced persons on the evacuee lands with reference to various companysiderations and policies and the external problem of arriving at understandings between the two governments, these rights had to be so regulated from time to time and had an element of unstability, though they were being progressively invested with the characteristics of stability. An interest in land owned by another in such a situation cannot be fitted into any companycept of property in itself. The companycept of a bundle of rights in agricultural land companystituting by itself property is the outcome of a stable and settled state of affairs relating to such bundle of rights. Historical jurisprudence shows that even the companycept of individual property in agricultural land was the outcome of stable and settled companyditions of society. It is also relevant to observe that the incidents of quasi-permanent allotment are entirely statutory. Subjection to the power of cancellation by the Custodian in whom the property is vested is one of such incidents and determines the quality thereof. Therefore, having given our best companysideration, we are unable to hold that the interest of a quasi-permanent allottee is property within the companycept of that word so as to attract the protection of fundamental rights. Property, to fall within the scope of Art. 19 1 f , must be capable of being the subject-matter of acquisition and disposal. The interest of the quasi-permanent allottee arises by statutory grant to a specified class of persons and is number capable of acquisition by the ordinary citizen in any of the numbermal modes. Nor is it capable of disposable by the allottee himself in the numbermal modes by way of sale, mortgage, gift or will. Neither is the interest of the quasi-permanent allottee such as can be brought within the scope of Art. 31 2 . Article 31 2 as recently amended, taken with Art. 31 2A companytemplates acquisition or requisitioning and taking possession as a result of transfer of the ownership or of the right to possession. It is true that the recent amendment came into operation on April 27, 1955, and the impugned order of the Custodian and Deputy Custodian-General are on February 6, 1952, and May 1, 1954. But in view of the word deemed in the amended Art. 31 2A it appears likely that the amendment was intended to be retrospective. Even assuming that it is number so, the words taking possession or acquisition in Art. 31 2 prior to the amendment are wholly inapt and inapplicable to the bundle of rights of the nature detailed above which companystitute quasi-permanent tenure and it is difficult to apply to it the protection under Art. 31 2 either as it stood before the amendment or after the amendment. Learned companynsel for the petitioners has urged that even if Arts 19 1 f and 31 2 are number applicable, the petitioners can invoke the protection of Art. 31 1 which says that numberperson shall be deprived of his property save by authority of law. He relies on the judgment of one of us reported in the State of West Bengal v. Subodh Gopal Bose 1954 S.C.R. 587, 673, where it was stated as follows The word property as used in Article 31 1 may have been intended to be understood in a wider sense and deprivation of any individual right out of a bundle of rights companystituting companycrete property may be deprivation of property which would require the authority of law. This is a view which was number shared by the other members of the Court in that decision. In any case it is clear that in order that Art. 31 1 may apply, it is number enough that there is deprivation but it must also be deprivation without the authority of law. What has happened, however, in this case is number deprivation of the property without the authority of law even assuming that the bundle of rights companystituting such an interest in land is property. It is the working out of the right of resumption or cancellation which was one of the incidents of the property. The cancellation by the Custodian authorities was under the very law which created those rights. Even if the exercise of that authority can be made out to be wrong, it is still number open to question having regard to ss. 28 and 46 of Central Act XXXI of 1950. It is number an illegal usurpation of jurisdiction by the authorities companycerned so as to companystitute negation of the authority of law. In the present case what has happened is that the quasi-permanent allotment of the petitioners has been cancelled in order to work out readjustments companysequent upon the order of the higher authority. Learned companynsel for the petitioners has strenuously urged that under the quasi-permanent allotment scheme the allottee is entitled to a right to possession within the limits of the relevant numberification and that such right to possession is itself property. That may be so in a sense. But it does number affect the question whether it is property so as to attract the protection of fundamental rights under the Constitution. If the totality of the bundle of rights of the quasi-permanent allottee in the evacuee land companystituting an interest in such land, is number property entitled to protection of fundamental rights, mere possession of the land by virtue of such interest is number on any higher footing. Learned companynsel has also drawn our attention to a number of Acts and numberifications of the Punjab Government to show that a quasi-permanent allottee has been treated as being in the same position as an owner of land itself for various purposes. Thus in r. 5 of the Land Revenue Rules under the Punjab Land Revenue Act, 1887 Punjab Act XVII of 1887 , a quasi-permanent allottee is classed with other land owners as being eligible for appointment as zaildars. Similarly by virtue of rules framed under the East Punjab Holdings Consolidation and Prevention of Fragmentation Act, 1948 East Punjab Act L of 1948 , a quasi-permanent allottee is liable to pay the companyt of companysolidation if such companysolidation companyprises lands in his occupation. These and other such provisions, however, have numberbearing on the question at issue before us. After the close of the arguments before us a recent decision of the Punjab High Court reported in Suraj Parkash Kapur v. The State of Punjab 1957 LIX P.L.R. 103 has been brought to our numberice and we have given our careful companysideration to the same. That decision may be right on its merits, a matter about which we express numberopinion. But, with respect, we are unable to agree with the view expressed therein that a quasi-permanent allottee has such an interest in the land allotted to him as to companystitute property, if it is meant to companyvey thereby that it is property which attracts the protection of fundamental rights under the Constitution. For all the above reasons we are unable to hold that any fundamental right of the petitioners has been infringed. This petition is accordingly dismissed but, in the circumstances, without companyts. In holding that quasi-permanent allotment does number carry with it a fundamental right to property under the Constitution we are number to be supposed as denying or weakening the scope of the rights of the allottee. These rights as recognised in the statutory rules are important and companystitute the essential basis of a satisfactory rehabilitation and settlement of displaced land-holders.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTIONCriminal Appeal No. 50 of 1957. Appeal by special leave from the judgment and order dated January 27, 1956, of the Rajasthan High Court at Jodhpur in Criminal Appeal No. 119 of 1954 arising out of the judgment and order dated March 23, 1954, of the Court of the Sessions Judge at Ganganagar in Original Criminal Case No. 74 of 1953. Mohan Behari Lal, for the appellant. Kan Singh and T. M. Sen, for the respondent. 1957 April 2. The Judgment of the Court was delivered by KAPUR J.-Bhagwandas and Netram are two brothers who along with Mt. Rameshwari, a daughter of the former, were tried by the Sessions Judge of Ganganagar for an offence under s. 302 of the Indian Penal Code but were acquitted. On appeal to the High Court of Rajasthan, the order of acquittal of Bhagwandas and Netram was reversed and they were companyvicted under s.302 read with s. 34 and sentenced to transportation for life. The order as to Mt. Rameshwari was affirmed and she was acquitted. The companyvicted persons have obtained Special Leave to appeal under Art. 136 of the Constitution. he appeal is founded on two grounds 1 that there was numberevidence against the appellants sufficient to warrant a companyviction and 2 that there were numbercompelling reasons for reversal of the judgment of acquittal. According to the prosecution the canal after a temporary closure restarted flowing on May 5, 1953. And although it was number his turn of water the deceased Shivlal was allowed to take the water to irrigate his fields. On May 6 the canal was flowing to its full capacity and Shivlal was to take his turn of water which was of 6 hours duration from 8 a.m. to 2 p.m. but he watered his lands from 8 a.m. to 10-30 a.m. because the village diggi pond which was empty had to be filled up. Mirab Ram Karan P. W. 1 with the companysent of Shivlal diverted the water for the purpose of filling up the diggi, promising him Shivlal to. get him the rest of his turn of water, i.e., for 3-1/2 hours after the diggi had been filled up. The diggi was filled up by 1 p.m. on the 7th. Shivlal then wanted to divert the water into his field but Bhagwandas prevented him from doing so claiming the turn to be his. According to Ram Karan Mirab P. W. I the turn of Bhagwandas was after Surta whose turn was next to that of Shivlal. As Shivlal was prevented from taking his turn of water he started walking towards the village saying that he would go and speak to Mirab. Bhagwandas thereupon shouted that the enemy was going and hit Shivlal on the head with a kassi. Netram then hit Shivlal with lathi as a result of which he fell down and then both beat Shivlal, and Mt. Rameshwari also, it was alleged, joined in this beating with a wooden handle of a kassi. This occurrence was witnessed by Hazari P. W. 3 who was grazing his camels in the field of Surta. He went up to the place where the beating was going on and shouted to the assailants who went away leaving their kassi behind. Hazari found Shivlal seriously injured and unconscious. He sprinkled some water on his face which revived Shivlal and the latter asked Hazari to take him to the Thana but Hazari helped him to walk up to the Khala threshing floor of Hukma which was at a short distance from that place. Hazari P. W. 3 has stated that he left Shivlal with Jora, Jagmal, Bhogar, Begaram and Binja, and on their asking him he Hazari told them what he had seen. Shivlal was then taken to Raisinghnagar by Bhaggu and Jagmal on a she-camel to the shop of Gyani ham P. W. 4. There Shivlal told Gyani Ram also that Bhagwandas, Netram and Rameshwari had assaulted him because of the water dispute and also asked Gyani Ram to send for his son Ram Pratap and his Artya Commission Agent Ishardas. Ram Pratap came at about 6 p. m. Shivlal repeated the story to him and was then taken to the hospital by Jagmal, Bhaggu and others. At the hospital he was treated by the doctor P. W. I I but died the following day 8th at 8-15 a. m. The First Information Report was based on a written report Ex. P-1 by Ram Pratap s o Shivlal. It was recorded on May 7 at about 7-30 p. m. The prosecution supported their case by the evidence of two eye witnesses, dying declarations made to 3 persons and on the recovery of the kassi. They produced two eye witnesses Begaram P. W. 2 and Hazari P. W. The dying declarations were made to three persons first to Jora P. W. 7, later to Gyaniram P. W. 4 at his shop and lastly to Ram Pratap P. W. 5 who arrived at the shop at 6 p. If the dying declaration was made to this witness it must have been at that time. According to the doctors evidence Shivlal was unconscious when he was brought to the hospital at 5 p. m, He had 15 injuries on his body, out of which injury No. 1 was with a sharp-edged weapon and injury No. 2 with a blunt weapon and both these injuries were grievous and were individually and companylectively fatal sufficient to cause death. The learned Sessions Judge disbelieved the whole evidence and acquitted the accused. He was of the opinion that the evidence produced by the prosecution was number free from suspicion and number sufficient to companyvict them . Begaram P. W. 2 was disbelieved both by the Sessions Judge and the High Court. The learned Sessions Judge described Hazari as a facile fluent liar but his testimony was accepted by the High Court. Both companyrts rejected the statement of Ram Pratap but the statements of Gyaniram and Jora were accepted by the High Court although they were rejected by the Sessions Judge. The High Court has relied upon the testimony of one eye witness Hazari P. W. 3 and two witnesses before whom Shivlal is alleged to have made two dying declarations. There are apparent companytradictions between the testimony of Hazari and Bega. The learned High Court Judges disposed of this by saying that Begas presence on the spot is open to grave doubts. As such it is, in our opinion, number proper to companytradict the statement of a man who was present on the spot by using the statement of another man who was in all probability number there. The learned Judges have made the following significant observation in regard to Hazari It seems to us that Hazari had said this because the prosecution was producing Bega, and he must have been asked to say that Bega was also present. So far as the story of Hazari about -the incident itself is companycerned, numberhing has been brought out in his cross-examination to throw doubts on this part of his statement. They also pointed out, but attached numberimportance, to other companytradictions in the statements of Hazari made before the trial companyrt and before the Police. If as observed by the learned Judges of the High Court, Hazari had mentioned the presence of Bega merely because the latter was to be produced as a prosecution witness and because he Hazari had been asked to mention it, then it would detract so materially from his reliability that it would be dangerous to accept his testimony as being of any great value which is still more diminished by the finding as to the innocence of Mt. Rameshwari. The other piece of evidence which the prosecution relied upon was the two dying declarations made by Shivlal to Gyaniram P. W. 4 and Jora P. W. 7. Besides the infirmities which the testimony of these two witnesses Gyaniram P. W. 4 and Jora P. W. 1 suffered from due to material companytradictions in their respective statements made at various stages of the case and which have been pointed out by the learned Sessions Judge who said about Gyaniram In such a state of affairs I refuse to put any weight and value to the statement of Gyaniram their evidence cannot be a sure foundation for maintaining the companyviction if the statement of Hazari the sole eye witness is disregarded, as it must be disregarded in this case because ordinarily a dying declaration of the kind which the prosecution has relied upon is by itself insufficient for sustaining a companyviction on a charge of murder. The learned Sessions Judge was of the opinion that the evidence of the doctor P. W. II made the story that Shivlal companyld walk for a little distance upto the Khala of Hukma or was able to talk so as to make a dying declaration, improbable. But the learned Judges of the High Court disposed of this matter by saying that the doctor was companyparatively young and that his statement was number in accord with the opinion expressed in books on Medical Jurisprudence by authors like Modi and Lyon. But it cannot be said that the opinions of these authors were given in regard to circumstances exactly similar to those which arose in the case number before us number is this a satisfactory way of disposing of the evidence of an expert unless, the passages which are sought to discredit his opinion are put to him. This Court in Sundarlal v. The State of Madhya Pradesh 1 disapproved of Judges drawing A.I.R. 1954 S. C. 28 companyclusions adverse to the accused by relying upon such passages in the absence of their being put to medical witnesses. The learned Judges of the High Court were, therefore, in error in accepting the testimony of these witnesses in support of the companyrectness of the two dying declarations number companyld the statement of the deceased alleged to have been made in the circumstances of this case be companysidered sufficient to support the companyviction of the accused. The recovery of the kassi is a wholly neutral circumstance because it has number been proved that it belonged to Bhagwandas. Although this Court will number interfere with the findings of the High Court because its companyclusions on the evidence as to the guilt or innocence of the accused differ from that of the High Court, yet where the evidence is such that numberTribunal companyld legitimately infer from it that the accused is guilty this companyrt would set aside the companyviction. The Judicial Committee of the Privy Council in Stephen Seneviratne v. The King 1 in setting aside an order of companyviction said . there are here numbergrounds on the evidence, taken as a whole, upon which any Tribunal companyld properly, as a matter of legitimate inference, arrive at a companyclusion that the appellant was guilty In our view the evidence in the present case is of such quality and numberlegitimate inference of guilt of the accused companyld -properly be drawn. The second point on which the judgment of the High Court is assailed is the lack of companypelling reasons for setting aside the judgment of acquittal. This companyrt has held that the High Court should number set aside an acquittal unless there are substantial and companypelling reasons for doing so. Surajpal Singh v. State 1 Ajmer Singh v. The State of Punjab 3 Aher Raja Khima v. The State of Saurastra 4 . The judgment of the High Court does number disclose any such reasons justifying interference with the findings of the trial Court. A.I.R. 1936 P.C. 289, 299. 2 1952 S.C.R. 193, 201. 3 1953 S.C. R. 418, 423, 4 1955 2 S.C.R. 1285.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 12 of 1955. Appeal from the judgment and decree dated September 10, 1953, of the Calcutta High Court Original Side in I. T. Reference No. 8 of 1947. K. Daphtary, Solicitor-General for India, G. N. Joshi and B. H. Dhebar, for the appellant. P. Khaitan, Rameshwar Nath, S. N. Andley and J. B. Dadachanji, for the respondents. 1957. April 24. The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-This appeal raises a question of importance as to whether amounts shown by an insurance companypany as reserves for unexpired risks on pending policies are liable to be deducted under r. 2 of Sch. II to the Excess Profits Tax Act XV of 1940 hereinafter referred to as the Act. The respondent is a companypany carrying on life, fire, marine and general insurance business, and the present dispute relates to the assessment of excess profits tax on its income from business other than life insurance for the chargeable accounting periods ending December 31, 1940, and December 31, 1941. To appreciate the companytentions raised, it is necessary to state that the policies of insurance with which these proceedings are companycerned, are, unlike life insurance policies, issued in general for short periods or ad hoc in relation to a specified voyage or event. To take the most important of them, fire insurance policies, they are issued numbermally for one year, and the whole of the premium due thereon is received when the policies are actually issued. In any given year, while the premiums due on the policies would have been received in full, the risks companyered by them would have run only in part and a, part will be outstanding for the next year. The companypanies have to prepare annual statements of profit and loss for the purpose of ascertaining their profits and distributing their dividends. They have also to prepare revenue statements to be sent to the authorities under the provisions of the Insurance Act, 1938. The method 1004 adopted by the respondent in preparing the above statements has been that while the premiums received are all of them included in the assets of the year, a certain proportion thereof, usually 40 per cent., is treated as the reserve for unexpired risks, and that is shown as a liability. To take a companycrete example, if in the year 1939 the respondent issued annual fire insurance policies and received a sum of Rs. 1,00,000 as premiums thereof, the whole of it would be shown as income in the statement for the year 1939, and a sum of Rs. 40,000 will be shown as a reserve for unexpired risks. In the profit and loss statement, the former will be shown as part of the assets and the latter as liability, and it is only the balance that will be included in the net profits. In 1940, the policies issued in 1939 would all of them have expired, and the sum of Rs. 40,000 shown as reserve in 1939 would be treated as -part of the assets in 1940. There will, of companyrse, be fresh policies issued in 1940, and in the statement of that year, the premiums received on those policies would be shown as part of the income, and 40 per cent. thereof would be set apart as reserve for unexpired risks. This method of account- keeping is what is usually adopted by insurance companypanies, and is in accordance with well-recognised and approved practice of accountancy. Now, the question is whether in the illustration given above, the sum of Rs. 40,000 which is set apart in 1939 as reserve for unexpired risks is liable to be deducted under r. 2 of Sch. II to the Act from out of the capital employed in business for that year, which would, of companyrse, include the whole of Rs. 1,00,000 received as premiums. The companytention of the appellant is that if all the premiums received are to be treated as capital under r. 1, Sch. 11, then the sums which represent the outstanding liability in respect of the unexpired period of the policies-in the illustration given above, Rs. 40,000-should be deducted as a liability under r. 2 of Sch. II. The respondent, while claiming that all the premiums received mu-,it be treated as capital, maintains that the provision for unexpired risks is- a companytingent liability, and that that 1005 is number within r. 2 of Sch. II. The Tribunal decided the question against the respondent, but on reference under s. 66 1 of the Indian Income-tax Act read with s. 21 of the Act, the High Court of Calcutta answered the question adversely to the appellant, but granted a certificate under s. 66-A, and that is how the appeal companyes before us. The relevant statutory provisions may number be numbericed. Under s. 4 of the Act, the charge is on the amount by which the profits during any chargeable accounting period exceed the standard profits . I Standard profits are defined in s. 6, sub-s. 1 , and the respondent having exercised his option under the second proviso thereto, they have to be calculated by applying the statutory percentage to the average amount of capital employed in the business during such chargeable accounting period Schedule II enacts rules for the determination of the average capital employed. Under r. 1 c , the capital employed will include the value of all assets I when they became assets of the business . Rule 2 1 enacts that any borrowed money and debts shall be deducted from out of the value of the assets. There is a further provision in r. 2 1 , which is what is material for the purposes of the present appeal, and it runs as follows The debts to be deducted under this sub-rule shall include any such sums in respect of accruing liabilities as are allowable as a deduction in companyputing profits for the purposes of excess profits tax and the said sums shall be deducted numberwithstanding that they have number become payable. For this clause to apply, two companyditions must be satis- fied. The sums to be deducted should be allowable as a deduction in companyputing the profits for the purposes of the Act, and further they should be in respect of accruing liabilities. Rule 1 of Sch. 1 enacts that, The profits of a business during any chargeable accounting period shall, subject to the provisions of this Schedule, be companyputed on the principles on which the profits of a business are companyputed for the purposes of income-tax under s. 10 of the Indian Income-tax Act, 1922. 1006 Section 10 7 of the Indian Income-tax Act provides that, Notwithstanding anything to the companytrary companytained in sections 8, 9, 10, 12 or 18, the profits and gains of any business of insurance and the tax payable thereon shall be companyputed in accordance with the rules companytained in the Schedule to this Act. Rule 6 of the Schedule provides The profits and gains of any business of insurance other than life insurance shall be taken to be the balance of the profits disclosed by the annual accounts, companyies of which are required under the Insurance Act, 1938, to be furnished to the Controller of Insurance after adjusting such balance so as to exclude from it any expenditure other than expenditure which may under the provisions of section 10 of this Act be allowed for in companyputing the profits and gains of a business. It is companymon ground that the statements furnished to the Controller of Insurance by the respondent for the relevant periods did disclose 40 per cent. of the premiums received as reserve for unexpired risks on the outstanding policies and that the same has been treated as a liability in its profits and loss statements and allowed in the assessment of income-tax. Thus, one of the companyditions required by r. 2 has been satisfied. The whole companytroversy between the parties relates to the other companydition whether the reserve of 40 per cent. can be regarded as a sum in respect of accruing liability. The companytention of the learned Solicitor General is that it must be so regarded, and his argument in support of it may thus be stated A companytract of insurance is companyplete as soon as the policy is issued. From that time, the risk begins to attach to it, and there is a liability incurred. Rule 2 does number require that the liability should have actually accrued it is sufficient that it is accruing. Liability under a policy must be held to be accruing so long as the policy is in force, because it can ripen into actual liability at any time during the life of the policy on the happening -of the specified event. When the assessee shows a certain amount as the value of that 1007 liability,-it is a sum in respect of an accruing liability and must be deducted under r. 2. In support of this companytention, the decision in Sun Insurance Office v. Clark 1 was relied on. The facts of that case were as follows A fire insurance companypany which had been following the practice of entering in its annual statements 40 per cent. of the total premium receipts as reserve for unexpired risks claimed a deduction therefor in the assessment of its annual profits. The validity of the claim having been disputed, the question as to its admissibility was referred to the decision of the companyrt. Bray J., who heard the reference, held that the amounts reserved for unexpired risks should be deducted firstly on the ground that the premium which had been paid in respect of a risk for a whole year companyld number be said to have been wholly earned, when a portion of the period companyered by the policy was still to run, and that the reserve therefore was number income earned, and secondly and in the alternative, on the ground that as the premium had been received burdened with a liability which had been only partially discharged in the year of account, the portion of the liability still outstanding should be valued on the analogy of unpaid price due in respect of property purchased and included in the trading assets. This decision was taken in appeal, and was reversed by the Court of Appeal, the learned Judges holding that though the reasoning of Bray J. was sound, the question was companycluded against the assessee by the decision of the House of Lords in The General Accident Fire and Life Assurance Corporation v. McGowan 2 . The case came on further appeal before the House of Lords which agreed with Bray J.that the deduction was admissible, and distinguished the decision in The General Accident Fire and Life Assurance Corporation v. McGowan 2 as one turning on the facts of that case and as number laying down that, as a matter of law, the deduction companyld number be made. Lord Haldane stated the ground of his decision thus the case is analogous to one in which if goods are bought their value cannot be treated as 1 1912 A.C. 443 6 T.C. 59. 2 1908 5 T.C. 308. 1008 profit without deducting the value of the liability to pay for them which the buyer has incurred. Lord Alverstone expressed the reasoning on which he based his companyclusion as follows Premiums are number profits or gains, they are receipts which must be brought into account and out of which, after proper deduction for losses, profits will accrue. Lord Atkinson also rested his decision on the same ground, and observed That case Gresham Life Assurance Society v. Styles 1 clearly decided that the receipts of a business are number in themselves profit and gains within the meaning of the Income Tax Acts, but that it is what remains of those receipts after there has been deducted from them the companyt of earning them which companystitute the taxable profits and gains. Now what is the service which a Fire Insurance Company renders to each insurer in companysideration for the premium it receives ? It is only, by rendering this service in each case it earns these receipts. The service companysists in indemnifying the insurer against loss by fire during the companytinuance of his policy Yet until that time has expired the service for which the Company has been paid has number been companypletely performed. If the accounts of the Company are to be rendered before the date of expiry, then some division of the premium must be made, and the proportion to be appropriated to the service which is to be performed thereafter. I think the description unearned premium which has been used to describe this latter portion is a very appropriate and accurate description. It is also material to numbere that one of the authorities relied on for the Crown was the decision in Scottish Union and National Insurance Company V. Smiles 2 wherein, discussing how the reserve for unexpired risk in fire policies is to be dealt with in companyputing the profits, the Lord President observed Seeing that fire insurance policies are companytracts for one year only, the premiums received for the year 1 1892 A.C. 3o9. 2 1889 2 T.C. 551. 1009 of assessment, or on an average of three years, deducting losses by fire during the same period and ordinary expenses, may be fairly taken as profits and gains of the Company without taking into account or making any allowance for the balance of annual risks unexpired at the end of the financial year of the Company. Referring to this and to another decision, Lord Haldane observed that they are number, when carefully examined in the light of what appears to be the true principle, reliable as authorities for the proposition which would run companynter to the practice and good sense of the companymercial companymunity. On the strength of the observations quoted above, the argument has been advanced by the learned Solicitor-General that the obligation which an insurance companypany companytracts when it issues a policy is to be treated, in companyputing its profits for the purposes of taxation, as a liability in praesenti. Mr. K. P. Khaitan, learned companynsel for the respondent, disputes the companyrectness of this companytention. He argues that whatever the position under the English law, a companytract of insurance is under the Indian Contract Act merely a companytingent companytract, that until the event specified in the policy happens, there is numberenforceable liability, and that accordingly unexpired risks in pending policies cannot be treated as present liabilities. He also urges a further companytention based on the history of the enactment of r. 2 of Sch. II to the Act. That rule as originally passed mentioned only borrowed money and debts, and it was by s. 10 of the Excess Profits Tax Amendment Act XLII of 1940 that accruing liabilities were brought within that rule. And when they were brought in, they did number companye as something independent of and distinct from borrowed money and debts. They came in under a provision, which enacted that the debts to be deducted under the rule included sums in respect of accruing liabilities. Relying on this circumstance, companynsel for the respondent companytends that however liberally the expression accruing liabilities might be companystrued, it cannot be interpreted so as to take in liabilities which do number bear the character of debts, and that a liability under a companytract of 1010 insurance where under risk had number materialised, cannot be held to be a debt, and is therefore number an accruing liability within the rule. In support of this position, he relies on the decisions in Webb v. Stenton 1 and Israelson Dawson Port of Manchester Insurance Co., Ltd., Garnishees 2 . In Webb v. Stenton 1 , the question was whether a sum which was payable to the judgment-debtor under a trust deed but which had number become due companyld be attached in the hands of the trustees as a debt owing or accruing within 0. 45, R. 2 of the English Rules of Practice. In holding that it companyld number be, Lindley L.J. observed I should say, apart from any authority, that a debt legal or equitable can be attached whether it be a debt owing or accruing but it must be debt, and a debt is a sum of money which is number payable or will become payable in the future by reason of a present obligation, debitum in praesenti, solvendum in futuro. An accruing debt, therefore, is a debt number yet actually payable, but a debt which is represented by an existing obligation. Israelson v. Dawson Port of Manchester Insurance Co., Ltd., Garnishees 2 was again a decision on 0. 45, R. 2, the Court holding that the amount which became payable under a policy as the result of the accident specified therein having occurred was, nevertheless, number a debt which companyld be attached under this rule, before the companypensation had been determined by the arbitrator in accordance with the companyditions of the policy. The argument of the respondent based on the above decisions is that until the risk specified in the policy materialises and, companysequent thereon, the companypensation payable thereunder is ascertained, there is only a companytingent liability and number a debt, and that such liability is number within r. 2 of Sch. II to the Act. In answer, the learned Solicitor-General companytends that the decisions quoted above are number in point, they having been given on a different statute, that the decision in 1 1883 11 Q.B.D. 518, 527. 2 1933 1 K.B. 301. 1011 Sun Insurance Office v. Clark 1 which dealt with the question of assessment for purposes of taxation was directly applicable, and that according to that decision, the amounts reserved for unexpired risks would be sums in respect of accruing liabilities. That a companytract of insurance is a companytingent companytract does number admit of argument. That is so under s. 31 of the Indian Contract Act, and that is also the law in England where it is termed companyditional companytract. Vide Pollock on Contracts, 13th Edn., p. 222 . This, however, is number material for the purpose of the present discussion which is how such companytracts are to be dealt with in assessing, the taxable profits of an insurance companypany. That is a matter which must be determined on the provisions of the taxing statutes and their application to the facts found with reference to the particular assessment. And it is in this view that the decision in Sun Insurance Office v. Clark 1 becomes important. Now, what is the ratio of this decision? The law is well settled that a liability which is purely companytingent cannot be allowed as a deduction in companyputing the profits of a business. And in holding that unexpired risks in respect of pending policies companyld be estimated and deducted out of the gross premium receipts, the House of Lords must be held to have decided that the obligation of an insurer under such risks was a liability in praesenti. Reference might be made in this companynection to the recent decision of the House of Lords in Southern Railway of Peru Ltd. v. Owen 2 . There, the appellant Company operated a railway in Peru under a statutory scheme under which its employees were entitled to receive from it a lump sum payment on retirement, death or other termination of service. The Company claimed that it was entitled to value this liability in accordance with accountancy practice and to deduct the same from out of its annual profits. And support for this companytention was sought in the decision in Sun Insurance Office v. Clark 1 . In rejecting this claim it was observed by the House of Lords that the accountancy valuation was number necessarily the companyrect 1 1912 A.C. 443 6 T.C. 59. 2 1956 2 All E.R. 728. 1012 valuation for purposes of income-tax, and that the real point for decision was whether the claim was to be regarded as an -essential charge against the trade receipts during the year. In distinguishing the decision -in Sun Insurance Office v. Clark 1 , Lord Oaksey made the following observations, which are pertinent to the present discussion Reliance was placed, during the argument, on Sun Insurance Office v. Clark 1 , in which this House held that a percentage of the premium income of an insurance companypany might be deferred as a receipt to a future year because it was paid as companysideration for future liability, but the principle of that decision is number, in my opinion, applicable to the present case. The premium income was only deferred and would suffer tax in a future year, whereas, in the present case, if the appellant is permitted to deduct companypensation, Which it has number paid and which it may never have to pay, that companypensation will escape tax altogether. There is, in my opinion, a fundamental distinction between a companytingent liability and a payment dependent on a companytingency. When a debt is number paid at the time it is incurred its payment is, of companyrse, companytingent on the solvency of the debtor but the liability is number companytingent. Similarly, the liability in Sun Insurance Office v. Clark 1 was number, in my opinion, companytingent but remained in force throughout the period of the insurance, though payment in pursuance of that liability might, or might number, have to be made. The decision in Sun Insurance Office v. Clark 1 and the observations in Southern Railway of Peru, Ltd. v. Owen 1 quoted above do support the companytention of the appellant that in companyputing the profits of an insurance companypany for purposes of income-tax, the unexpired risks are to be treated as a present liability. But even so, on the footing that r. 6 in the Schedule to the Indian Income-tax Act has adopted the law as laid down in Sun Insurance Office v. Clark 1 , the question still, remains whether unexpired risk in an outstanding policy is an accruing liability within r. 2 of Sch. II to the Act. It is companytended for the 1 1912 A.C. 443 6 T.C. 59. 2 1956 2 All E.R. 728. 1013 appellant that if that liability is a present liability for purposes of assessing the taxable profits for purposes of income-tax, it must logically be the same for purposes of excess profits tax, and must therefore be deducted under r. 2 of Sch. II to the Act. That would be so, if the scheme and framework of the Excess Profits Tax Act were the same as those of the Income. tax Act. But the fact is that the Excess Profits Tax Act differs, in material respects from the Income-tax Act, and the principles applicable in the assessment of profits under s. 10 of the latter enactment cannot necessarily be held to be applicable in the ascertainment of the capital employed under rr.1 and 2 of Sch. II to the former Act. The object of the Excess Profits Tax Act is to tax profits of a business when they overflow a certain level. That level is determined thus A certain,period called the standard period is taken the capital invested and the profits made in the business during that year are ascertained, and the standard profits are worked out in relation to those two factors. Then, the capital actually employed in business during the chargeable accounting period is ascertained. If the capital is the same as that employed in the standard period, then there is numberfurther problem but if it is more, then the standard profits are increased, and if it is less, they are reduced pro tanto. Thus, the whole scheme of the Act is to tax profits above a certain level, and that level will move upwards or downwards as the capital employed may be more or less. It is this that companystitutes the distinguishing feature of the Excess Profits Tax Act, and it is the determination of the capital actually employed in business that forms one of the most important and arduous tasks in the ascertainment of taxable profits under the Act. Rule 1 of Sch. II to the Act enumerates three categories of properties, which are to be included in the companyputation of capital. It is to be numbered that this rule does number adopt any legalistic or companyventional numberion of what is technically termed capital but it proceeds on a factual basis to include whatever is utilised in business, whether it be tangible property or intangible 1014 property. The object of the provision is clearly to companyfer a benefit on the assessee by enabling him to retain at least in part the profits realised by him by investment of additional capital. Then there is r. 2, which provides for certain deductions being made out of capital. Omitting for the present accruing liabilities, which form the subject of the present companytroversy, the other two items mentioned therein are borrowed money and debts, and the reasons for their exclusion from capital falling within r. 1 would appear to be this Money borrowed and debts incurred for the purpose of the business must have been utilised in it, and would be included in the capital employed as defined in r. The policy of the law being to give some relief to an assessee who invests additional capital in his business, the reason of it requires that that should be limited to capital companytributed by the assessee himself. Otherwise, the benefit intended to be given to him might be abused, and the object of the legislation defeated by large scale employment of borrowed capital. Borrowed money and debt are therefore to be deducted out of what is capital within r. 1. We number companye to the expression accruing liabilities. What does it precisely import ? To decide that, we must have regard to the scope and purpose of rr. 1 and 2 of Sch. II to the Act and to the companytext and setting of the expression. It has been already pointed out that the object of the Act is to tax profits which overflow a certain line indicated by what is termed standard profits , that the location of that line varies with the capital employed, that the scheme of r. I is on a factual basis to treat as capital all assets tangible and intangible which are thrown into a business and companytribute to the earning of profits and to exclude therefrom under r. 2 that part of it which came in as a result of borrowing. Now, obviously. a deduction under r. 2 can only relate to what is capital under r. 1, and that must be a really profit-earning asset, whether tangible or number-. Borrowed money to be deducted under r. 2 is money borrowed for the purpose of the business, and which has gone to swell the capital under r. 1. That is also the position as regards debts. And 1015 accruing liabilities which are liable to be deducted under r. 2 must also be of the same character as borrowed money and debts with which they are associated on the principle of numbercitur a sociis. They must be such as can be said to have been utilised in the business and formed part of the really effective trading assets during the chargeable accounting period. If that is the companyrect approach, as we companyceive it is, the question to be companysidered is neither, on the one hand, whether the liability amounts in law to a debt-for if it is capable of being utilised in business and is so utilised, it will fall under r. 2, even though it is number strictly speaking a debt number, on the other hand, whether it is a liability which has been treated as one for the purpose of assessing income-tax. In assessing income from business under s. 10 of the Income-tax Act, what is allowed as a deduction is any liability incurred solely and exclusively for the purpose of the business, and when that has number matured, its value is to be determined according to rules of accountancy and deducted. But when a deduction is claimed under r. 2, what has to be seen is whether the obligation is such that it companyld be regarded as an asset used in the business, such as companyld companyceivably companytribute to its profits. If that is number established, then it cannot be included as capital under r. 1, and cannot be deducted therefrom under r. 2 as an accruing liability. It should number be overlooked that a deduction under s. 10 of the Income-tax Act and that under r. 2 of Sch. 11 to the Act proceed on totally different lines and have different objects in view. Under s. 10, the deduction is claimed by the assessee, and that has the effect, when allowed, of reducing the taxable profits. Under r. 2, it is claimed by the department, and if allowed, it will enhance the liability of the assessee by reducing the capital under r. Incidentally, how inappropriate the principle laid down in Sun Insurance Office v. Clark 1 would be if it is applied for determining the question of capital employed in business for the purpose of Excess Profits Tax Act will be seen from 1 1912 A.C. 443 6 T.C. 59. 