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CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 216 to 218 NT of 1973. From the Judgment and Order dated 3rd December, 1971 of the Andhra Pradesh High Court in R.C. No. 14 of 1970. T. Desai and Miss A. Subhashini for the Appellant. S. Nariman, B. Parthasarthy and T.A. Ramachandran for the Respondent. P. Rana, G.S. Chatterjee, S.K. Dholakia, C.S.S. Rao and Raju Ramachandran for the Interveners. The Judgment of the Court was delivered by MADON, J. The above three Appeals have been filed by certificate granted by the Andhra Pradesh High Court under section 261 of the Income-tax Act, 1961, against the judgment of that High Court in an income-tax reference. The Respondent, the Andhra Pradesh State Road Transport Corporation, is a Road Transport Corporation established with effect from January 11, 1958, by the State of Andhra Pradesh by a numberification issued under section 3 of the Road Transport Corporations Act, 1950 Act No. 64 of 1950 hereinafter referred to in short as the RTC Act . Prior to the establishment of the Respondent Corporation road transport in the State of Andhra Pradesh was a department of the Government, being run by the Government of Hyderabad prior to the formation of the State of Andhra and thereafter by the Government of Andhra Pradesh. During the whole of this period the income made from road transport was exempt from income tax. After the Respondent Corporation was formed, the Income-tax Department took the view that the income of the Respondent Corporation was liable to income- tax and assessed the Respondent Corporation to income-tax for the assessment years 1958-59 and 1959-60. The Respondent Corporation thereupon filed a writ petition in the Andhra Pradesh High Court companytending that the property owned by it and the income earned by it were the property and income of a State exempted from Union taxation under Article 289 1 of the Constitution. This companytention was rejected and the writ petitions were dismissed by the High Court. Appeals filed by the Respon- dent Corporation in this Court were also dismissed. The judgment of this Court is reported as Andhra Pradesh State Road Transport Corporation v. Income-tax Officer, B-1 B- Ward, Hyderabad and Anr., 1964 52 I.T.R. 524, 535-36 s.c. 1964 7 S.C.R. 17, 29-30. After referring to the various provisions of the RTC Act, this Court held Far from making any provision which would make the income of the companyporation the income of the State, all the relevant provisions emphatically bring out the separate personality of the companyporation and proceed on the basis that the trading activity is run by the companyporation and the profit and loss that would be made as a result of the trading activity would be the profit and loss of the companyporation. . . . When we are deciding the question as to whether the income derived by the companyporation is the income of the State, the provision made by section 30 for making over to the State Government the balance that may remain as indicated therein, is of numberassistance. The income is undoubtedly the income of the Corporation. All that section 30 requires is that a part of that income may be entrusted to the State Government for a specific purpose of road development. It is number suggested or shown that when such income is made over to the State, it becomes a part of the general revenue of the State. It is income which is impressed with an obligation and which can be utilised by the State Government only for the specific purpose for which it is entrusted to it. Having failed in its companytention that its income was exempt from income-tax under Article 289 1 of the Constitution, the Respondent Corporation filed returns in respect of the assessment years 1960-61, 1961-62, and 1962- 63, showing its income as Nil. In respect of the assessment years 1960-61 and 1961-62, which are the subject of Civil Appeals Nos. 216 and 217 NT of 1973 before us, it claimed exemption from income-tax under section 4 3 i of the Indian Income-tax Act, 1922 hereinafter referred to as the 1922 Act . In respect of the assessment year 1962-63, which is the subject of Civil Appeal No. 218 NT of 1973 before us, it claimed exemption under section 11 of the Income-tax Act, 1961 hereinafter referred to as the 1961 Act . The Respondent Corporations claim for exemption was rejected by the Income-tax Officer, Company Circle, Hyderabad. The appeals filed by the Respondent Corporation were allowed by the Appellate Assistant Commissioner of Income-tax, D-Range, Hyderabad, but the appeals filed by the Department before the Income-tax Appellate Tribunal, Hyderabad Bench, were allowed and at the instance of the Respondent Corporation the Tribunal by a companymon order made in all the three appeals before it stated a case and referred the following question of law to the High Court Whether, on the facts and in the circumstances of the case, the assessees income for the assessment years 1960-61 and 1961-62 was exempt from income- tax under section 4 3 i of the Income-tax Act, 1922, and for the assessment years 1962-63, under section 11 of the Income-tax Act, 1961. The High Court answered the above question in favour of the Respondent Corporation and against the Department and on an application made by the Appellant, the Commissioner of Income-Tax, Andhra Pradesh, Hyderabad, granted under section 261 of the 1961 Act a certificate of fitness for appeal to this Court. Section 4 3 i of the 1922 Act, omitting what is number relevant for our purpose, provided as follows Any income, profits or gains falling within the following classes shall number be included in the total income of the person receiving them Subject to the provisions of clause c of sub-section 1 of section 16, any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anything done within the taxable territories, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto Provided that such income shall be included in the total income- x x x x b in the case of income derived from business carried on on behalf of a religious or charitable institution, unless the income is applied wholly for the purposes of the institution and either- the business is carried on in the companyrse of the actual carrying out of a primary purpose of the institution, or the work in companynection with the business is mainly carried on by beneficiaries of the institutions x x x x In this sub-section charitable purpose includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility, but numberhing companytained in clause i or clause ii shall operate to exempt from the provisions of this Act that part of the income from property held under a trust or other legal obligation for private religious purposes which does number enure for the benefit of the public. The material provisions of section 11 1 a of the 1961 Act are as follows Income from property held for charitable or religious purposes.