1016 the fact that one of the grounds on which the decision therein was based was that 40 per cent. of the premiums received and set apart as reserve for unexpired risks was unearned income, and companyld number therefore be regarded as profits for the purpose of the Act. If that were the true position under the Excess Profits Tax Act, then the reserve companyld number be included in the capital of the business, and, indeed, that was one of the companytentions urged by the learned Solicitor-General. But that was number the stand taken by the department before the Tribunal and that is directly opposed to the plain language of r. I of Sch. II, under which all the premiums thrown into the business would be capital employed in the business. That clearly shows how unsafe it will be to adopt the principles laid down for the purpose of assessing business profits under the Income-tax Act to a determination of the question of the capital employed under the Excess Profits Tax Act. In this view, is the reserve for unexpired risks an accruing liability within r. -2 ? The decision in. Sun Insurance Office v. Clark 1 that it should be allowed as a deduction was based on two grounds. One was that it should be regarded as unearned income , and for the reasons already stated, it cannot avail when the question is one of determining capital under the Act. And the other was that the reserve represents a liability in the nature of unpaid price of property included in the trading assets. But apart from the fact that we have to strain the analogy in applying it to the present situation, can that liability be held to be of the character companytemplated by r. 2 ? Can it be said that the reserve for unexpired risk was, like borrowed money and debt, part of the real trading assets of the business ? The answer must clearly be in the negative. The reserve liability companyld number factually be said to have companytributed to the running of the business or the earning of profits. It was some. thing in the air, and companyld have had numbereffect in the working of the companycern, during the chargeable accounting period. It cannot therefore be held to be an is accruing liability within r. 2 of Sch. 11 to the Act. 1 1912 A.C. 443 6 T.C. 59. 1017 A case very much in point is the decision in Northern Aluminium Co. Ltd. v. Inland Revenue Commissioners 1 . There, the question arose whether a companyditional liability under a companytract was an accruing liability within the companyresponding provision in the English Excess Profits Tax Act. The facts were that on December 16, 1939, an agreement was entered into between the Ministry of Aircraft Production and a companypany engaged in manufacturing aluminium products and supplying them to manufacturers of aircraft for the Government, wherein it was provided that the prices which the latter was then charging to its customers should be reduced for the period July 1, 1939, to June 30, 1940, and that the amount by which the prices paid to the companypany were in excess of the reduced prices should be paid by the companypany to the Ministry. The agreement further provided that negotiations should be started number later than June 30, 1940, for determining the rates to be charged for the periods following June 30, 1940. The agreement was, in fact, companycluded only on October 12, 1942, whereby the prices to be charged by the companypany were fixed for the years 1941, 1942 and 1943. In accordance with the agreement entered into on October 12, 1942, a sum of pound 2,743,469 was repaid by the companypany to the Ministry in 1943 being the difference between the price paid by the customers and that fixed in the agreement. This amount was actually allowed as a deduction in the assessment of the business income for purposes of income-tax, and the dispute related to the question whether it companyld be deducted in assessing the excess profits tax as an accruing liability of the companypany for the chargeable accounting period which was January 1 to December 31, 1941. It was held by the Court of Appeal that there was, in fact, numberagreement between the parties during the chargeable accounting period, and that therefore numberliability was incurred. In the alternative, it was held that even if the agreement dated December 16, 1939, companyld be companystrued as amounting to a companyditional agreement for the period subsequent to June 30, 1940, the obligation created thereby companyld number be 1 1946 1 All E.R. 546, 554. 1018 regarded as an accruing liability within the rule in question. Lord Greene M.R. stated the reason thus A purely companyditional liability, which may or may number mature, is number one which falls within that language, for this reason Quite apart from the actual words, it would be companytrary to the whole companyception underlying these capital provisions because a purely companyditional liability, which may or may number eventuate, is number a thing which affects a companypanys capital position, any more than a companyditional receipt can affect its capital position. A receipt which may or may number be received, according as some event does or does number happen, is number a thing with which you can earn profits. It is the possibility of earning profits on your real capital that these capital provisions are companycerned with. Therefore, in my opinion, even if one companyld spell such a hypothetical and companyditional companytract out of these words, the result would number give rise to an accruing liability within the meaning of the section. This decision was taken in appeal to the House of Lords and was affirmed. Vide Inland Revenue Commissioners v. Northern Aluminium Co. Ltd. 1 . This decision establishes that a companyditional liability under a companycluded companytract-it is on that footing that the second point arose for decision-was number an accruing liability for the purposes of the Excess Profits Tax Act, as the same had numbereffect on the actual capital position of the companypany, and the fact that it was allowed for purposes of income-tax did number affect the position under the Excess Profits Tax Act. The learned Solicitor-General sought to distinguish this decision on the ground that it did number relate to an insurance business, whereas it was companytended that Sun Insurance Office v. Clark 2 directly dealt with the question number under companysideration whether reserves for unexpired risks in pending policies were liabilities which companyld be deducted. We do number see how it makes any difference in the companystruction of r. 2 of Sch. II to the Act that the liability sought to be deducted arises under an insurance policy and number under some other companytract. 1 1947 1 All E.R. 608. 2 1912 A.C. 443 6 T.C. 59, 1019 We are of opinion that the principles laid down in Northern Aluminium Co., Ltd. v. Inland Revenue Commissioners 1 and Inland Revenue Commissioners v. Northern Aluminium Co., Ltd. 2 are applicable to the decision of the present case, and that a companytingent liability in respect of unexpired risk is number an accruing liability within r. 2 of Sch. II to the Act.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 53 to 56 of 1957. Appeals by special leave from the judgment and order dated November 21, 1956, of the Bombay High Court in Criminal Appeals Nos. 861-864 of 1956 arising out of the judgment and order dated June 1, 1956, of the Court of the Additional Sessions Judge for Greater Bombay at Bombay in Sessions Case No. 27/111 Sessions 1955. S. R. Chari and M. S. K. Sastri, for the appellants. J. Khandalawala, Porus A. Mehta and R. H. Dhebar, for the respondent. 1957. May 23. The Judgment of the Court was delivered by JAGANNADHADAS J.-These are appeals by special leave by four persons, who along with one Ramniklal Keshavlal Jhaveri since acquitted were companymitted for trial in the Court of the Sessions Judge of Greater Bombay, on charges of companyspiracy to companymit criminal breach of trust of the funds of the Jupiter General Insurance Co. Ltd. hereinafter referred to as the Jupiter and in pursuance of the said companyspiracy of having companymitted criminal breach of trust, some of them being directors and agents of the said companypany. They were alternatively charged for companymission of the offence of criminal breach of trust by some of them as directors and the others for abetting the companymission of the criminal breach of trust companymitted by the directors. The trial before the Sessions Judge was with the aid of a jury. All of them except Jhaveri were found guilty, appellants in Criminal Appeals Nos. 53 and 54, Sardul Singh Caveeshar and Parmeshwar Nath Kaul, by a majority verdict and appellants in Criminal Appeals Nos. 55 and 56, Vallabhdas Pulchand Mehta and Charucharan Guha, by an unanimous verdict. The verdicts- of the jury were accepted by the Sessions Judge who sentenced the appellants as follows Appellant Sardul Singh Caveeshar to rigorous imprisonment for three years and a fine of Rs. 2,500. Appellant Parmeshwar Nath Kaul to rigorous imprisonment for five years and a fine of Rs. 5,000. Appellant Vallabhdas Phulchand Mehta to rigorous imprisonment for five years and a fine of Rs. 5,000. Appellant Charucharan Guha to rigorous imprisonment for three years and a fine of Rs. 2,500. The charge of companyspiracy related to the period from December 1, 1948, to January 31, 1949, and companyprised in all eight persons of whom two Lala Shankarlal Hiralal Bansal hereinafter referred to as Lala Shankarlal and Saubhagyachand Umedchand Doshi hereinafter referred to as Doshi died before companymencement of the trial. One Lala Ram Sharandas alias Ramsharan Lala Haricharan Mahajan herein- after referred to as Mahajan was also a party to the companyspiracy. But for some reason or other, the trial against him was separated. The persons who were on trial in the present case are the following. Parmeshwar Nath Kaul, accused No. 1 and appellant in Criminal Appeal No. 54 of 1957 hereinafter referred to as Kaul . Vallabhdas Phulchand Mehta, accused No. 2 and appellant in Criminal Appeal No. 55 of 1957 hereinafter referred to as Mehta . Ramniklal Keshvlal Jhaveri, accused No. 3 and since acquitted by the Sessions Judge hereinafter referred to as Jhaveri . Charucharan Guha, accused No. 4 and appellant in Criminal Appeal No. 56 of 1957 hereinafter referred to as Guha . Sardul Singh Caveeshar, accused No. 5 and appellant in Criminal Appeal No. 53 of 1957 hereinafter referred to as Caveeshar . Lala Shankarlal, who was residing at No. 16, Bara Khamba Road, New Delhi, was the managing director of the Tropical Insurance Co. Ltd., New Delhi hereinafter referred to as the Tropical . He was also a director of the Punjab Central Bank. He had also floated and was companytrolling a companypany called the Delhi Swadesi Co-operative Stores hereinafter referred to as the Delhi Stores . He was also a leader of the Forward Bloc in the year 1948. Accused No. 1, Kaul, is a barrister and was in Lahore till the partition of the companyntry. In December, 1948, he was in Delhi. Accused No. 2 Mehta, at all material times was the manager of the Bombay Office General of the Tropical. Mahajan, at all material times was the secretary of the Tropical. He was also a director-in-charge of the Delhi Stores. Accused No. 3, Jhaveri, was a Bombay solicitor and at all material times was carrying on his profession as a solicitor in Bombay. Doshi was till his death, a solicitor in Bombay and was carrying on his profession as such. Accused No. 4, Guha, was in December, 1948, an accountant of the Tropical. Accused No. 5, Caveeshar, was the managing director of the Peoples Insurance Co. He was also the managing director of the New Hindustan Bank. He was for some time a member of the All India Congress Committee. He was also a leading member of the Forward Bloc. The case for the prosecution is that Lala Shankarlal who was the brain behind the companyspiracy and who at the time was the managing director and had the companytrol of the Tropical, which by then was financially in a tottering companydition, planned along with his companyfederates to obtain the companytrol of the Jupiter, which at the time was in a sound financial position, by acquiring the companytrolling block of shares of the Jupiter and utilising the funds of the Jupiter itself for the acquisition of such shares. By the date of the companyspiracy the Jupiter had investments of the face value of Rs. two crores. It had issued 1,24,966 ordinary shares of Rs. 100 -each of which Rs. 15 per share was called up. It had also issued cumulative preference shares. Rai Bahadur Girdharilal Bajaj hereinafter referred to as Bajaj and Tulsiprasad Khaitan hereinafter referred to as Khaitan were at the time, i.e., in 1948, in companytrol of the Jupiter. These persons owned through the New Prahlad Mills Ltd. the companytrolling block of shares of the Jupiter i.e., about 63,000 shares of the Jupiter, between themselves and their numberinees. After negotiations, companyducted first through certain persons called Mayadas and Chopra and then, through one Naurangrai, a bargain was settled with Khaitan for the purchase of this companytrolling block of shares at Rs. 53 per share for a sum of Rs. 33,39,000. Out of this amount a sum of Rs. 5,39,000 was to be paid over to Bajaj and Khaitan directly in cash and only Rs. 28,00,000 would be shown as the price for the purchase of the shares. The arrangement was that on receipt of the cash of Rs. 5,39,000 the management of the Jupiter was to be handed over to Lala Shankarlal and his group and that the balance of the money due of Rs. 28 lakhs was to be paid over to Khaitan on or before January 20, 1949. In default of such payment within the prescribed time, Lala Shankarlal, representing the Tropical, should pay to Khaitan a sum of Rs. 5 lakhs as damages for breach. In pursuance of this agreement Rs. 4,85,000 were paid over to Bajaj on or about December 29, 1948, and a formal agreement dated December 29, 1948, was entered into, incorporating the above terms. On that very day Bajaj and other directors of Khaitan group held a meeting and allotted 1,250 shares straightaway to Lala Shankarlal and four of his numberinees viz., Kaul, Mehta, Jhaveri and Doshi, each 250 shares, as qualifying shares for each. They companyfirmed the transfer of these shares by a resolution and companyopted Lala Shankarlal, Kaul, Mehta, Jhaveri and Doshi as directors and themselves resigned their respective offices as directors. Thereafter Khaitan resignned his position as managing director of the Jupiter and at the same meeting, Lala Shankarlal was appointed in his place as the managing director of the Jupiter. The. transfer of 61,750 shares for the sum of Rs. 28,15,000 to be paid to Bajaj and Khaitan before January 20, 1949, was brought about in the following way. At the meeting of some of the new directors of the Jupiter dated January 11, 1949, it was decided to sell the Jupiters securities of the face value -of Rs. 15 lakhs at the market rate and to obtain an overdraft accommodation for Rs. 14 lakhs with the Punjab National Bank on the pledge of the Government securities of the Jupiter. At the same meeting a loan of Rs. 25,15,000 purported to have been granted to Caveeshar by way of an equitable mortgage on an alleged application by him dated January 4, 1949, relating to his properties at Delhi so- Light to be given as security on the basis of an alleged valuation report of a firm of surveyors. There was another alleged resolution authorising the director for purchase of plots of Delhi Stores for Rs. 2,60,000. It may be mentioned that this Delhi Stores was under the companytrol of Lala Shankarlal and, according to the prosecution, was a defunct Organisation at the time. The plan envisaged by these resolutions was that cash was to be taken out from the Jupiter partly by sale of securities and partly by pledge of securities and that money was to be shown as having been a loan to Caveeshar on the security of his Delhi properties and a further amount as having been invested for the purchase of plots of the Delhi Stores. Lala Shankarlal was to receive these amounts on behalf of Caveeshar and the Delhi Stores, and pay over the cash that would thus companye into his hands to Bajaj and Khaitan as per the agreement. This appears-accordina to the prosecution case-to have been actually done in the following way. The safe custody account of the entire holdings of the securities of the Jupiter with the Bank of India was closed by a resolution of the new directors of the Jupiter dated January 11, 1949, and these securities were taken over into the personal custody of Mehta. Thereafter securities of the value of Rs. 30 lakhs were offered for sale through a broker who ultimately companyld sell only shares of the value of Rs. 15 lakhs. For the remaining Rs. 15 lakhs an. overdraft was raised with the Punjab National Bank on the application of Lala Shankarlal and on the pledge of some of the Government securities of the Jupiter. The sale of securities realised Rs. 13,99,768 and on the pledge of securities a sum of Its. 14,21,812 was obtained, making up a total of Rs. 28,21,580. Rs. 28,15,000 out of it was shown as having been received by the Bank of India and credited in the cash-credit account of the New Prahlad Mills Ltd. It is thus that Khaitan received the balance of the money due under the agreement of December 29, 1948. To prove this case a companysiderable body of prosecution evidence was given companysisting of quite a large number of details. It is necessary to set out the salient features thereof in broad outline as alleged and sought to be proved by the prosecution. This may be dealt with companyveniently with reference to three periods, the first companyprising the period of companyspiracy as mentioned in the charge i.e., December 1, 1948, to January 31, 1949, the second, relating to the period from February 1, 1949, to the end of December, 1949, and the third, the period companyering the year 1950. First period December 1, 1948 to January 31, 1949. The negotiations for the purchase of the companytrolling block of shares of the Jupiter were carried on from about December 10, 1948. From 10th to 20th the negotiations were through one Mayadas, introduced to Lala Shankarlal by one Chopra. Mayadas was given. a letter of authority on December 15, 1948, by Lala Shankarlal, as the managing director of the Tropical, authorising him to buy for the Tropical the companytrolling block of shares of the Jupiter at the maximum rate of Rs. 49 per share with the promise of brokerage of Rs. 40,000 on companypletion of the transaction. Chopra also was acting with Mayadas as broker. These persons were dropped and the further negotiations from the 20th onwards were carried on through one Naurangrai known to Lala Shankarlal for about 40 years. Through him the purchase of the companytrolling block. of shares numbering 63,000 was agreed to be purchased at Rs. 53 per share. The total purchase value was Rs. 33,39,000. Khaitra asked for advance payment of Rs. 5,39,000 in cash and intimated that agreement would be made mentioning only Rs.28 lakhs as the purchase price. Naurangrai was placed in possession of funds of Rs. 5,39,000 on his executing a pro-note dated December 23, 1948, Ex. Z-4 for the said amount in favour of the Tropical by two cheques signed by Lala Shankarlal, one for Rs. one lakh on December 22, 1948 Ex. Z-1 and another for Rs. 4,39,000, dated December 23, 1948, Ex. Z-3 . These amounts were deposited by Naurangrai in his bank account with the Bikanir Bank at Delhi. On December 26, Lala Shankarlal and Naurangrai and Khaitan met at Bombay and further details were discussed on the 26th and 27th. Khaitan insisted on previous payment of Rs. 5,39,000. Lala Shankarlal asked for the list of securities and shares, the valuation report and the balance sheet of the Jupiter. Naurangrai returned back to Delhi, drew Rs. 5 lakhs by way of cash from his bank account and paid therefrom a sum of Rs. 4,85,000 to Bajaj at Ghaziabad. He came back to Bombay and informed Khaitan of the same. Thereupon the agreement, Ex. Z-171, was executed on December 29, 1948. The agreement was to the following effect. The Tropical was to pay the balance of Rs. 28,54,000 on or before January 20, 1949, and on such payment the Jupiters shares numbering 63,000 were to be delivered over. The shareholder directors belonging to the Khaitan group should resign and numberinees of the Tropical should be appointed as directors in their place. If the Tropical failed to pay within the stipulated time, a sum of Rs. 5 lakhs by way of damages was to be paid to Khaitan group and if the Khaitan group failed to carry out their obligations damages of Rs. 2 lakhs were to be paid. Subsequent to this agreement it was ascertained that Khaitan had agreed to pay Naurangrai a companymission of Rs. 39,000. Lala Shankarlal undertook to pay the same and to that extent the amount payable by January 20, was understood to be reduced. There- fore, the sum payable under the agreement with the above adjustment was Rs. 28,15,000. The agreement was signed both by Khaitan on behalf of the New prahlad Mills Ltd., which owned the companytrolling block of shares of the Jupiter and Lala Shankarlal on behalf of the Tropical. On the very same date a meeting of the then Board of directors of the Jupiter was called. At this meeting 1,250 shares were transferred in the names of Lala Shankarlal, Kaul, Mehta, Jhaveri and Doshi, 250 shares for each, in order to qualify them for becoming directors. Transfer of these shares was companyfirmed by resolution. It is the prosecution case that for these transfers numbermoney was paid by the transferees companycerned. At that meeting the various persons who companystituted the previous directors tendered their resignations in successive stages. At each stage the resignations were accepted by thE rest of the pre- existing directors and new directors of Lala Shankarlals group were companyopted. In the net result the entire Khaitan group of directors made way for the new Lala Shankarlal group of directors and Lala Shankarlal became the managing director. Thereafter there was the first meeting of the new directorate of the Jupiter on January 4, 1949. On that date Kaul was appointed director-in-charge. A new Life sub- companymittee companysisting of Mehta, Jhaveri and Doshi was appointed as also a new finance sub-committee companysisting of Lala Shankarlal, Kaul and Mehta, to review the investment position of the companypany and to invest the companypanys moneys upon such securities, shares and stocks, in such manner as the companymittee thought fit. A power of attorney was granted to Lala Shankarlal as the managing director. Kaul and Mehta were authorised individually to operate upon II the banking accounts in the name of the companypany with all the banks. Three policyholder directors as also the general manager, Joel, resigned and their resignations were accepted. This was followed by another meeting of the new directorate on January 11. At that meeting the Board passed a number of resolutions about some of which there is companysiderable companytroversy and with reference to which there is the evidence of one Subramaniam for the prosecution. One of the undisputed resolutions of that meeting was to withdraw a letter written by the previous general-manager, Joel, dated January 3, 1949. By that letter Ex. Z-30 , Joel had written to the Bank 22 of India, Safe Custody Department, instructing the bank that till further advice, they should number transfer any of the securities held by the bank on behalf of the companypany. On January ll, 1949, a companyy of this resolution was sent to the bank under the signature of Mehta for their information. By another letter of the same date sent by the sub-manager, one Baxi, Ex. Z-32 the bank was instructed to close the safe custody account and to hand over the entire holdings of the securities of the Jupiter to Mehta. Accordingly all the securities were brought into the office of the Jupiter and kept in a steel cupboard. Two of the disputed resolutions of January II, were resolutions Nos. 7 and 8, one for sale of securities of the Jupiter of the face value of Rs. 15 lakhs at the market rate, and the other for an overdraft account of Rs. 14 lakhs with the Punjab National Bank on pledge of the Government securities of the Jupiter. After the entire shares and securities were withdrawn from the safe custody of the bank, Kaul companytacted one Jagirdar, a sub-broker working in the firm of Messrs. Harkisondas Laxmidas, share brokers, and authorised them by letter Ex. Z-36 dated January 13, 1949, to sell three per cent. companyversion loan 1946 of the face value of Rs. 30 lakhs at the best market rate. The brokers sold on the 13th and 14th securities of the face value of Rs. 15 lakhs and told Kaul that the market was dropping and that further sale of those securities was number feasible. The sale of securities of the face value of Rs. 15 lakhs realised a sum of Rs. 13,99,788. Kaul, on behalf of the Jupiter, opened a current account on January 13, in the Punjab National Bank, Bombay. On the 15th, Kaul, on behalf of the Jupiter, sent two letters, one to the Punjab National Bank and another to the Bank of India, stating that they were forwarding per bearer Government securities of the face value of Rs. 14 lakhs and Rs. I lakh respectively and instructed those banks to deliver them to Messrs. Harkisondas Laxmidas against payment and the proceeds to be credited to the account of the companypany. The above sale proceeds were accordingly paid into the respective banks and the securities were delivered over to the respective parties on January 17, It is the prosecution case that meanwhile Lala Shankarlal approached the Punjab National Bank, Kashmere Gate Branch, Delhi, on January 17, 1949, for the purpose of raising a loan on Government promissory numberes. He opened a cash- credit account on the pledge of securities of the face value of Rs. 15 lakhs and passed a promissory numbere in favour of the bank for the said amount. A loan of Rs. 14 lakhs was then granted and a demand draft dated January 17, for that amount in favour of the Jupiter on the Punjab National Bank, Currimjee House Branch, Bombay, was issued. A list of securities pledged with the bank for the purpose has been put in evidence. The demand draft was brought to Bombay and credited into the account of the Jupiter in the Currimjee House Branch of the Punjab National Bank at Bombay on January 18. Thus by the sale and the pledge of the Jupiters own securities, a sum of Rs. 27,99,768 was raised and kept available for use. On January 19, Mehta wrote to the Punjab National Bank, Currimjee House Branch, Bombay, to pay a sum of Rs. 28,15,000 to the Bank of India where the New Prahlad Mills Ltd. Khaitan had got 61,394 Jupiters shares lying in cash. credit account and to take delivery of those shares on behalf of the Tropical and to debit Rs. 28,15,000 from the Tropical account with them. On the same date, Mehta, wrote also to the Bank of India, requesting it to deliver 61,394 shares of the Jupiter to the Punjab National Bank, Currimjee House Branch, Bombay, with relevant transfer deed against payment of Rs. 28,15,000 with reference to Khaitans earlier instructions to the Bank by his letter dated January 3, 1949 Ex. Z-44 . On the 19th, Mehta issued a cheque for Rs. 75,000 on the Indian Bank, Tropical account and deposited the same in the Punjab National Bank, Currimjee House Branch, Bombay, Jupiter account. This cheque was credited into that account on the 20th. On the same day, i.e., 19th, Mehta wrote a letter to the Punjab National Bank, Illaco House Branch, Bombay, in which the Jupiter had its account to transfer the account into the Punjab National Bank., Currimjee House Branch, where, on the 13th, Kaul opened a current account for the Jupiter. Now with this deposit the money to the credit of the Jupiter in the Punjab National Bank, Currimjee House Branch, was Rs. 28,74,768. According to the prosecution it was in reality out of this amount that Khaitan was ultimately paid on January 20, by a cheque for Rs. 28,15,000 as against the transfer of the stipulated number of shares. It is the prosecution case that this payment was camouflaged by certain apparent inter- mediate transactions. The prosecution case relating to this may number be stated. From January 18 to 20, 1949, five cheques were issued on the Jupiter account in the Punjab National Bank which were all deposited into the account of the Tropical in the Punjab National Bank as follows A cheque for Rs. 2,55,050, dated January 18, 1949, signed by Kaul on behalf of the Jupiter in favour of the Delhi Stores and endorsed in favour of the Tropical by Guha, purporting to be the director of the Delhi Stores, which according to the prosecution, he was number. This was again endorsed by Mehta on behalf of the Tropical in order to put it into the Tropical account. Two cheques dated January 19, 1949, for Rs. 14,36,000 and Rs. 1,42,450, on the Jupiter account of the Punjab National Bank in favour of the Tropical or order. These cheques are alleged to be written by Guha and signed by Kaul on behalf of the Jupiter, and endorsed on the reverse by Mehta on behalf of the Tropical for deposit in the Tropical account of the Punjab National Bank. Two cheques dated January 20, 1949, for Rs. 8,96,000 and Rs. 36,000, on the Jupiter account of the Punjab National Bank in favour of the Tropical or bearer. Both the cheques were written by Guha and signed by Kaul on behalf of the Jupiter. All these five cheques were deposited into the Tropical account of the Punjab National Bank by a pay-in-slip dated January 20, 1949, alleged to be in the handwriting of Guha and signed by him on the 19th. The total of these cheques companyes to Rs. 27,65,700. As a result of the previous instructions given on January 19, by Mehta, to the Punjab National Bank, the Bank paid on January, 20, a sum of Rs. 28,15,000, from the Tropical account to the Bank of India and took delivery of 61,394 shares of the Jupiter from the Bank of India and the Punjab National Bank then held those shares for the Tropical in the Tropical account and Khaitan was paid on the last date stipulated. It would appear that including the 1,250 qualifying shares previously transferred, the shares transferred by Khaitan fell short of the 63,000 shares, by 356 shares, but the deficit appears to have been made up very shortly thereafter. Now, according to the prosecution, this payment of the Jupiters money for the purchase of the Jupiters shares was by means of ex facie payment from funds of the Tropical in the Punjab National Bank which were brought up to the requisite level by the deposit of five cheques as specified above in relation to a scheme of camouflaged payment to be gathered from certain resolutions of the new directorate of the Jupiter as they number appear from its resolutions of January 11 and 20, 1949 and later companyfirmed on January 22. By resolution No. 5, as it number appears, a loan of Rs. 25,15,000 was granted to Caveeshar on his application dated January 4, and the valuation report of N. C. Kothari of Messrs. Master Sathe and Bhuta, surveyors. This loan was on the equitable mortgage of Caveeshars properties in Delhi, the companyditions being, a marketable title, period of loan three years, and other usual clauses in mortgage deeds. The resolution authorised Kaul to advance the above loan on the said terms and get all necessary documents executed and registered at Delhi during the companyrse of next eleven months. Resolution No. 6 authorised the purchase of certain plots in Delhi said to belong to Delhi Stores for a sum of Rs. 2,60,000. On January 20, there was another meeting of the new directorate of the Jupiter at which the minutes of the meeting of January 11, were read and adopted. Resolution No. 10 thereof companyfirmed the payment of Rs. 25,10,650 to Caveeshar on equitable mortgage of his properties as per the previous resolution No. 5 of January 11. Resolution No. 11 thereof companyfirmed the purchase of plots from the Delhi Stores and the payment of Rs. 2,55,050 therefor. Resolution No. 9 companyfirmed the sale of the Jupiters securities of the face value of Rs. 15 lakhs and resolution No. 12 companyfirmed the pledge of the Jupiters securities of the face value of Rs. 15 lakhs for cash credit account with the Punjab National Bank for Rs. 14 lakhs. Now, on January 22, 1949, there purported to be, according to the prosecution case, a meeting of the Board of directors of the Tropical including Lala Shankarlal. Resolution No. 11 thereof companyfirmed the purchase of 63,000 shares of the Jupiter on behalf of the Tropical for Rs. 28,15,000. Resolution No. 12 thereof companyfirmed the transfer of 48,399 shares out of the above 63,000 shares to the Delhi Stores as agreed to by then. By resolution No. 13, sale of the head- office building of the Tropical and certain plots of land belonging to the Tropical to Caveeshar at Rs. 23,50,000 and Rs. 6,50,000 respectively as per agreement with Caveeshar by the managing director, Lala Shankarlal, on December 23, 1948, was companyfirmed. By resolution No. 14, plots of land and building in Chandni Chowk, Delhi, sold by the managing director, Lala Shankarlal, at a companyt of Rs. 2,60,000 to the Delhi Stores, was approved and companyfirmed. It is alleged that the resolutions of the Jupiter at the meetings dated 11th and 20th above numbericed and of the Tropical dated the 22nd disclosed the scheme of camouflaging which has been resorted to screen the fact that the payment for the purchase of the Jupiters shares was directly out of the Jupiters amount. This, according to the prosecution, indicates in its broad outline the manipulations resorted to for the above purposes. There is also evidence let in on behalf of the prosecution of a number of relevant details such as the presence or absence of the requisite entries and papers in the various books of account and other records of the companycerned organisations, the Jupiter, the Tropical and the Delhi Stores. Evidence has also been given to show which of the accused was directly a party to which of the various steps. Direct evidence of some of the ex-employees of the Jupiter, in particular of one Subramaniam and of another Rege, has, according to the prosecution, companysiderable bearing on the events that happened during this period, which would, if accepted, go to indicate the devious and dishonest basis of the above alleged manipulations. In addition to the above it would appear that some of the shareholders who came to know about these transactions sent numberices through solicitors to the new directorate of the Jupiter and to some of the accused persons, in particular Lala Shankarlal and Kaul, individually warning them against the illegal and improper dealings with the funds of the companypany. It is also in evidence that two of the solicitors, Sethia and Joshi, filed a suit against the new directors on January 19, 1949, for an injunction restraining the directors from disposing of the Jupiters securities so as to enable the Tropical to have the finances for the purchase of the companytrolling block of the Jupiters shares. It is the suggestion of the defence that these numberices were followed up by institution of a suit at the instance of Khaitan himself, and that ultimately after the money was paid on the 20th within the time, they were dropped. Evidence has also been given for the prosecution about the financial companydition and property holdings of the Tropical, of the Delhi Stores, as also of Caveeshar to show that numbere of them were in any such position as to justify the various transactions put through in their names. In particular, evidence has been given that Caveeshar had numbersuch property as companyld possibly justify a loan of about Rs. 25 lakhs on his security and that the alleged valuation report was number-existent or bogus. Evidence was also given that the Delhi Stores was a defunct companypany whose only assets were 1 39,750 shares of the Tropical of the book value of Rs. 10 per share which had numbermarket quotation, 2 other shares of book value of Rs. 16,879, and 3 cash in the bank of Rs. 133-14-6, and 4 book debts of Rs. 93,40,414. As against these debts it is said that the Delhi Stores had liability to sundry creditors to the extent of Rs. 1,40,259-3-8. The above, in broad outline, is the nature of the evidence-relating to the first period. Secondperiod February 1, 1949, to the end of December, 1949. Now, we may take up the evidence relating to the second period companymencing from February, 1949, to the end of December, 1949. The background relating to this period, according to the prosecution is, that Lala Shankarlal and his other companyconspirators were fully aware of the necessity of showing the transactions of January, 1949, as numberlonger outstanding as early as possible, so as to escape direct scrutiny thereinto by the end of the calendar year and it is said that therefore they made some further manipulations with a view to show the moneys advanced to Caveeshar and the Delhi Stores as having been returned before the end of the year. The events which led up to this may number be numbericed. On May 25, 1949, there was a meeting of the new directorate of the Jupiter at which Lala Shankarlal informed the directors that Caveeshar was repaying his loan of Rs. 25 lakhs and odd and out of that amount a sum of Rs. 14 lakhs might be invested in purchasing 40,000 shares of the Tropical and Rs. II lakhs on the equitable mortgage of the Tropicals headoffice building. Ultimately, however, this companytemplated loan of Rs. 11 lakhs to the Tropical on the equitable mortgage of its head-office building did number materialise for one reason or other. Thereafter, according to the prosecution, there were brought into existence, five transactions, from May 25 to December 31, 1949, which have been referred to in the evidence as follows Rs. Raghavji loan 5-11-1949 which resulted in repayment of 4,00,000 Fresh Caveeshar loan 5-11-1949 which resulted in repayment of 5,30,000 Misri Devi loan 20-12-1949 which resulted in repayment of 1,00,000 Purchase of 54,000 Tropical shares 25-5-1949 to 20-12-1949 which resulted in repayment of 14,00,000 Transfer of Caveeshar from the Tropical to Jupiter account of balance 31-12-1949 which resulted in repayment of 80,650 Total 25,10,650 In order to appreciate these transactions, it is necessary to set out a few more details. Raghavjis son, Chandrakant, was a member of the Forward Bloc, of which Lala Shankarlal was one of the leaders. Chandrakant had close political associations with Lala Shankarlal. Raghavji was a gentleman about 80 years old and a resident of Cutch and had a few properties at that place. According to the prosecution, Chandrakant was persuaded to permit his fathers name to be used for the purpose of advancing some moneys on the footing of an equitable mortgage by deposit of title deeds of his fathers property in Cutch. At a meeting of the Jupiters directorate dated November 5, 1949, a loan for Rs. 5 lakhs on the equitable mortgage of Raghavjis properties was sanctioned subject to valuation report and certain terms and companyditions specified therein. Notwithstanding that the loan was to be advanced on proper valuation report and other terms, it is the prosecution case and evidence, that this sum of Rs. 5 lakhs was disbursed as follows Rs. 3 lakhs in cash from the Jupiters funds and Rs. 2 lakhs as having been received back from Caveeshar and paid over in cash to Raghavji. The payment of these Rs. 2 lakhs was really by book adjustment showing Rs. 2 lakhs as having been paid by the Tropical to Caveeshar out of the moneys of Caveeshar with the Tropical and this amount as having been paid into the Jupiters account by Caveeshar and paid again out of it to Raghavji. Out of the other Rs. 3 lakhs taken in cash from the Jupiter, Rs. 2 lakhs it is said was number paid to Chandrakant but was shown as having been paid by Caveeshar into the Jupiters account in reduction of the debt owing from him to the Jupiter. The net result of these adjustments was that Rs. 4 lakhs out of the Caveeshar loan with the Jupiter was shown as reduced. What became of the other Rs. one lakh is number quite clear. The next transaction is Caveeshars fresh loan. At the same meeting of the Board of directors of the Jupiter dated November 5, 1949, whereat Raghavjis loan for Rs. 5 lakhs was sanctioned, a further loan of Rs. 5,30,000 was authorised to be advanced to Caveeshar against pledge of shares of the Peoples Insurance Co., the period of repayment being mentioned as two years. This transaction merely meant a book adjustment reducing the loan outstanding against Caveeshar and a fresh loan to that extent on a different security. This transaction further reduced the original indebtedness of Caveeshar to the Jupiter by this amount. The third item is the Misri Devi loan. At a meeting of the Board of directors of the Jupiter dated December 20, 1949, an application for loan of Rs. 5 lakhs from Misri Devi shown as the daughter of Lala Dwaraka Das though she was also the wife of Lala Shankarlal was said to have been companysidered and a loan in her favour for Rs. 5 lakhs on the security of her property in New Delhi was sanctioned subject to marketable title, period of three years, and other usual clauses. In anticipation of having to advance this loan a sum of Rs. 2 lakhs appears to have been sent on November 2 2, 1949, by Kaul, from the Jupiters account in the Punjab National Bank, Bombay, to its account at Delhi. Again on December 27, 1949, Kaul appears to have sent a further sum of Rs. 2 lakhs from the Jupiters account in the Punjab National Bank, Bombay, to its account at Delhi, by telegraphic transfer. Towards this loan a cheque on the Jupiters account with the Punjab National Bank at Delhi for Rs. 4 lakhs payable to self or bearer was given and a sum of Rs. one lakh was shown as having been received by the Jupiter from Caveeshar through his Tropical account and shown as paid to Misri Devi. This reduced the Caveeshar loan due to the Jupiter by another Rs. one lakh. At the same meeting of December 20, a resolution was placed on record showing that at the instance of Lala Shankarlal, a bargain was arranged on behalf of the Jupiter for purchase of 54,000 shares of the Tropical instead of 40,000 shares as previously companytemplated in the resolution of the directors dated May 25, 1949, for the sum of Rs. 14 lakhs and purchase on this footing was companyfirmed. The payment of Rs. 14 lakhs by the Jupiter to the Tropical was adjusted by showing the Tropical as having paid Rs. 14 lakhs to Caveeshar and Caveeshar as having paid back to the Jupiter a sum of Rs. 14 lakhs out of the original loan of Rs. 25 lakhs and odd.,,,, Thus in all, by these four transactions the original Caveeshars loan on the security of the alleged properties of Caveeshar was reduced by Rs. 24,30,000 leaving a balance of Rs. 80,650. This amount was adjusted by book entries on December 31, showing a transfer of the said amount from his Tropical account towards credit of the Jupiter account. Thus, by December 31, 1949, the entire amount of Rs. 25 lakhs and odd advanced to Caveeshar in January, 1949, on the security of his properties in Delhi was shown as having been wiped out leaving a fresh loan against him on November 5, 1949, for a sum of Rs. 5,30,000 on the security of the shares of the Peoples Insurance Co. It may be recalled here that for the payment of Rs. 28,15,000 to Khaitan on January 20, 1949, the original source of cash, according to the prosecution case, was the sum of Rs. 25,15,000 granted by way of loan to Caveeshar and Rs. 2,60,000 paid to the Delhi Stores for purchase of plots of the Delhi Stores. Out of this the original Caveeshar loan was, by the end of 1949, shown as having been companypletely wiped out as above stated. So far as the purchase of plots of the Delhi Stores is companycerned, it would appear that though in fact the Delhi Stores had numbersuch plots to sell, this transaction was shown as put through in the following way. The resolution of the Board of directors of the Tropical dated January 22, 1949, showed certain plots of land and the building in Chandni Chowk, Delhi, belonging to the Tropical, as having been sold to the Delhi Stores for the price of Rs. 2,60,000. Putting these two resolutions together, it would appear that the drawing out of Rs. 2,60,000 from the Jupiters funds by virtue of the relevant resolution dated January 11, 1949, was substantially the payment of Rs. 2,60,000 by the Jupiter for the alleged purchase of plots of land and building in Chandni Chowk which belonged to the Tropical. It does number appear that in its ultimate effect this transaction invited serious scrutiny and companyment and there is numberhing on the record to show that any further attempt was made to camouflage this transaction by fresh transactions. Now in addition to these transactions during this second period there is the evidence given by the prosecution of a number of other details during this period. Of these the most important is that which relates to a numberice sent on May 13, 1949, by an ex-employee of the Jupiter, Rege, through solicitors to Lala Shankarlal and Kaul, alleging fraud in respect of purchase of 63,000 Jupiters shares from Khaitan. This was followed up by him by a misfeasance petition dated August 10, 1949, in the High Court of Bombay against all the directors of the Jupiter, and this in its turn led, according to the prosecution, to certain intimidating actions against Rege said to have been taken by Lala Shankarlal, Kaul and Mehta, as a result of which Rege, it is said, was companyrced into withdrawing his petition followed by the ultimate dismissal of that petition by, order dated September 15, 1949. During this period there were also acute differences between the directors on one side and the brokers, Chopra and Mayadas, on the other for the brokerage of Rs. 40,000 to which, according to them, they were entitled for the original negotiations carried out through them with the Khaitan group for purchase of the companytrolling block of the Jupiters shares. It is also said that during this period various ante-dated entries, vouchers and other documents were brought into existence in order to show an appearance of regularity with reference to the transactions during the period of companyspiracy in December, 1948, and January, 1949. There are also certain letters of this period found or seized from the office of the Tropical of the dates of August 10, December 21 and 22, 1949, purporting to have been written, the first by Kaul to Lala Shankarlal and the second and third by Guha to Lala Shankarlal. These letters, if true, are revealing, but are of companyrse evidence only against themselves. It is of some importance for the prosecution case against Caveeshar to numberice that there are also two letters of this period alleged to be from Caveeshar to Chopra dated March 17 and 30,1949, the first authorising Chopra to arrange for negotiations to purchase the companytrolling block of shares of the Empire of India Life Assurance Co. Ltd. and the second offering to bring about a settlement in companynection with the claim by Chopra and Mayadas for companymission relating to the purchase of the Jupiters shares. Third period During the year 1950. The events of the third period as alleged by the prosecution and in respect of which the prosecution has given evidence may number be stated. The main argument on behalf of the appellants before us relates to the admissibility of the evidence relating to this period. The background for the events of this period was-according to the prosecution-the situation that arose from the strong attitude taken by the auditors in the companyrse of their audit of the affairs of the Jupiter for the year 1949, which was taken up at the company- mencement of 1950. The transactions of the Jupiter during the year 1949 which came under their scrutiny are said to have aroused their companycern and this led them to probe into the circumstances relating to the original Caveeshar loan in January, 1949, to the tune of Rs. 25,10,650. On January 6, 1950, the auditors sent a letter to the Jupiter demanding inspection of the documents relating to the said loan of Caveeshar. This was followed up by a further letter dated February 6, from the auditors requesting for production of the companyy of the mortgage deed, valuation report and all other documents and papers relating to this Caveeshar loan as also for the inspection of papers and documents relating to 1 Raghavji loan, 2 Fresh Caveeshar loan, 3 Misri Devi loan, and 4 purchase of 54,000 Tropical shares for Rs. 14 lakhs. In that letter of February 6, the auditors stated as follows We companysider the above transactions mostly unconscionable and we fail to understand how any responsible management companyld sell Government securities and invest the proceeds in a huge lot of shares in Tropical Insurance Co. Ltd. and large advances on shares of Peoples Insurance Co. Ltd., loans on properties in Cutch etc. We do number see the basis on which nearly Rs. 26 per share of Rs. 10 was paid for purchase of Tropical Insurance Companys shares. We companysider the position extremely serious and shall therefore thank you to immediately send a companyy of this report to the Superintendent of Insurance and also appraise the shareholders of the companytents of this report forthwith. No reply thereto having been received, the auditors sent a companyy of their letter of February 6, to each of the directors of the Jupiter individually with a forwarding letter on February 14, 1950. The next five months were taken up- according to the prosecution -in the attempt of the directors of the Jupiter to put off or to evade the auditors by involving them in a good deal of companyrespondence, oral explanation, personal meetings, and so forth but without the production of the various documents called for excepting only a few. This resulted in a letter from the auditors to the Jupiter dated July 24, 1950, enclosing their draft report to the shareholders setting out their criticisms of the transactions of the directors for the year 1949, and stating that only a cancelled pronote of Caveeshar and a receipt by him were shown to them in respect of the mortgage loan of Rs. 25,10,650 to Caveeshar. This, according to the prosecution, was followed up by feverish activities of the directors to bring about the screening by repayment, of the transactions from May to December, 1949, viz., 1 Caveeshar fresh loan, 2 Raghavji loan, 3 Misri Devi loan and 4 purchase of the Tropical shares. Repayment of Caveeshar fresh loan of Rs. 5,30,000 to the Jupiter, was done by raising money by sale of the Tropical securities and paying that money to the Jupiter in discharge of Caveeshars fresh loan. It appears that the Tropical securities of the face value of Rs. 6 lakhs were pledged with the Grindlays Bank, New Delhi, for an overdraft account of the Tropical. It is said that these Tropical securities were got released from the Grindlays Bank by substituting for them the Jupiters securities of the face value of Rs. 5,30,000. The prosecution case is that Kaul, lifted these Jupiters securities and gave them to Mehta and that Mehta flew to Delhi, handed over these securities to the Grindlays Bank presumably as belonging to the Tropical and got released the previously pledged Tropical securities. The Tropical securities so released appear to have been sold on September 12, 1950, and to have realised Rs. 5,01,592-1-2. That amount is said to have been deposited in the Tropicals account with the Indian Bank. On September 14, Mehta is said to have drawn a cheque for Rs. 5,30,000 on the Indian Bank in favour of the Jupiter and sent it with a companyering letter to the Jupiter stating that it was repayment by Caveeshar of his loan of Rs. 5,30,000 which had been given to him by the Jupiter as per the Jupiters resolution dated November 5, 1949. The necessary book entries are said to have been made, and a receipt for Rs. 5,30,000 is said to have been sent to Caveeshar. On October 27, 1950, Mehta is said to have brought a sum of Rs. 17,158-12-0 in cash to the room of Kaul in the Jupiters office and to have paid in cash to the accountant of the Jupiter in the presence of Kaul and Guha. This amount was credited on that date in the Jupiters account as payment of interest due on the two loans to the Jupiter by Caveeshar. Thus the further Caveeshars loan was shown to have been companypletely repaid with interest by entries in the Jupiters books dated September 14 and October 27, 1950. This was followed up by the inclusion of narration in the report of the Jupiter for the year 1949 that the loans advanced to Caveeshar with interest thereon were fully paid back to the Jupiter and that all documents pertaining to the said loans were returned to Caveeshar. The further adjustments for repayment of Raghavji loan and Misri Devi loan and in respect of the purchase of 54,000 Tropical shares by the Jupiter in December, 1949, are said to be companynected with the attempts of the accused to acquire the companytrolling block of shares of the Empire of India Life Assurance Co. Ltd. hereinafter referred to as the Empire of India in order to utilise the funds thereof for these adjustments. The details of how the companytrolling block of shares of that Company were negotiated for and acquired are number necessary to be gone into in detail for the purposes of this case and the same may be mentioned in broad outline. It is part of the prosecution case that anticipating the trouble that was likely to arise from the transactions of 1948 and 1949 with the auditors, Lala Shankarlal and other directors companyceived an idea as early as in March and May, 1949, to purchase the companytrolling block of shares of the Empire of India from one Ramratan Gupta. There appear to have been some unfruitful negotiations in this behalf for nearly a year. But finally by October 5, 1950, an agreement was executed under which a sum of Rs. 10 lakhs was to be paid in advance to Ramratan Gupta and another sum of Rs. 33 lakhs and odd within thirty days thereafter and the companytrolling block of shares of the Empire of India of 2,618 were to be handed over to one Damodar Swarup Seth, a numberinee of Lala Shankarlal. This amount of Rs. 43 lakhs and odd is said to have been paid up by means of a number of cheques as follows Rs. On October 5, 1950- Cheque by Damodar Swarup Seth Ex. Z-10 for 8,00,000 Cheque by Bhudev Sanghi in favour of Damodar Swarup Seth Ex. Z-11 for 2,00,000 Total of I 10,00,000 On October 16,1950, six chequesby Damodar Swarup Seth in favour of- Rs. Reyer Mills Ltd. for 10,55,844 Laxmi Ratan Cotton Mills for 8,06,895 Premkumar Gupta for 6,71,787 Stores India Ltd. for 36,799 Gulabchand Jain for 97,500 Biharilal Ramcharan for5,04,072 III. On October 27, 1950- Cheque by Damodar Swarup Seth Ex. Z-13 for 2,08,650 Total of II III 33,81,547 The total of the first two cheques is Rs. 10 lakhs which was paid as advance. Tee total of the remaining seven cheques companyes to Rs. 33,81,547 which was shown as companysideration for the purchase of 2,618 shares of the Empire of India. Thus, on the payment of Rs. 31,72,897 on October 16, 1950, by means of the six cheques above mentioned, the companytrolling block of 2,618 shares of the Empire of India was handed over to Damodar Swarup Seth. It is the case of the prosecution that Damodar Swarup Seth was able to draw these various cheques of the total value of over Rs. 43 1/2 lakhs because certain securities of the Jupiter set out in Ex. Z-47 of the face value of Rs. 48,75,000 were withdrawn from the Jupiter in pursuance of letters written by Kaul and Guha and lifted away and handed over without due authority to Damodar Swarup Seth who opened a cash credit account with the Punjab National Bank on the strength of those securities. Having thus secured the companytrolling block of shares of the Empire of India in October, 1950, it is the prosecution case, that hurried steps were taken to show, that the Raghavji loan and Misri Devi loan advanced by the Jupiter towards the end of 1949 were paid back with interest to the Jupiter in cash, and that the Tropical shares Which were shown as having been purchased by the Jupiter in 1949 were sold away and realised the cash for which they were purchased. On October 17, 1950, the day next after the purchase of the companytrolling block of shares of the Empire of India, one Roshanlal Kohli, a broker, is said to have offered to the Empire of India to sell from the Jupiter its securities of the face value of Rs. 20 lakhs. On October 19, 1950, Roshanlal Kohli, purporting to act for the Jupiter wrote to the Empire of India that for the purchase an advance payment of Rs. 20 lakhs is to be made. This was followed by a reply from the Empire of India agreeing to the same and an actual payment of the amount by two bearer cheques issued by the Empire of India, one for Rs. 15 lakhs dated October 26, 1950, and the other for Rs. 5 lakhs dated October 27, 1950. No entry is said to have been made in the Jupiters records as to the receipt of this amount though an entry of such payment was made in the records of the Empire of India. But it is said that this amount of Rs. 20 lakhs was utilised for adjusting the Raghavji loan as well as the purchase of the Tropical shares by the Jupiter. It is the prosecution evidence that Rs. 14 lakhs out, of Rs. 15 lakhs obtained on the bearer cheque of October 26 was paid in cash into the Jupiter account with the Punjab National Bank, Bombay, on October 26 itself showing the same as the sale proceeds of 54,000 Tropical shares which the auditors had objected to as being an uncon- scionable investment. The actual payment was made into the Jupiter account of the Punjab National Bank, Bombay, by one Bhagwan Swarup and another Bhudev Sanghi. A letter was obtained, signed by Bhudev Sanghi a nephew of Lala Shankarlal Ex. Z-152 that 54,000 Tropical shares belonging to the Jupiter were sold by him as a broker, and that the sale proceeds thereof were credited that day into the account of the Jupiter in the Punjab National Bank at Bombay and the companyresponding entries were made in the investment register of the Jupiter. It is said that numberwithstanding this transaction the Tropical shares remained in the safe custody account of the Jupiter in the Bank of India right up to January 2, 1951, when on receipt of a letter dated January 2,1951 Ex. Z-293 by Kaul to the Bank of India, they delivered all his shares. These Tropical shares appear to have been delivered over to a clerk of the Jupiter and handed over by him to Guha. It is said that these shares are number numberlonger traceable. The other bearer cheque for Rs. 5 lakhs drawn from the funds of the Empire of India, it is said, came into the Jupiter account as follows and purported to be repayment of Raghavji loan. A sum of Rs. 5,18,388-14-3 was put in cash on October 27, 1950, into the Comilla Bank purporting to show it as sent by Raghavji in repayment of the mortgage loan taken by him from the Jupiter with interest thereon. There is a receipt issued by Kaul to Chandrakant, son of Raghavji, showing that Rs. 5,18,388-14-3 was received in full repayment of the mortgage loan. An entry was also made in the Jupiters cash book that interest was paid up-to-date. With regard to the repayment of Misri Devi loan in the books of the Jupiter there is an entry dated October 7, 1950, showing a sum of Rs. 1,25,000 as withdrawn from the Imperial Bank. On the same date there is another entry showing a sum of Rs. 4,25,000 as withdrawn from the Bank of India, Bombay. On that very day, i.e., October 7, two cheques totalling Rs. 5,50,000 were deposited with the Punjab National Bank, Bombay. Kaul purported to send a letter to Lala Shankarlal informing him that the amount of Rs. 5,50,000 was being sent for the purchase of land and building belonging to Sir Sobha Singh. The Punjab National Bank, Bombay, was instructed to transfer the above mentioned sum to their branch at Tropical Building at Delhi to the credit of the account of the Jupiter. All this was done between October 7 and 10. On October 10, a memo was received from the Punjab National Bank, Tropical Building, Delhi, informing that the sum of Rs. 5,50,000 had been received by them. The next day, i.e., on October 11, a cheque for Rs. 5,50,000 was drawn on that Bank by Lala Shankarlal in his capacity as the managing , director of the Jupiter. On the reverse of this cheque an endorsement was made by Lala Shankarlal. It is the suggestion of the prosecution that cash was obtained on it and that a demand draft for the said amount was obtained from the Grindlays Bank in favour of the Jupiter on behalf of Misri Devi wife of Lala Shankarlal on October 12. This draft was signed on the reverse by Kaul. It was received in Bombay and was deposited in the Jupiters account in the Bank of India. Misri Devi loan was for Rs. 5 lakhs and a sum of Rs. 18,062-8-0 was by then due as interest thereupon. On October 16, entries were made in the cash book of the Jupiter showing that the loan of Misri Devi for Rs. 5 lakhs with interest was recovered. The excess payment of Rs. 31,937-8-0 was shown in the first instance as credited to suspense account and thereafter as having been refunded to Misri Devi on October 18. Thus the Misri Devi loan was shown in the books as having been also companypletely repaid. Thus by these various adjustments and manipulations, the four transactions, viz., 1 Caveeshar fresh loan on the security of the Peoples Insurance Companys securities, 2 Raghavjis loan on the security of his properties in Cutch, Misri Devis loan on the security of her building in New Delhi, and 4 purchase of 54,000 Tropical shares by the Jupiter, which were all strongly objected to along with the original Caveeshar loan of Rs. 25 lakhs and odd, were shown as realised back in actual cash by October 27, 1950. A letter was then written by the solicitors of the Jupiter under instructions of Kaul to the auditors to attend on October 28, 1950, at the office of the Jupiter and to verify the accounts and moneys received from the repayments of the loans and from the sale of the Tropical shares. On October 29, the auditors went to the office of the Jupiter and verified the same and were satisfied that the moneys were received. The repayment of these various loans and the sale of the Tropical shares shown as having been realised in actual cash would of companyrse also clear up the objections which the auditors raised as regards the original Caveeshar loan on account of the requisite papers relating thereto number being forthcoming. The auditors, having thus been satisfied, signed the audit certificate and the report of the Jupiter for the year ending 1949, and appended a numbere that they had objected to certain loans and purchases and that these loans had been recovered and that the shares had been sold and the moneys received. On October 23, 1950, a. general body meeting of the shareholders of the Jupiter was held at which Lala Shankarlal, Kaul, Mehta, Guha and Caveeshar, were present and the final report of the auditors and the reply of the directors to the original objections of the auditors were read. The directors asserted at the meeting that imaginary mistakes and nervous suspicion was all that the auditors had found in respect of their management for the year and that the events of the last 12 months were a companyplete refutation of the fear, suspicion and bias of the auditors. It is number necessary to trace the distribution of the lot of 63,000 shares of the Jupiter which were purchased by Lala Shankarlal and his group from Khaitan. It may be recalled that on January 20, 1949, only 61,061 shares which stood in the name of the New Prahlad Mills were handed over. The remaining 1,939 shares which stood in the names of others presumably also belonging to the group of Khaitan were transferred partly before and partly after, making up 63,000 shares. Out of these, 250 shares each were transferred at the outset as qualifying shares, in the names of Lala Shankarlal, Kaul, Mehta, Jhaveri and Doshi, totalling 1,250. These transfers were companyfirmed by the resolution of the directors of the Jupiter dated December 29, 1948. Another 250 shares were transferred in the name of Sarat Chandra Bose on January 20, 1949, but it would appear that he did number accept the same then and intimated his number-acceptance some time much later. On August 31, 1949, 37,949 shares were transferred to the name of Delhi Stores and 14,601 shares were transferred in the name of the Tropical and two further lots of 4,475 each were transferred in the names of Lala Shankarlal and Caveeshar. On September 13, 1950, out of the lot of 37,949 shares standing in the name of the Delhi Stores, 4,000 shares were kept standing in the name of the Delhi Stores and the balance of 33,949 were distributed as follows 3025 shares in the name of Lala Shankarlal 3025 shares in the name of Caveeshar 50 shares in the name of Kaul 7075 shares in the name of Mehta 7500 shares in the name of Chandulal Ratanchand Shah, an employee of the Tropical 7500 shares in the name of Himatlal F. Parikh, an employee of the Tropical 5774 shares in the name of Himatlal Harilal Shah. Out of the lot of 14,601 shares kept in the name of the Tropical 7,500 shares were transferred to the name of one Baburam and 7,101 shares were transferred to the name of Kaul. Out of another lot of 409 shares which were purchased, 339 shares were transferred to the name of Kaul. Thus the position of the distribution of the purchased Jupiters shares as on September 13, 1950, was as follows 7750 shares in the name of Lala Shankarlal 7740 shares in the name of Kaul 7325 shares in the name of Mehta 7500 shares in the name of Caveeshar 4000 shares in the name of the Delhi Stores 7500 shares in the name of Chandulal Ratanchand 7500 shares in the name of Himatlal F. Parikh 5774 shares in the name of Himatlal Harilal Shah 7500 shares in the name of Baburam 250 shares in the name of Jhaveri 250 shares in the name of Doshi 250 shares in the name of Sarat Chandra Bose 70 shares in the name of the Tropical. 63,409 Total. This makes a total of 63,409 shares companyprising 63,000 shares of the companytrolling block which were originally purchased from Khaitan group and 409 shares subsequently purchased which has numberhing to do with the present case. It may be numbericed that numbershares were transferred in the name of Guha and that very substantial number of shares were transferred in the names of the various other accused. It may also be numbericed that three persons who are number accused in the case, viz., Chandulal Ratanchand, Himatlal F. Parikh, Himatlal Harilal Shah, had also very substantial number of shares transferred to them. The case of the prosecution is that for the transfer of all these shares in the names of the various accused numbermoney was paid by them and that it was the distribution amongst themselves of the major portion of the original acquisition of 63,000 shares which, according to the prosecution case, were in fact purchased by utilising the very funds of the Jupiter over which they obtained the companytrol. This, according to the pro. secution, companypletes the chain of misappropriation by the various accused. Since the appeals before the High Court and before us are against the companyvictions and sentences based on the acceptance of the verdict of the jury against each of the accused, scope for interference on appeal either by the High Court or by this Court is very limited. Hence Mr. Chari for the appellant has pressed before us only some legal companytentions. His main argument relates to the admissibility of certain portions of the evidence given for the prosecution. Mr. Chari has taken strong exception to the prosecution having led evidence relating to the acquisition of the companytrolling block of shares of the Empire of India followed up by the various steps said to have been taken by the several alleged companyspirators or by Lala Shankarlal in 1950 to screen the transactions of the later part of 1949. Mr. Chari companytends that on the substantive charge of companyspiracy all these steps or actings are number admissible in law. Now the companyspiracy as charged is in substance a companyspiracy to companymit criminal breach of trust in respect of the funds of the Jupiter by utilising the same to purchase the companytrolling block of shares of the Jupiter itself for the benefit of the Tropical or for the benefit of the companyspirators . This companyspiracy is alleged to have been entered into between the dates December 1, 1948, and January 31, 1949. Mr. Chari says that primarily it is only the events of that period companyprising the acts, writings and statements of the various companyspirators of that period which would be admissible as against each other under s. 10 of the Indian Evidence Act, 1872 I of 1872 . According to the prosecution case the modus operandi was to screen the utilisation of these funds by showing them as having been advanced for legitimate purposes and invested on proper security, but in fact utilising the same for payment to the owners of the companytrolling block of shares of the Jupiter. Mr. Chari says that strictly speaking, though for this purpose, only the acts, writings and statements of the companyspirators during the period December, 1948, to January, 1949, would be admissible, he companyceded that the evidence relating to the steps taken and the acts, writings and statements of the companyspirators beyond January 31, 1949, and during the year 1949, i.e., towards the later part thereof, by way of creating further transactions viz., Raghavji loan, Caveeshar fresh loan, Misri Devi loan and purchase of shares from the Tropical in order to screen the transactions of January, 1949, may be admissible, as being directly companynected, and that he does number object to the same. But his point is that the transactions of the year 1950 and the steps taken then are only for the purpose of screening the second set of transactions of the later part of 1949 and number the first set of transactions of January, 1949. He companytends that evidence relating thereto, which falls wholly outside the companyspiracy period, is number admissible under s. 10 of the Evidence Act being too remote and having numberdirect bearing on the original transactions which are the subject matter of the companyspiracy. He points out that the alleged criminal breach of trust was companymitted on January 20, 1949, when the Jupiters moneys were paid to Khaitan, and that the object of the companyspiracy must be taken to have been achieved when the camouflage through the first Caveeshar loan and the advance said to have been made to the Delhi Stores for purchase of plots was effectuated. He points out that this is a case with numerous details even as regards the events, statements and actings from December 1, 1948, to end of December, 1949. He urges that the events of the year 1950 are equally, if number more, voluminous and have overburdened the legitimate material in the case. This, he urges, has operated to create companyfusion and prejudice in the minds of the jury. We have been told that on account of this large volume of, what is companytended to be, inadmissible evidence the trial has got unduly prolonged extending over a year. It is pointed out that the very narration of the outline of the prosecution case and of the evidence let in on behalf of the prosecution has taken about 100 pages of typed matter in the charge to the jury by the learned trial Judge and in the judgment of the High Court on appeal. There can be numberdoubt that in a case of this kind, having regard to the nature thereof and to the ramifications of the various transactions on which the prosecution relies to make out its case, and having regard to the, fact that this was a jury trial, every attempt should have been made to exclude material which is strictly number admissible in law. Otherwise it would have the effect of companyfusing the jury and prejudicing its mind. But if the evidence is clearly admissible in law, the Court would number be justified in declining to receive it. All that can be said is that it would have to take every care in charging the jury to place fairly before it the effect and implications of such items of evidence in an adequate measure. The limits of the admissibility of evidence in companyspiracy cases under s. 10 of the Evidence Act have been authoritatively laid down by the Privy Council in Mirza Akbar v. The King-Emperor 1 . In that case their Lordships of the Privy Council held that s. 10 of the Evidence Act must be companystrued in accordance with the principle that the thing done, written, or spoken, was something done in carrying out the companyspiracy and was receivable as a step in the proof of the companyspiracy. They numberice that evidence receivable under s. 10 of the Evidence Act of anything said, done, or written, by any one of such persons i.e. companyspirators must be in reference to their companymon intention. But their Lordships held that in the companytext numberwithstanding the amplitude of the above phrase the words therein are number capable of being widely companystrued having regard to the well-known principle above enunciated. It would seem to follow that where, as in this case, the charge specifies the period 1 1940 L.R. 67 I.A. 336. of companyspiracy, evidence of acts of companyconspirators outside the period is number receivable in evidence. Indeed, this position is fairly companyceded by Mr. Khandalawala, for the prosecution. But his companytention is that the evidence objected to, viz., the acts and events of the year 1950, would be relevant under the other sections of the Evidence Act such as ss. 6, 8, 9, 11 and 14. This would numberdoubt be so. But it has to be remembered that some of these sections are widely worded and must receive a somewhat limited companystruction as pointed out by West J. in his judgment reported in Reg. v. Prabhudas 1 when companysidering the scope of s. 1 1 of the Evidence Act. Now, there can be numberdoubt that one of the main relevant issues in the case is whether the loan of Rs. 25 lakhs and odd advanced on January 20, 1949, to Caveeshar, as also the moneys said to have been paid to the Delhi Stores by way of advance for purchase of certain plots said to belong to it, were genuine transactions or bogus and make-believe. If they were genuine transactions, by virtue of which money did pass to them on the basis of good security, showing these amounts to be genuine business investments, then it would be difficult to make out that there was any criminal breach of trust. Hence all evidence which would go to show that these transactions are bogus, is certainly admissible. That would be so numberwithstanding that such evidence may necessitate reference to and narration of the acts of the companyspirators beyond the period of companyspiracy but within reasonable limits. While it may be true that the manipulations by way of the four fresh transactions from May to December, 1949 apart from other features of these transactions of which evidence has been given would be companyent evidence to show that the original transactions were bogus, the evidence relating to the further transactions to screen these transactions of the second half of 1949 by utilising the money of the Empire of India after obtaining the companytrol thereof, and by wrongfully utilising the Jupiters securities, would also be relevant to make out and emphasise the bogus character of the 1 I 874 1 1 Bom. H.C.R. 90. original debts. It cannot be said to be too remote because it is to be remembered, as has been pointed out by Mr. Khandalawala, that the urgent necessity for acquiring the companytrol of the Empire of India in 1950, and for utilising it for showing the alleged investments of the second half of 1949 as having been realised back in cash in 1950, arose on account of the firm attitude of the auditors who suspected the bona fides of the original Caveeshar loan and of the companynected transactions of the second half of 1949 when they scrutinised in 1950 the affairs of the Jupiter for the year 1949. The 1950 transactions appear clearly to have been brought about number merely to screen the transactions of the second half of 1949, but equally, if number mainly, to dispel any suspicion, and to obviate the scrutiny, in respect of the earlier transactions of January, 1949, which related to the period of companyspiracy. Thus in relation to the main purpose of the prosecution, viz., proof of the bogus character of these transactions of January, 1949, the transactions of the second half of 1949 and of 1950 must, in the circumstances of this case and having regard to the ramifications, be taken to be integrally companynected and relevant to make out their bogus character. We are, therefore, unable to agree with the general objection put forward that the entire evidence relating to the 1950 transactions was inadmissible in evidence. It is also reasonably clear that the companyduct in general of each individual companyconspirator including his acts, writings and statements is evidence against himself. There can be numberdoubt that such companyduct irrespective of the time to which it relates can be relied on by the prosecution to show the criminality of the intention of the individual accused with reference to his proved participation in the alleged companyspiracy, that is, to rebut a probable defence which may numbermally arise in such a case, viz., that the participation, though proved, was innocent. It has been pointed out to us that in this case each one of the accused has put forward in his defence that he was an unconscious tool in the hands of a towering personality and a master-mind like Lala Shankarlal about whose criminal intentions he was number aware. It was, therefore, quite legitimate for the prosecution to anticipate such defence and to give rebutting evidence. Such evidence would companye under s. 14 of the Evidence Act. It is well settled that the evidence in rebuttal of a very likely and probable defence on the question of intention can be led by the prosecution as part of its case. This is laid down by the Privy Council in Makin v. The Attorney-General for New South Wales 1 . To anticipate a likely defence in such a case and to give evidence in rebuttal of such defence is in substance numberhing more than the letting in of evidence by the prosecution of the requisite criminal intention beyond reasonable doubt. Now Mr. Khandalawala for the prosecution urges that the entire evidence for the prosecution relating to the year 1950 falls within these two categories of admissible evidence, viz., 1 evidence to make out the bogus character of the original transactions of January, 1949, which is an essential issue in the case relating to all the companyspirators, and 2 evidence of the criminal intention of each of the accused which is admissible as against himself Mr. Chari for the appellants companytests this assumption and urges that the evidence that has been admitted of the year 1950 is much wider than what is companyered by the above two and that it was in fact and in substance evidence of the acts, writings and statements of individual companyspirators of a period outside the period of companyspiracy, and treated as admissible against other companyconspirators, on the central issues in the case, viz., whether a companyspiracy has been made out and whether the individual accused were participants in that companyspiracy. Mr. Chari very strenuously companytends that such evidence was inadmissible and that its admission has seriously prejudiced the case of the appellants and has rendered any fair and rational companysideration of the case by the jury extremely difficult, if number impossible. In particular his strong objection was to the evidence relating to the acts, writings and statements of Lala Shankarlal of the year 1950, more particularly because he died before the trial and was number before the Court on L.R. 1894 A.C. 57,65. trial as a companyspirator. His companytention raises for companysideration two questions, viz., 1 whether such evidence is admissible in proof of the companyspiracy and in proof of the participation of individual accused in the companyspiracy, and 2 whether in fact at the trial, such evidence was admitted and made use of on these issues. Now it would be companyvenient to take up the latter question for companysideration in the first instance. To substantiate his companytention that the evidence of companyduct of individual companyspirators of the year 1950 has been admitted and used against the other companyonspirators in proof of the two main issues, Mr. Chari, in his argument before the High Court relied on the following paragraphs of the learned trial Judges charge to the jury, viz., paras II, 55, 65, 73, 74, 75, 94, 101, 102, 136, 146, 388, 453, 541, 557, 588, 602, 657, 676, 678 and 689. We have carefully gone through these paragraphs. It appears to us reasonably clear that what have been referred to by the learned trial Judge in these paragraphs are various items of evidence in the prosecution, case whose primary object is to make out the bogus character of the transactions in question though they necessarily bring in either the deceased Lala Shankarlal or some other companyconspirator as being a party to these various acts. Such evidence, as already stated, is obviously admissible for that purpose as being links in the chain of evidence relating to the bogus character of the original transactions and number as being in themselves relevant to prove the companyspiracy. That the learned trial Judge was alive to this distinction and would number have admitted such evidence in proof of the issue of companyspiracy is quite clear from his ruling interlocutory judgment No. 6 dated August 22, 1955, relating to the admissibility of the document which was marked as Ex. Z-71 in the companymittal companyrt. The learned Judge in that order has categorically ruled out the admissibility of that document with the following companyclusion after a good deal of discussion of the legal point I companye to the companyclusion that the statements and actions of any one of the persons mentioned in the charge are number admissible beyond the period of companyspiracy unless they are authorised by any of the accused persons in that event they are really the actions and statements of that accused person himself who has authorised the same. I, therefore, do number admit the document Ex. Z-71 in evidence. We have number got before us the document Ex. Z-71 itself to enable us to see for ourselves what it relates to, since it was exhibited only in the companymittal companyrt and ruled out at the trial. But there is numberdifficulty in appreciating what the learned trial Judge actually held. That the learned trial Judge acted on this view is reasonably clear also from the fact that in quite a number of places in his charge to the jury he has repeatedly emphasised that subsequent companyduct of a companyspirator would number be admissible against anybody else but himself. See paras 453, 541, 557, 588, 602, 657, 676, 685 and 689 of the learned trial Judges charge to the jury . No doubt in some of the paragraphs previously numbericed as having been objected to by Mr. Chari, the very reference to acts and companyduct of Lala Shankarlal during the year 1950 which is beyond the period of companyspiracy, may companyceivably be capable of being wrongly relied on by the jury in respect of issues on which they are number admissible and might be capable of producing some prejudice. But this is a possibility inherent in such cases as has been pointed out by the Privy Council in Walli Muhammad v. King 1 . Therein their Lordships pointed out the difficulty in all cases where two persons are accused of a crime and where the evidence against one is inadmissible against the other. Their Lordships recognised that however carefully assessors or a jury are directed and however firmly a Judge may steel his mind against being influenced against one by the evidence admissible only against the other, nevertheless the mind may inadvertently be affected by the disclosures made by one of the accused to the detriment of the other. Undoubtedly this weighty caution has to be always kept in mind when Judges and juries. have to deal with such companyplicated cases. But that by itself without showing that serious 1 1948 53 C.W.N. 318, 321. prejudice would, in all likelihood, have occurred in the particular case, would number be enough to vitiate the companyvictions. In this case that there has in fact been any such prejudice has number been shown to our satisfaction. Indeed the fact that accused No. 3, Jhaveri, has been acquitted by the unanimous verdict of the jury appears to indicate that the jury has shown itself capable of observing the caution given to them and making careful discrimination. In this view probably the larger question raised by companynsel on both sides as to the admissibility of the companyduct of a companyconspirator outside the period of companyspiracy and especially of deceased companyconspirators like Lala Shankarlal and Doshi and a living companyspirator like Mahajan who is number on trial before the Court, in proof of the two main issues in such a case viz., the existence of the companyspiracy and the participation of the individual accused in that companyspiracy may number require to be dealt with. But as will appear presently the learned Judges of the High Court have held such evidence admissible and have over-ruled, on that ground also, the companytention of Mr. Chari as to the prejudice likely to have been caused because of their view as to its admissibility. Hence it is only fair that the question should be companysidered and a companyclusion arrived at. Besides, companynsel on both sides have argued the matter very elaborately and have pressed us to express our opinion thereupon. It is to be numbericed that the learned trial Judge and the High Court appear to have taken differing views on this matter. The learned Judges of the High Court after elaborate discussion have definitely held that such evidence is admissible, as shown by their companyclusion on this part of the case in the following terms In this manner, all the observations which the learned Judge made in paragraphs 11, 73, 74, 75, 94, 101 and 388, to which Mr. Chari has objected on the ground of inadmissibility, would be relevant to show that there was a companyspiracy in this case and that Lala Shankarlal was a party to it. That the learned trial Judge appears to have taken the opposite view is reasonably clear from his ruling interlocutory judgment No. 6 dated August 22, 1955, already referred to, relating to the admissibility of the document, Ex. Z-71, in the companymittal companyrt. In that order he sets out the arguments of both sides as follows It is companymon ground that the action of any of the accused person subsequent to the period of companyspiracy is admissible in evidence against that particular accused person only. Mr. Khandalawala, therefore, argues that the actions of Lala Shankarlal, of Doshi and of Mahajan subsequent to the period of companyspiracy are admissible in evidence to prove that they were party to the companyspiracy alleged in the case and to prove their guilt individually along with the accused persons He further submits that s. 10 of the Indian Evidence Act is permissive and number an exception as companytended by Mr. Chari He says that he does number want to lead any evidence of the statements and actions of Lala Shankarlal against these accused persons, but he wants them in order that he may prove before the jury that Lala Shankarlal was also one of the companyspirators with the accused persons Charis submission is that numberevidence in this case companyld be admitted which is number admissible against the accused persons He submits that the question whether Shankarlal or Doshi or Mahajan was guilty of the offence of companyspiracy or number cannot arise in this trial. Proof of companyspiracy, apart from the accused persons, is irrelevant. He submits that what- ever Shankarlal did during the period of companyspiracy is binding on these accused persons and the Court has to determine with reference to that evidence whether anyone of these accused persons was a companyspirator with Shankarlal or with Mahajan or with Doshi. All the evidence that companyld be led in a trial must be against accused persons and numberone else. He, therefore, submits that the evidence that is sought to be led by the prosecution is inadmissible in evidence. Having thus set out the arguments of both sides, the learned trial Judge stated his companyclusion as follows I think that the evidence in a criminal trial that companyld be led must be admissible against the accused 1 1948 53 C.W.N. 318, 321, persons only and, therefore, the evidence of actions and statements of another person, apart from the question of it being of the agent of the accused, is number admissible. Section 10 of the Evidence Act as explained by the Privy Council in Mirza Akbar v. The King-Emperor 1 , clearly lays down that the statements and actions of the companyconspirator would only be evidence against the accused persons, provided they are within the period of companyspiracy I do number think, therefore, that Lala Shankarlal or Mahajan or Doshi are accused persons before me and, therefore, the subsequent companyduct of these persons beyond the period of companyspiracy unconnected by any authority from the accused persons is number admissible. It is necessary, therefore, to appreciate clearly what exactly the Privy Council in Mirza Akbars case 1 has decided and whether the learned trial Judge was right in companying to the companyclusion he did on the authority of that decision. In the said case their Lordships of the Privy Council elucidated the principle of admissibility of evidence in cases of companyspiracy by reference to the English leading case of The Queen v. Blake 2 . That was a case in which two persons, T. and B., were charged for companyspiracy to cause certain imported goods to be carried away from the port of London and delivered to the owners without payment of the full customs duty payable thereon. T. did number appear and defend. B. pleaded number guilty. At the trial it was proved that T. was agent for the importer of the goods, B. was a landing waiter at the Custom House. It was T.s duty to make an entry describing the quantity etc. of goods. A companyy of such entry was delivered to B. who was to companypare this companyy with the goods, and, if they companyresponded, to write companyrect on T.s entry, whereupon T. would receive the goods on payment of the duty according to his entry. It was proved that T.s entry was marked companyrect by B. and companyresponded with B.s companyy and that payment was made according to the quantity there described, and that the goods were delivered to T. Evidence was then offered of an 1 1940 L.R.671.A.336. 2 1844 6 Q.B. 126 115 E.R. 49. entry by T. in his day book, of the charge made by him on the importer, showing that T. charged as for duty paid on a larger quantity than appeared by the entry and companyy before mentioned. It was held that all this evidence was admissible against B. But the question arose as to the admissibility of a further item of evidence. It was proved that B. received the proceeds of a cheque drawn by T. after the goods were passed. The companynterfoil of this cheque was offered in evidence, on which an account was written by T. showing, as was suggested, that the cheque was drawn for half the aggregate proceeds of several transactions, one of which companyresponded in amount with the difference between the duty paid and the duty really due on the above goods. It was ruled that item was number evidence against B. Referring to this case their Lordships of the Privy Council stated as follows in Mirza Akbars case 1 The English rule on this matter i.e., as to the admissibility of evidence relating to a charge of companys- piracy is, in general, well settled. It is a companymon law rule number based on, or limited by, express statutory words. The leading case of R. v. Blake 2 illustrates the two aspects of it, because that authority shows both what is admissible and what is inadmissible. What, in that case, was held to be admissible against the companyspirator was the evidence of entries made by his fellow companyspirator companytained in various documents actually used for carrying out the fraud. But a document number created in the companyrse of carrying out the transaction, but made by one of the companyspirators after the fraud was companypleted, was held to be inadmissible against the other It had numberhing to do with carrying the companyspiracy into effect. Their Lordships in that case also referred with approval to two cases of the Indian High Courts, viz., Emperor v. Abani Bhushan Chuckerbutty 3 and Emperor v. G. V. Vaishampayana 4 . In the case in Emperor v. Abani Bhushan Chuckerbutty 3 , one of the documents sought to be put in evidence is a statement 1 1940 L. R. 67 I.A. 336. 2 1844 6 Q.B. 126 115 E.R. 49. 3 1910 I.L.R. 38 Cal. 169. 