- Subject to the provisions of sections 60 to 63, the following income shall number be included in the total income of the previous year of the person in receipt of the income- a income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India . . . . Clause 15 of the section 2 of the 1961 Act defines the expression charitable purpose. This definition is as follows 15 charitable purpose includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility number involving the carrying on of any activity for profit. The difference between the 1922 Act and the 1961 Act with respect of the definition of the expression charitable purpose was thus stated by this Court in Additional Commissioner of Income-Tax, Gujarat v. Surat Art Silk Cloth Manufacturers Association, 1980 121 I.T.R. 1, 25-26, s.c. It is obvious that the exclusionary clause was added with a view to overcoming the decision of the Privy Council in the Tribunes case, 1939 7 T.R. 415 PC , where it was held that the object of supplying the companymunity with an organ of educated public opinion by publication of a newspaper was an object of general public utility and hence charitable in character even though the activity of publication of the newspaper was carried on on companymercial lines with the object of earning profit. The publication of the newspaper was an activity engaged in by the trust for the purpose of carrying out its charitable purpose and on the facts it was clearly an activity which had profit-making as its predominant object, but even so it was held by the Judicial Committee that since the purpose served was an object of general public utility, it was a charitable purpose. It is clear from the speech of the Finance Minister that it was with a view to setting at naught this decision that the exclusionary clause was added in the definition of charitable purpose. The test which has, therefore, number to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where profit-making is the predominant object of the activity, the purpose, though an object of general public utility, would cease to be a charitable purpose. But where the predominant object of the activity is to carry out the charitable purpose and number to earn profit, it would number lose its character of a charitable purpose merely because some profit arises from the activity. The exclusionary clause does number require that the activity must be carried on in such a manner that it does number result in any profit. It would indeed be difficult for persons in charge of a trust or institution to so carry on the activity that the expenditure balances the income and there is numberresulting profit. That would number only be difficult of practical realisation but would also reflect unsound principles of management. The position as stated above in the above case was reiterated by this Court in Commissioner of Income-tax, Bombay v. Bar Council of Maharashtra, 1981 130 I.T.R. 28, 33-34, S.C. In that case this Court said It may be numbericed that whereas any object of general public utility was included in the definition of charitable purpose in the 1922 Act, the present definition has inserted the restrictive words number involving the carrying on of any activity for profit which qualify or govern the last head of charitable purpose. In CIT Andhra Chamber of Commerce, 1965 55 I.T.R. 722, a case decided by this Court under the 1922 Act, where the restrictive words were absent, this companyrt laid down that if the primary or dominant purpose of a trust or institution was charitable, any other object which by itself might number be charitable but which was merely ancillary or incidental to the primary or dominant purpose would number prevent the trust or institution from being a valid charity. After the addition of the restrictive words in the definition in the 1961 Act, this companyrt in Addl. CIT v. Surat art Silk Cloth Manufacturers Association 1980 121 I.T.R. 1 affirmed that the aforesaid test of primary or dominant purpose of a trust or institution still holds good, that the restrictive words qualify object and number the advancement or accomplishment thereof and that the true meaning of the restrictive words was that when the purpose of a trust or institution was the advancement of an object of general public utility it was that object of general public utility and number its accomplishment or carrying out which must number involve the carrying on of any activity for profit. And, applying these tests, trading bodies like Andhra Chamber of Commerce and Surat Art Silk Cloth Manufacturers Association have been held to be institutions companystituted with a view to advance an object of general public utility because their primary or dominant purpose was to promote and protect industry, trade and companymerce either generally or in certain companymodities, even though some benefit through some of their activities did accrue to their members which was regarded as incidental and this Court held that the income derived from diverse sources by these institutions rental income from property in the case of Andhra Chamber of Commerce and income from annual subscriptions companylected from its members and companymission of a certain percentage of the value of licences for import of foreign yarn and quotas for purchase of indigenous yarn obtained by the assessee from its members in the case of Surat Art Silk Cloth Manufacturers Association was exempt from tax liability under s. 11 of the Act. It was companytended on behalf of the Appellant that the Respondent Corporation was number entitled to any exemption as claimed by it because its activities were carried on profit as shown by sections 22, 23 and 28 of the RTC Act. In fairness to learned Counsel for the Appellant it must be stated that in view of the Judgment of the Judicial Committee of the Privy Council in In re The Trustees of The Tribune, 1939 7 I.T.R. 415 P.C. in which it was held that where an activity carried on with the object of general public utility did number cease to be charitable in character even though it was carried on on companymercial lines with the object of earning profit, the companycentration of the attack was on the exemption claimed in respect of the assessment year 1962-63 which was companyered by the 1961 Act. The above companytention entails an examination of the relevant provisions of the RTC Act. The objects for which a Road Transport Corporation is established by a State Government are set out in section 3. These objects are a the advantages offered to the public, trade and industry by the development of road transport b the desirability of companyordinating any form or road transport with any other form of transport and c the desirability of extending and improving the facilities for road transport in any area and of providing an efficient and economical system of road transport service therein. These were, therefore, the objects for which the Respondent Corporation was established. Section 18 reiterates the above objects. It provides as follows General duty of Corporation.