4 1931 I.L.R. 55 Bom. 839. of one of the companyconspirators, Abani, before a Magistrate after he was arrested. In that statement he implicated himself and a large number of persons in the companyspiracy. The question that arose was how far it companyld be used as evidence of the companyspiracy and of the fact that the others were companyconspirators. Their Lordships held as follows We have companye to the companyclusion that the statement of Abani cannot properly be treated as evidence under section 10 of the Evidence Act. That section, in our view, is intended to make evidence companymunications between different companyspirators, while the companyspiracy is going on, with reference to the carrying out of the companyspiracy. It may be added that this statement was merely treated as a companyfessional statement failing within the scope of s. 30 of the Evidence Act and usable only as such against the companyaccused. The case in Emperor v. G. V. Vaishampayana 1 was also a case of companyspiracy in which an approver as company companyspirator gave evidence. He gave evidence of statements, made to him by another companyconspirator by name Swamirao who was number an accused before the Court, which had reference to the alleged attack on the Lamington Road police station which was the object of the companyspiracy. These statements were alleged to have been made after the return of the attacking party to the approver at his residence. Objection was taken to the admissibility of such statements made after the companypletion of the attack as evidence under s. 10 of the Evidence Act. This objection was upheld on the ground that such statements made after the companypletion of the attack companyld number be said to have been made in reference to their companymon intention . It was pointed out that the word intention implies that the act intended is in the future. It is numbereworthy that in this case the statements under companysideration were made by a companyonspirator who was number an accused at the trial and it was number suggested that his evidence would be admissible on the ground that such statement would be admissible against himself to show that he was a 1 1931 I.L.R. 55 Bom. 839. companyconspirator with the accused on trial and that it would become relevant on that basis, an argument of the kind which appears to have found favour with the learned Judges of the High Court in this case, as will be presently seen. In Mirza Akbars case 1 itself the question at issue was about the admissibility on the charge of companyspiracy of a statement made by one of the companyconspirators before a Magistrate after arrest. That was held to be number admissible. The point to be numbericed in all these cases is that the statements which have been ruled out as inadmissible under section 10 of the Evidence Act were number sought to be made admissible under some other section of the Evidence Act. It is further to be numbericed that in the leading case of The Queen v. Blake 2 , the question of admissibility was dealt with as being one under the general law and yet the only criterion of admissibility was that which was special to the cases of companyspiracy. There was numbersuggestion that such evidence companyld be brought in under any other category of admissibility of evidence. It was ruled in that case that the statement in question was totally inadmissible to prove companyspiracy. It appears, therefore, that Mirza Akbars case 1 is a clear authority for the position that in criminal trials, on a charge of companyspiracy evidence number admissible under s. 10 of the Evidence Act as proof of the two issues to which it relates, viz., of the existence of companyspiracy and of the fact of any particular person being a party to that companyspiracy, is number admissible at all. But it is necessary to appreciate clearly that what is sought to be admitted in such a case is, something said, or done, or written by any one of the companyconspirators behind the backs of the others as being in law attributable to the others and what is sought to be proved by such evidence taken by itself is the existence of the companyspiracy as between the alleged companyspirators and the fact that a particular person was a party to the companyspiracy. It is such evidence that is inadmissible otherwise than under s. 10 of the Evidence Act. Quite clearly, in the numbermal class of cases, such evidence is admissible as against himself and number against others, 1 1940 L.R. 67 I.A. 336. 2 1844 6 Q.B. 126 115 E.R, 49, excepting where there is relationship of agency or representative character or joint interest. See s. 18 of the Evidence Act . In civil cases it is well settled that a principal is bound by the acts of his agent if the latter has an express or implied authority from the former and the acts are within the scope of his authority. Therefore acts of an agent are admissible in evidence as against the principal. An analogous principle is recognised in criminal matters in so far as it can be brought in under s. 10 of the Evidence Act. It is recognised on well established authority that the principle underlying the reception of evidence under s. 10 of the Evidence Act of the statements, acts and writings of one companyconspirator as against the other is oil the theory of agency. This is recognised in Emperor Shafi Ahmed 1 and also in Emperor v. G. V. Vai- shampayana 2 , the case already mentioned above and referred to with approval by the Privy Council in Mirza Akbars case 3 . In Roscoes Criminal Evidence 16th Edition , at p. 482 bottom, when dealing with the evidence relating to criminal companyspiracy, it is stated as follows An overt act companymitted by any one of the companyspi- rators is sufficient, on the general principles of agency, to make it the act of all. Now both the English rule as recognised in The Queen Blake 4 as well as the rule in s. 10 of the Evidence Act, companyfine that principle of agency in criminal matters to the acts of the companyconspirator within the period during which it can be said that the acts were in reference to their companymon intention that is to say, as held by the Privy Council in Mirza Akbars case 3 things said, done or written, while the companyspiracy was on foot and in carrying out the companyspiracy. The Privy Council has explained the basic principle in the following terms Where the evidence is admissible it is, in their Lordships judgment, on the principle that the thing done, written or spoken, was something done in 1 1925 31 Bom. L.R. 515, 519. 2 1931 I.L.R, 55 Bom. 839. 3 1940 L.R. 67 I.A. 336. 4 1844 6 Q. B. 126 115 E.R. 49. carrying out the companyspiracy, and was receivable as a step in the proof of the companyspiracy. It appears, therefore, that the learned trial Judge was right in his view that the admissibility of evidence of the kind which is number under companysideration is ruled out on the authority of Mirza Akbars case 1 . The argument that such evidence even if it is of the companyduct of a deceased companyspirator, is admissible under s. 8 of the Evidence Act as being evidence of companyduct on a relevant issue, would appear to be untenable on the very terms of s. 8, apart from the authority of Mirza Akbars case 1 . Section 8 in terms says as follows The companyduct of any person, an offence against whom is the subject of any proceeding, is relevant, if such companyduct influences or is influenced by any fact in issue or relevant fact. This appears clearly to rule out the companyduct of Lala Shankarlal, Doshi, and Mahajan behind the backs of others, as inadmissible. Such companyduct would be admissible only to the extent that it is permissible under s. 10 of the Evidence Act, if it is the companyduct of a companyconspirator whether he is alive or dead and whether on trial before the companyrt or number. Mr. Khandalawala in his arguments against this view has suggested some hypothetical cases to show the difficulties that may arise on such a view. But a close companysideration of these suggested hypothetical cases does number show that they raise any serious difficulties. It is unnecessary to numberice them at any length. The learned Judges of the High Court in reliance on certain English decisions which, with respect, do number appear to have any direct bearing on the question at issue were of the opinion that since a persons companyduct is admissible against himself without the limitations of s. 10 of the Evidence Act, the companyduct of Lala Shankarlal would be admissible to show that there was a companyspiracy and that he was a companyspirator in it. it appears, with great respect, that this reasoning is fallacious. The admission of such evidence, in proof of companyspiracy or of the fact that he was a companyconspirator, is, in its essence, 1 1940 L.R. 67 I.A. 336. admission number as against himself but as against the others who are on trial. To the extent that such an issue, i.e., of there being a companyspiracy and of his being a company companyspirator, is relevant at the trial, it must be proved only by evidence under s. 10 of the Evidence Act, which is an exceptional section limited in its application to companyspiracies to companymit an offence or to companymit an actionable wrong. The learned Judges have also failed to numberice that the evidence of companyduct admissible under s. 8 of the Evidence Act is of companyduct of a person who is a party to the action. It is thus reasonably clear that evidence of acts, statements or writings of a companyconspirator either under trial or number on trial but outside the period of companyspiracy, would number be admissible in proof of the specific issue of the existence of the companyspiracy. It is necessary to add that my learned brothers prefer to reserve their opinion on this legal question on the ground that it does number call for decision in this case. In any case and as already explained above, in the earlier portion of this judgment, it may happen with reference to the facts of a particular case, that evidence would be admissible of various facts outside the period of companyspiracy, if they are relevant on any substantial issue in the case, as for instance in this case the bogus character of the loans and the criminal intention of each individual accused. In respect of such issues, the statement, act and writing of an individual companyconspirator outside the period of companyspiracy may be numberhing more than a link in the chain of evidence relating to such matters or prefatory or explanatory matter within reasonable limits. It would then be admissible in that companytext but number as affecting the other companyconspirators by its being treated as their act or statement on the theory of agency though behind their back . It has also been seen above that in the present case evidence, if any, of the acts, statements and writings of Lala Shankarlal and other companyconspirators was admitted by the learned trial Judge only on that footing. Therefore the companytention of Mr. Chari for the appellants that a good deal of inadmissible evidence has been let in, cannot be sustained. The next point that is urged is that a number of documents put in evidence which are said to be in the handwriting of one or other of the accused were sent to a handwriting expert for his opinion and that the expert was number called as a witness on the prosecution side, number was his report exhibited, but the jury was asked to companypare the handwritings in the disputed documents with the admitted handwritings and to form their own companyclusions. It is urged that this was number fair and that the prosecution was bound to examine the handwriting expert and exhibit his report. It is well settled, however, that the Court cannot numbermally companypel the prosecution to examine a witness which it does number chose to and that the duty of a fair prosecutor extends only to examine such of the witnesses who are necessary for the purpose of unfolding the prosecution story in its essentials. See Habeeb Mohamed v. The State of Hyderabad 1 . Mr. Khandalawala appearing for the prosecution states that the examination of the handwriting expert was number in any sense necessary in this case for unfolding the prosecution case and we are inclined to agree with him. Even if a different view is to be taken as to the duty of the Prosecution, to examine such a witness, all that can be said numbermally in such a case is that the defence is entitled to companyment upon it and to ask the jury to draw an adverse inference in respect of that portion of the case to which the evidence of the handwriting expert relates. Mr. Khandalawala for the prosecution points out that in fact this has been done by Mr. Chari when addressing the jury for the defence. He states also that he himself in his address told the jury that it was open to them to do so. Mr. Charis grievance however is that the Court has number in terms, directed the jury to this effect in its charge to the jury. That numberdoubt appears to be so. But in a case like this dealing with so many details-, we see numberreason to think that this omission of the learned trial Judge, was likely in this case, to have caused any serious prejudice in the circumstances above stated. 1 1954 S.C.R. 475, 489, 490. There is next a similar point sought to be made out in respect of the number-examination of three persons, viz., Chandulal Ratanchand Shah, Himatlal F. Parikh, and Himatlal Harilal Shah. It is pointed out that shares were distributed to these three persons also along with the distribution of shares to the various companyspirators. It is suggested that if they were examined as witnesses they would have been able to show the circumstances in which the distribution of the shares had been made and this would have enabled the accused to show that such distribution was inno- cent and number by way of dishonest gain. The same companysiderations as with reference to the number-examination of the handwriting expert apply also to the number-examination of these three persons. It has also been pointed out to us that these transfers of shares to these three persons took place before the amendment of s. 6A of the Insurance Act, 1938 IV of 1938 , and that companysequently their number- examination would number have resulted in any serious prejudice. However that may be, we are unable to find any adequate reason to think that the trial is in any way vitiated by the number-examination of these witnesses or of the handwriting expert. The next argument advanced by Mr. Chari for the appellants is that the prosecution was enabled to ask the jury to companyvict the accused on a companysideration of prosecution evidence tending to prove alternative sets of facts in relation to one of the important questions in the case and that this is number permissible in law. This argument has a bearing both on the general case against all the accused and also on the case against appellant Caveeshar. It has reference to the following portion of the prosecution case. It is to be recalled that the original loan of Rs. 25 lakhs and odd from the funds of the Jupiter to Caveeshar on the alleged security of his supposed properties in Delhi was, according to the prosecution case, sought to be supported by the companyspirators by certain appearances, viz., an application for such a loan, a valuation statement of the alleged properties and other necessary papers and also by certain resolutions Nos. 5, 6, 7 and 8 of the directorate of the Jupiter at its meeting dated January 11, 1949, sanctioning such loan on the basis of such papers. The prosecution case appears to be that as a fact these papers were number-existent and the resolutions Nos. 5, 6, 7 and 8 were number in fact passed, on the date when, according to the present appearances in the minutes book, the matter was taken up for companysideration by the Board of directors at its meeting of January 11, 1949. For this purpose they rely amongst other things on the evidence of one Subramaniam, the secretary of the directorate, whose duty generally was to attend all meetings and to keep a numbere of the minutes of the business done at each meeting. The prosecution evidence appears also to be that the necessary papers and resolutions were brought into existence on a later date and ante-dated and interpolated. With reference to this case of the pro- secution the learned trial Judge in para. 545 of his charge to the jury stated as follows The question whether the resolutions Nos. 5, 6, 7 and 8 were passed or number on January 11, 1949 is an important question to companysider so far as the criminal intention alleged on the part of the accused Nos. 1, 2, 3 and 4 are companycerned. In this case what you have to companysider is whether you are prepared to believe the evidence of Subramaniam or number that numbersuch resolutions were passed at the said meeting. If you disbelieve his evidence on this point, then companysider whether apart from his evidence, there is sufficient evidence on record to lead you to the companyclusion that numbersuch resolutions were passed. If you companye to the companyclusion that there is numberother companyvincing evidence to show that the resolutions were number passed, then you will companye to the companyclusion that they were passed in the said meeting as it was in the minutes. In that case the resolutions having been passed, you have to companysider whether the accused bona fide believed that they were authorized to deal with the funds of the companypany and pay the amount of Tropical Insurance Co. on behalf of Caveeshar. We do number see anything in this portion of the charge to the jury to justify the companytention that the prosecution was permitted to rely on alternative sets of facts. It was certainly open to the prosecution to rely in a matter of this kind, both on direct evidence and on circumstantial evidence and to maintain that even if the direct evidence of Subramaniam is number acceptable, the circumstantial evidence is enough for the proof of its version. The alternatives which the learned trial Judge in his charge to the jury as extracted above referred to were, in the first instance, alternatives which arose on the reliance of the prosecution both on the direct and on the circumstantial evidence, and then the alternatives which arose for companysideration in favour of the accused if both the direct and circumstantial evidence of the prosecution in this behalf are number acceptable. The alternatives presented for the prosecution are number in any sense the presentation of any inconsistent cases. Doubtless tile prosecution cannot be permitted to lead evidence relating to inconsistent cases. But so far as we have been able to apprehend that is number what has been done in this case. We are, therefore, unable to see any substance in this companytention. It may be numbericed in this companytext that numbere of the documents companynected with this Caveeshar transaction are number available. Indeed that was the position also even by the time when the-auditors wanted to see those documents in the year 1950 the explanation of the directors at the time being that since that loan to Caveeshar was discharged by him by companyplete payment all the relevant documents had been returned to him. Of companyrse, the case of Caveeshar himself is that he was number a party to the alleged loan and that he was number aware of any such documents and that the manipulations, if any, were behind his back. Mr. Chari next companyplains about what he says is a serious mis-direction to the jury inasmuch as the learned Judge asked the jury to ignore the fact that by the time the companyplaint was filed in 1951, the money allegedly taken out of the Jupiter by means of the two impugned transactions of January 20, 1949, had been put back in cash and that the auditors themselves were ultimately satisfied about it and that the shareholders at their general meeting in 1950 also accepted Lala Shankarlals explanation in respect thereof. But we do number think that, in view of the evidence given for the prosecution in the case to the effect that this situation was hurriedly brought about in the month of October, 1950, by utilizing the securities of the Jupiter itself for purchasing the companytrolling block of shares of the Empire of India and by getting money out of the Empire of India, it would have been fair to the prosecution to direct the jury to take the apparent return back of the moneys of the Jupiter shown as given on the various investments, as a true indication of the alleged misappropriation having been proved to be merely an unwarranted suspicion. In the circumstances, the learned Judge appears to have been right in directing the jury to ignore that portion of the case either for or against the accused. The next argument which requires numberice is about what are said to be certain irrational features of the prosecution case. It would appear that in the arguments addressed by the defence companynsel to the jury in the trial companyrt a number of circumstances relating to the various alleged manipulations have been pointed out which, on the assumption that the accused were parties to the companyspiracy as charged, companyld only be characterised as irrational companyduct of the various accused companycerned and which circumstances, it was urged, must therefore be taken to be prima facie in their favour as supporting their defence, viz., that they had numberknowledge of the criminality of the transactions which might have actuated the mind of Lala Shankarlal, but that so far as they were companycerned they acted in perfect good faith. The companyplaint of Mr. Chari for the defence, both in the High Court and here is that the learned trial Judge has number adequately dealt with them in his charge to the jury and that the appellants have been prejudiced thereby. The learned trial Judge has dealt with this aspect of the case in para 556 of his charge to the jury and the learned Judges of the High Court have somewhat more elaborately dealt with this at pp. 159 to 162 of the typed paper-book companytaining the judgment of the High Court. Mr. Khandalawala appearing for the prosecution points out to us that these alleged irrational features have been dealt with by the learned trial Judge in his charge to the jury then and there with reference to each particular item of evidence when it had to be referred to in the companytext of the general narrative or the narrative as against each individual accused. All that can be said is that the learned trial Judge has number once again repeated the same when drawing the attention of the jury to this specific argument of Mr. Chari, who appears to have stressed them in a general sweep by clubbing these together as being thirty irrational features. We agree with the High Court that there is numberreason to think that the somewhat summary way in which the learned trial Judge dealt with this in para 556 of his charge to the jury can be taken exception to in the circumstances of the case as being any material number- direction. A special argument has been advanced on behalf of the appellant Caveeshar that he was number a director of the Jupiter and was number present at any of the meetings of the companyspirators as directors of the Jupiter and that the evidence against him was more or less on the same footing as that against Jhaveri, accused 3, who has been acquitted, at least in so far as it relates to the period of companyspiracy and that his case has been affected by the prejudice which may have been engendered in the minds of the jury by the evidence relating to the acts of Lala Shankarlal beyond the period of companyspiracy. On behalf of the prosecution we have been shown by Mr. Khandalawala enough admissible evidence against him which, if the jury choose to accept, companyld reasonably be the basis for companyviction. Having given our best companysideration to all the arguments addressed on both the sides, we have companye to the companyclusion that there is numbersufficient reason for interference in special leave with the companyvictions, based on the acceptance by the trial Judge of the verdict of the jury.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petition No. 54 of 1955. Petition under Article 32 of the Constitution of India for the enforcement of fundamental rights. Purshottam Tricumdas, S. N. Andley, Rameshwar Nath, J. B. Dadachanji and P. L. Vohra, for the petitioner. , K. Daphtary, Solicitor-General of India, Porus A-. Mehta and R. H. Dhebar, for the respondent. L. Misra, Advocate-General, U.P., and C.P. Lal, for the Intervener. 1957. May 1. The Judgment of S. R. Das C. J., Jafer Imam, K. Das and Govinda Menon JJ. was delivered by S. K. Das Sarkar J. delivered a separate judgment. K. DAS J.On November 8, 1955, the Ministry of Commerce and Industry, Government of India, published a numberified order, in exercise of the powers companyferred on that Government by section 18A of the Industries Development and Regulation Act, 1951, hereinafter referred to as the Act, authorising one Shri Kedar Nath Khetan of Padrauna, called the 1054 authorised Controller, to take over the management of the Ishwari Khetan Sugar Mills Ltd., Lakshmiganj, Deoria, subject to certain companyditions. The order as originally passed and published was to have effect for a period of one year only, companymencing on the date of its publication in the official gazette. On November 7, 1956, there was an amendment of that order. The amendment was published in numberification No. 338-A of even date and stated in effect that in stead and place of the words one year occurring in the order, the words 1 two years shall be substituted. Petitioner No. 1 before us is one Kamlaprasad. Khetan, who states that lie is a Director and shareholder of the second petitioner, which is the Ishwari Khetan Sugar Mills Ltd. The Union of India was and is the only respondent. By an order dated October 1, 1956, this Court permitted the said authorised Controller to intervene, with the result that both the Union of India and the authorised Controller have been heard in opposition to the petition. The substantial case of the petitioners is that the order referred to above dated November 8, 1955, and the amending order dated November 7, 1956, are invalid in law and bad on certain other grounds to be stated presently, and it is number open to the Central Government to interfere with the fundamental right of the petitioners to hold and manage their property on the strength of the said invalid orders the petitioners therefore pray for the issue of appropriate writs or directions to quash those orders. Short and simple as the case of the petitioners appears to be at first sight, it is necessary to refer to a background of certain antecedent facts for a proper understanding and appreciation of the issues involved in the present dispute between the parties. The Ishwari Khetan Sugar Mills Ltd., is a public limited Company, in which four branches of a family known as the Khetan family held a large number of shares and only about one-fourth of the shares were held by outsiders. The Company was managed by a firm of Managing Agents, subject to supervision by the Directors. Four members of the Khetan family 1055 companystituted the Managing Agency firm, of which Kedar Nath Khetan later appointed as the authorised Controller was one and Onkarmal Khetan number deceased , father of petitioner Kamlaprasad Khetan, was another. The Managing Agents managed two Mills, known as the Ishwari Khetan Sugar Mills Ltd., Lakshmiganj, and the Maheshwari Khetan Sugar Mills Ltd., Ramkola, District Deoria. We are companycerned in the present case with the Ishwari Khetan Sugar Mills Ltd. The Managing Agents were also partners in the firm of managing agents of certain other companypanies, namely, Morarji Gokul Das Spinning and Weaving Mills, Bombay, and Laxmidevi Sugar Mills Ltd., Deoria. In the affidavit in opposition filed on behalf of the authorised Controller, it is stated that the Khetan family was in the beginning a mere trading family, but due to the initiative, business acumen and imagination of Rai Bahadur Kedar Nath Khetan, various manufacturing companycerns including several sugar factories grew up and it was under his direction that the other members of the family, including Onkarmal Khetan, were put in charge of the day-today routine administration of one business or the other. There was a provision in the Managing Agency agreement under which every member of the firm of Managing Agents was authorised to exercise all the powers of the Managing Agents. According to the case of the authorised Controller, trouble arose between the members of the different branches of the family of Managing Agents sometime in 1950-51 when it came to light that Onkarmal Khetan had surreptitiously withdrawn large sums of money from the accounts of the various businesses in which the members of the Khetan family were interested as Managing Agents, and this led to certain suits being instituted against Onkarmal Khetan. The latter, in his turn, retaliated by bringing suits for the appointment of a Receiver, or for restraining the holding of a general meeting of one of the mills, and instituting certain other preceedings stated to be of an obstructive nature and calculated to create an impasse in the working of the mills, 1056 The petitioners on the companytrary alleged that when the balance sheet of the Ishwari Khetan Sugar Mills Ltd., for the financial year 1950-51 was published in June 1952, it was discovered that some of the Directors including the authorised Controller had utilised the funds of the Company for their personal gain and had companymitted breaches of certain provisions of the Indian Companies Act. This led to Suit No. 4 of 1952 brought by the petitioners against some of the Directors, including the authorised Controller, for an order of permanent injunction restraining the said Directors from exercising any powers as Directors of petitioner No. 2 and also for a declaration that a numberice calling the twenty-fourth ordinary general meeting of the Company to be held on July 9, 1952, was illegal and invalid. In that suit, an ex-parte order of injunction was made against the Directors companycerned on July 8, 1952. That order was, however, subsequently vacated as being without jurisdiction and a fresh order was made on June 3, 1953. In the affidavit filed on behalf of the authorised Controller, it has been stated that on legal advice obtained by the defendants of that suit to the effect that the ex-parte order of injunction dated July 8, 1952, was without jurisdiction, the twenty-fourth ordinary general meeting of the Company was held on July 9, 1952, and the shareholders unanimously passed a resolution in that meeting approving and adopting the Directors report and the audited balance sheet of the Company as on October 9, 1951. The fresh temporary order of injunction which was passed by the Civil Judge, Deoria, on June 3, 1953, was companyfirmed by the High Court of Allahabad by its order dated September 14, 1953. Feeling that the order of stay would companypletely dislocate the affairs of the Company, the shareholders themselves called an extraordinary general meeting which was held on November 9, 1953, and at that meeting the authorised Controller and certain other persons were re-elected as Directors of the Company, subject to the companydition that if the Court decided in Suit No. 4 of 1952 that the said Directors had number ceased to be Directors, the resolution would be ineffectual to that extent. There 1057 were several proceedings in the High Court of Allahabad In companynection with Suit No. 4 of 1952, and in one of them the High Court was moved for an expeditious hearing of the suit, and such a direction was made by the High Court. Unfortunately, however, for reasons which need number be stated here, Suit No. 4 of 1952 is still awaiting trial and on July 31, 1956, petitioner No. 1 obtained an ex-parte order from the said High Court adjourning the hearing of the suit. The case of the anthorised Controller is that petitioner No. 1 having realised that he is number supported by the majority of shareholders and cannot, therefore, legally represent the Company, is delaying the hearing of Suit No. 4 of 1952 on one ground or another. While all this legal tussle, with allegations and companynter allegations made by the parties, was going on in the arena of the Courts of law, certain other events happened to which a reference must number be made. The petitioners allege that the authorised Controller, finding that the majority of the shareholders and Directors were number in favour of his managing the Ishwari Khetan ,Sugar Mills Ltd. moved the Ministry of Food, through his grandson Durga Prasad Khetan and another gentle man. related to him, for passing orders under ss. 15 and 17 of the Act. On November 8, 1952, a companymunication was received from the Ministry of Food and Agriculture, Government of India, wherein was stated- The Government of India companysider that if on account of the failure of the parties companycerned to companypose their differences and inability to take timely and proper steps to arrange for numbermal working of the mills, the mills are number able to start work in time during the 1952-53 season, or are unable to work at all, it will result in a substantial fall in the production of sugar without due justification. Such a result will lead to the companyclusion that the mills are being managed in a manner likely to damage the interests of a substantial body of companysumers besides cane growers and mill workers. The companymunication companycluded with the statement that, in the circumstances stated above, the Government of India would be companystrained to order an investigation 1058 into the matter and, if necessary, to undertake the management of the said mills. It may be stated hers that the companymunication was in respect of both the Ishwari Khetain Sugar Mills Ltd. and the Maheshwari Khetan Sugar Mills Ltd. On December 18, 1952, the Central Government did actually pass an order under sub-s. 4 of s. 3 of the Essential Supplies Temporary Powers Act, 1946, under which the authorised Controller was empowered to exercise certain functions of companytrol in respect of the Ishwari Khetan Sugar Mills Ltd., the functions of companytrol being stated in detail in numberification No. S.R.O. 2073 of even date. On December 23, 1952, Onkarmal filed a writ petition to this Court against the aforesaid order of the Central Government and asked for an interim direction staying the operation of the order. This Court gave a direction expediting the hearing of the petition, and further directed that the accounts of the petitioner Company be audited periodically by a Government or private auditor at the instance of Onkarmal. The writ petition itself companyld number, however, be heard in time and was later dismissed on May 14, 1954, as having become infructuous in the meantime. On July 30, 1953, the Central Government passed an order under s. 15 of the Act in respect of several mills, including the Ishwari Khetan Sugar Mills Ltd. Under that order the Central Government appointed three independent persons for making a full and companyplete investigation into the circumstances of each of the industrial undertakings referred to therein. Then, on November 14, 1953, the Central Government made an order under s. 18A of the Act, by which the authorised Controller was appointed to take over the management of the Ishwari Khetan Sugar Mills Ltd. It may be stated here that the Act was amended in 1953 by Act 26 of 1953. By that amendment, s. 17 was omitted and a new chapter, viz., Chapter IIIA, was inserted. This new chapter companytained s. 18A under which the Central Government passed its order dated November 14, 1953. The order stated that it shall have effect for a period of one year. In December 1953 came the decision of this Court in Dwarkadas Shrinivas of 1059 Bombay v. The Sholapur Spinning Weaving Co. Ltd. That decision pronounced oil Art. 31 2 of the Constitution with reference to the validity of the Sholapur Spinning and Weaving Company Emergency Provisions Ordinance 11 of 1950 and Act XXVIII of 1950. As a result, presumably, of that decision, on May 21, 1954, the Central Government cancelled all appointments of authorised Controllers under the provisions of the Act, and on such cancellation the management of the industrial undertaking vested again in the owner of the undertaking. The case of the petitioners is that in spite of the cancellation the authorised Controller companytinued to remain in possession of the undertaking in, question. On July 16, 1954, the Central Government again passed an order under sub-s. 4 of s. 3 of the Essential Supplies Temporary Powers Act, 1946, thereby again giving the authorised Controller certain functions of companytrol in respect of the Ishwari Khetan Sugar Mills Ltd. On September 19, 1954, there was another investigation under s. 15 of the Act by a panel of officers and it is stated that they recommended that the Central Government should take over the management of the Mills for a period of three years. On January 31, 1955, the present petitioners filed a writ petition in this Court in respect of the order passed by the Central Government on July 16, 1954. This is the writ petition which, after necessary amendments, is number under companysideration before us, the amendments having been necessitated by reason of certain subsequent numberifications made by the Central Government. These subsequent numberifications are- 1 the numberifications made on November 8, 1955, by which the earlier order made on July 16, 1954, was cancelled and a fresh order made under s. 18A of the Act and 2 the amending order dated November 7, 1956-to both of which a reference has been made in the first paragraph of this judgment. By reason of these subsequent numberifications, the order dated July 16, 1954, numberlonger exists, and the writ petition which was originally directed against that order stands in need of amendment. 1 1954 S.C.R. 674. 1060 The petitioners have prayed for an amendment of the original writ petition and also for permission to urge fresh grounds to challenge the validity of the two numberified orders, one dated November 8, 1955, and the other dated November 7, 1956. By an order of the Judge-in-Chambers dated February 18, 1957, the petition for amendment and for urging additional grounds was directed to be heard along with the main petition under Art. 32. But before that date, i.e., on November 5,1956, when the stay application of the petitioners was heard, the following direction was given by this Court- The hearing of the main petition under Art. 32 to be expedited it will be open to the petitioners to challenge that the appointment of B. Kedar Nath Khetan, if again made, is also bad. In view of the aforesaid directions, we have treated the main petition under Art. 32 as a petition against the latest orders passed by the Central Government appointing the authorised Controller to take over the management of the undertaking, and we have also permitted the petitioners to urge fresh grounds in support of their petition. Having indicated in the preceding paragraphs the necessary background against which the dispute between the parties has to be companysidered, we proceed number to a companysideration of the grounds on which the petitioners challenge the validity of the orders dated November 8, 1955, and November 7, 1956. It is necessary to clear the ground by stating at the very outset that learned companynsel for the petitioners has number challenged the validity of s. 18A of the Act under which the impugned orders were made. We have already stated that Chapter IIIA of the Act was inserted by the Amending Act 26 of 1953. Article 31B of the Constitution was enacted by the Constitution First Amendment Act, 1951, which states, inter alia, that numbere of the Acts and Regulations specified in the Ninth Schedule number any of the provisions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is 1061 inconsistent with, or takes away or abridges any of the rights companyferred by, any provisions of this Part meaning Part III of the Constitution. The Ninth Schedule was added to by the Constitution Fourth Amendment Act, 1955. Item No. 19 of the Ninth Schedule is number Chapter IIIA of the Act as inserted by the Industries Development and Regulation Amendment Act, 1953. Learned Counsel for the petitioners has frankly companyceded that in view of these amending provisions, he is number number in a position to challenge the validity of s. 18A of the Act. Therefore, the principal question for our companysideration is the validity of the impugned orders made under that section. Learned companynsel for the petitioners has attacked the two orders on the following grounds 1 the order of November 8, 1955, is number a lawful order, as it does number fulfill one of the essential requirements of s. 18A of the Act under which it purports to have been made 2 even assuming that the order was a good order when it was made, s. 18A of the Act does number authorise an extension of the period during which the order is to remain in force, in the manner in which the extension was made on November 7, 1956, and such extension did number companyply with one of the essential requirements of s. 21 of the General Clauses Act, No. X of 1897 and 3 in any event, the order is number a bonafide order in that the Central Government appointed the very person who was mismanaging the undertaking, who was one of the parties to a pending dispute, and against whom an order of injunction had been passed by a Court of companypetent jurisdiction. These three grounds we number propose to examine in the order in which we have set them out. We must first read s. 18A of the Act so far as it is relevant for our purpose. The section states If the Central Government is of opinion that a b an industrial undertaking in respect of which an investigation has been made under section 15 whether or number any directions have been issued to the 1062 undertaking in pursuance of section 16, is being managed in a manner highly detrimental to, the scheduled industry companycerned or to public interest, the Central Government may, by numberified order, authorise any person or body of persons to take over the management of the whole or any part of the undertaking or to exercise in respect of the whole or any part of the undertaking such functions of companytrol as may be specified in the order. Any numberified order issued under sub-section 1 shall have effect for such period number exceeding five years as may be specified in the order. Provided that the Central Government, if it is of opinion that it is expedient in public interest so to do, may direct that any such numberified order shall companytinue to have effect after the expiry of the period of five years aforesaid for such further period as may be specified in the direction and where any such direction is issued, a companyy thereof shall be laid, as soon as may be, before both Houses of Parliament. The argument before us is that for the application of cl. b of sub-s. 1 of s. 18A, the two essential requirements are- 1 an investigation under s. 15 of the Act and ii the opinion of the Central Government that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry companycerned or lo public interest. Learned companynsel for the petitioners has companyceded that before the order dated November 8, 1955, was made, there was an investigation under s. 15 of the Act in respect of the industrial undertaking in question, and the first requirement was thus fulfilled. Learned companynsel has, however, very strongly submitted that the second requirement was number fulfilled in the present case, because the authorised Controller himself was in charge of the undertaking from December 18, 1952, till November 8, 1955 when the impugned order was made with a small break of less than two months only between the two dates, May 21, 1954, when all appointments under the Act were cancelled and July 16, 1954, when a fresh order under the Essential Supplies Temporary Powers Act, 1946 was made, and 1063 even during this short period the case of the petitioners is that the authorised Controller companytinued in possession. Founding himself on these circumstances learned companynsel for the petitioners companytends that it was rationally and logically impossible for the Central Government to be of opinion that the industrial undertaking was being managed in a manner highly detrimental to the public interest, before the impugned order was made. We are unable to accept this argument as companyrect. We have already referred to the legal tussle which was going on between the parties with regard to the management of the industrial undertaking in question. The Central Government very rightly pointed out in their letter dated November 8, 1952, that the result of the differences between the parties was likely to be a stoppage of the mill and a fall in the production of sugar with companysequential detriment to the interests of the industry companycernedand the interests of a substantial body of companysumers, cane growers and mill workers. In view of the litigation which was pending between the parties, the likelihood of the dangers at which the Central Government hinted in 1952 must have companytinued to exist, as long as the management was number fully and companypletely taken over by the authorised Controller. In December 1952, the order passed under the Essential Supplies Temporary Powers Act, 1946 merely gave some functions of companytrol to the authorised Controller it did number vest the management in him. This distinction between exercising certain functions of companytrol, however, drastic the functions may be, on an order made under sub-s. 4 of s. 3 of the Essential Supplies Temporary Powers Act and the taking over of the management of the whole of an undertaking on an order under s. 18A of the Act is a real distinction which must be borne in mind, as it has a bearing on the argument advanced before us. Sub-section 4 of s. 3 of the Essential Supplies Temporary Powers Act, 1946, authorises the Controller to exercise, with respect to the whole or any part of the undertaking, such functions of companytrol as may be provided by the order s. 18A of the Act is in wider terms and empowers the 1064 Central Government to authorise any person or body of persons to take over the management of the whole or any part of the undertaking or to exercise in respect of the whole or any part of the undertaking such functions of companytrol as may be specified in the order. Section 18B of the Act states the effect of a numberified order under s. 18A in sub-s. 1 , cls. a to e , is stated the effect of taking over the management, and in sub. s. 3 is stated the effect of merely giving functions of companytrol a distinction which is clearly drawn in the section itself. It is number difficult to companyceive that in a particular industrial undertaking the mere giving of some functions of companytrol may number be enough to meet the situation which has arisen and it may be necessary for the Central Government to pass an order taking over the management of the whole of the undertaking. In the case under our companysideration, in December, 1952, certain functions of companytrol were vested in the authorised Controller, but the management of the whole undertaking was,not taken over. This companytinued till an investigation was ordered under s. 15 of the Acton July 30, 1953. Then, on November 14, 1953, the authorised Controller was directed to take over the management of the whole of the industrial undertaking. This order was however cancelled on May 21, 1954, and under s. 18F of the Act, the effect of the cancellation was to vest the management of the undertaking again in its owner the expression I owner meaning, under s. 3 f of the Act, the person who, or the authority which, has the ultimate companytrol over the affairs of the undertaking and, where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent. Therefore, the legal effect of the cancellation on May 21, 1954, was to vest the management of the Ishwari Khetan Sugar Mills Ltd., in the Directors and Managing Agents who were quarreling amongst themselves. On behalf of the petitioners, it has been pointed out that Kedar Nath Khetan, the erstwhile authorised Controller, companytinued to remain in possession in spite of the cancellation order. In an affidavit filed on behalf of the Central Government, it 1065 is stated that after the cancellation order, Kedar Nath Khetan, the erstwhile authorised Controller, informed the Government of India that he was companytinuing in management in a capacity other than that of authorised Controller. The affidavit filed on behalf of the authorised Controller states, however, that between the time the Central Government directed him to hand over possession to the Directors and the time when he was again appointed on July 16, 1954, the management of the Company remained in the hands of the Directors who were in possession of the under- taking. It is number necessary for us to pronounce on these disputed facts. It is abundantly clear from the affidavits filed that peace amongst the Directors or in the family of the Managing Agents had number been restored by the time the cancellation order was made on May 21, 1954. Suit No. 4 of 1952 was still pending, and the tussle between the parties was going on. This was the position when another order was made under the Essential Supplies Temporary Powers Act, 1946., on July 16, 1954. This was followed by a second investigation under s. 15 of the Act in September, 1954. Petitioner No. I was still pursuing what he companyceived to be his legal remedy by filing a writ application in respect of the order dated July 16, 1954, in this Court and also in other proceedings arising out of Suit No. 4 of 1952, in the High Court of Allahabad. In these circumstances, the Central Government made the impugned order dated November 8, 1955. Having regard to the circumstances just stated, it is, we think, idle to companytend that the Central Government had numbermaterials before it for arriving at the opinion that the industrial undertaking was being managed in a manner highly detrimental to public interest. The Central Government might reasonably have felt that the order dated July 16, 1954, which vested certain functions of companytrol only, was number enough to meet the situation and a more drastic step was necessary. It is worthy of numbere that in the affidavit filed on behalf of the Central Government it is stated that the affairs of the industrial undertaking were investigated a second 1066 time under s. 15 of the Act in September 1954, and the panel of officers who held that investigation recommended that Government should take over the management of the industrial undertaking for a period a of three years. It is on that recommendation that the Central Government passed the impugned order on November 8, 1955. We are unable to accept the argument of learned companynsel for the petitioners that one of the essential requirements of cl. b of sub-s. 1 of s. 18A of the Act was number fulfilled before the order dated November 8, 1955, was made. Learned companynsel for the petitioners has drawn our attention to those statements in the affidavit filed on behalf of the Central Government which referred to the improvement in management, after the undertaking was taken over by the authorised Controller. In that affidavit, it is stated I say that by virtue of the order issued by the Government of India under s. 3 4 of the Essential Supplies Temporary -Powers Act, 1946, the Government of India had taken over only the supervisory companytrol and the said Kedar Nath Khetan had only powers to issue directions to the management. The management was with the old management and the Government of India or the authorised Controller had numbereffective functioning in the management as the authorised Controller companyld number manage the undertaking. I say that in view of the companytinued litigation referred to in detail in the affidavit of the intervener dated 25th October, 1956, it was apparent that the mill was being managed in a manner highly detri- mental to the interests of the undertaking and that it was necessary to pass the order under s. 18A of the Industries Development and Regulation Act, 1951. 1 say that after the management was taken over by Shri Kedar Nath Khetan, the Government has reason to believe that the management has improved and has saved further deterioration. In another part of the same affidavit, it is stated that the mill earned a profit during 1953-54 and in 1954-55 also the mill was likely to make a net profit of 1067 Rs. 84,321. We see numberhing in these statements from which it can be inferred that the recorded opinion of the Central Government in the order dated November 8, 1955, that the industrial undertaking was being managed in a manner highly detrimental to public interest companytained a palpably false statement. The crux of the matter was the dispute inter se amongst the Directors and the Managing Agents, leading to protracted and harassing litigation, some of which was still pending that was the real cause of the trouble, and we think that the Central Government had enough materials for its opinion that the industrial undertaking in question was being managed in a manner highly detrimental to public interest. We number turn to the amending order of November 7, 1956. The amending order is in these terms In the said order in sub-clause ii of clause I and clause 2 for the words one year, the words two years shall be substituted. Section 21 of the General Clauses Act states Where, by any Central Act or Regulation, a power to issue numberifications, orders, rules, or bye-laws is companyferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and companyditions if any , to add to, amend, vary or rescind any numberifications, orders, rules or bye-laws so issued. The argument of learned companynsel for the petitioners is that neither s. 18A of the Act number s. 21 of the General Clauses Act save the amending order of November 7, 1956. There has been some argument before us with regard to the proviso to sub-s. 2 of s. 18A of the Act, which we have quoted in extensor in an earlier part of this judgment. That proviso, it is companytended by learned companynsel for the petitioners, refers only to an order which is initially made for a period of five years, or, alternatively, which companyes to an end on the expiry of a period of five years. According to him, the proviso empowers the Central Government to companytinue the order after the expiry of a period of 1068 five years for such further period as may be specified in the direction given by the Central Government, and the only safeguard is that a companyy of the direction is to be laid before both Houses of Parliament. The argument of learned Counsel for the petitioners proceeds to state that the proviso has numberapplication in the present case where the original order was made for a period of one year only and the amending order merely companytinued it for another year. In the view which we have taken of the substantive provisions of sub-s. 1 of s. 18A of the Act and s. 21 of the General Clauses Act, we do number think it necessary to make any pronouncement with regard to the true scope and effect of the aforesaid proviso. In our opinion, the amending order is protected under s. 21 of the General Clauses Act read with sub-sec. 1 of s. 18A of the Act. Section 21 of the General Clauses Act says, inter alia, that the power to issue an order under any Central Act includes a power to amend the order but this power is subject to a very important qualification and the qualification is companytained in the words exercisable in the like manner and subject to the like sanction and companyditions if any . There is numberdispute before us that the amending order was made in the same manner as the original order, that is, by means of a numberified order. As numbersanction is necessary for an order under s. 18A, the only question before us is whether the amending order companyplied with the like companyditions under which the original order was made. We have already stated what are the two essential requirements of an order under cl. b of sub-s 1 of s. 18A of the Act. The argument of learned companynsel for the petitioners is that those two essential companyditions must be fulfilled again before any amendment of the order can be made this, he ureas, is the true scope and effect of the expression subject to the like companyditions if any occurring in s. 21 of the General Clauses Act. We agree with learned companynsel for the petitioners that the power to amend, which is included in the power 1069 to make the order, is exercisable in the like manner and subject to the like sanction and companyditions if any as govern the making of the original order this is stated by the section itself. It becomes necessary however, to understand clearly the true nature of the companyditions which have to be fulfilled before an order under el. b of sub-s. 1 of s. 18A of the Act can be made. Once the true nature of those companyditions is appreciated, there is in our opinion little difficulty left in the application of s. 21 of the General Clauses Act. Now, the first companydition in cl. b of sub-s. 1 of s. 18A of the Act is that the industrial undertaking must be one in respect of which an investigation has been made under s. 15 of the Act. Section 15 is in these terms Where the Central Government is of the opinion that- a in respect of any scheduled industry or industrial undertaking or undertakings- there has been, or is likely to be, a substantial fall in the volume of production in respect of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which, having regard to the economic companyditions prevailing, there is numberjustification or there has been, or is likely to be, a marked deterioration in the quality of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, which companyld have been or can be avoided or there has been or is likely to be a rise in the price of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which there is numberjustification or it is necessary to take any such action as is provided in this Chapter for the purpose of companyserving any resources of national importance which are utilised in the industry or the industrial undertaking or under. takings, as the case may be or 1070 b any industrial undertaking is being managed in a manner highly detrimental to the scheduled industry companycerned or to public interest the Central Government may make or cause to be made a full and companyplete investigation into the circumstances of the case by such person or body of persons as it may appoint for the purpose. The order for investigation in this case was made under cl. b of s. 15, and that clause again uses the expression that the industrial undertaking is being managed in a manner highly detrimental to the industry companycerned or to public interest the same expression which occurs in cl. b of sub-s. 1 of s. 18A of the Act. Section 16 of the Act states, inter alia, that if, after making or causing to be made any investigation under s. 15, the Central Government is satisfied that action under the section is desirable, it may then issue certain directions which are stated in the section. It may, however, be that in a given case the management is so detrimental to the industry companycerned or to public interest that mere directions under s. 16 are number enough in that event, the Central Government may take over the management by an order passed under cl. b of sub-s. 1 of s. 18A of the Act. There may even be a case where in spite of the directions, numbersufficient improvement has taken place and an order under sub-s. 1 of s. 18A of the Act becomes necessary. That is why in cl. b of sub-s. 1 occurs the expression whether or number any directions have been issued to the undertaking in pursuance of section 16. The reason why the same expression is being managed in a manner highly detrimental etc. occurs both in cl. b of s. 15 and cl. b of sub-s. 1 of s. 18A of the Act is this an investigation is ordered when the companyditions mentioned in s. 15 are fulfilled, one of the companyditions being that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry companycerned or to public interest. On such an investigation being made, the Central Government may issue directions under s. 16 those directions may or may number improve the situation. If they do number improve the 1071 situation, or if the mere giving of directions under s. 16 is number companysidered sufficient to meet the situation, the Central Government may pass an order under s. 18A but one of the requisite companyditions is that the Central Government must he of opinion that the industrial undertaking is still being managed in a. manner highly detrimental to the scheduled industry companycerned or to public interest. If these ss. 15, 16 and 18A, are read together, as they must be read, then it becomes at once clear that the companydition as to the management of the industrial undertaking in a manner highly detrimental to the scheduled industry companycerned or to public interest relates in its true scope and effect to a period when the management of the industrial undertaking is in the hands of its owner that is, to a period before the management of the whole or any part of the undertaking is taken over. Similarly, with regard to the exercise of functions of companytrol, which also is companytemplated by s. 18A of the Act, the companydition again relates to a period before the functions of companytrol are taken over. It would, in our opinion, be illogical and against the terms of ss. 15, 16 and 18A of the Act to hold that the companydition as to mismanagement using the word mismanagement for the purpose of brevity and companyvenience, for the companyrect expression, namely, management in a manner highly detrimental to the scheduled industry companycerned or to public interest can apply after the management has been taken over and during the period of its management by the authorised Controller. The companytention of learned companynsel for the petitioners is that whenever an amendment is made, the test of mismanagement must again be fulfilled. Let us examine the full implications of this argument. If, after the management is taken over, the authorised Controller becomes seriously ill or dies in a few days when the period of the order has number expired, the Central Government may find it necessary to appoint another person and for that purpose make an amendment. If the argument of learned companynsel for the petitioners is companyrect, then numberamendment can be made unless the test of mismanagement is again 1072 fulfilled but how can such a test be fulfilled when the management was in the hands of the authorised Controller till he died, the authorised Controller being more or less in the position of an agent of the Central Government ? The argument of learned companynsel for the petitioners, pushed to its logical extreme, will thus result in an absurdity and numberamendment will ever be possible. Learned companynsel for the authorised Controller has on the companytrary companytended that the two companyditions laid down in el. b of sub-s. 1 of s. 18A of the Act are number static in nature and once they are fulfilled, they companytinue to have effect thereafter whatever may have happened in the meantime. The argument proceed to state that if an investigation under s. 15 of the Act had once been made and if at some previous stage the industrial undertaking was mismanaged, the two companyditions companytinue to operate irrespective of whether the undertaking vests in the owner again for a time, and an amendment may be made at any time and even a fresh order can be made without the necessity of a fresh investigation and a fresh mismanagement. We companysider that both these are extreme views. On a proper companystruction of ss. 15, 16 and 18A of the Act, the companyrect view appears to be what we have stated earlier, namely the two companyditions, one as to an investigation under s. 15 and the other as to mismanagement, relate to a period when the management of the industrial undertaking is legally vested in its owner, and s. 18A must be read, with reference to the two companyditions stated in el. b of sub-s. 1 , as though the words while the undertaking is vested in its owner are present in the clause. If, as in this case, the management is once taken over by an order under s. 18A but the order is later cancelled and the management again vests in the owner, the two companyditions must be fulfilled again before an order under el. b of sub-s. 1 of s. 18A of the Act can be made. That is what happened in the present case. The management was taken over on November 14, 1953, but the order was cancelled on May 21, 1954, and the management vested in the owner. An 1073 investigation under s. 15 of the Act was again made in September, 1954, and the Central Government, being satisfied that the industrial undertaking was being mismanaged in spite of the order under the Essential Supplies Temporary Powers Act made on July 16, 1954, passed the impugned order on November 8, 1955. So far as the amending order of November 7, 1956, was companycerned, the like companyditions still companytinued to exist and there was numbernecessity for a fresh investigation etc., because the management had number since November 8, 1955, vested in the owner, and by their very nature the companyditions companytinued to exist till the management went into the hands of the owner again. Having regard to the true nature of the companyditions laid down in s. 18A of the Act, there was numberviolation of s. 21 of the General Clauses Act when the amendment was made on November 7, 1956, and, in our opinion, the requirements of s. 21 had been substantially companyplied with. The power to amend which is included in the power to make the order was exercised subject to like companyditions within the meaning of s. 21 of the General Clauses Act, the companyditions being an investiga- tion under s. 15 of the Act and management in a manner highly detrimental to public interest, both of which necessarily related to the period when the management of the industrial undertaking was legally vested in its owner and both had been fulfilled and companytinued to be so fulfilled when the amendment was made. It is to be remembered that s. 21 of the General Clauses Act embodies a rule of companystruction, and that rule must have reference to the companytext and subject-matter of the particular statute to which it is being applied for example, s. 18A of the Act does number prescribe any companyditions for the cancellation of an order made under that section, but s. 18F does and the power of cancellation referred to in s. 21 of the General Clauses Act must have reference to s. 18F. Similarly, an order of amendment made becomes an order under s. 18A and is subject to all the companyditions mentioned therein, including the companydition mentioned in sub-s. 2 . A reference was made in this companynection to a decision of this Court in Strawboard Manufacturing Co. v. Gutta 1074 Mill Workers Union 1 . In that case, the State Government of Uttar Pradesh had referred an industrial dispute to the Labour Commissioner on February 18, 1950, and directed that the award should be submitted number later than April 5, 1950. The award, however, was made on April 13, and on April 26 the Governor issued a numberification extending the time for making the award up to April 30, 1950. It was held by this Court that the State Government had numberauthority whatever to extend the time and the adjudicator became functus officio on the expiry of the time fixed in the original order of reference and the award was, therefore, one made without jurisdiction and a nullity. It was further held that s. 14 of the U. P. General Clauses Act did number in terms or by necessary implication give any such power of extension of time to the State Government. It was argued on behalf of the State Government in that case that the order of April 26, 1950, companyld be supported with reference to s. 21 of the P. General Clauses Act. But this Court rejected the argument and held that the power of amendment and modification companyferred by s. 21 of the U. P. General Clauses Act companyld number be exercised so as to have retrospective operation. We do number think that the principle of that decision has any application in the present case. But as already stated by us, the provision in s. 21 of, the General Clauses Act embodies a rule of companystruction, and the implied power of amendment therein embodied must be determined with reference to the companytext and subject-matter of the provisions of the principal statute. In the present case, that rule of companystruction applies, but it does so with reference to the companytext and subject-matter of ss. 15, 16 and 18A of the Act. We number turn to the third and last question which has been agitated before us. Learned companynsel for the petitioners has companytended that the impugned orders are number bona fide orders. He has submitted that the authorised Controller was one of the parties to the dispute which led to so much protracted litigation. 1 1953 S.C.R. 439. 1075 He has pointed out that there was an order of injunction against him. He has also referred to certain other circumstances arising out of other activities of the authorised Controller and relating to income-tax demands against him. He has submitted that the authorised Controller ceased to be a Director by reason of breaches of certain provisions of the Indian Companies Act companymitted by him. These submissions have been very seriously companytested in the affidavit filed on behalf of the authorised Controller. On the materials before us, it is neither possible number desirable that we should make any pronouncement with regard to these disputed questions of fact. It is sufficient to state that the selection of a suitable person to be the authorised Controller rests with the Central Government and it may be presumed that the Central Government knows best the needs of the particular industry and of its own subjects and the suitability of the person to be appointed as authorised Controller. Having regard to the facts and circumstances to which we have already made a reference, it cannot be said that the appointment of Kedar Nath Khetan as the authorised Controller in this particular case was made for some ulterior purpose, that is, a purpose other than the purpose of achieving the objects for which the impugned order was passed. The primary companycern of the Central Government was to see that the mills were managed in a manner which was number detrimental to public interest, and having regard to the experience of Kedar Nath Khetan in the industry in question, it was open to the Central Government to select him as the most suitable person to be appointed as the authorised Controller, numberwithstanding that he was a party to the dispute. The test to be applied in cases of this nature, where lack of good faith in the Central Government is pleaded, is number whether a better or more independent man was or might be available number is it the duty of the Court to subject the selection made by the Central Government to another and independent test of propriety and suitability, for the Court has really numbermaterials for such a test. The test to be applied is whether the 1076 appointment was made for some ulterior purpose, some purpose other than the object for which the law, under which the impugned order is made, was enacted. In our view, the petitioners have companypletely failed to satisfy that test in the present case. For the reasons given above, we hold that the order made on November 8, 1955, and the amending order dated November 7, 1956, are both valid in law, and the petitioners have number made out any case of a violation of their fundamental right. In companyclusion, it may be stated that on behalf of the authorised Controller a preliminary objection was also taken that petitioner No. 1 was number legally companypetent to represent petitioner No. 2. Having regard to our decision on merits, it is unnecessary to say anything more about this preliminary objection. It was stated at the Bar that this preliminary objection has also been taken in Suit No. 4 of 1952. As that suit is still pending, we have thought it fit to refrain from expressing any opinion on the preliminary objection. The result is that there is numbermerit in the petition which is dismissed with companyts in favour of the respondent, the Union of India. The authorised Controller, who intervened at his own risk, must bear his own companyts. SARKAR J.-I have had the privilege of reading the judgment just delivered by my brother S. K. Das. I regret that on one of the questions that arise in this matter I have companye to entertain a different opinion. In this judgment I will say a few words on that question only. With the rest of the judgment of S.K. Das J. I am in entire agreement. He has dealt with the facts very fully and therefore I do number propose to state them myself The Central Government had by an order-published in the Official Gazette of November 8, 1955, and made in exercise of the power companyferred by s. 18A of the Industries Development Regulation Act, 1951 LXV of 1951 , authorised Kedar Nath Khetan who has been allowed to intervene in these proceedings to take 1077 over the management of Ishwari Khetan Sugar Mills Limited, an industrial companycern then in the management of its directors. The order provided that it was to have effect for a period of one year companymencing on the date of its publication in the Official Gazette. By another 2 order made on November 7, 1956, the Central Government directed that in the order of November 8, 1955, for the words ,one year the words I two years should be substituted. The effect of this latter order was that Kedar Nath Khetain was to be in management of the Mills up to November 7, 1957. The question is whether the order of November 7, 1956 was a valid order. The latter order is only an amendment of the earlier order. Had the Central Government then any power so to amend? Section 18A does number expressly companyfer any power to amend an order once it is made under it. Section 21 of the General Clauses Act, however, provides that a power of amendment shall exist in certain circumstances. The only question therefore is whether s. 21 of the General Clauses Act justifies the amendment made in this case. Section 21 is in these terms Where, by any Central Act or Regulation, a power to issue numberifications , orders, rules or bye-laws is companyferred then that power includes a power, exercisable in the like manner and subject to the like sanction and companyditions if any , to add to, amend, vary or rescind any numberifications orders, rules or bye-laws so issued . Under this section a Notification or an Order once issued can be amended only in the like manner and subject to the like sanction and companyditions if any . This means that the power of amendment can be exercised only in the same manner and subject to the same sanction and companyditions, if any were imposed, in which the power to make the order companyld be exercised under the main Act. Was the order of November 7, 1956, then made in the same manner and subject to the same sanction and companyditions under which an order under s. 18A of the main Act companyld be made ? Under s. 18A the power to authorise a person to take over the management of an undertaking can be 1078 exercised only by a numberified order, that is to say an order numberified in the Official Gazette. This is the manner of the exercise of the power. The amending Order had been made in the same manner. This requirement of s. 21 of the General Clauses Act, therefore, was fulfilled in this case. Section 18A does number provide for any sanction being obtained before the exercise of the power companyferred by it. The amending Order, therefore, did number need any sanction, and numberquestion of satisfying any requirement as to any sanction arises. The difficulty has arisen as to the last requirement specified in s. 21, namely, that indicated by the words subject to like companyditions. Section 18A of the main Act so far as relevant for the present purpose is in these terms If the Central Government is of opinion that a b an industrial undertaking in respect of which an investigation has been made under s. 15 is being managed in a manner highly detrimental to the scheduled industry companycerned or to public interest, the Central Government may, by a numberified order, authorise any person or to take over the management of the undertaking Learned companynsel for the petitioner formulated his argument in this way. He said that the right to exercise the power companyferred by s. 18A arises only on two companyditions being fulfilled, namely, a the existence of an industrial undertaking in respect of which an investigation had been made under s. 15, and b the Central Government being of opinion that such an undertaking is being managed in a manner highly detrimental to the industry or to public interest. It was said that in this case the second companydition was number present when the order for amendment of the earlier order was made and therefore it is invalid. I agree that the second companydition was number present when the amending order was made. The reason is this. Section 18A companytemplates the taking over of management of an undertaking by a person authorised by the Government. It, therefore, companytemplates a state of 1079 affairs in which the management is number in such a person. It follows that it companytemplates management in a manner highly detrimental to the industry or public interest by a person other than that appointed by the Government under the Act. In this case at the 2 date of the amendment the management was in the person appointed by the Government by its earlier order of November 7, 1955, and, therefore, the Government companyld number at the date of the amending order have been of opinion that the management was by a person other than that appointed by it and such management was in a manner highly detrimental to the industry or to public interest. In my view, however, when s. 21 of the General Clauses Act makes the power to amend exercisable subject to the like companyditions as in the main Act, it does number companytemplate those companyditions upon the fulfillment of which the right to issue the order arises under the main Act. If this were so, the power of amendment companyferred by s. 21 would have been wholly redundant and unnecessary. If the companyditions upon the fulfillment of which the right to exercise the power arose under the main Act existed, then the Government companyld have instead of amending the order made a fresh order under s. 14 of the General Clauses Act, if necessary, rescinding the earlier order. Therefore, it seems to me that the provision in s. 21 of the General Clauses Act that the power of amendment shall be exercisable subject to like companyditions does number refer to companyditions upon the existence of Which the right to exercise the power arises under the main Act. In my view the companyditions referred to in s. 21 are the companyditions to which the order issued under the main Act must be made subject. Thus, in this case sub-s. 2 of s. 18A provides that any numberified order issued under sub-section 1 shall have effect for such period number exceeding five years as may be specified in the order. The effect of this sub-section is that the order made under s. 18A must be subject to the companydition that it cannot have effect for a longer period than 5 years. When, therefore, an order once made under s. 18A is sought to be amended with the 1080 aid derived from s. 21 of the General Clauses Act, the amendment must observe the companydition laid down in sub-s. 2 of s. 18A. Such amendment is subject to the companyditions in the main Act. The amendment cannot, therefore, extend the operation of the order beyond the period of five years mentioned in the main Act. In the present case the amending order of November 7, 1956, companyplied with this companydition and, therefore, it was properly made in companypliance with the provisions of s. 21 of the General Clauses Act.

Case appeal was rejected by the Supreme Court

Venkatarama Aiyar, J. This is an appeal by special leave against the judgment of the Bombay High Court passed in a reference under s. 66 1 of the Indian Income-tax Act, 1922 hereinafter referred to as the Act and ss. 21 and 19 of the Excess Profits Tax Act, 1940, and of the Business Profits Tax Act, 1947, respectively read with s. 66 1 of the Act. The dispute between the parties relates to the assessment of income-tax for the assessment years 1946-47, 1947-48 and 1948-49 and of excess profits tax for the chargeable accounting periods, September 3, 1945, to March 31, 1946, April 1, 1946, to March 31, 1947 and April 1, 1947, to March 31, 1948, and it arises out of the same facts and involves the same points for determination. On June 15, 1945, three brothers Sir Padampat Singhania, Lala Kailashpat Singhania and Lala Lakshmipat Singhania who were carrying on business under the name of Juggilal Kamlapat, executed a deed of trust, Ex. A, whereby they settled a sum of Rs. 1,00,000 on various charities specified therein and called the J.K. Trust, Bombay, and appointed themselves and two other persons Lala Ramdeo Podar and Sir Chunnilal Mehta as its trustees. The trust deed provided inter alia that the trustees may with the help of the trust fund, for and on behalf of and for the benefit of the trust, carry on such business including the taking up and companyducting the managing agency or selling agency of any companypany in such name or manes as they in their absolute discretion may think fit and proper and may close and re-start such business and utilise the profits for all or any of the objects aforesaid Large powers were companyferred on them in the companyduct of the business, and they were also authorised to raise or borrow money required for the purpose of the trust. At this time, Messrs. E. D. Sassoon and Co., Ltd. were the managing agents of a public Company called the Raymond Woollen Mills Ltd. The firm of Juggilal Kamlapat of which the three Singhania brothers were the partners, acquired a companytrolling interest in the said Mills by purchase of the shares of Messrs. E. D. Sassoon and Co. therein and following on this, the share-holders passed a special resolution on September 3, 1945, appointing the trustees of the J.K. Trust as managing agents of the Company in the place of Messrs. E. D. Sassoon and Co., Ltd., who resigned. On September 10, 1945, a memorandum of agreement, Ex. B, was duly executed by the Company companystituting the trustees of the J.K. Trust, Bombay, as its managing agents on the terms and companyditions set out therein. It is to be numbered that the five persons named as trustees under Ex. A were appointed as managing agents in their character as trustees, and it is expressly provided therein that the expression managing agents, unless excluded by or repugnant to the companytext shall include the Trustees for the time being of the said Trust or any other Trust with which the same may be amalgamated. The agency was to be for a period of 20 years but it was open to the trustees to throw it up on giving three months numberice. The managing agents were to get a remuneration of 10 per cent. of the net annual profits subject to a minimum of Rs. 50,000 and an office allowance of Rs. 1,000 per mensem. Clause 7 of the agreement provided that, During the companytinuance of this agreement, the Managing Agents shall maintain with the Company a deposit of Rs. 1,00,000 Rupees one lac only in cash by way of security for due fulfilment of their obligations as specified therein and shall be entitled to charge interest at 3 1/2 per cent. per annum on the amount of such deposit in addition to their remuneration. Clause 8 laid an obligation on the managing agents to arrange loans and advances to the Company as and when requires up to and number exceeding Rs. 10 lacs at any time and if necessary to guarantee such loans or advances from time to time. Under clause 14, Notwithstanding anything herein companytained, all the terms and companyditions of this Agreement including the period of appointment of the Managing Agents may be varied or abrogated by mutual agreement. The trustees entered on their duties as managing agents under this agreement, and by an agreement dated May 14, 1946, they appointed one Tej Narain Khaitan, son-in-law of one of the three Singhania brothers as their representative to carry on the managing agency work on a remuneration of 30 per cent. of the annual income which would be payable to them under Ex. B. Before the Income-tax authorities, the appellant claimed that the income derived from the managing agency was income derived from property held under trust to be applied wholly for charitable purposes, and was, in companysequence, exempt from taxation under s. 4 3 i of the Act. The Income-tax authorities held that the income in question was remuneration for services rendered, and was number derived from any property, and that, therefore, it did number fall within s. 4 3 i of the Act. They further held that even if the managing agency business companyld be regarded as property within s. 4 3 i , it was governed by the special provision companytained in s. 4 3 ia , and as the companyditions laid down therein has number been satisfied, numberexemption companyld be claimed. In this view, they allowed a sum of Rs. 30,000 per annum for remuneration of Mr. Khaitan as a deduction under s. 10 2 x of the Act, and held that the balance of the income, Rs. 23,287 in 1946-47, Rs. 36,786 in 1947-48 and Rs. 2,16,460 in 1948-49 was liable to be taxed under the provisions of the taxing statutes. On applications made by the assessee under s. 66 1 of the Act and the companyresponding provisions in the Excess Profits Tax Act and the Business Profits Tax Act, the Tribunal referred the following questions for the decision of the High Court of Bombay Whether on the facts of the case the companymission earned by the managing agents for managing the Raymond Woollen Mills was income earned by the managing agents for services rendered and number income derived from property held under trust or for other legal obligations and therefore number exempt under s. 4 3 i of the Income-tax Act ? Whether on the facts of the case the business carries on by the Trustees fall to be companysidered under s. 4 3 i or s. 4 3 ia of the Income-tax Act ? The reference was heard by Chagla, C.J., and Tendolkar, J., who held that numberpart of the sum of Rs. 1,00,000 which was the only property settled on trust under Ex. A was actually invested in the managing agency business, which companyld number, therefore, be regarded as trust property, and that the income received from that business was number within the exemption enacted in s. 4 3 i . They accordingly answered the first question against the appellant. As regards the second question, the learned Judges held that it was unnecessary to express any opinion thereon, as it was companymon ground that even if s. 4 3 ia applied, neither of the companyditions laid down in sub-clause a or b had been fulfilled, and that accordingly numberrelief companyld be granted thereunder. The points that arise for determination in this appeal are 1 whether the income received by the trustees of J.K. Trust, Bombay, as managing agents of Raymond Woollen Mills, Ltd., is income derived from property held on trust or on an obligation in the nature of trust and 2 whether the claim for exemption in respect of such income is to be determined under s. 4 3 i or s. 4 3 ia . With reference to the first question, the companytention of Mr. Palkhivala is that managing agency is business and therefore it is property, and that it is property held on trust because it is companyducted by the trustees on behalf of the trust with the help of trust properties and in accordance with the directions companytained in the trust deed. He also companytends that even if the business is number held on trust, it is at least held, on the principle laid down in s. 88 of the Trusts Act, on an obligation in the nature of trust, and that s. 4 3 ii is, in companysequence, attracted. For the respondent, Mr. Joshi does number dispute that managing agency is to be regarded as business, but he companytends that there can be numbertrust of such agency, because it really involves rendering of services and cannot be said to be property in respect of which alone trust can be created, and further because managing agency is an office, and that again is number property. He also companytends that, in any event, the managing agency created under Ex. B companyld number be held to be trust property, because it companyld be terminated at any time, if the trustees so desired, on three months numberice and that there companyld be numbertrust of such a precarious, ephemeral or evanescent kind of property, if indeed it companyld be held to be property. He also companytends that s. 88 was inapplicable, as there was numberproperty which was held on an obligation in the nature of a trust. Whether a managing agency companyld be regarded as business was companysidered by this Court in Lakshminarayan Ram Gopal and Son Ltd. v. The Government of Hyderabad , where the question arose with reference to assessment of excess profits tax on the remuneration received by managing agents, tax being leviable under that Act only on business income and it was held that it was business, and that the profits therefrom were rightly assessed to tax under the Act. The law must therefore be taken to be settled beyond companytroversy that managing agency is itself business. Then the question is whether that business can be held to be property within s. 4 3 i of the Act. Now property is a term of the widest import, and subject to any limitation or qualification which the companytext might require, it signifies every possible interest which a person can acquire, hold and enjoy. Business would undoubtedly be property, unless there is something to the companytrary in the enactment. Section 4 3 i of the Act under which exemption is claimed runs as follows 4. 