- It shall be the general duty of a Corporation so to exercise its powers as progressively to provide or secure or promote the provision of an efficient, adequate, economical and properly company ordinated system of road transport services in the State or part of the State for which it is established and in any extended area x x x x Section 19 enumerates the powers of a Road Transport Corporation. They include the power to operate road transport services in the State and in any extended area and to provide for any ancillary service. Section 22 provides as follows General principle of Corporations finance.- It shall be the general principle of a Corporation that in carrying on its undertaking it shall act on business principles. Under sub-section 1 of section 23, the capital of a Road Transport Corporation is to be provided by the Central Government and the State Government in such proportion as may be agreed to by both the Governments. Under sub-section 2 of section 23, where the capital of a Road Transport Corporation is number provided by the Central Government or the State Government, such Corporation may raise such capital by the issue of shares as may be authorized in that behalf by the State Government. Under sub-section 3 of section 23, the shares are to be subscribed by the Central Government the State Government and other parties including persons whose undertakings have been acquired by the Corporation and under sub-section 6 a Corporation may at any time, with the previous approval of the State Government, redeem the shares issued to the other parties in such manner as may be prescribed. Under section 24, if after the issue of such shares, the Corporation requires additional capital, it may, with the previous approval of the State Government, raise such additional capital by the issue of new shares and the provisions of section 23 apply to such issue. Under section 25, the shares of a Road Transport Corporation are to be guaranteed by the State Government both as to the payment of the principal and the annual dividend at such minimum rate as may be fixed by the State Government by numberification published in the Official Gazette at the time of issuing the shares. Section 26 authorizes a Road Transport Corporation, with the previous approval of the State Government, to borrow money in the open market for purposes of raising its working capital or for meeting any expenditure of a capital nature. Section 27 provides that every Road Transport Corporation is to have its own fund and all receipts of the Corporation are to be carried thereto and all payments by the Corporation are to be made therefrom, and that except as otherwise directed by the State Government, all moneys belonging to that fund are to be deposited in the Reserve Bank of India or with the agents of the Reserve Bank of India or invested in such securities as may be approved by the State Government. Under section 28 where the capital of a Road Transport Corporation is provided by the Central Government and the State Government, the Corpo- ration is to pay interest on such capital and where the Corporation has raised its capital by issue of shares it is to pay dividend on such shares at such rate as may, from time to time, be fixed by the Corporation, subject to any general limitations which may be imposed by the State Government in companysultation with the Central Government, and such interest and dividend are to be deemed to be a part of the expenditure of the Corporation. Section 30 provides as follows Disposal of net profits.- After making provision for payment of interest and dividend under section 28 and for depreciation, reserve and other funds under section 29, a Corporation may utilise such percentage of its net annual profits as may be specified in this behalf by the State Government for the provision of amenities to the passengers using the road transport services, welfare of labour employed by the Corporation and for such other purposes as may be prescribed with the previous approval of the Central Government, and out of the balance such amount as may, with the previous approval of the State Government and the Central Government, be specified in this behalf by the Corporation, may be utilised for financing the expansion programmes of the Corporation and the remainder, if any, shall be made over to the State Government for the purpose of road development. The bracketed portion in section 30 was substituted for the words and the balance shall be made over to the State Government for the purpose of road development by the Road Transport Corporation Amendment Act, 1959 Act No. 28 of 1959 . It was number disputed that the object of the activity carried on by the Respondent Corporation was one of general public utility. What was submitted was that such activity was carried on for profit as shown by section 22 under which the Respondent Corporation was enjoined to act on business principles. It was further submitted that the Respondent Corporation companyld issue shares even to the members of the public and that dividend would be paid to the shareholders and, therefore, profit would be made from the activity of the Respondent Corporation by its owners, namely, the shareholders. We are unable to accept these submissions. The submission founded upon section 22 is based upon a misunderstanding of what that section provides. A road Transport Corporation cannot be expected or be required run at a loss. It is number established for the purpose of subsidizing the public in matters of transportation of passengers and goods. The objects for establishing a Road Transport Corporation are those set out in section 3 of the RTC Act which we have already reproduced above. Section 18 shows that it is the duty of a Road Transport Corporation to provide, secure and promote the provision of an efficient, adequate, economical and properly companyordinated system of road transport services in the State. No activity can be carried on efficiently, properly, adequately or economically unless it is carried on on business principles. If an activity is carried on on business principles, it would usually result in profit, but as pointed out by this Court in the Surat Art Silk Cloth Manufacturers Association Case, it is number possible so to carry on a charitable activity that the expenditure balances the income and there is numberresultant profit, for to achieve this would number only be difficult of practical realization but would reflect unsound principles of management. What section 22, therefore, does when it states that it shall be the general principle of a Road Transport Corporation that in carrying on its undertakings it shall act on business principles is to emphasize the objects set out in section 3 for which a Road Transport Corporation is established and to prescribe the manner in which the general duty of the Corporation set out in section 18 is to be performed. It is number firmly established by decisions of this Court in the Surat Art Cloth Manufacturers Association Case and the Bar Council of Maharashtra Case that the test is What is the pre-dominant object of the activity - whether it is to carry out a charitable purpose or to earn profit? If the pre-dominant object is to carry out a charitable purpose and number to earn profit, the purpose would number lose its charitable character merely because some profit arises from the activity. There is numberfactual foundation for the submission based upon section 23 2 and other sections of the RTC Act which empower a Road Transport Corporation to issue shares including issuing shares to members of the public and to pay dividend thereon. It is an admitted position, as pointed out by the High Court in its judgment under Appeal, that numbershare capital has been raised under section 23 2 and the entire capital has been provided by the Government under section 23 1 and the Government is only paid interest thereon under section 28 1 just as interest would be paid on any money due as a debt. That the activity of the Respondent Corporation is number carried on with the object of making profit is made abundantly clear by the provisions of section 30 under which prior to the amendment of that section by the Amendment Act of 1959, the balance of income left, after utilization of the net profits for the purposes set out in section 30, was to be made over to the State Government for the purpose of road development and after the Amendment Act of 1959 is to be utilized for financing the expansion programmes of the Respondent Corporation and the remainder, if any, is to be made over to the State Government for the purpose of road development. As pointed out by this Court in Andhra Pradesh Road Transport Corporation v. Income-tax Officer, B-I B-Ward, Hyderabad and Anr. the amount handed over to the State Government does number become a part of the general revenue of the State but is impressed with an obligation that it should be utilized only for the purpose for which it is entrusted, namely, road development. It is number, and cannot be, disputed that road development is an object of general public utility. For the reasons given above, we hold that the Respondent Corporation was entitled to the exemption claimed by it both under the 1922 Act and the 1961 Act. In the result, these Appeals fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 3683 of 1984. From the Judgment and Order dated 16th September, 1980 of the Bombay High Court in Letters Patent Appeal No. 46 of 1980. U. Mehta and C.K. Ratnaparkhi for the Appellants. Naunit Lal, Kailash Vasdev and Mrs. Vinod Arya for the Respondents. The following Judgments were delivered CHINNAPPA REDDY, J. Unfamiliar as I am with the history, tradition and the lore of the city and the High Court of Bombay, I companytent myself by agreeing with the companyclusion of my learned brother that numberappeal under clause 15 of the Letters Patent lies to the High Court against the order of a single judge of the High Court exercising jurisdiction under Art. 227 of the Constitution, numberless and numbermore I do number have any doubt that the reference to s.107 of the Government of India Act, 1915 in Clause 15 of the Letters Patent must necessarily be read as a reference to Art. 227 of the Constitution. So read an appeal under clause 15 is clearly number maintainable against an order made in exercise of the power under Art. 227. This is the view taken by all the High Courts in India except the High Court of Bombay, where alone opinion has number been unanimous. MADON, J. The question which falls for determination in this Appeal is whether an appeal lies under clause 15 of the Letters Patent of the Bombay High Court to a Division Bench of two judges of that High Court from the judgment of a Single Judge of that High Court in a petition filed under Article 226 or 227 of the Constitution of India? The facts which have given rise to this Appeal by Special Leave granted by this Court need to be briefly stated. The First Respondent, Radhikabai, is a widow. She is the owner of three fields situate at Mouza Khed-Makta, Tahsil Brahmapuri, District Chandrapur. Kesheo, the father of the Appellants, was the tenant of the said fields. The First Respondent filed an application under section 36 2 of the Bombay Tenancy and Agricultural Lands Vidarbha Region Act, 1958 Bombay Act No. XCIX of 1958 , read with section 39 of that Act for possession of the said fields on the ground that she wanted them for personally cultivating them. The said application was allowed and she took possession of the said fields. On the ground that instead of personally cultivating the said fields the First Respondent had leased them to the Second Respondent, the Appellants filed an application under section 52 of the Tenancy Act claiming that they had become entitled to have the possession of the said fields restored to them. It was the case of the First Respondent that the Second Respondent was working in the said fields as her servant on a monthly salary. The Appellants said application was allowed by the Additional Tahsildar, Brahmapuri. The First Respondents appeal against the said order was allowed by the Sub-Divisional Officer, Brahmapuri. The Appellants thereupon went in revision to the Maharashtra Revenue Tribunal at Nagpur and the Tribunal allowed the said revision application. Thereupon the First Respondent filed a petition under Article 227 of the Constitution of India before the Nagpur Bench of the High Court of Bombay being Special Civil Application No. 1392 of 1974. By reason of the provision of Rule 18 of Chapter XVII of the Bombay High Court Appellate Side Rules, 1960, the said petition was heard by a learned Single Judge of the said High Court who allowed the petition, set aside the order of the Tribunal and restored the order of the Sub- Divisional Officer. Against this judgment and order the Appellants filed an appeal under clause 15 of the Letters Patent to a Division Bench of the Bombay High Court, Nagpur Bench. The Division Bench dismissed the said appeal as number being companypetent in view of the decision of a Full Bench of the Bombay High Court, Nagpur