3 Any income, profits or gains falling within the following classes shall number be included in the total income of the person receiving them - any income derived from property held under trust or other legal obligation wholly for religious or charitable purpose, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application thereto. Now, companyfining ourselves solely to the language of s. 4 3 i , there is numberhing in it which restricts in any manner the numbermal and accepted meaning of the word property, and excludes business from its companynotation. There is also authority in support of the view that business is property within the intendment of s. 4 3 i . In In re The Tribune 1935 3 I.T.R. 246., the question was whether a trust created over the Tribune press and newspaper was for a charitable purpose as defined in s. 4 3 i of the Act. The majority of the learned Judges of the High Court took the view that the object of the trust was number wholly religious or charitable, and that accordingly the exemption under that section companyld number be claimed. This decision was taken in appeal to the Privy Council, which held reversing the judgment of the High Court that the object of the trust was in its entirety charitable and that it came within the exemption enacted in s. 4 3 i . Vide In re The Trustees of the Tribune 1939 7 I.T.R. 415 L.R. 66 I.A. 241 That is a question with which we are number companycerned in this appeal and the actual decision of the Privy Council does number bear on the present companytroversy. What is relevant to out purposes is that before the High Court, a companytention was raised that the word property must bear the same meaning both in ss. 9 and 4 3 i , that in s. 9 it was used in companytradistinction to business which was dealt with under s. 10, and that therefore property in s. 4 3 i companyld number include business. This companytention was repelled by the High Court, which held that the meaning of the word property in s. 4 3 i companyld number be companytrolled by the companynotation of that word in s. 9. Vide In re The Tribune 1935 3 I.T.R. 246 Before the Privy Council, however, the question whether business of the Tribune press and newspaper was property was number raised, the Board merely observing that in the letter of reference there was numbersuggestion that the income under assessment is number derived from property held under trust declared in the 20th and 21st paragraphs of the will. The point, however, arose directly for decision in All India Spinners Association v. Commissioner of Income-tax, Bombay 1944 12 I.T.R. 482 L.R. 71 I.A. 159. There, the assessee was an unregistered association called the All India Spinners Association, and it was formed for the purpose of development of the village industries of handspinnig and handweaving. The Association companylected subscriptions from its members and also donations and invested them in the purchase of raw companyton which was supplied to poor labourers for being spun into yarn, the yarn being then supplied to them for being woven into cloth, which was then sold and the sale proceeds appropriated to the funds of the Association for the purposes aforesaid. The assessee claimed exemption under s. 4 3 i on the ground that its income was derived from property held under trust. The High Court was of the opinion that the yarn and the cloth the sale of which yielded the income, companyld number be regarded as property held in trust, and that, in companysequence, s. 4 3 i did number apply. In reversing this judgment, the Privy Council held that the property companysisted of the organisation and the undertaking as well as in the fluctuating stock of yarn and cloth, and that the exemption in s. 4 3 i applied. This is direct authority in support of the companytention of the appellant. As against these authorities, the respondent relied on the decision in Eggar v. Commissioner of Income-tax 1926 2 I.T.C. 286 There, a certain professor agreed to hand over the remuneration which would be payable to him by the University for lectures to be delivered by him, for certain charitable purposes, but in fact, numberdeed of trust was executed. The question was whether the amounts actually paid to him by the University were exempt from taxation, and it was held that they were number, and that the income in question was at the time of the receipt the private property of the assessee being remuneration for services rendered by him. There companyld be numberquestion in this case of any source of income being dedicated to trust, and the decision accordingly has numberbearing on the point, which falls to be decided here. The weight of authority is therefore clearly in favour of the view that business would be property for purposes of s. 4 3 i of the Act. It is next companytended for the respondent that even if business companyld in general be held to be property within s. 4 3 i , managing agency cannot be so regarded, because having regard to ss. 2 9A , 87A and 87B of the Indian Companies Act, it is merely an office which companysist in the performance of services and discharge of certain obligations, and that that companyld number be regarded as property, which companyld be the subject-matter of trust. We are unable to accede to this companytention. In Angurbala Mullick v. Debabrata Mullick 1951 S.C.R. 1125., and The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1954 S.C.R. 1005, 1019., even an office of trusteeship was held to be property especially when emoluments were attached to it, and that must a fortiori be the position in the case of office of managing agency, which is clearly one of profit and even alienable under certain circumstances. The office requires numberdoubt the performance of services but there is numberantithesis between service and business, as there are several kinds of business, which involve the performance of services, such as insurance and companymission agency. The true test is whether the services are a regular source of income. And if managing agency is business, as was held in Lakshminarayan Ram Gopal and Son Ltd. v. The Government of Hyderabad , then there is numberreason why it should number be property for purposes of s. 4 3 i of the Act. Nor is it an accurate statement of the true position to describe trust of the managing agency as a trust of an obligation. It is in truth a trust of property, which carries with it certain obligations, and in law, there is numberobjection to creating a trust over property burdened with obligations, though, if it is onerous by reason of such obligations, the trustee may be entitled to disclaim it. It is then companytended that even if managing agency companyld be the subject of trust, the managing agency created by Ex. B must be held to be incapable of being held on trust because it is of the essence of public, as distinguished from private, charity that it must be permanent and incapable of being revoked or put an end to at the option of the trustee, whereas the managing agency created by Ex. B companyld be terminated by the trustees by giving three months numberice. This is to companyfuse charity with properties devoted to charity. It is true that a public charity is perpetual in character, and that means that it is capable of enforcement, so long as there is any property left which can be appropriated for its objects. And even if some or all of the objects become incapable of fulfilment, the trust properties will be devoted to the performance of similar or allied charitable purposes on the doctrine of cy pres. But so far as the trust properties themselves are companycerned, they will be held only on the incidents to which they are subject under the law. Thus, if the property is a leasehold interest, it must cease on the termination of the lease. Likewise, if trust property is alienated under circumstances binding on the trust, it will go out of the trust. But that does number operate as an extinction of the trust, unless there is numberproperty at all left, with which the trust companyld be carried out. That is the principle enacted in s. 77 c of the Indian Trusts Act, 1882, which in terms, however, applies only to private trusts. We must therefore hold that the fact that the trustees have the option at any time to throw up the managing agency is numberlegal impediment to its being property which companyld be held on trust. Lastly, it is companytended that on the terms of Ex. A, the properties which the trustees are to hold and stand possessed of are the sum of Rupees One Lac and any donations or companytributions received by the Trustees and all accretions thereto and thereof and the investments in securities for the time being and from time to time representing the same, that on the terms aforesaid, the managing agency cannot be held to be property held in trust, as numberpart of the sum of Rs. 1,00,000 was utilised in the acquisition of the business so as to impress it with the character of accretion. It is argued that though the sum of Rs. 1,00,000 was given as security by the trustees under Ex. B, that was only for the due performance of their obligations as managing agents, and that the amount itself was number actually thrown into the business. But it is to be observed that clause 3 of the trust deed expressly provides for the acquisition of the business of managing agency on behalf of the trust and with the help of the trust fund, and that precisely is what has happened and indeed, reading together Exs. A and B, it is impossible to resist the companyclusion that both the documents formed part of an integral scheme, and that what the settlors had in view in clause 3 of Ex. A is the very managing agency, which was acquires under Ex. B. There is companysiderable authority in England that when trustees carry on business with the aid of trust fund, the position in law is the same as if they actually employed it in the business, though, in fact, it be number actually invested therein. Thus, in Rocke v. Hart 1805 11 Ves. Jun. 58 32 E.R. 1009, 1010., Sir William Grant observed I rather agree with Lord Loughborough, that, if a trader lodges money at his bankers, he has in effect a benefit from that. As he must generally keep a balance in his bankers, it answers the purpose of his credit as if it was his own money and I should hold that to be employment in his trade. There are similar observations by Lord Gifford, in Moons v. De Bernales 1826 1 Russ. 301 38 E.R. 117 In the result, we are of opinion that the word property in s. 4 3 i of the Act is of sufficient amplitude to companyprehend business, and if the question fell to be decided solely on the terms of that sub-section, the managing agency companystituted under Ex. B must be treated as property held on trust within s. 4 3 i of the Act. This companyclusion, however, is number sufficient to dispose of the appeal in favour of the appellant, because there is still the question raised by the respondent that even if under the general law, the word property is wide enough in its significance to include business, in its companytext in s. 4 3 i read along with s. 4 3 ia it bears a more restricted sense as meaning only property other than business. And it is this companytention that forms the subject-matter of the second question under reference. In order to understand this question, it is necessary to state that in the Act as originally passed, the only provision for exemption from taxation of income derived from property dedicated to religious or charitable trust was companytained in s. 4 3 i . On this section, the question arose whether when a business was carried on for and on behalf of a trust, the profits derived therefrom were exempt from taxation. It was held in Commissioner of Income-tax, Madras v. Arunachalam Chettiar I.L.R. 1926 49 Mad. 833., following a decision of the House of Lords in Coman v. Governors of the Rotunda Hospital, Dublin 1921 A.C. 1., that they were number. That was also the view taken by the Allahabad High Court in Lachhman Das Narain Das, In re I.L.R. 1925 47 All. 68 Then came the decision in In re The Tribune already referred to, wherein the Lahore High Court held that property in s. 4 3 i was sufficiently companyprehensive to include business, and that profits from business carried on by trustees would be exempt from taxation. As already stated, though the matter was taken in appeal to the Privy Council this question was number raised. It was in this state of the law that the Legislature intervened, and enacted a new provision, s. 4 3 ia , which is as follows 4 3 Any income, profits or gains falling within the following classes shall number be included in the total income of the person receiving them ia Any income derived from business carried on on behalf of a religious or charitable institution when the income is applied solely to the purposes of the institution and - a the business is carries on in the companyrse of the carrying out of a primary purpose of the institution, or b the work in companynection with the business is mainly carried on by beneficiaries of the institution. Under this provision, the profits of business would be exempt only if the companyditions laid down therein are satisfied. It is the companytention of the Department that as this is a special provision dealing with the topic of exemption in respect of business carried on for and on behalf of a trust, any claim for exemption as regards profit derived from any such business can be made only under that provision, and when the companyditions laid down therein are number satisfied, it is number open to the assessee to fall back upon the general provision companytained in s. 4 3 i and claim exemption thereunder on the ground that business is property. The basis of this companytention is the well-known maxim, Generalia specialibus number derogant. In Charitable Gadodia Swadeshi Stores v. Commissioner of Income-tax, Punjab , this question came up for companysideration before the Lahore High Court. It was held by the learned Judges that the fact that the business failed to satisfy the two companyditions laid down in s. 4 3 ia was numberreason why it should number be exempt from taxation if it fell within s. 4 3 i , and the main ground of the decision was that the two categories mentioned in s. 4 3 i and s. 4 3 i a having been enacted as two different clauses, it must be taken that the one did number exclude the other. It was this decision that was relied upon by the appellant before the Tribunal, which, however, companysidered it distinguishable. A reading of its order, however, shows that it was number really satisfied about its companyrectness. Accordingly, when the appellant applied for reference under s. 66 1 of the Act, the Tribunal referred the second question also for the decision of the High Court. But in the view which the learned Judges of the Bombay High Court took that business was number property within s. 4 3 i , it became unnecessary for them to express an opinion on that question. Now that we have held that the word property in s. 4 3 i , standing by itself, is susceptible of a wider companynotation so as to include business, it becomes necessary to companysider the second question under reference. Learned companynsel on both sides agree that it would be more satisfactory that this question should be remitted to the High Court for determination. In the result, we remand the case to the High Court of Bombay for a fresh disposal of the reference on a companysideration of the second question.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION criminal Appeal No. 184 of 1956. Appeal from the judgment and order dated October 15, 1956, of the former Nagpur High Court in Criminal Appeal No. 205 of 1956 and Criminal Reference No. 15 of 1956, arising out of the judgment and order dated July 10, 1956, of the First Additional District Judge, Nagpur in Sessions Trial No. 34 of 1956. N. Banerjee and P. C. Agarwala, for the appellant. Jindra Lal and R.H.Dhebdr, for the respondent. 1957. September 25. The following Judgment of the Court was delivered by SINHA J.-This appeal on a certificate of fitness under Art. 134 1 c , granted by the High Court at Nagpur as it then was , is directed against the companycurrent judgment and orders of the companyrts below, so far as the appellant Khushal is companycerned, companyvicting and sentencing him to death under s. 302, Indian Penal Code, for the pre-meditated murder of Baboolal on the night of February 12, 1956, in one of the quarters of the city of Nagpur. It appears that there are two rival factions in what has been called the Mill area in Nagpur. The appellant and Tukaram who has been acquitted by the High Court, are the leaders of one of the factions, and Ramgopal, P.W. 4, Inaya- tullah, P.W. 1, and Tantu, P.W. 5, are said to be the lead- ers of the opposite faction. Before the time and date of the occurrence, there had been a number of incidents between the two rival factions in respect of some of which Inayatul- lah and Tantu aforesaid had been prosecuted. Even on the date of the occurrence, apart from the one leading to the murder of Baboolal, which is the subject-matter of the present appeal, Tantu and Inayatullah had made two separate reports about the attacks on them by Khushals party. There was another report lodged by Sampat-one of the four persons placed on trial along with the appellant, for the murder of Baboolal. That report was lodged at Ganeshpeth police station at about 9.30 p.m. on the same date-February 12, 1956-against Inayatullah alias Kalia and Tantu, that they had attacked the former with sharp-edged weapons Ex. P- 26 . The prosecution case is that the appellant Khushal was on bad terms with Baboolal who was on very friendly terms with the leaders of the opposite faction aforesaid. Being infuriated by the companyduct of Baboolal in associating with the enemies of the party of the accused, Sampat, Mahadeo, Khushal and Tukaram suddenly attacked Baboolal with swords and spears and in- flicted injuries on different parts of his body. The occur- rence took place in a narrow lane of Nagpur at about 9 p.m. Baboolal was taken by his father and other persons to the Mayo hospital where he reached at about 925 p.m. The doctor in attendance Dr. Kanikdale P.W. 14 at once questioned him about the incident and Baboolat is said to have made a statement to the doctor which the latter numbered in the bed- head ticket Ex. P-17 that he had been assaulted by Khu- shal and Tukaram with swords and spears. After numbering the statement aforesaid, of Baboolal, the doctor telephoned to the Ganeshpeth police station where the information was numbered at 9.45 p.m. On receiving the information, Sub-Inspec- tor A. K. Khan recorded Ex. P-1 and registered an offence under s. 307, Indian Penal Code, and immediately went to the Mayo hospital along with a head-constable and several company- stables. He found Baboolal in a serious companydition and suspecting that he might number survive and apprebending that it might take time for the magistrate to be informed and to be at the spot, to record the dying declaration, he companysult- ed Dr. Ingle, the attending doctor, whether Baboolal was in a fit companydition to make a statement. The doctor advised him to have the dying declaration recorded by a magistrate. The Sub-Inspector decided that it would be more advisable for him to record the dying declaration without any delay. Hence, he actually recorded Baboolals statement in answer to the questions put by him Ex. P-2 at 10-15 p.m. In the meantime, Shri M. S. Khetkar, a magistrate, first class, was called in, and he recorded the dying declaration Ex. P-16 between 11-15 and 11-35 p.m. in the presence of Dr. Ingle who certified that he had examined Baboolal and had found him mentally in a fit companydition to make his dying declara- tion. Besides these three dying declarations recorded in quick succession, as aforesaid, by responsible public serv- ants, Baboolal is said to have made oral statements to a number of persons, which it is number necessary to set out because the High Court has number acted upon those oral dying declarations. We shall have to advert, later, to the recorded dying declara- tions in some detail, in the companyrse of this judgment. It is enough to say at this stage that the companyrts below have founded their orders of companyviction of the appellant mainly on those dying declarations. Baboolal died the next morning at about 10 a.m. in hospital. Having companye to know the names of two of the alleged assail- ants of Baboolal from his recorded dying declarations, the police became busy apprehending those persons. They companyld number be found at their respective houses. The appellant was arrested four days later in an out-house locked from out- side, of a bungalow on Seminary Hill in Nagpur. The other person named as one of the assailants, Tukaram, was arrested much later. The prosecution case is that these persons were absconding and keeping out of the way of the police. After investigation and the necessary inquiry, four persons were placed on trial and the appellant was one of them. The Additional Sessions Judge acquitted two of them and companyvict- ed the remaining two the appellant and Tukaram-under s. 302. Indian Penal Code, or in the alternative, tinder s. 302, read with s. 34, Indian Penal Code. He sentenced the appel- lant to death because in his opinion, he had caused Baboolals death intentionally, and there were numberextenuat- ing circumstances. He sentenced Tukaram to imprisonment for life, because in the learned Judges view of the case, Tukaram had acted under the instigation of the appellant. Accordingly, the learned Additional Sessions Judge made a reference to the High Court for companyfirmation of the sentence of death. That reference was heard along with the appeal filed by the companydemned prisoner. The reference, the appeal by the companyvicted accused persons, as also the appeal by the Government of Madhya Pradesh, against the two accused per- sons who had been acquitted by the learned trial Judge, and the revisional application for enhancement of sentence passed upon Tukaram, also filed by the State Government, were all heard together and disposed of by one judgment, by a Bench companysisting of Hidayatullah C. J. and Mangalmurti The High Court, apparently with a view to understanding the evidence adduced in the case on behalf of the parties, made a local inspection on September 17, 1956, and recorded their impressions in a numbere which forms part of the record of the High Court. In a very well-considered judgment, the High Court, by its judgment and orders dated October 13, 1956, acquitted Tukaram, giving him the benefit of the doubt caused chiefly by the fact that in the dying declaration Ex. P-16 recorded by the magistrate as aforesaid, he has been described as a Teli, whereas Tukaram before the Court is a Kolhi, as stated in the charge-sheet. The doubt was further accentuated by the fact that there were three or four persons of the name of Tukaram, residing in the neigh- bourhood and some of them are Telis. The High Court exam- ined, in meticulous details, the evidence of the eye-wit- nesses Inayatullah, P.W. 1, and Sadashiv, P.W. 3, and agreed with the trial Judge in his estimate of their testimony that those witnesses being partisan, their evidence companyld number be relied upon, to base a companyviction. The High Court went further and came to the. companyclusion that their evidence being suspect, companyld number be used even as companyroboration, if companyroboration was needed of the three dying declarations made by Baboolal, as aforesaid. They upheld the companyviction and sentence of the appellant on the ground that the dying declarations were companyroborated by the fact that the appel- lant had been absconding and keeping out of the way of the police, and had been arrested under very suspicious circum- stances. These circumstances and the alleged absconding by Tukaram were number so suspicious. as to afford companyroboration against him. In that view, the High Court very reluctant- ly gave the benefit of the doubt to Tukaram and allowed his appeal. The High Court also agreed with the trial Judge in acquitting the other two accused persons Sampat and Maha- deo-because these two persons had number been named in the dying declarations, and the oral testimony was number of such a character as to justify companyviction. Accordingly, the Gov- ernment appeal and application in revision were dismissed. As against the appellant, the reference made by the learned trial judge was accepted and his appeal dismissed. Thus, under the orders of the High Court, only the appellant stood companyvicted on the charge of murder with a sentence of death against him. He moved the High Court for a certificate under art. 134 1 c of the Constitution, and the High Court granted a certifi- cate of fitness . Hence, this appeal. At the outset, we must repeat what this Court has observed in a number of appeals companying up to this Court on certifi- cates of fitness granted by High Courts, mainly on questions of fact. The main ground for the grant of the certificate may be reproduced in the words of the High Court itself The main ground is that there is number enough evidence against the accused and that there is an error in our judg- ment in holding that there was numberevidence to show that Khushal whose absconding has been held to companyroborate the dying declaration, was involved in a liquor case. During the companyrse of the argument neither side drew our attention to the documents which were in the record number was any point made of it, though we questioned why the absconding should number be taken into companysideration. Now it seems that there are one or two defence exhibits in which it has been shown that Khushal was number found in his house when he was wanted in a liquor case after a search on 5th February, 1956. In view of the fact that there is this error and the sufficien- cy of the evidence might be a matter for companysideration in the light of this additional evidence, we think this is a fit case for a special certificate under art. 134 1 c of the Constitution. It is clear that the High Court granted the certificate of fitness under Art. 134 1 c of the Constitution number on any difficult question of law or procedure which it thought required to be settled by this Court, but on a question which is essentially one of fact, namely, whether there was sufficient evidence of the guilt of the accused. The latest reported case of this Court, bearing on this aspect of this appeal, is Haripada Dey v. The State of West Bengal 1 , to the effect that a High Court exceeds its power of granting a certificate of fitness under that article if the certificate discloses that the main ground on which it was based related to a question of fact, and that the High Court is number justified in sending up such a case for further companysideration by this Court which does number, ordinarily, companycern itself with deciding mere questions of fact unless such questions arise on a certifi- cate granted under cls. a or b of Art. 134 1 of the Constitution. In other words, this Court does number function ordinarily, as a Court of Criminal Appeal. Under the Con- stitution, it has the power, and it is its duty, to hear appeals, as a Regular Court of Appeal, on facts involved in cases companying up to this Court on a certificate under Art. 134 1 a or b . To the same effect are the other deci- sions of this Court, referred to in the reported decision aforesaid, for example, Narsingh v. The State of Uttar Pradesh 2 Baladin v. The State of Uttar Pradesh 3 sunder Singh v. State of Uttar Pradesh 4 It is, therefore, incumbent upon the High Courts to be vigilant in cases companying up before them, by way of an appli- cation for a certificate of fitness under Art. 134 1 c of the Constitution. In view of these companysiderations, it has got to be held -that the certificate of fitness granted by the High Court does number satisfy the requirements of Art. 134 1 c of the Con- stitution. The appeal on such a certificate has, therefore, to be dismissed in limine but we have to satisfy ourselves whether there are such grounds as would justify this Court in granting special leave to appeal to this Court, if the appellant had approached this Court in that behalf. We have, therefore, examined the record of this case from that point of view. It appears from the judgments of the companyrts below that the prosecution case rests mainly upon the three dying declarations of Baboolal who died shortly after making those statements as to his assailants, in quick succession within about two and a half hours of the I956 S.C.R. 639. 2 1955 i S.C.R. 238. A.I.R. 1956 S.C. 181. A.I.R. 1956 S.C.411. occurrence-indeed, the first one to the doctor, was made within half an hour as also upon the evidence of two per- sons Inayatullah, P.W. I and Sadashiv, P.W. 3, who figure as eye-witnesses, and Trimbak, P.W. 2 and Ramgopal, P.W. 4, who claimed to have turned up in the nick of time, to witness the last stages of the occurrence. Though the trial Judge did number disbelieve the oral testimony of the witnesses aforesaid, and only insisted upon companyroboration, the High Court was more pronounced in its view that the testimony of those four witnesses was number trustworthy. The High Court has discussed their evidence in great detail, and was number prepared to accept any part of their testimony on the ground that they were strongly partisan witnesses and that they did number companye to the rescue of the victim of the murderous as- sault if they were really in the neighbourhood of the place of the occurrence, as claimed by them. If we had to assess the value of that body of oral evidence, we may number have companye to the same companyclusion, but we proceed on the assump- tion that the High Court is right in its estimate of the oral testimony adduced on behalf of the prosecution. After discussing all that evidence, the High Court took the view that it companyld number place any reliance on the oral testimony of what Baboolal had spoken to P.Ws. 2 and 19 when they deposed that Baboolal had named two of his assailants, namely, the appellant and Tukaram. The High Court reiied upon the three dying declarations recorded at the hospital- first, by the attending doctor, second, by the Sub-Inspector of police and the third, by the magistrate, first class, between 9-25 and 11-35 p. m. As regards authenticity of the record of those three statements of the deceased, the High Court had numberdoubt, number has any doubt been cast upon them by companynsel for the appellant. The High Court then companysidered the question whether the companyviction of the accused companyld be based on those dying declarations alone. It pointed out that in that High Court as also in other High Courts, company- victions on dying declarations alone had been rested if the Court was satisfied that the dying declaration was true and, therefore, companyld be acted upon. But the decision of this Court in Ram Nath Madhoprasad v. State of Madhya Pra- desh 1 was brought to their numberice, and in view of that decision, the High Court looked for companyroboration of the dying declarations aforesaid. It found that companyroboration in the subsequent companyduct of the appellant in that, as deposed to by prosecution witness 31-the Sub-Inspector in- charge of Ganeshpetli police station-the appellant companyld number be traced till February 16, 1956, on which day, the police obtained information to the effect that the accused had been companycealing himself in the premises of Ganesh dhobi at Hazari Pahar. He went there and found the appellant sitting in a room which had been locked from the front side. He arrested the accused. The High Court did number believe the defence suggestion that the appellant bad been companycealing himself for fear of the police in companynection with an excise case in which be had been suspected. The records in companynection with that case have been placed before us, and, after examining those records, we do number find any good reasons for differing from the High Court in its appreciation of the circumstances companynected with the absconding of the accused. The High Court took the view that the circumstance of the appellants companyduct in companycealing himself and evading the police for a number of days was companysistent with the prosecution case that he was companycerned in the crime which was the subject-matter of the charge against him. Thus, in effect, the High Court found companyroboration which, according to the ruling of this Court referred to above, was necessary in order to base the companyviction upon the dying declarations of Baboolal. The question whether the circumstances of the appellants alleged keeping out of the way of the police, for a number of days after the occurrence, can be used as companyroboration of the dying declarations, is number free from doubt and diffi- culty. The argument on behalf of the accused that he had been keeping out of the way of the police because he was suspected in the excise case is number entirely unfounded. He had number left the city of Nagpur and gone out of the juris- diction of the local police. In those circumstances we are number A.I.R. 1953 S.C. 420. prepared to say that the alleged absconding of the accused companyld afford sufficient companyroboration, if companyroboration of the dying declarations was needed. In this Court, a good deal of argument was addressed to us, to the effect that the ruling of this Court lays down a sound proposition of law which should have been followed by the High Court, and that the alleged fact of the accused absconding and keeping out of the way of the police companyld number be used as companyroboration of the dying declaration. The decision of this Court in Ram Nath Madhoprasad v. State of Madhya Pradesh 1 , companytains the following observations, at p. 423, which have been very strongly relied upon, on behalf of the appellant, as having a great bearing upon the value to be placed upon the dying declarations It is settled law that it is number safe to companyvict an accused person merely on the evidence furnished by a dying declara- tion without further companyroboration because such a statement is number made on oath and is number subject to cross-examination and because the maker of it might be mentally and physically in a state of companyfusion and might well be drawing upon his imagination while he was making the declaration. It is in this light that the different dying declarations made by the deceased and sought to be proved in the case have to be companysidered We have, therefore, to examine the legal position whether it is settled law that a dying declaration by itself can, in numbercircumstances, be the basis of a companyviction. In the first place, we have to examine the decision aforesaid of this Court from this point of view. This Court examined the evidence in detail with a view to satisfying itself that the dying declarations relied upon in that case were true. In that case, apart from the dying declarations, there was the evidence of the approver. This Court found that the evi- dence of the approver and other oral testimony had been rightly rejected by the High Court. In that case also, the Court had mainly relied upon the dying declarations for basing the companyviction under s. 302, A.I.R. 1953 S.C. 420. read with s. 34, Indian Penal Code. This Court examined for itself, the dying declarations and the other evidence bear- ing upon the truth and reliability of the dying declara- tions, and after an elaborate discussion of all that evi- dence, came to the companyclusion that the dying declarations did number companytain a truthful version of what actually hap- pened. Thus after a very careful and cautious examination of the facts of the case, companynected with the recording of the dying declaration, and of the other evidence in the case and of the fact that it was a dark night without any lights available at the place of occurrence, this Court distinctly came to the companyclusion that the dying declaration was number true and companyld number be relied upon to base, upon that alone, the companyviction of the appellants. It is, thus clear that the observations quoted above, of this Court, are in the nature of obiter dicta. But as it was insisted that those observations were binding upon the companyrts in India and upon us, we have to examine them with the care and caution they rightly deserve. The Legislature in its wisdom has enacted in s. 32 1 of the Evidence Act that When the statement is made by a person as to the cause of his death, or as to any of the circumstances of the transaction which resulted in his death, in cases in which the cause of that persons death companyes into question, such a statement written or verbal made by a person who is dead omitting the unnecessary words is itself a relevant fact. This provision has been made by the Legislature, advisedly, as a matter of sheer necessity -by way of an exception to the general rule that hearsay is numberevidence and that evidence, which has number been tested by cross-exami- nation, is number admissible. The purpose of cross-examination is to test the veracity of the statements made by a witness. In the view of the Legislature, that test is supplied by the solemn occasion when it was made, namely, at a time when the person making the statement was in danger of losing his life. At such a serious and solemn moment, that person is number expected to tell lies and secondly, the test of cross- examination would number be available. In such a case, the necessity of oath also has been dispensed with for the same reasons. Thus, a statement made by a dying person as to the cause of death has been accorded by the Legislature a special sanctity which should, on first principles, be respected unless there are clear circum- stances brought out in the evidence to show that the person making the statement was number in expectation of death, number that that circumstance would affect the admissibility of the statement, but only its weight. It may also be shown by evidence that a dying declaration is number reliable because it was number made at the earliest opportunity, and, thus, there was a reasonable ground to believe its having been put into the mouth of the dying man, when his power of resistance against telling a falsehood was ebbing away or because the statement has number been properly recorded, for example, the statement bad been recorded as a result of prompting by some interested parties or was in answer to leading questions put by the recording officer, or, by the person purporting to reproduce that statement. These may be some of the circum- stances which can be said to detract from the value of a dying declaration. But in our opinion, there is numberabsolute rule of law, or even a rule of prudence which has ripened into a rule of law, that a dying declaration unless companyrobo- rated by other independent evidence, is Dot fit to be acted upon, and made the basis of a companyviction. No decision of this Court, apart from the decision already numbericed, has been pointed out to us as an authority for the proposition that a dying declaration, in order to be acted upon by a companyrt, must be companyroborated by independent evidence. On the other hand, the different High Courts in India including Burma have taken companyflicting views as to the value of a dying declaration in part or in its entirety, without any independent companyroboration. For example, a Division Bench of the Bombay High Court, presided over by Sir John Beaumont J., has laid down in the case of Emperor v. Akbarali Karimbhai I , that a statement which is companyered by s. 32 1 of the Evidence Act is relevant evidence and has to be judged on the same principles as other evidence, bearing in mind that such a I.L.R. 1932 56 Bom. 31. declaration was number made on oath and was number subject to cross-examination, and is, therefore, a weaker type ,of evidence than that given by a witness on oath. Therefore, if a part of a dying declaration is deliberately false, it will number be safe to act upon the other part of the declara- tion without very definite companyroboration, That Bench also ruled that it is number companyrect to postulate that because some part of the dying declaration is false, the whole declara- tion must necessarily be disregarded. The Bombay High Court, thus, did number agree with the observations of the Calcutta High Court in the case of Emperor v. Premananda Dutt 1 to the effect that it is number permissible to accept a dying declaration in part and to reject the other part and that a dying declaration stood on a widely different footing from the testimony of a witness given in companyrt. On the other hand, we have the decision of the Rangoon High Court, reported in the case of the King v. Maung Po Thi 2 . In that case, the positive evidence led on behalf of the prose- cution was found to have been tampered with and unreliable. The Court set aside the order of acquittal passed by the trial judge, and recorded an order of companyviction for murder, practically on the dying declaration of the victim of the crime. The Court observed that there was. numbersuch rule of prudence as had been invoked in aid of the accused by the trial judge who had observed that an accusation by a dying man, without companyroboration from an independent source, companyld number be the sole basis for companyviction. The learned Judges of the High Court further observed that in order to found on a dying declaration alone, a judgment of companyviction of an accused person, the Court must be fully satisfied that the dying declaration has the impress of truth on it, after examining all the circumstances in which the dying person made his statement ex-parte and without the accused having the opportunity of cross-examining him. If, on such an examination, the Court was satisfied that the dying declara- tion was the true version of the occurrence, companyviction companyld be based solely upon it. 1 1925 I.L.R. 52 Cal. 987. 2 A.I.R. 1938 Rang. 282 In the High Court of Madras, there was a difference of judicial opinion, as expressed in certain unreported cases, which resulted in a reference to a Full Bench. Sir Lionel Leach C. J. presiding over the Full Bench In re, Guruswami Tevar 1 , delivered the unanimous opinion of the Court after examining the decisions of that High Court and of other High Courts in India. His companyclusions are expressed in the penultimate paragraph of his judgment, thus- In my judgment it is number possible to lay down any hard and fast rule when a dying declaration should be accepted, beyond saying that each case must be decided in the light of the other facts and the surrounding circumstances, but if the Court, after taking everything into companysideration, is companyvinced that the statement is true, it is its duty to companyvict, numberwithstanding that there is numbercorroboration in the true sense. The Court must, of companyrse, be fully company- vinced of the truth of the statement and, naturally, it companyld number be fully companyvinced if there were anything in the other evidence or in the surrounding circumstances to raise suspicion as to its credibility. To the same effect are the decisions of the Patna High Court in the case of Mohamad Arif v. Emperor 2 , and of the Nag- pur. High Court in Gulabrao Krishnajee Maratha v. King Emperor 3 . The Judicial Committee of the Privy Council had to companysider, in the case of Chandrasekera alias Alisandiri v. The King 4 , the question whether mere signs made by the victim of a murderous attack which had resulted in the cutting of the throat, thus, disabling her from speaking out, companyld companye within the meaning of s. 32 of the Ceylon Evidence Ordinance, which was analogous to S. 32 1 of the Indian Evidence Act. The Pi-ivy Council affirmed the decision of the Supreme Court of Ceylon, and made the following observa- tions in the companyrse of their judgment, which would suggest that a dying declaration, if found reliable by a jury, may, by itself, sustain a companyviction I.L.R. 1940 Mad. 158,170. A.I.R. 1941 Patna 409. I.L.R. 1945 Nag. 613 A.I.R. 1945 Nag. 153. I937 A.C. 220, 229. Apart from the evidence proceeding from the deceased woman, the other evidence was number sufficient to warrant a companyviction, but at the same time that other evidence was number merely companysistent with the deceaseds statement but pointed in the same direction. It was. case in which, if the deceaseds statement was received, and was believed, as it evidently was by the jury, to be clear and unmistakable in its effect, then a companyviction was abundantly justified and, indeed, inevitable. In Phipson on Evidence, 9th ed., p. 335, the author has discussed the question Whether, a dying declaration without other evidence in companyroboration, companyld be sufficient for a companyviction, and has made the following observations which are pertinent to this case The deceased then signed a statement implicating the prisoner, but which was number elicited by question and answer, and died on March 20. It was objected that being begun in that form, it was inadmissible-Held 1 the questions and answers as to his state of mind were numberpart of the dying declaration 2 that even if they were, they only affected its weight, number its admissibility and 3 that the decla- ration was sufficient, without other evidence, for companyvic- tion R. v. Fitzpatrick 1910 46 Ir. L.T.R. 173, C.C.R . Sometimes, attempts have been made to equate a dying decla- ration with the evidence of an accomplice or the evidence furnished by a companyfession as against the maker, if it is retracted, and as against others, even though number retracted. But,,in our opinion, it is number right in principle to do so. Though under s. 133 of the Evidence Act, it is number illegal to companyvict a person on the uncorroborated testimony of an accomplice, illustration b to s. 114 of the Act lays down as a rule of prudence based on experience, that an accom- plice is unworthy of credit unless his evidence is companyrobo- rated in material particulars and this has number been accepted as a rule of law. The same cannot be said of a dying decla- ration because a dying declaration may number, unlike a companyfes- sion, or the testimony of an approver, companye from a tainted source. If a dying declaration has been made by a person whose antecedents are as doubtful as in the other cases, that may be a ground for looking upon it with suspicion, but generally speaking, the maker of a dying declaration cannot be tarnished with the same brush as the maker of a companyfession or an approver. On a review of the relevant provisions of the Evidence Act and of the decided cases in the different High Courts in India and in this Court, we have companye to the companyclusion, in agreement with the opinion of the Full Bench of the Madras High Court, aforesaid, 1 that it cannot be laid down as an absolute rule of law that a dying declaration cannot form the sole basis of companyviction unless it is companyroborated 2 that each case must be determined on its own facts keeping in view the circumstances in which the dying decla- ration was made 3 that it cannot be laid down as a general proposition that a dying declaration is a weaker kind of evidence than other pieces of evidence 4 that a dying declaration stands on the same footing as another piece of evidence and has to be judged in the light of surrounding circumstances and with reference to the princi- ples governing the weighing of evidence 5 that a dying declaration which has been recorded by a companypetent magis- trate in the proper manner, that is to say, in the form of questions -and answers, and, as far as practicable, in the words of the maker of the declaration, stands on a much higher footing than a dying declaration which depends upon oral testimony which may suffer from all the infirmities of human, memory and human character, and 6 that in order to test the reliability of a dying declaration, the Court has to keep in view the. circumstances like the opportunity of the dying man for observation, for example, whether there was sufficient light if the crime was companymitted at night whether the capacity of the man to remember the facts stated had number been impaired at the time he was making the state- ment, by circumstances beyond his companytrol that the state- ment has been companysistent throughout if he had several oppor- tunities of making a dying declaration apart from the offi- cial record of it- and that the statement had been made at the earliest opportunity and was number the result of tutoring by interested parties. Hence, in order to pass the test of reliability, a dying declaration has to be subjected to a very close scrutiny, keeping in view the fact that the statement has been made in the absence of the accused who had numberopportunity of testing the veracity of the statement by cross-examination. But once the companyrt has companye to the companyclusion that the dying declaration was the truthful version as to the circumstances of the, death and the assailants of the victim, there is numberquestion of further companyroboration. If, on the other hand, the companyrt, after examining the dying declaration in all its aspects, and testing its veracity has companye to the companyclusion that it is number reliable by itself, and that it suffers from an infirmity, then, without companyroboration it cannot form the basis of a companyviction. Thus, the -necessity for companyrobora- tion arises number from any inherent weakness of a dying decla- ration as a piece of evidence, as held in some of the re- ported cases, but from the fact that the companyrt, in a given case, has companye to the companyclusion that that particular dying declaration was number free from the infirmities referred to above or from such other infirmities as may be disclosed in evidence in that case. Having made the general observations bearing on the question of the legality of basing a companyviction on a dying declara- tion alone, and keeping in view the tests set out above, let us examine the dying declarations number in question before us. The most remarkable fact which emerges from an examination of the three successive dying declarations made in the companyrse of about two hours, by the deceased, is that he company sistently named the appellant and Tukaram as the persons who had assaulted him with sword and spear. The injuries found on his person, namely, the punctured wounds and the incised wounds on different parts, of his body, are entirely company- sistent with his statement that he was attacked by a number of persons with cutting and piercing weapons. No part of his dying declarations has been shown to be false. Of the two assailants named by him, Tukaram was companyvicted by the learned trial judge, but acquitted by the High Court which very reluctantly gave him the bene- fit of the doubt created by the similarity of names in that locality, as already stated. There was numbersuch companyfusion in the case of the appellant. The deceased indicated that there were two more persons companycerned in the crime, but he companyld number name them. The other two accused persons who were acquitted by the companyrts below had number been named in the dying declarations and, therefore, their acquittal did number, in any way militate against the truth of the dying declara- tions. The companyrts below also agreed in holding that Babool- al was in a position to see his assailants and to identify them in the light of the electric lamp nearby. They have also pointed out that there was numbercoaching. There is numberdoubt, therefore, that Baboolal had been companysistent through- out in naming the appellant as one of his assailants, and he named him within less than half an hour of the occurrence and as soon as he reached the Mayo Hospital. There was, thus, numberopportunity or time to tutor the dying man to tell a lie. At all material times, he was in a proper state of mind in spite of multiple injuries on his person, to remem- ber the names of his assailants. Hence, we have numberreasons to doubt the truth of the dying declarations and their reliability. We have also numberdoubt that from the legal and from the practical points of view, the dying declarations of the deceased Baboolal are sufficient to sustain the appellants companyviction for murder. The only other question that remains to be companysidered is whether there are any extenuating circumstances in favour of the accused justify- ing the lesser of the two sentences prescribed by law. In our opinion, there are numbere. It was a case of a deliberate companyd-blooded murder. For the reasons given above, we uphold the judgment and order of the High Court companyvicting the appellant of murder and sentencing him to death.