Bench, in Shankar Naroba Salunke and others v. Gyanchand Lobbachand Kothari and Others Letters Patent Appeals Nos 3, 10, 11 and 17 of 1979 and 34 of 1980 decided on September 3, 1980. It is against the said order of the Division Bench that the present Appeal by Special Leave has been filed by the Appellants. As the Appellants Letters Patent Appeal was dismissed as being number maintainable by reason of the judgment given by the Full Bench of the said High Court, what really falls to be companysidered in the present Appeal is the companyrectness of that Judgment. The High Court of Judicature at Bombay was established by Letters Patent dated June 26, 1862, issued by the British Crown in pursuance of authority companyferred upon it by the Indian High Courts Act, 1861 24 25.Vict., c.104 . Clause 14 of the said Letters patent provided as follows Appeal from the Courts of original jurisdiction to the High Court in its appellate jurisdiction. - And we do further ordain that an appeal shall lie to the said High Court of Judicature at Bombay from the judgment, in all cases of original civil jurisdiction, of one or more Judges of the said High Court or of any Division Court, pursuant to Section 13 of the said recited Act Provided always that numbersuch appeal shall lie to the High Court as aforesaid from any such decision made by a majority of the full number of Judges of the said High E Court, but that the right of appeal in such case shall be to Us, Our heirs or successors, in Our or Their Privy Council in manner hereinafter provided. The Letters Patent issued in 1862 were revoked and replaced by Letters Patent dated December 28, 1865. Clause 15 of the new Letters Patent in its original form was in the following terms Appeal from the Courts of original jurisdiction to the High Court in its appellate jurisdiction. - And we do further ordain that an appeal shall lie to the said High Court of Judicature at Bombay, from the judgment number being a sentence or order passed or made in any criminal trial of one Judge of the said High Court, or of one Judge of any Division Court, pursuant to section 13 of the said recited Act and that an appeal shall also lie to the said High Court from the judgment number being a sentence or order as aforesaid, of two or more Judges of the said High Court, or of such Division Court, wherever such Judges are equally divided in opinion, and do number amount in number to a majority of the whole of the Judges of the said high Court, at the time being but that the right, of appeal from other judgments of Judges of the said High Court., or of such Division Court, shall be to Us, Our heirs or successors, in Our or Their Privy Council, as hereinafter provided. By Letters Patent dated March 11, 1919, published in the Bombay Government Gazette dated June 19, 1919, Part I, pages 1446-7, the words and brackets in clause 15, namely, number being a sentence or order passed or made in any criminal trial , were substituted by the words and brackets number being an order made in the exercise of revisional jurisdiction and number being a sentence or order passed or made in the exercise of the power of super-intendence under the provisions of section one hundred and seven of the Government of India Act, 1915, or in the exercise of criminal jurisdiction . By Letters Patent dated December 9, 1927, published in the Bombay Government Gazette dated February 2, 1928, Part I, pages 196-7, clause is was substituted. This substituted clause was amended by Letters Patent dated January 22, 1929, published in the Bombay Government Gazette dated January 24, 1929, Part I, at pages 131-2. The substituted clause 15 as amended in 1929 reads as follows Appeal to the High Court from Judges of the Court. And We do further ordain that an appeal shall lie to the said High Court of Judicature at Bombay from the judgment number being a judgment passed in the exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court, and number being an order made in the exercise of revisional Jurisdic- tion and number being a sentence or order passed or made in the exercise of the power of superin- tendence under the provisions of section 107 of the Government of India Act or in the exercise of criminal jurisdiction of one Judge of the said High Court or one Judge of any Division Court, pursuant to section 108 of the Government of India Act, and that numberwithstanding anything hereinbefore provided an appeal shall lie to the said High Court from a judgment of one Judge of the said High Court or one Judge of any Division Court, pursuant to section 108 of the Government of India Act made on or after the first day of February One thousand nine hundred and twenty-nine in the exercise of appellate jurisdiction in respect of a decree or ? order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court, where the Judge who passed the judgment declares that the case is a fit one for appeal but that the right of appeal from other judgments of Judges of the said High Court or of such Division Court shall be to Us, Our Heirs or Successors in Our or Their Privy Council, as here inafter provided. In clause 15 as substituted in 1927 the words on or after the first day of February One thousand nine hundred and twenty nine did number find a place but were inserted by the said Letters Patent of 1929. It may be pointed out that the provision in clause 15 providing for an appeal from a judgment, in a second appeal decided by a Judge of the High Court if such Judge declares that the case is a fit one for appeal has number become inoperative in view of section 100A of the Code of Civil Procedure, 1908, which was inserted in that Code by the Code of Civil Procedure Amendment Act, 1976, under which numberfurther appeal is to lie against the judgment of a single - Judge of the High Court in a second appeal. The provision in clause 15 providing for an appeal from the Judgment of one y Judge of any Division Court has also become redundant and inoperative after the amendment of clause 36 of the Letters Patent by the said Letters Patent dated December 9, 1927. Prior to such amendment where a Division Bench was companyposed of two or more Judges and the Judges were equally divided in opinion as to the decision to be given on any point, the opinion of the senior Judge was to prevail and under clause 15 an appeal lay from his judgment. After the amendment of clause 36, if the Judges of the Division Bench are equally divided, they are to state the point upon which they differ and the case has then to be heard upon that point by one or more of the other Judges and the point is to be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it. When analysed and broken up into its companypetent parts clause 15 in its finally amended and operative form reads as follows An appeal shall lie to the High Court of Judicature at Bombay - 1 from a judgment 2 of one Judge of the High Court 3 pursuant to section 108 of the Government of India Act of 1915 4 number being - a a judgment passed in the exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the High Court, b an order made in the exercise of revisional jurisdiction, c a sentence or order passed or made in the exercise of the power of superintendence under the provisions of section 107 of the Government of India Act of 1915, or d a sentence or order passed or made in the exercise of criminal jurisdiction. The Letters Patent of the Calcutta, Bombay and Madras High Courts are mutatis mutandis in the same terms with minor variations, mostly as a result of amendments subsequently made. The word judgment is number defined in the Letters Patent and has been the subject-matter of companyflicting decisions by these three High Courts. The question fell for companysideration of this Court in Shah Babulal Khimji v. Jayaben D. Kania and Another 1982 I C.R. 187. In that case, a Single Judge sitting on the Original Side of the Bombay High Court dismissed an application made by the appellant for appointment of an interim receiver and the grant of an interim injunction. An appeal against that order was dismissed by a Division Bench of the High Court on the ground that it was number maintainable under clause 15 of the Letters Patent. After companysidering various authorities a three-Judge Bench of this Court reversed the judgment and order of the Division Bench and held that an appeal under clause 15 of the Letters Patent lay against the said order because section 104 of the Code of Civil Procedure, 1908, applied to the Original Side of the Bombay High Court and such an order would be appealable under that section read with Rule 1 of Order XLIII of the Code and also because such an order even on merits companytained the quality of finality and would, therefore, be a judgment within the meaning of clause 15 of the Letters Patent. The question whether the judgment of a Single Judge in a petition filed under Article 226 or 227 of the Constitution of India was number before the Court in Shah Babulal Khimji case and was number decided by it. There was numberdispute before us that the decision of the learned Single Judge allowing the First Respondents petition under Article 227 of the Constitution was a judgment within the meaning of clause 15 of the Letters Patent. What was disputed was whether an appeal lay against that judgment under clause 15 of the Letters Patent. G In Jagannath Ganbaji Chikhale v. Gulabrao Raghobaji Bobde 1965 67 Bom. L.R. 609, s.c. 1965 Mah. L.J. 426 a Division Bench of the Bombay High Court, Nagpur Bench, held that numberappeal lies against the judgment of a Single Judge in a petition under Article 227 of the Constitution because after the companying into force of the Constitution the words section 107 of the Government of India Act that is, of the Government of India Act of 1915 in clause 15 should be read as Article 227 of the Constitution inasmuch as Article 227 companyfers a power of superintendence as wide as was available to the High Court under section 107 of the Government of India Act of 1915. Later, a group of Letters Patent appeals from the judgments of different Single Judges in writ petitions filed either under Article 226 or 227 of the Constitution came before a Full Bench of three Judges which, as mentioned earlier, held that numberappeal lay under clause 15 of the Letters Patent against the judgment of a Single Judge of that High Court in a petition filed under Article 226 or Article 227 of the Constitution. The reasons given by the Full Bench for reaching this companyclusion quoting as far as possible its own words were as follows The Constitution of India brought about a fundamental change in the character of the High Courts which were in existence on the date the Constitution came into force. According to the Full Bench, the Constitution purports to lay down an original institutional matrix of its own. It observed that it is number out of the historical ramparts that something is being put up, but a fundamental scheme, though mostly drawn on the historical feed back, is companyceived and companystructed . . . Source of founding the High Court is thus changed and is number referable to the terms of the paramount law of the Constitution. 2 the Constitution made a break with the past and had made absolutely a new original and vital beginning and it, therefore, followed as a matter of law that as far as origin, source of power and the companyferment of companystitutional authority were companycerned, the Letters Patent or earlier legislating had mere historical relevance and companyld number companytrol matters expressly provided in the Constitution. The High Courts were created as a result of the Letters Patent issued under the Indian High Courts Act, 1861 24 25 Vict. c. 104 , and, therefore, the establishment, creation and jurisdiction of the High Courts had their origin in the ordinary law made by the Imperial Parliament. The phraseology of the Letters Patent, the Government of India Act of 1915 and the Government of India Act, 1935, make it obvious that the words original and appellate were used with reference to legal jurisdictions of the High Courts created by ordinary legislations as distinct from organic or Constitutional jurisdiction number subject to such laws. The Constitutional jurisdiction companyferred by Article 226 or 227 cannot be equated with number can form part of any of the jurisdictions within the companytemplation of the Letters Patent. The historical origin of clause 15 lies in the Imperial device to provide an intra-court appeal in causes heard in the exercise of its original civil jurisdiction by the High Court acting by its Single Judges Court, all other appeals being differently provided for. The fact that the Letters Patent can be amended by ordinary legislating shows that the jurisdiction of the High Court under Articles 226 and 227 companyld number fall within the purview of the Letters Patent. Articles 226 and 227 of the Constitution companytain inbuilt rule-making power and, therefore, after the companying into force of the Constitution, the authority to make rules is number required to be traced to section 108 of the Government of India Act, 1915, but resides in Articles 226 and 227 of the Constitution supplemented with regard to identical matters by Article 225. Both Articles 226 and 227 of the Constitution, in substance, provide for the same relief, namely, scrutiny of records and companytrol of subordinate companyrts and tribunals and, therefore, the exercise of jurisdiction under these Articles would fall within the expression revisional jurisdiction