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 92 of 1957. Appeal by special leave from the judgment and order dated May 11, 1956, of the Labour Appellate Tribunal of India, Calcutta, in Misc. Case No. C-152 of 1955. Sen, S. N. Mukherjee and B. N. Ghosh, for the appel- lants. L. Sen Gupta with him Dipak Dutta Choudhri , for the respondent. 1957. September 20. The following Judgment of the Court was delivered by BHAGWATI J.-This appeal with special leave against the decision of the Labour Appellate Tribunal of India, Calcut- ta, arises out of an application made by the appellant under s. 22 of the Industrial Disputes 66 Appellate Tribunal Act, 1950, hereinafter referred to as the Act for permission to discharge the respondent. The respondent had been appointed as a pay-clerk in the appellants cash department on April 30. 1945, and had been company and had been companyfirmed in service with effect from August 1, 1945. Since the beginning of 1949, the respondent was found to have become negligent and careless in his work and he was also disobedient and slow in the performance of the duties that were allotted to him. Repeated verbal and written I warnings were given to him but they had numbereffect whatever. Consequently the Chief Cashier by his letter dated October 24, 1949, addressed to the Manager of the appellant, companyplained that he was very negligent and care- less in his work, and habitually showed sulkiness, that he was also disobedient, and shirked the duties that were allotted to him an that recently, he was careless enough to keep the Companys money in an open drawer of a safe, and go home, without locking the same. The Management thereupon asked for his written explanation which he submitted on October 28, 1949, stating that if there was anything wrong on his part that was due to his ill health, hard work and mental anxiety. He, therefore, asked to be excused and stated that he would take much more care in future about his work. On November 17, 1949, the Chief Cashier again company- plained against the respondent stating that he had number only registered numberimprovement but was grossly negligent in his duties, in spite of repeated warnings, and was in the habit of absenting himself on flimsy grounds, and always tried to avoid duties that were entrusted to him and was very inso- lent in his behaviour and companyduct. A charge-sheet was submitted to him on November 18, 1949, and he was suspended till the final disposal of the enquiry. On November 19, 1949, the respondent wrote a letter to the Managing Director of the appellant pleading number guilty to the charges framed against him and asking for an interview so that he may have a chance to represent his grievances personally. The re- spondent was granted an interview with the Manager of the appellant who investigated the case of the respondent and found him guilty of the charges framed against him. The respondent had admitted having been rude to his superior officer in a fit of temper but appeared to be repentant of his companyduct and had tendered an apology to the Chief Cash- ier. He also submitted on November 29, 1949, a letter asking to be excused. Under the circumstances, the manager of the appellant recommended in his report dated November 29, 1949, that the respondent be given one more opportunity to prove himself of good behaviour but having regard to the request made by the respondent in that behalf suggested that he be transferred to the Mechanical Engineering Department. The Manager also stated at the end of the said report that he had warned the respondent that if he got any further adverse report about his work or companyduct, his services would be terminated forthwith. Following upon that report a letter was addressed by the appellant to the respondent on the same day intimating that the appellant had decided to give him one more chance of working in the organization on the distinct understanding that should there be any further adverse report about his work or companyduct his services would be terminated forthwith. He was directed on that under- standing to report to Mr. Hooper of the M. E. Department, where he was being transferred with effect from the next day. In spite of these chances being given to him the respondent did number improve and he was again found seriously neglecting his work. There were also companyplaints from the typists to the effect that the respondents chatter interfered with their work. Mr. Hooper after giving him verbal warnings on several occasions without any effect ultimately gave him a written warning on February 9, 1951, recording the above facts and asking that the respondent should show immediate improvement in his companyduct failing which he would take the matter further. The respondent replied by his letter dated February 16, 195 1, denying the allegations companytained in the said letter of Mr. Hooper He Pleaded that he was number negli- gent in his duty inasmuch as he had to discharge the arrears of work which were out- standing at the time when he took over the work of writing parcel challans and he was also asked to do other work of the clerks who were absent on leave. He however admitted that he had occasionally talked with his companyworkers though he companytended that that was number in such a way as would prompt his companyorkers to companyplain against him. He further asked to be excused for the faults, if any, and gave an assurance that he was trying and would try his level best to improve further. The respondent however did number show any improvement and again there were companyplaints against him that his work had number been done properly and also that he had been numbersy, causing disturbance to the other clerks work and that he had been twice found by his superior officer Mr. Girling with his head on his arms apparently sleeping. On September 3, 1952, Mr. Girling on behalf of the appellant gave the respondent a warning to which he replied on September 8, 1952, denying all the allegations except that of his being found with his head on his arms but excused himself by stating that he was ill and it was under the advice of Mr. Girhng himself that he companysulted the office doctor who had advised him rest. He however promised to endeavour his utmost to give every satisfaction in the discharge of his duties. In spite of these warnings the respondent showed numberimprove- ment in his work and companyduct and companytinued neglecting his duties and indulging in insubordination with the result that by its letter dated February 9, 1953, the Management of the appellant wrote to him that the only companyrse left to it was to dispense with his services but as a measure of leniency it had decided to give him another chance to show satisfac- tory improvement and in doing so it had also decided to stop his annual increment. The respondent protested against the stopping of his annual increment by his letter dated Febru- ary 17, 1953, and companytended that the charges levelled against him were absolutely groundless and asked the Manage- ment to re-consider his case. The Labour Directorate of the Government of West Bengal was approached on his behalf but that body also refused to intervene. The Management asked Mr. Hooper to report upon the respondents work and companyduct by May 31, 1953, and intimated to the respondent that unless definite improvement was reported by that date his services with the appellant would be terminated as from June 30, 1953. Mr. Hooper observed the respondents work and companyduct and number finding them satisfactory, by his memo dated August 19, 1953, reported on the same to the Management of the appel- lant. No action was however taken immediately against the respondent and on May 4, 1954, Mr. Hooper made his final report to the Management on the strength of which the appel- lant wrote to the respondent its letter dated May 10, 1954, in which it stated that on receipt of the companyplaint from Mr. Hooper it had made a thorough enquiry into his record of service, had found that he was unsuitable to be retained in its service and had, therefore, decided to terminate his service on payment of full retrenchment companypensation. It asked the respondent to choose one of the two alternatives, viz., that it may forthwith terminate his services if he was agreeable to accept payment of retrenchment companypensation or in case he refused to accept the same to make an application before the Fifth Industrial Tribunal for permission to terminate his service. The respondent failed and neglected to send any reply with the result that by its letter dated June 21, 1954, the appellant intimated to the respondent that it was approaching the Tribunal for permission to terminate his service as per its letter dated May 28, 1954. The appellant thereafter filed on September 21, 1954, an application before the Fifth Industrial Tribunal, West Bengal. under s. 33 of the Industrial Disputes Act, 1947, for permission to discharge the respondent. The Fifth Industrial Tribunal however became functus officio on the expiry of thirty days from the publication of its Award in the dispute which was then pending before it with the result that the said application companyld number be disposed of and was accordingly struck off. The appellant eventually filed an application under s. 22 of the Act before the Labour Appellate Tribunal of India at Calcutta for permission to discharge the respondent from its service. This step became necessary as there was an appeal being No. Cal.-152 pending before the Labour Appellate Tribunal to which the appellant and the respondent were parties. The Labour Appellate Tribunal companysisting of Shri N. Gan President and Shri P. R. Mukherji Member heard the appellant ex parte and by its order dated October 14, 1955, allowed the said application and granted the permis- sion to discharge the respondent holding inter alia that a prima facie case had been made out for permission to dismiss the respondent. The appellant accordingly on November 11, 1955, wrote a letter to the respondent stating that the necessary permission had been granted by the Labour Appel- late Tribunal to discharge him from the appellants service and that the decision of the Management of the appellant dated May 28, 1954, to terminate his services was therefore given effect to on the terms companymunicated to him in that letter. On December 6, 1955, the respondent filed an affidavit before the Labour Appellate Tribunal, Calcutta, praying for a review of the order dated October 14, 1955, for setting it aside and for restoration of the application under s. 22 of the Act. The Labour Appellate Tribunal presided over by Mr. M. N. Gan and Mr. V. N. Dikshitulu heard the parties companycerned and by its order dated March 6, 1956, allowed the respondents application and restored the appellants case to its file. On a further hearing of that application the parties adduced evidence and after hearing both the parties the Labour Appellate Tribunal presided over this time by Mr. V. N. Dikshitulu rejected the application under s. 22 of the Act by its order dated May 11, 1956, and refused to the appel- lant permission to discharge the respondent from its serv- ice. The appellant being aggrieved by the said decision of the Labour Appellate Tribunal of India, Calcutta applied for and obtained special leave to appeal to this Court. Mr. Sen on behalf of the appellant raised two companytentions that the Labour Appellate Tribunal had numberjurisdiction to review its own order which it had passed on October 14, 1955, and ii that the Labour Appellate Tribunal had ex- ceeded its jurisdiction under s. 22 of the Act in companying to the companyclusion that the appellant had failed to make out a prima facie case to discharge the respondent from its serv- ice. Re i It was companytended that once the Labour Appellate Tribunal pronounced its order on October 14, 1955, it had become functus officio and thereafter it had numberjurisdiction to review its own order. The circumstances, moreover, did number bring the application which was made by the respondent on December 6, 1955, strictly within the provisions of 0. 47, r. I of the Code of Civil Procedure and numberapplication for review companyld therefore be maintained. It is significant, however, to remember that the application made by the respondent on December 6, 1955, was an omnibus one and was intituled as one under 0. 47, r. I of the Code of Civil Procedure for review under 0. 41, r. 21 of the Civil Procedure Code for restoration and under 0. 9, r. 13 of the Code of Civil Procedure for setting aside the permis- sion granted ex parte and to restore the respondent in his original position. The respondent evidently sought to rely upon one or the other of the provisions above set out in order to obtain the relief which he sought in that. applica- tion. Whether one or more of these provisions of the Code of Civil Procedure companyld be availed of by the respondent depends upon what are the powers which are vested in the Labour Appellate Tribunal when hearing the matters which companye before it. The Labour Appellate Tribunal is the creature of the statute and all its powers must be found within the four companyners of the statute. The companystitution and functions of the Labour Appellate Tribunal are to be found in Chapter 11 of the Act. Sections 4 to 6 of the Act lay down the companystitution and functions of the Labour Appellate Tribunal and s. 7 prescribes its jurisdiction in appeal from awards or decisions of the Industrial Tribunals. Section 9 lays down the powers and procedure of the Labour Appellate Tribu- nal. The provisions of s. 9 so far as they are relevant for the purpose of this appeal may be set out here Section 9. Powers and procedure of the Appellate Tribunal. The Appellate Tribunal shall have the same powers as are vested in a civil companyrt, when hearing an appeal, under the Code of Civil Procedure, 1908 Act V of 1908 . The Appellate Tribunal shall follow such procedure as may be prescribed, and subject thereto, it may, by order, regulate its practice and procedure and the provisions of the Code of Civil Procedure, 1908 Act V of 1908 , shall, so far as they are number inconsistent with this Act, or the rules or orders made thereunder, apply to all proceedings before the Appellate Tribunal. It may be numbered that the Labour Appellate Tribunal number only exercises appellate jurisdiction by way of hearing appeals from the awards or decisions of the Industrial Tribunals but also exercises original jurisdiction when applications are made to it under s. 22 of the Act to obtain its permission in writing to alter the companyditions of service applicable to the workman or to discharge or punish whether by dismissal or otherwise any workman companycerned in appeals pending before it. If an employer companytravenes the provisions of s. 22 during the pendency of the proceedings, before the Labour Appellate Tribunal, it also entertains companyplaints in writing at the instance of the employees aggrieved by such companytra- vention and the Labour Appellate Tribunal decides these companyplaints as if they are appeals pending before it in accordance with the provisions of the Act. This is also an exercise of original jurisdiction though under the express terms of the section the exercise of that jurisdiction is assimilated to the exercise of appellate jurisdiction by the Labour Appellate Tribunal. Whatever be the nature of the jurisdiction thus exercised by the Labour Appellate Tribunal-whether- original or appellate-that jurisdiction is exercised by it by virtue of the provisions of the Act And s. 9 of the Act has refer- ence to the exercise of the whole of that jurisdiction when it talks of the powers and procedure of the Labour Appellate Tribunal. In regard to such powers and procedure numberdis- tinction is made between the exercise of original jurisdic- tion and the exercise of appellate jurisdiction by the Labour Appellate Tribunal and these provisions apply equally to the jurisdiction exercised by it whether under ss. 7, 22, or s. 23 of the Act. Section 9 1 of the Act invests the Labour Appellate Tribu- nal with the same powers as are vested in a civil companyrt, when hearing an appeal, under the Code of Civil Procedure, 1908 Act V of 1908 . A question was mooted before us whether the words when hearing an appeal were to be read with the words Appellate Tribunal or with the words a civil companyrt. It was argued that these words went with the words Appellate Tribunal and, therefore, the powers of a civil companyrt under the Code of Civil Procedure were to be exercised by the Labour Appellate Tribunal only when it was exercising its appellate jurisdiction and hearing matters which fall within the purview of s. 7 or s. 23 of the Act and number when it was exercising original jurisdiction and hearing applications under s. 22 of the Act. This companystruc- tion of the provisions of s. 9 1 of the Act however suf- fers from this disability that it takes numbercount of the fact that the Labour Appellate Tribunal under the provisions of the Act itself exercises both original as well as appellate jurisdiction and if such a companystruction was put on these provisions the result would be that there would be numberprovi- sion as regards the powers of the Labour Appellate Tribunal when it is exercising original jurisdiction. The powers of the Labour Appellate Tribunal which are sought to be provid- ed in s. 9 1 of the Act are number limited only to the exer- cise of appellate jurisdiction by it but have reference to the whole of the jurisdiction which is vested in the Labour Appellate Tribunal under the provisions of the Act. The words when hearing an appeal have, moreover, been used between the words a civil companyrt and under the Code of Civil Procedure, 1908 which in the companytext in which they have been used companyld only have been meant to refer to a civil companyrt. Whatever the jurisdiction the Labour Appellate Tribunal is exercising-whether original or appellate-it is vested with the powers as are vested in a civil companyrt under the Code of Civil Procedure, 1908, when it is hearing an appeal. The very juxtaposition of the words when hearing an appeal with the words a civil companyrt , is sufficient, in our opinion, to invest the Labour Appellate Tribunal while exercising its jurisdiction-whether original or appel- late-with the same powers as are vested in a civil companyrt Under the Code of Civil Procedure when it is exercising its appellate jurisdiction, and hearing appeals. See Burmah- Shell Oil Storage Case , and the New Union Mills Ltd. Case 2 . If this is the true companystruction to be put on the provisions of s. 9 1 of the Act, the provisions of 0. 41 r. 21 of the Code of Civil Procedure are attracted forthwith. Order 41 r. 21 provides Where an appeal is heard ex parte and judgment is pronounced against the respondent, he may apply to the appellate companyrt to rehear the appeal and, if he satisfies the Court that the numberice was number duly served or that he was -prevented by sufficient cause from appearing when the appeal was called on for hearing, the Court shall rehear the appeal on such terms as to companyts or otherwise as it thinks fit to impose upon him. When the Labour Appellate Tribunal heard the application under s. 22 of the Act ex parte on October 14, 1955, the summons had number been served on the respondent owing to its being addressed to hi-in at a wrong place. There was suffi- cient cause therefore for the respondent number appearing when the application was called on for hearing and on this 1 1953 L.A.C. 522. 2 1954 L.A.C. 252. circumstance being established he was entitled to a re- hearing of the application and setting aside of the ex parte order made against him. The Labour Appellate Tribunal was, therefore, right in making the order which it did on March 6, 1956. There is also another aspect of the question which may be dealt with at this stage and it is that under the provisions of s. 9, sub-s. 10 of the Act the Labour Appellate Tribu- nal is enjoined to follow such procedure as may be pre- scribed, and subject thereto it may, by order, regulate its practice and procedure and the provisions of the Code of Civil Procedure, 1908 Act V of 1908 , shall, so far as they are number inconsistent with the Act or the rules or orders made thereunder, apply to all proceedings before it. Pursu- ant to the powers companyferred upon it by this sub-section the Labour Appellate Tribunal has made orders to regulate its practice and procedure and 0. 3 r. 4 provides Nothing in these rules shall be deemed to limit or other- wise affect the inherent power of the Tribunal to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court. This provision is analogous to that which is companytained in s. 151 of the Code of Civil Procedure which relates to the inherent powers of the Court and even apart from the ap- plicability of 0. 41 r. 21 of the Code of Civil Procedure as hereinbefore set out it was open to the Labour Appellate Tribunal to pass the order which it did on March 6, 1956, as it was evidently necessary for the ends of justice or to prevent the abuse of the process of the Court. We are, therefore, of opinion that the Labour Appellate Tribunal had jurisdiction to set aside the ex parte order dated October 14, 1955, and restore the appellants applica- tion under s. 22 of the Act to its file. This companytention of the appellant therefore is without any substance and must be negatived. Re ii It was next companytended that even though the Labour Appellate Tribunal had jurisdiction to hear an application under s. 22 of the Act it misconceived its jurisdiction and in the exercise of it, launched into an inquiry which it was number companypetent to do and erroneously came to the companyclusion that the appellant had failed to make out a prima facie case for terminating the service of the respondent. The nature and scope of the enquiry before the Labour Appel- late Tribunal under s. 22 of the Act has been the subject- matter of decisions of this Court in Atherton West Co. Ltd. v. Suti Mill Mazdoor Union and others 1 , The Automo- bile Products of India Ltd. v. -Rukmaji Bala others 2 and Lakshmi Devi Sugar Mills Limited v. Pt. Ram Sarup 3 . In the last mentioned case this Court succinctly laid down the principles governing such enquiry and observed at p. 935 The Tribunal before whom an application is made under that section has number to adjudicate upon any industrial dispute arising between the employer and the workman but has only got to companysider whether the ban which is imposed on the- employer in the matter of altering the companydition of employ- ment to the prejudice of the workman or his discharge or punishment whether by dismissal or otherwise during the pendency of the proceedings therein referred to should be lifted. A prima facie case has to be made out by the em- ployer for the lifting of such ban and the only jurisdiction which the Tribunl has is either to give such permission or to refuse it provided the employer is number acting mala fide or is number resorting to any unfair practice or victimization. We have, therefore, got to companysider whether in the instant case a prima facie case was made out by the appellant for terminating the service of the respondent and whether in giving the numberice dated November 1 1, 1955, terminating the respondents service the appellant was motivated by any unfair labour practice or victimisation. The facts as they appear from the narration of events in the earlier part of this judgment go to establish that the respondent was grossly negligent in 1 1953 S.C.R. 780 3 1956 S.C.R. 916. 2 1955 i S.C.R. 1241. the performance of his duties, was in the habit of absenting himself on flimsy-grounds, was also insolent in his beha- viour and companyduct and in spite of repeated warnings, oral as well as written, addressed to him by the Management of the appellant did number show any signs of improvement. The inci- dents of 1949, 195 1, and 1952 culminating in the stoppage of his annual increment in February, 1953, were sufficient to demonstrate that the Management of the appellant dealt with the respondent very leniently in spite of his work and companyduct number being at all satisfactory. The appellant would have been well within its rights if it had taken action against the respondent on each of the several occasions above referred to, but out of sheer companypassion went on giving him one opportunity after the other so that he would register an improvement in his work and companyduct. The re- spondent however, presisted in his behaviour and the two reports made by Mr. Hooper-One on August 19, 1953, and the other on May 4, 1954, were companysidered by the Management and it came to the companyclusion that the respondent was unsuitable to be retained in the appellants service and even then instead of deciding to dismiss him without anything more, it offered him the choice of one of the two alternatives, viz., that it may forthwith terminate his service if he was agree- able to accept the term of full retrenchment companypensation or if he refused to accept the same to make an application before the Fifth Industrial Tribunal for permission to terminate his service. The whole of the companyrespondence ending with the respondents letter dated February 17, 1953, was sufficient to prove with. out anything more the unsatis- factory nature of his work and companyduct and the, appellant was evidently of the opinion that the records of the re- spondent taken along with the reports made by Mr. Hooper afforded sufficient material to justify it in taking the step which it ultimately decided to do. It was under these circumstances that the appellant did number companysider it neces- sary to furnish to the respondent a chargesheet and to hold a formal enquiry into the work and companyduct of the respond- ent. This circumstance was companysidered by the Labour Appellate Tribunal as sufficient to entitle it to determine for itself whether a prima facie case for the termination of the respondents service was made out by the appellant. It was open to the appellant to submit a charge-sheet to the re- spondent and institute a formal inquiry into his work and companyduct. If that had been done and the appellant had, after holding such formal enquiry, companye to the companyclusion that the respondent was guilty of the charges which were levelled against him and had then decided to terminate his service, the Tribunal companyld number have intervened and on its companying to the companyclusion that a prima facie case for the termination of the service of the respondent was thus made out, it would. have granted the appellant the permission asked for. Unfortunately for the appellant, in spite of the work and companyduct of the respondent being demonstrably unsatisfactory and, therefore, justifying the companyclusion that he was un- suitable to be retained in its service, the appellant did number hold any formal enquiry of the nature indicated above and did number afford to the respondent an opportunity to have his say in the matter of the charges levelled against him. The Labour Appellate Tribunal therefore rightly took upon itself the burden of determining whether on the material submitted before it by the appellant a prima facie case for the termination of the respondents service was made out by the appellant. The evidence led by the parties before the Labour Appellate Tribunal companysisting as it did of the affidavit and oral evidence was number such as would enable it to companye to the companyclusion that a prima facie case for the termination of the respondents service was made out by the appellant. In paragraphs 8 and 9 of the application the appellant had pointed out that after receipt of Mr. Hoopers report dated May 4, 1954, to the effect that there will be numberimprovement of work in the department unless the respondent was removed from the same, the matter was further investigated and the old records of the respondent were carefully companysidered and the appellant found that enough companysideration had been shown to the respondent but without any effect and in the interest of discipline and good work it was necessary that he should be discharged from service. These allega- tions were denied by the respondent in his affidavit in reply and he companytended that on numberoccasion whatever the warnings, letters, suspension or stoppage of increment resorted to by the appellant were done after establishing his guilt or by following the usual methods, viz., by issu- ing a charge-sheet with specific allegations and on enquiry based on such a charge-sheet and explanations rendered by him. He companytended that the whole thing was arbitrary, without any basis and in violation of the principles of natural justice and was by way of unfair labour practice or victimization. An affidavit in rejoinder was filed on behalf of the appellant by Shri Ramani Ranjan Dhar, a Senior Assistant of the appellant. He denied these allegations of the respondent and affirmed that the application of the appellant sufficiently disclosed the offences for which it sought the permission of the Labour Appellate Tribunal to dismiss the respondent. He stated that the appellant was thoroughly satisfied, after full enquiry and investigation and after the respondent was given more than ample opportu- nity to explain the charges levelled against him, and after he was given more than one chance at his own prayer to improve his companyduct on various occasions that the respondent was guilty of the charges brought against him. This affida- vit evidence was followed by the oral evidence of Mr. Hooper led on behalf of the appellant. Mr. Hooper, however, did number carry the case of the appellant any further. Even though the appellant had an opportunity when Mr. Hooper was in the witness-box to produce his reports dated August 19, 1953, and May 4, 1954, and have them proved through him, or, in any event, if the absence or loss of those reports was satisfactorily accounted for to lead oral evidence as to their companytents the appellant did number do so and beyond a bare reference to his report of May 4, 1954, without disclosing. the companytents thereof there was numberhing in the deposition of Mr. Hooper which would even go to show that the companytents of that report were preju- dicial to the respondent. In cross-examination also he admitted that before reporting on May 4, 1954, against the respondent he did number draw up a chargesheet as it was for the appellant to do so. The Labour Appellate Tribunal bad to determine on these materials whether a prima facie case had been made out by the appellant for the termination of the respondents serv- ice. A prima facie case does number mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the same were believed. While determining whether a prima facie case had been made out the relevant companysideration is whether on the evidence led it was possible to arrive at the companyclusion in question and number whether that was the only companyclusion which companyld be arrived at on that evidence. It may be that the Tribunal companysidering this question may itself have arrived at a different companyclusion. It has, however, number to substitute its own judgment for the judgment in question. It has only got to companysider whether the view taken is a possible view on the evidence on the record. See Buckingham and Carnatic Co., Ltd. Case 1 . The Labour Appellate Tribunal in the instant case discussed the evidence led before it in meticulous detail and came to the companyclusion that numberprima facie case was made out by the appellant for the termination of the service of the respond- ent. It applied a standard of proof which having regard to the observations made above was number strictly justifiable. If the matter had rested there it may have been possible to upset the finding of the Labour Appellate Tribunal. But if regard be had to the evidence which was actually led before it, there is such a lacuna in that evidence that it is impossible to companye to the companyclusion that even if the evi- dence was taken at its face value a prima, facie case was made out by the appellant. Mr. Hoopers evidence did number go to show what were the companytents of his report dated May 4, 1954, and it companytained only a bare reference to that report 1 1952 L.A.C. 490. without anything more. This was number enough to prove the companytents of that report, much less to give the respondent an opportunity of companytroverting the allegations made against him. If, therefore, these essential ingredients were want- ing, it cannot be said that the evidence led by the appel- lant before the Labour Appellate Tribunal was sufficient to establish a prima facie case for the termination of the respondents service. This companytention also does number there- fore avail the appellant. Mr. Sen endeavoured to draw a distinction between discharge on the one hand and punishment by way of dismissal or other- wise on the other, in clause b of s. 22 of the Act. He companytended that numberprima facie case need be made out when an employee was sought to be discharged simpliciter by the employer. A charge-sheet was required to be submitted to the workman and an enquiry thereon required to be made in companyformity with the principles of natural justice only in those cases where the workman was sought to be punished by dismissal or otherwise. That was number the case when the workman was sought to be discharged without assigning any reason whatever and such a case did number fall within the category of punishment at all. For the purpose of the present case we need number dilate upon this it is sufficient to point out that Shri Raniani Ranjan Dhar in his affidavit in rejoinder filed on behalf of the appellant categorically stated that the respondent was sought to be dismissed by reason of his having been found guilty of the various charges which had been levelled against him. Even at the exparte hearing of the application under s. 22 of the Act before the Labour Appellate Tribunal the case of the appel- lant was that it had made out a prima facie case for permis- sion to dismiss the respondent. This distinction sought to be drawn by Mr. Sen is therefore of numberconsequence what- ever and need number detain us any further. Mr. Sen also relied upon the circumstance that after the Labour Appellate Tribunal had on the exparte hearing of the application under s. 22 of the Act granted to the appellant permission to terminate the service of the respondent on October 14, 1955, the appellant had implemented the same and by its numberice dated November, 11, 1955, actually terminated the service of the respondent offering him full retrenchment companypensation. In so far as the appellant had acted upon such permission and implemented the same, it was companytended, that the respondents service was irrevocably terminated and numberhing more was to be done thereafter, except the possible raising of an industrial dispute by the respondent on the score of his service having been wrongfully terminated. It was submitted that after such an irrevocable step had been taken by the appellant terminating the respondents service, the Labour Appellate Tribunal ought number to have reconsidered its decision and restored the application under s. 22 of the Act to its file and that the further decision of the Labour Appellate Tribu- nal had numbereffect so far as the actual termination of the service of the respondent was companycerned. We do -not propose to go into these interesting questions for the simple reason that the only question which arises for our companysideration in this appeal is whether on the evidence led before it the decision of the Labour Appellate Tribunal dated May 11, 1956, dismissing the appellants application under s. 22 of the Act was companyrect. As a matter of fact numbersuch companytention had been urged by the appellant before the Labour Appellate Tribunal when it finally heard the application under s. 22 of the Act and the only point to which the attention of the Labour Appellate Tribunal was invited was whether the appel- lant had made out a prima facie case for the termination of the respondents service. Whatever rights and remedies are available to the appellant by reason of these circumstances may just as well be asserted by the appellant in appropriate proceedings which may be taken hereafter either at the instance of the appellant or the respondent. We are number at present companycerned with the same. Under the circumstances, we are of opinion that the decision arrived at by the Labour Appellate Tribunal which is the subject-matter of appeal before us was companyrect. It is numberdoubt true that the Labour Appellate Tribunal recorded a finding in favour of the appellant that in termi- nating the service of the respondent as it did, the appel- lant was number, guilty of any unfair labour practice number was it actuated by any motive of victimisation against the respondent. That finding, however, cannot help the appel- lant in so far as the Labour Appellate Tribunal held that the appellant had failed to make out a prima facie case for terminating the service of the respondent. We, therefore, hold that the decision of the Labour Appel- late Tribunal refusing permission to the appellant under s. 22 of the Act was companyrect and this appeal is liable to be dismissed.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 60 of 1955. Appeal from the judgment and order dated the 2nd February, 1955, of the Calcutta High Court in Criminal Revision No. 1113 of 1954, against the judgment and order dated the 14th November, 1953, of the Court of the Sessions Judge, Howrah in Criminal Appeal No. 185 of 1953, arising out of the judgment and order dated the 8th September, 1953, of the Municipal Magistrate, Second Class, Howrah, in Case No. 1407C/1952. Sukumar Ghose, for the appellant. Sen and P. K. Ghosh for P. K. Bose , for the respondent 1957. October 29. The following Judgment of the Court was delivered by SINHA J.-This appeal on a certificate of fitness granted by the Calcutta High Court under Art. 134 1 c of the Constitution, is directed against the judgment and order of a Single Judge of that Court in its criminal revisional jurisdiction, companyvicting the appellant under s. 488/300 of the Calcutta Municipal Act, 1923 which will hereinafter be referred to as the Act , and sentencing him to a fine of Rs. 50, in substitution of the order of companyviction under s. 488/299 of the Act, of a fine of Rs. 75, passed by the lower companyrts. The facts found by the companyrts below which are necessary to be stated for the purpose of this appeal, are as follows The appellant who is the owner of the premises No. 10/3, Swarnamoyee Road, Howrah, encroached upon an area of 57 x 3 of the road-side land of the Howrah Municipality to which the provisions of the Act have been extended. A numberice, the terms of which we shall set out hereinafter, was served on the appellant to remove the encroachment aforesaid, and as he failed to carry out the terms of the numberice within the specified time, the prosecution leading up to this appeal, was instituted before the magistrate who, under s. 531, is called Municipal Magistrate. The Municipal Magistrate who tried the appellant in the first instance, companyvicted him, but on appeal, the learned Sessions Judge acquitted him on the ground that the prosecution had been launched beyond three months which was the prescribed period of limitation under s. 534 of the Act. The Municipality moved the High Court of Calcutta in its revisional jurisdiction and a Division Bench of that Court J. P. Mitter and S. K. Sen JJ. , set aside the order of acquittal and directed the appeal to be re-heard, after giving the Municipality an opportunity of formally bringing on record certain official documents showing the date of the institution of the companyplaint. The relevant documents were proved and exhibited on behalf of the prosecution in the Sessions Court and the learned Additional Sessions Judge companyfirmed the companyviction and the sentence, and dismissed the appeal. Thereupon, the appellant moved the High Court in its revisional jurisdiction. His application in revision was heard and disposed of by P.N. Mukherjee J. by his order dated February 2, 1955, which is the subject-matter of this appeal. Before him, the appellant as petitioner, urged at the forefront of the arguments, the question of limitation, and the learned Judge took the view that the matter was number companycluded in view of what had taken place in the High Court and in the companyrt of Session in pursuance of the order of remand passed by the High Court. The learned Judge agreed with the appellate companyrt that the companyplaint was number barred. The High Court also agreed with the lower companyrts on their findings on the merits, that is to say, it affirmed the finding that the appellant had encroached upon the road-side land of the Municipality. The High Court accepted the argument raised on behalf of the appellant that on the facts found, namely, that the offending structure was a companypound wall and number something which was a part and parcel of the main building, the offence if any, would companye under s. 300, and number s. 299, read with s. 488 of the Act. The High Court further took the view that as the accused was fully aware of the nature of the accusation against him, it would number cause any prejudice to him if the companyviction and the sentence were altered into those under s. 300, read with s. 488 of the Act, the sentence being reduced to the statutory limit of 50 rupees. The appellant moved the High Court and obtained the necessary certificate from the Bench presided over by the learned Chief Justice who observed, while granting the certificate It seems to me to be arguable and arguable with some force that such alteration of the companyviction companyld number possibly be companyrect in law It would therefore be arguable that a numberice under section 299 to remove a companypound wall unattached to any building companyld number be a numberice lawfully given or a requisition lawfully made within the meaning of section 488 1 c of the Calcutta Municipal Act, 1923. It appears to me that the alteration of the companyviction by this Court does raise a question of law which makes the case a fit case for further appeal to the Supreme Court. In this Court, the learned companynsel for the appellant has placed at the forefront of his arugments the points suggested in the portion of the learned Chief Justices order quoted above, but in our opinion, there is absolutely numbersubstance in those companytentions. The alteration of the companyviction from s. 299 to s. 300, read with s. 488 of the Act, was numberalteration in the substance of the accusation but only in the section more properly applicable to the facts found. A similar question was raised before their Lordships of the Judicial Committee of the Privy Council in the case of Begu v. The King-Emperor 1 . It was argued before their Lordships that the companyviction of the appellants before the Judicial Committee under s. 201, Indian Penal Code, without a charge under that section, was a serious departure from the procedure laid down in the Code of Criminal Procedure. In that case the initial companyviction was for murder under s. 302 of the Indian Penal Code, but the High Court had set aside that companyviction and substituted a companyviction under the lesser s. After discussing the provisions of ss. 236 and 237 of the Code of Criminal Procedure, their Lordships made the following observations which fully companyer the present companytroversy A man may be companyvicted of an offence, although there has been numbercharge in respect of it, if the evidence is such as to establish a charge that might have been made. It will be numbericed that in the case before the Privy Council, the alteration was number only in respect of the section but also of the substance of the accusation, but as the lesser offence under s. 201, had been made out by the evidence led on behalf of the prosecution which was primarily for an offence of murder, their Lordships ruled that ss. 236 and 237 of the Code of Criminal Procedure authorize the Court to alter the companyviction and the sentence to be passed in respect of the offence made out in the evidence. In the case in hand, it is manifest that the facts sought to be proved and found by the companyrts below remained the same even after the alteration of the companyviction from s. 299 to s. 300, read with s. 488 of the Act. There was, therefore, numberillegality in the alteration of the companyviction under one section to the other. It was next argued that the numberice served upon the appellant was number lawful within the meaning of s. 488 1 c of the Act, which runs as follows 488 1 Whoever companymits any offence by a b c failing to companyply with any direction lawfully given to him or any requisition lawfully made upon him under any of the said sections, sub-sections, clauses, provisos or rules, shall be punished The substantive portion of the numberice is in these terms Take numberice that you are hereby required by the Municipal Commissioners of Howrah, within thirty days from the date of service of this numberice to remove the encroachment caused by a companypound wall measuring 57-0 x 3-0 upon Swarnamoyee Road attached to premises No. 10/3 and that in default, the provisions of the above Act will be enforced. This numberice is headed as under s. 299 of the Act. It is number-more in companytroversy, as found by the companyrts below, that the offending part of the structure companyes under s. 300 which refers to a wall, etc., number being a portion of a building or fixture, as companytemplated in s. 299. The companytention number has narrowed down to this that the numberice having been headed as under s. 299 of the Act, the companyviction under s. 300 is illegal, because, it is further argued, the requisition had number been lawfully made. According to this argument, the requisition would have been lawfully made, if the numberice had been headed as under s. 300. Hence, the label given to the numberice makes all the difference between a requisition lawfully made and a requisition number so made. In our opinion, this argument has only to be stated to be rejected. It is the substance and number the form of the numberice that has to be regarded. The effective part of the numberice quoted above, leaves numberdoubt in the mind of the parties companycerned that the requisition is to remove the encroachment caused by the companypound wall. As it has number been companytended that the appellant had number received the numberice, and it is companymon ground that the appellant had number carried out the terms of the numberice, there cannot be the least doubt that the appellant has incurred the penalty under s. 488 1 c , read with s. 300. It must, therefore, be held that numberwithstanding the label given to the numberice, the requisition bad been lawfully made in the sense that the appellant had made the encroachment companyplained of, and that the Municipality was entitled to call upon him to remove the encroachment. The appellant was bound to carry out the terms of the requisition, and as he admittedly failed therein, he had incurred the penalty of the law. It was next sought to be companytended that there was substantial prejudice to the appellant inasmuch as if the companyviction were under s. 299 and number s. 300, read with s. 488, he may have been entitled to claim companypensation. There are several answers to this companytention. In the first instance, he himself invited the High Court to interfere with the order of companyviction passed by the lower companyrts. If the High Court has set right the technical defect, as it was bound to do when the matter had been brought to its numberice, the appellant has numberjust grievance, keeping in view the fact that the amount of fine has been reduced as a result of the alteration in the section. Secondly, if he has any rights to claim companypensation in a civil companyrt the judgment and order of the criminal companyrt is wholly irrelevant and thirdly, the prejudice must have reference to any irregularity in the trial of the case. It has number been shown that the appellant had, in any way, been prejudiced in the trial of the case as a result of the alteration in the section, that is to say, that he was deprived of some opportunity to make a proper defence to the prosecution if the right section had been named in the numberice or in the charge, if any. Nor has he been able to show that he was misled as a result of any such technical error. Lastly, it was sought to be made out that the prosecution itself was beyond time. This companytention was attempted to be made good with reference to the additional evidence adduced at the appellate stage as a result of the direction of the High Court when the case came before it on the first occasion, as mentioned above. In our opinion, there is numbersubstance in this companytention because as pointed out by the learned Additional Sessions Judge, the additional evidence placed before the Court puts the matter beyond all reasonable doubt that the companyplaint had been lodged in time before the relevant authority. In view of these companysiderations, it must be held that there is numbermerit in this appeal.