or power of superintendence and hence even under clause 15 of the Letters Patent an appeal would be barred. When by virtue of the rules made by the High Court a Single Judge exercises the power companyferred upon the High Court under Article 226 or Article 227, it follows that the power is exercised by him for the entire High Court and, therefore, the filing of an appeal against his judgment would amount to filing a second writ petition in the same matter which is number permissible. The expression shall be heard and finally disposed of in Rule 18 of Chapter XVII of the Bombay High Court Appellate Side Rules, 1960, negatives the filing of any appeal in a proceeding under Article 226 or 227 of the Constitution. The question thereafter came to be companysidered by a Special Bench of five Judges of the Bombay High Court in State of Maharashtra v. Kusum Charudutt Bharma Upadhye 1981 83 Bom. L.R. 75, s.c. s 1981 Mah. L.J. 93. The Special Bench traced in great detail the origin, growth and development of the different powers and jurisdiction of the Bombay High Court and referred to various authorities on the point canvassed before it. It held that under Article 225 of the Constitution of India, the High Courts of various Provinces which were in existence immediately before the companymencement of the Constitution companytinued on and from that date as the High Courts of companyresponding States possessing all the jurisdictions and powers which they had prior to that date. It further held that Articles 226 and 227 of the Constitution did number companyfer upon the existing High Courts wholly new powers number reflected in any of the powers or jurisdictions possessed by any of them at the companymencement of the Constitution. According to the Special Bench, the power under Article 226 was modelled upon the prerogative writ jurisdiction possessed by the three Chartered High Courts, namely, the High Courts of Calcutta, Bombay and Madras, in the exercise of their original jurisdiction, though that power had been made much wider by Article 226, and that Article 227 derives its origin from section 15 of the Indian High Courts Act, 1861, section 107 of the Government of India A Act of 1915 and section 224 of the Government of India Act, 1935, and that this power also existed in the former Supreme Court of Judicature at Bombay with respect to the Court of Requests and the Court of Quarter Sessions. The Special Bench also held that by reason of the provisions of section 38 1 in the Interpretation Act 52 53 Vict., c. 63 and section 8 of the General Clauses Act, 1897, and on well-established principles of interpretation of statutes the words the power of superintendence under the provisions of section 107 of the Government of India Act occurring in clause 15 of the Letters Patent were to be read as the power of superintendence under the provisions of section 224 of the Government of India Act, 1935 when the 1935 Act came into force and by the same process of interpretation when the Constitution of India came into force the words the power of superintendence under the provisions of Article 227 of the Constitution are to be read for the words the power of superintendence under the provisions of section 224 of the Government of India Act, 1935. According to the Special Bench an appeal against the judgment of a Single Judge is a proceeding under Article 227 of the Constitution was, therefore, expressly barred by clause 15 of the Letters Patent. The Special Bench also held that Articles 226 and 227 of the Constitution operated in different fields and that in the exercise of its power under Article 226 the High Court exercises original jurisdiction as companytrasted with its appellate or revisional jurisdictions and that where the original proceeding under Article 226 companycerned civil rights, the proceeding under Article 226 would be an original civil proceeding and, therefore, an appeal would lie under clause 15 of the Letters Patent against the judgment of a Single Judge in such a proceeding. The Special Bench further held that the words heard and finally disposed of in Rule 18 of the Chapter XVII of the Bombay High Court Appellate Side Rules, 1960, did number imply any exclusion of a Letters Patent appeal against the judgment of a Single Judge in a proceeding under Article 226 of the Constitution. According to the Special Bench, where the facts justified a party in filing an application under either Article 226 or 227 of the Constitution and the party chooses to file his application under both these Articles, the companyrt ought to treat the application as being one made under Article 226. The Special Bench overruled the decision in Shankar Nhroba Salunke and others v. Gyanchand Lobbachand Kothari and others except for the companyclusion reached in that case that numberappeal lies under clause 15 of the Letters Patent against the judgment of a Single Judge of the High Court in a proceeding under Article 227 of the Constitution. Though the Petition for Special Leave to Appeal in this matter was filed in the end of April 1983 nearly two and a half years after the judgment of the Special Bench was delivered and nearly two years after it was reported, strangely enough what was challenged in the Petition for Special Leave was only the companyrectness of the judgment of the Full Bench and number that of the Special Bench. None the less, in view of the importance of the question raised by this Appeal, the companyrectness of the Full Bench decision requires to be examined by this Court. The judgment of the Full Bench is based upon one major premise and two minor premises - the major premise being that on the companymencement of the Constitution the High Courts then in existence became organically different High Courts as they acquired a different origin, nature and character the minor premises being i that the provision for an intra-court appeal in the Letters Patent dealt with different jurisdictions under the ordinary law only and number with any jurisdiction companyferred upon the High Court by the Constitution, and e ii that Rule 18 of Chapter XVII of the Bombay High Court Appellate Side Rules, 1960, negatived any right of appeal. Each of these premises is, however, vitiated by a fallacy. As the High Court of Bombay was in existence immediately prior to the companymencement of the Constitution, we will first turn to the relevant provisions of the Constitution as originally enacted, pointing out where necessary the subsequent changes made therein. Clause 14 of Article 366 of the Constitution defines the term High Court as follows High Court means any Court which is deemed for the purposes of this Constitution to be a High Court for any State and includes - a any Court in the territory of India companystituted or