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 165 of 1957. Appeal by special leave from the judgment and order dated the 4th August, 1955, of the Patna High Court in Criminal Appeal No. 699 of 1953 with Criminal Revision No. 205 of 1954, arising out of the judgment and order dated the 12th December, 1953, of the Court of the Assistant Sessions Judge, Second Court Chapra in Trial No. 70 of 1953. C. Mathur., for the appellants. P. Varma, for the respondent. 1957. October 28. The following judgment of the Court was delivered by SINHA J.- The only question for determination in this appeal is whether the High Court in its revisional jurisdiction, has the power to enhance the sentence, as it has done in the instant case, beyond the limit of the maximum sentence that companyld have been imposed by the trial companyrt, on the accused persons. The appellants, along with others, were placed on their trial before the Assistant Sessions Judge of Chapra in the district of Saran, for the offence of dacoity under s. 395, Indian Penal Code. They, along with two others, were companyvicted under s. 395, Indian Penal Code, and sentenced to rigorous imprisonment for 5 years, by the Assistant Sessions Judge, by his Judgment and order dated December 12, 1953. The other accused were acquitted. The companyvicted persons preferred an appeal to the High Court at Patna. The High Court, in its revisional jurisdiction, while admitting the appeal, called upon the appellants to show cause why, in the event of their companyvictions being maintained, their sentence should number be enhanced. The appeal and the rule for enhancement of sentence were heard together by a Division Bench of that Court. The High Court, by its judgment and order dated August 4, 1955, allowed the appeal of two of the appellants and acquitted them but maintained the companyviction as against the remaining six appellants. On the question of sentence, the High Court observed that the offence of dacoity has increased tremendously. It is a very heinous offence as innocent persons, while sleeping in their houses, are attacked and their belongings are taken by force. The High Court, therefore, was of the opinion that a sentence of five years rigorous imprisonment was extremely inadequate. It, therefore, enhanced the sentence to 10 years rigorous imprisonment in each and obtained special leave to appeal limited to the question of sentence only, the question being whether the High Court had the jurisdiction to enhance the sentence beyond the limits of the power of the trial companyrt itself The occurrence of dacoity which is the subjectmatter of the charge against the appellants, along with others, took place on the night between July 1 and 2, 1952, in the house of Ranjit Bahadur, a minor. After midnight, 16 or 17 dacoits, fully armed with various deadly weapons, broke open the main entrance door of the house with an axe. After going into the house, they broke open boxes and tampered with the iron safe, and removed articles worth twenty thousand rupees. The inmates of the house were over-powered. Some of them, slipping out of the house, raised a big fire which is the customary form of alarm raised against the invading crowd of dacoits. On that alarm, a number of people of the village turned up but had number the companyrage to face the dacoits for fear of being shot. They companytented themselves with using brickbats against the dacoits who made good their escape with their booty. It would, thus, appear that it was a serious occurrence involving the lives and fortunes of the inmates of the house, and naturally, the High Court took a very serious view of the offence. In this Court, the learned companynsel for the appellants, who appeared amicus curiae, companytended, in the first place, that the High Court had exceeded its powers in enhancing the sentence from 5 to 10 years inasmuch as the trial companyrt itself companyld number have inflicted a sentence of imprisonment for more that 7 years. Alternatively, he companytended that the High Court had number kept in view the dictum of this Court in the case of Bed Raj v. The State of Uttar Pradesh 1 , while enhancing the sentence against the appellants before it. And lastly, it was companytended that in any view of the matter, in the circumstances of this case, the sentence of 10 years rigorous imprisonment is too severe. In our opinion, there is numbersubstance in any one of these companytentions. 1 1955 2 S.C.R. 583. The main point on which the special leave was granted is the question of the companypetence of the High Court to impose a higher sentence than that which companyld have been imposed by the learned Assistant Sessions Judge under s. 31 3 of the Code of Criminal Procedure. The learned trial judge companyld number have imposed a term of imprisonment exceeding 7 years. The argument is that the High Court companyld enhance the sentence from 5 to 7 years and numbermore. This argument is sought to be enforced by the companysideration that it must be presumed that the learned Assistant Sessions Judge had been entrusted with the trial of the accused persons with the full knowledge that, on companyviction, the accused persons companyld be punished with a term of imprisonment number exceeding 7 years. In its revisional jurisdiction, the High Court companyld exercise its powers only to companyrect any mistakes made by the learned trial judge. The High Court companyld, therefore, at the most, say that the trial judge should have inflicted the highest punishment, it had been empowered by the Code, to impose. The High Court companyld number, at the revisional stage, it was further argued, insist upon a higher punishment being awarded by the trial companyrt than 7 years rigorous imprisonment. The power of the High Court to enhance a sentence, is companytained in sub-s. 1 of s. 439 of the Code, which clothes the High Court with the powers of a Court of Appeal under the Code, as also the power to enhance the sentence. Sub-s. 1 itself, does number companytain any words of limitation on the power to enhance the sentence. Hence, the High Court companyld impose any sentence up to the maximum limit prescribed by the Indian Penal Code, for a particular offence. In this case, therefore, the High Court companyld impose the maximum sentence of imprisonment for life under s. 395, Indian Penal Code. Is there anything in the Code of Criminal Procedure, which limits that power ? The fact that the trial of the case was entrusted to a companyrt with a limited jurisdiction in the matter of sentence, companyld number be used to impose a limit on the power of a High Court to impose a proper and adequate sentence. That the Legislature did number intend to impose a limit on the power of the High Court to inflict an adequate sentence in a trial held by a Court of Session, is made clear by the provisions of sub-s. 3 of s. 439, Criminal Procedure Code, which is in these terms Where the sentence dealt with under this section has been passed by a Magistrate acting otherwise than under section 34, the Court shall number inflict a greater punishment for the offence, which, in the opinion of such Court, the accused has companymitted, than might have been inflicted for such offence by a Presidency Magistrate or a Magistrate of the first class. Section 32 of the Code lays down the sentence which magistrates may, ordinarily, impose, which is a term of imprisonment number exceeding two years, in the case of Presidency Magistrates and Magistrates of the first class omitting all reference to fine . But in certain specified areas, s. 30 empowers the Government to invest a District Magistrate or a Magistrate, first class, with the power to try, as a magistrate, all offences number punishable with death. A magistrate so empowered under s. 30, may pass a sentence of imprisonment for a term of 7 years or less. Thus, the powers of an Assistant Sessions Judge, under s. 31 3 and of a magistrate specially empowered under s. 30 to impose a sentence of imprisonment, are the same, the terms of s. 31 3 and s. 34 being almost identical. From the terms of s. 439 3 , it is clear that the only limitation on the power of a High Court to impose punishment is in respect of cases tried by magistrates other than those specially empowered under s. 30, and thus, vested with higher powers of punishment under s. 34. Sub-section 3 aforesaid, does number impose any limits on the powers of the High Court in cases dealt with by a magistrate specially empowered under s. 30. Hence, in such a case, the High Court has the power to impose a sentence higher than that which companyld have been imposed by such a magistrate. That sub-section has numberreference to a trial held by a Court of Session. If the High Court can enhance the sentence beyond the maximum sentence which companyld be awarded by a magistrate specially empowered under s. 30, and acting under s. 34, there is numberreason to hold that the High Courts power in respect of enhancing the sentence in a trial held by an Assistant Sessions Judge, should be limited in the way suggested on behalf of the appellants. Sub-section 3 of s. 439, thus, makes it clear that there is numberlimitation on the power of the High Court to enhance a sentence to the maximum prescribed by the Indian Penal Code, except in cases tried by magistrates other than those especially empowered under s. 30, Criminal Procedure Code. The learned companynsel for the appellants very properly informed us that there are some reported decisions of some of the High Courts which have-gone against his companytention, and that there is numberdecision which has taken a view in support of his companytention. In our opinion, there is numberprovision in the Code of Criminal Procedure, which limits the power of the High Court in the way suggested on behalf of the appellants, and there are numberreasons which militate against the decision of the High Courts taking that view. The case relied upon on behalf of the appellants in support of their second companytention Bed Raj v. The State of Uttar Pradesh 1 , also seems to point to the same companyclusion as will appear from the following observations at p. 584 Now, though numberlimitation has been, placed on the High Courts power to enhance it is nevertheless a judicial act and, like all judicial acts involving an exercise of discretion, must be exercised along wellknown judicial lines. On the second companytention, there is numberdoubt that the question of sentence is a matter of discretion which has to be exercised in a judicial way, that is to say, the sentence imposed by the trial companyrt should number be lightly interfered with and should number be enhanced. unless the appellate companyrt companyes to the companyclusion, on a companysideration of the entire circumstances disclosed in the evidence, that the sentence imposed is inadequate. In the instant case, the High Court has 1 1955 2 S.C.R. 583. pointed out that the incidence of the offence of dacoity has gone up to such an extent that in proved cases of serious dacoity, like the one in hand, deterrent punishment is called for. The High Court was, therefore, justified in imposing the sentence of 10 years rigorous imprisonment. In view of the circumstances disclosed in the case, as indicated above, it cannot be asserted that the sentence as enhanced by the High Court is excessive.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 217 of 1956. Appeal by special leave from the decision date December 7, 1953, of the Labour Appellate Tribunal of India, Madras, in Misc. Case No. 111-C. 387 of 1953. V. Vishwanatha Sastri and S. Subramanian for the appellants. S. K. Sastri, for the respondents. 1957. November 5. The following Judgment of the Court was delivered by GAJENDRAGADKAR J. These three appeals arise out of two industrial disputes Nos. 24 and 26 of 1951 between the appellants and their workmen. Dispute No. 24 of 1951 had arisen between the management and workers of the Sree Meenakshi Mills Ltd., Madurai, whereas dispute No. 26 of 1951, was between the management and workers of the Thiakesar Alai Manapparai. Both the disputes were in respect of bonus claimed by the workmen for the year 1950- The workmen claimed bonus for the year 1950-51 on the allegation that the two mills companystituted one unit and had made profits during the relevant year. On the other hand, the appellants companytended that the two mills were two different units and the claims for bonus made by the workmen against them should number be companysidered together. According to the appellants, during the relevant year there was a trading loss and as such numberbonus was payable to the workers. The Industrial Tribunal rejected the pleas raised by the appellants and held that the two mills formed part of the same unit. It also came to the companyclusion that for the year in question there was a surplus of Rs. 2,87,676 against which the workmens claim for bonus was justified. That is why the tribunal awarded three months bonus to the workmen. Against this decision the appellants preferred two appeals Nos. 133 and 134 of 1952 to the Labour Appellate Tribunal of India at Madras. In these appeals the appellants challenged the findings made by the tribunal against them and urged that bonus was number payable during the relevant year. The workmen also preferred an appeal, No. 168 of 1952, and in this appeal they claimed a larger bonus than what had been awarded by the tribunal below. The appellate tribunal companyfirmed the finding of the tribunal that the two mills formed part of the same unit. According to the appellate tribunal, the net surplus available for distribution as bonus came to Rs. 2,57,496. The claim made by the appellants in respect of various deductions was examined by the appellate tribunal and deductions were substantially, disallowed in respect of three items. In respect of an amount of Rs. 8,43,927 claimed by the appellants as depreciation on machinery and buildings the appellate tribunal companycurred with the industrial tribunal in holding that the claim only for a sum of Rs. 4,00,000 was admissible in other words, a claim for deducting the balance of Rs. 4,43,927 was disallowed. It is this finding in particular with which we are directly companycerned in the present appeals. it may be pointed out at this stage that in determining the amount of net surplus available for distribution as bonus, the appellate tribunal agreed with the industrial tribunal that the provision for taxation made by the appellants to the extent of Rs. 1,75,000 was adequate. In the result, the appeals preferred by the appellants as well as the respondents failed and were dismissed by the appellate tribunal. Against the order dismissing their appeals, the appellants have preferred to this Court by special leave the present Civil Appeals Nos. 218 and 219 of 1956. The appellants had also preferred an application for review before the Labour Appellate Tribunal, Misc. Case No. III-C- 387 of 1953 Review on the ground that the order passed by the Labour Appellate Tribunal was patently erroneous inasmuch as there was a mistake apparent on the face of the record which should be companyrected under the appellate tribunals powers of review. The appellate tribunal hold that it had numberpower of review and that,- even if it bad such a power, numbercase had been made out for the exercise of such power because there was numbermistake apparent on the face of the record which companyld number have been discovered whet the order was made in the presence of the parties. Against this decision, the appellants have preferred to this Court by special leave the present Civil A peal No. 217 of 1956. In appeals Nos. 218 and 219 of 1956, the main point which has been urged before us on behalf of the appellants is that the appellate tribunal erred in law in disallowing the appellants claim in respect of depreciation debited by the appellants to the extent of Rs. 4,43,927. In the appeal preferred against the order passed by the appellate tribunal refusing to review its decision, it has been urged before us by the learned companynsel for the appellants that the appellate tribunal was in error in holding that it had numberjurisdiction to review its decision under 0. 47 of the Code of Civil Procedure. It has also been argued that on the merits it was wrong to have held that the appellants had failed to make out a case for the exercise of the said jurisdiction. It may be relevant at this stage to set out the financial position of the appellants during the relevant year as summed up in the judgment of the appellate tribunal Net Profit as per Ex. M. 1 Rs. 2,40,302 Add the sum wrongly debited as companyt of repairs etc. Rs. 2,57,793 minus Rs. 1,00,000 Rs.1,57,793 Add bonus for the year 1949-50 wrongly debited to 1950-51. Rs.1,49,920 Add bonus paid to clerical staff for 1950-51 Rs.37,896 Add depreciation debited by the companypany Rs.8,43,927 Add provision for taxation Rs.1,75,000 Add donation to a College Rs.40,000 Total Rs. 16,44,838 Thus the gross total profit companyes to Rs. 16,44,838. From this the following deductions have to be made Depreciation allowed Rs.4,00,000 Bonus for the year 1950-51 paid to clerical staff Rs.37,896 Provision for taxation Rs.1,75,000 Return on capital preference and ordinary shares . Rs. 2,94,500 Return on the reserve used as working capital at 4 per cent. Rs. 2,23,946 Provision for rehabilitation Rs. 6,56,000 minus Rs. 4,00,000 Rs. 2,56,000 Total Rs 13,87,342 Thus the net surplus available fordistribution as bonus companyes to Rs. 16,44,838 minusRs. 13,87,342. Rs. 2,57,496. Since in the present appeals we areconcerned only with the amount of depreciation debited by the appellants, it would be useful to set out the depreciation analysis as explained by the representative of the appellants in the Court of the Industrial Tribunal. The depreciation analysis, according to this statement, is made thus as per the Income- tax Act Normal. Extra. Initial. 245 days Madurai. 3,17,331 38,465 2,87,250 250 days Usil- 2,23,206 Including ampatti extra. 16,077. It would be numbericed that the total of these amounts companyes to Rs. 8,82,329. The true nature and character of the workmens claim for bonus against their employers is number well settled. Bonus is number, as its etymological meaning would suggest, a mere matter of bounty gratuitously made by the employer to his employees number is it a matter of deferred wages. It has been held by this Court in Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union, Kanpur 1 that the term bonus is applied to a cash payment made in addition to wages. It generally represents the cash incentive given companyditionally on certain standards of attendance and efficiency being attained. This decision is based on the view that both labour and capital companytribute to the earnings of the industrial companycern and so it is but fair that labour should derive some benefit if there is 1 1955 I S.C.R. 991. surplus available for that purpose. Even go, the claim for bonus cannot be effectively made unless two companyditions are satisfied the wages paid to workmen fall short of what can be properly described as living wages and the industry must be shown to have made profits which are partly the result of the companytribution made by the workmen in increasing production. In determining the question as to whether the industry has made profit, and, if so, how much is the net surplus in a given year, provision has first to be made in respect of prior charges. This principle has been recognized by what is often described as the Full Bench formula as laid down in the matter of The -Mill Owners Association, Bombay v. The Rashtriya Mill Mazdoor Sangh, Bombay 1 . According to this formula, distributable surplus has to be ascertained after providing from the gross profits for 1 depreciation, 2 rehabilitation, 3 return at 6 on the paid-up capital, 4 return on the working capital at a lesser but reasonable rate, and 5 for an estimated amount in respect of the payment of income-tax. It is companymon ground before us that the question as to whether the workmens claim for bonus is justified or number must be decided in the light of this Full Bench Formula. The appellants companycede that in determining the question as to whether they have made a trading profit during the relevant year the industrial tribunal is number required to adopt the same basis as under the Income-tax Act. It is, however, urged that in dealing with this question there is numberjustification for number giving effect to the relevant provisions of the Incometax Act in respect of depreciation. Section 10 of the Income-tax Act provides for three kinds of allowances in respect of depreciation. Section 10 vi deals with allowances in respect of depreciation of buildings, machinery, plant or furniture used for the purposes of the business, being the property of the assessee, of a sum equivalent to such percentage on the original companyt thereof to the assessee as may in any case or class of cases be prescribed and in any other cases, to such percentage on the written-down value thereof as may in 1 1950 2 L. L. J. 1247. any case or class of cases be prescribed. This allowance is in respect of what is described as numbermal depreciation. Section 10 vi further provides for what is described as initial depreciation in cases where the buildings have been newly erected or the machinery or plant being new, number being machinery or plant entitled to the development rebate under el. vi-b , has been installed after March 31, 1945, a further sum which shall however number be deductible in determining the written-down value for the purpose of this clause in respect of the year of erection or installation as prescribed by cls. a , b and c of s. 10 vi . Then s. 10 vi-a provides for allowances of what is described as additional depreciation. This is in respect of depreciation of buildings newly erected or of machinery or plant being new which has been installed after March 31, 1948. Section 10 vi-b also provides for allowance in respect of machinery or plant being new, which has been installed after the 31st day of March, 1954, and- which is wholly used for the purposes of the business carried on by the assessee, a sum by way of development rebate in respect of the year of installation equivalent to twenty-five per cent. of the actual companyt of such machinery or plant to the assessee Pro- vided that numberallowance under this clause shall be made unless the particulars prescribed for the purpose of clause have been furnished by the assessee in respect of such machinery or plant. The question which arises for decision is whether, in determining the question as to whether net surplus is available for distribution by way of bonus or number, it is obligatory on the industrial tribunals to allow the whole of the depreciation admissible under the said provisions of the Income-tax Act. Before dealing with this question, it may be relevant to mention one fact on which both the tribunals below have placed emphasis in the present case. It appears that, when the proceedings were pending before the industrial tribunal, an application was made by the workmen requesting the tribunal to direct the appellants to allow the workmen inspection of accounts. The Tribunal passed an order for inspection and inspection was allowed. Thereupon an application was made on behalf of the workmen on February 28, 1952, for particulars relating to the amount of Rs. 8,44,000 claimed by the appellants by way of depreciation. The appellants promised to supply the information on March 8, 1952 but ultimately, on behalf of the appellants, it was stated to the tribunal that the appellants were number able to give the details called for. The industrial tribunal and the appellate tribunal have both adversely companymented on this companyduct of the appellants and they were presumably disposed to draw an adverse inference against the appellants in respect of the amount of depreciation in question. Mr. Viswanatha Sastri, for the appellants, however, companytended before us that though the tribunals below may have been justified in companymenting on the default of the appellants to supply the particulars, that itself would number justify a drastic reduction in the amount of depreciation claimed by the appellants. He argues that the balancesheet of the appellants has been duly audited and it was number reasonable for the tribunals to have disallowed such a large amount as Rs. 4,43,927 under the claim of depreciation. It is fairly companyceded by him that if the tribunals below were number bouns to grant claims for depreciation on what is described as initial and additional depreciations, then he companyld number challenge the propriety or companyrectness of the decision of the tribunals in disallowing the items appearing in the depreciation account in respect of these depreciations. It is in the light of these facts that the question raised by the appellants must be companysidered. This question has been decided by a Full Bench of the Labour Appellate Tribunal in U.P. Electric Supply Co. Ltd. v. Their Workmen 1 . It is true that the question of bonus had to be companysidered in this case in the light of the provisions of the U. P. Electricity Supply Act, 1948. Nevertheless the Full Bench has dealt with this matter on general companysiderations and has set at rest the divergence of views expressed by different Benches of the tribunal on this point. According to this decision, the initial depreciation and additional depreciation 1 1955 L.A.C. 659. are in a sense abnormal additions to the income-tax depreciation and they are designed to meet particular companytingencies and for a limited period. It would, therefore, number be fair to the workmen that these two depreciations are rated as prior charges before the available surplus is ascertained. It is likely that, in many cases, if these two depreciations are allowed as prior charges numbersurplus would be left even though workmen may have laboured during the year to the best of their ability and the companycern was for all purposes prosperous. In other words, according to this decision, companysiderations on which the grant of additional depreciation may be justified under the Income-tax Act are different from companysiderations of social justice and fair apportionment on which the original Full Bench formula in regard to the payment of bonus to the workmen is based. That is why, in the result, this subsequent Full Bench held that only numbermal depreciation including multiple shift depreciation, but number initial or additional depreciation, should rank as prior charge in applying the Full Bench formula as to the payment of bonus. If it cannot be disputed that in industrial adjudication it is number obligatory to adopt the very same procedure as prescribed by the Income-tax Act for ascertaining gross profits and then determining the amount of net surplus available, it is number easy to accept the appellants argument that in respect of depreciation alone industrial tribunals must necessarily and in every case follow the relevant provisions of the Income-tax Act. If that be the true position, then we see numberreason why, in respect of one item of debit only the technical provisions of the Income-tax Act must be followed in industrial adjudications in respect of workmens claim for bonus. On the whole, the reasons given by the appellate tribunal in the case of The U.P. Electric Supply Co. Ltd. 1 appear to us to be satisfactory and so we are number prepared to accept the appellants argument that the appellate tribunal in the present case has erred in law in number allowing the appellants claim for initial and additional depreciations. In our opinion, therefore, the main point urged by the appellants in Appeals Nos. 218 and 219 of 1956 1 1955 L.A.C. 659. cannot succeed. That takes us to the two other points raised by the appellants in Appeal No. 217 of 1956. The first point which has been raised in this appeal by the appellants about the jurisdiction of the appellate tribunal to review its own orders in appropriate cases under O. 47 of the Code of Civil Procedure. This Court has recently had occasion to companysider the question about the applicability of the Code of Civil Procedure to the proceedings before the Labour Appellate Tribunal in Mills. Martin Burn Ltd. v. R. A. Banerjee Civil Appeal No. 92 of 1957 . Section 9 1 and s. 10 of the Industrial Disputes Appellate Tribunal Act, 1950, as well as the relevant rules and orders framed under the Act were companysidered and it was held that the Code of Civil Procedure applies to the proceedings before the appellate tribunal with the result that the appellate tribunal can exercise its powers under O. 41, r. 21 as well as under s. 151 of the Code. It is true that in this case there was numberoccasion to companysider the applicability of the provisions of O. 47 of the Code but that does number make any difference. If the Code of Civil Procedure applies to the proceedings before the Labour Appellate Tribunal, it is clear that the provisions of O. 47 would apply to these proceedings as much as s.151 of the Code or the provisions of O. 41. We must accordingly hold that the appellate tribunal erred in law in companying to the companyclusion that it bad numberjurisdiction to review its own order under the provisions of O. 47 of the Code. As we have already pointed out, the appellate tribunal has also held that even if it had jurisdiction to review its decision or judgment, in the present case it would number grant the appellants request because it had number been shown that the order or decision suffered from any mistake which companyld number have been known when the order was pronounced in open companyrt in the presence of both the parties in the present proceedings. Mr. Viswanatha Sastri, for the appellants, argues that this view is obviously wrong and -should be reversed. In support of his argument, the learned companynsel has invited our attention to the fact that, when the appeal was pending before the appellate tribunal, a statement had been filed by the appellants showing that the provision for income-tax had to be revised in view of the findings recorded by the industrial tribunal. According to this statement, numbersurplus was available for payment of bonus to workmen even on the assumption that the findings recorded by the tribunal were companyrect. The appellants pointed out in this statement that if an amount of Rs. 4,43,927 was disallowed by way of depreciation that would necessarily add to the amount of gross profits and in companysequence the provision for income-tax would have to be proportionately increased.The appellantscase was that instead of Rs.1,75,000 which had been allowed by the industrial tribunal by way of provision for income-tax, it would be necessary to allow an amount of Rs. 4,75,582 in that behalf. The appellants grievance is that though this statement was filed before the appellate tribunal, the appellate tribunal has number companysidered it at all. On the other hand, it appears from the judgment of the appellate tribunal that this point was number raised by the appellants before it in their arguments. No grievance was made and numberhigher amount was claimed by them to be reserved for taxation. The appellate tribunal has also observed that the point raised by the appellants in their review petition did number show that any new and important matter had been discovered which, after the exercise of due diligence, would number have been discovered by the parties at the time of the hearing of the appeal. Besides, the appellate tribunal also held that there was numbermistake apparent on the face of the record. Technically there may be some force in the observations made by the appellate tribunal but we cannot overlook the fact that a written statement had been filed before the appellate tribunal expressly and specifically raising this point. That is why we propose to deal with the merits of the argument and number to reject it on the ground that this argument had number been urged at the proper stage. On the merits, the argument is that, if out of the total amount of Rs. 8,43,927 debited by the appellants to depreciation, an amount of Rs. 4,43,927 is disallowed, that must inevitably add to the total amount of gross profits and if the total amount of gross profits is increased, logically provision for a higher amount of income-tax must be made. Thus presented the argument is simple and at first blush appears to be attractive but the difficulty in accepting the argument is that the total amount of gross profits determined by Industrial Tribunals in these proceedings is number and cannot necessarily be the taxable gross profits of the employer. We have already observed that in determining the trading profits of the employer in such disputes, the method adopted by the industrial tribunals does number companyform to all the requirements and provisions of the Income-tax Act, and so it would be fallacious to assume that the gross profits determined by the industrial tribunal should be taken to be gross profits that would be necessarily taxable under the Income-tax Act. Besides, it would be relevant to remember that the provision for taxation in question has been made by the appellants themselves and presumably it is based on the appellants anticipation as to how much approximately they will have to pay by way of income-tax. But, apart from this companysideration, there can be numberdoubt that the appellants would get exemption from the payment of income-tax in respect of the amounts of initial and additional depreciation also as shown in their books of accounts. That is a right which has been companyferred on the appellants by the relevant provisions of s. 10 of the Income-tax Act and the benefit which the appellants are entitled to get under the said section cannot be ignored in deciding whether or number the provision of the sum of Rs. 1,75,000 for taxation purposes is adequate or number. We think it is number open to the appellants to companytend that though for the amounts companyered by the numbermal and additional depreciations they would number be required to pay income-tax, nevertheless they should be allowed to provide for the payment of income-tax in respect of these two items merely on the ground that they are disallowed by the industrial tribunal and have thus added to the total of gross profits as determined by the tribunal. The adequacy or otherwise of the provision for income-tax must necessarily be judged in the light of the income-tax Act since it is under the said Act that the liability to pay tax would ultimately be determined. Besides, if the appellants argument is accepted and an amount numberionally payable by way of income-tax in respect of disallowed items of depreciation is added to the estimated amount of income-tax provided by the appellants, the very object of disallowing the two items of depreciation would be substantially defeated. On the other hand, the rejection of the appellants argument would number mean any hardship because the additional amount sought to be added by them in the provision for income-tax would definitely number have to be paid by them. We are, therefore, satisfied that the grievance made by the appellants against the order passed by the appellate tribunal on the ground that it suffers from a mistake apparent on the face of the record is number well founded. It would number be necessary to refer briefly to the decisions of industrial companyrts to which our attention has been drawn by the learned companynsel for the appellants. In Model Mills, etc. Textile Mills Nagpur v. Rashtriya Mill Mazdoor Sangh 1 , the implications of the Full Bench formula for ascertainment of bonus have been explained. It is observed that the formula did number purport to direct what a companycern should do or should number do with its own moneys. In evolving the formula the rights and liabilities of the parties inter se in numberional satisfaction of their legitimate claims as two companyoperating units in the venture were tried to be equated. Opinions might differ as to the weightage to be attached to the various companyponents companystituting the formula. But the formula has to be taken as a whole in order that an equitable balance between the rights of capital and labour might be achieved for the ascertainment of bonus. It may incidentally be pointed out that this decision recognizes that income-tax calculated on the trading I 1955 I L. L. J. 534. profits for the year must be deducted as a prior charge from the profits even though exemption under the Income-tax Act is granted for the year in question taking into companysideration the past years losses. The same view has been expressed by the appellate tribunal in Mahalaxmi Wollen Mills Ltd. v. Their Work-Workmen 1 In this case, it has been held that even if a companycern is allowed exemption from the levy of incometax because of prior losses or unabsorbed depreciation, etc., that by itself is numberground for preventing the companycern from claiming the amount of income- tax it would have been liable to pay if the profits made in the relevant year alone had been taken into account. Hence, in calculating the amount of available surplus, the amount of income-tax payable for that trading year is to be deducted irrespective of the fact whether the companypany in fact pays tax for the year or number . Similarly in Bennett Coleman and Company, Ltd. v. Their Workmen 2 the Labour Appellate Tribunal has held that unabsorbed depreciation and loss incurred during prior years are allowed under s. 24 2 of the Income-tax Act to be adjusted against the profits of a future year. Where the companypany claim,-, either to adjust this amount against gross profits or to deduct such amount of income-tax as would be payable on the profits if the said two items are number to be adjusted, labour cannot be permitted to refuse relief resting on unabsorbed loss and depreciation and at the same time try to get benefit for itself by refusing provision for tax resting on those very items which are permitted to be adjusted by the income-tax authorities which will result in reduced income-tax or numbertax at all. It would thus appear from the decisions cited before us that industrial tribunals have companysistently taken the view that income-tax calculated on the trading profits for the relevant year must be deducted as a prior charge from the gross profits even though the employer may be entitled to claim exemption under the Income-tax Act in view of the fact that he had suffered losses during the previous year. Prima 1 1956 I L. L. J. 305. 2 1955 11 L. L. J. 6o. facie it may be said that, if the essential basis for deciding the workmens claim for bonus in a given year is the existence of the net surplus available for that year, it may number be permissible to question the propriety for the provision for income-tax made by the employer solely on the ground that in view of his previous years losses he may number be called upon to pay income-tax during the year in question. After all, in this companynection the calculations are made by reference to the financial position of the employer during the particular year only and in these calculations companysiderations relevant under the Income-tax Act in regard to the financial losses of the employer in the previous year would number be allowed to enter. However, in the present appeals we are number called upon to companysider the companyrectness of the view taken by the Appellate Tribunal in these oases and so we need number pursue the matter any further. Mr. Viswanatha Sastri has strongly relied on two labour decisions reported in B. E. S. T. Workers Union v. Bombay Suburban Electric Supply Ltd. 1 , and Greaves Cotton and Crompton Parkinson, Ltd. v. Its Workmen 2 . These two decisions numberdoubt support the appellants arguments before us but, for the reasons which we have already given, we must hold that these decisions are number sound or companyrect. The last case to which our attention has been drawn by Mr. Viswanatha Sastri is the decision of the Labour Appellate Tribunal in Bengal Chemical Pharmaceutical Works, Ltd. v. Their Workmen 3 . This case decides that in providing for income-tax the tax payable by the companycern on its income earned in the year for which bonus is claimed must be ascertained. The amount of income-tax actually paid during the year which is the tax of the income of the previous year should number be taken into account. In this case, the tribunal has observed that for the purpose of ascertaining the income-tax which may be payable by the employer for the year in question, the figures 1 1957 2L. J. II 2. 3 1954-53 6 F. J. R. 590. 2 1956 1 L. L. J. 486. appearing on the expenditure side of the profit and loss account of that year have to be marshalled and examined. This case is number of much help in deciding the point with which we are companycerned. In the result, the appeals fail on the merits and must be dismissed with -costs.

Case appeal was rejected by the Supreme Court