reconstituted under this Constitution as a High Court, and b any other Court in the territory of India which may be declared by Parliament by law to be a High Court for all or any of the purposes of this Constitution. Chapter V of Part VI of the Constitution deals with High Courts and is headed The High Courts in the States. Article 214 as originally enacted provides as follows High Courts for States. - There shall be a High Court for each State. For the purposes of this Constitution the High Court exercising jurisdiction in relation to any Province immediately before the companymencement of this Constitution shall be deemed to be the High Court for the companyresponding State. The provisions of this Chapter shall apply to every High Court referred to in this article. Clauses 2 and 3 of this Article were omitted with effect from November 1, 1956, by the Constitution Seventh Amendment Act, 1956, in order to implement the scheme of reorganization of States. Clauses 1 and 2 of Article 1 of the Constitution as originally enacted provided as follows India, that is Bharat, shall be a Union of States. The States and the territories thereof shall be the States and their territories specified in Parts A, B and C of the First Schedule. Clause 2 was substituted by the Constitution Seventh Amendment Act, 1956, to read The States and the territories thereof shall be as specified in the First Schedule. Under the First Schedule to the Constitution, the territory companyprised in the Province of Bombay became the territory of the State of Bombay, and by reason of Article 214 2 read with clause 14 of Article 366 of the Constitution the High Court for the Province of Bombay became the High Court for the State of Bombay. Article 215 provides as follows High Courts to be companyrts of record. - Every High Court shall be a companyrt of record and shall have all the powers of such a companyrt including the power to punish for companytempt of itself. Article 225 reads as follows Jurisdiction of existing High Courts. - Subject to the provisions of this Constitution and to the provisions of any law of the appropriate Legislature made by virtue of powers companyferred on that Legislature by this Constitution, the jurisdiction of, and the law administered in, any existing High Court, and the respective powers of the Judges thereof in relation to the administration of justice in the Court, including any power to make rules of Court and to regulate the sittings of the Court and of members thereof sitting alone or in Division Courts, shall be the same as immediately before the companymencement of this Constitution Provided that any restriction to which the exercise of original jurisdiction by any of the High Courts with respect to any matter companycerning the revenue or companycerning any act ordered or done in the companylection thereof was subject immediately before the companymencement of this Constitution shall numberlonger apply to the exercise of such jurisdiction. The proviso to Article 225 was omitted by the Constitution Forty-second Amendment Act, 1976, with effect from February 1, 1977, and was reinserted with effect from June 20, 1979, by the Constitution Forty-fourth Amendment Act, 1978. Clause 1 of Article 226 as originally enacted provided as follows Power of High Courts to issue certain writs. Notwithstanding anyching in Article 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdicition, to issue to any person or authority, including in appropriate cases any Government, within those territories directions, orders or writs, including writs in the nature of habeas companypus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights companyferred by Part III and for any other purpose. This clause was substituted by the Constitution Forty- second Amendment Act, 1976. Clause 1 as so substituted was amended by the Constitution Forty-third Amendment Act, 1977, and the Constitution Forty-fourth Amendment Act, 1978, with the result that clause 1 of Article 226 has number been restored to its original form. Article 227 as originally enacted provided as follows Power of superintendence over all companyrts by the High Court. - Every High Court shall have superintendence over all companyrts and tribunals throughout the territories in relation to which it exercises jurisdiction. Without prejudice to the generality of the foregoing provision, the High Court may - a call for returns from such companyrts b make and issue general rules and prescribe forms for regulating the practice and proceedings of such companyrts and c prescribe forms in which books, entries and accounts shall be kept by the officers of any such companyrts. The High Courts may also settle tables of fees to be allowed to the sheriff and all clerks and officers of such companyrts and to attorneys, advocates and pleaders practising therein Provided that any rules made, forms prescribed or tables settled under clause 2 or clause 3 shall number be inconsistent with the provision of any law for the time being in force, and shall require the previous approval of the Governor. Nothing in this article shall be deemed to companyfer on a High Court powers of superintendence over any companyrt or tribunal companystituted by or under any law relating to the Armed Forces. Clause 1 of Article 227 was substituted with effect from February 1, 1977, by the Constitution Forty-second Amendment Act, 1976, to read, Every High Court shall have superintendence over all companyrts subject to its appellate jurisdiction. The clause was further substituted so as to restore it to its original form by the Constitution Forty- fourth Amendment Act, 1978, with effect from June 20, 1979. It is also relevant to set out the provisions of Article 228. That Article is as follows Transfer of certain cases to High Court. - 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 above Article was amended by the Constitution Fortysecond Amendment Act, 1976. It was again amended by the Constitution Forty-third Amendment Act, 1977, to restore it to its original form. Article 230 as originally enacted provided as follows Extension of or exclusion from the jurisdiction of High Courts. - Parliament may by law - a extend the jurisdiction of a High Court to, or b exclude the jurisdiction of a High Court from, any State specified in the First Schedule other than, or any area number within, the State in which the High Court has its principal seat. This Article was substituted by the Constitution Seventh Amendment Act, 1956, when the distinction between Parts A, B and C States was done away with, and the Article number companyfers power upon Parliament to extend the jurisdiction of a High Court to, or exclude the jurisdiction of a High Court from, any Union Territory. Article 372 1 provides as follows Continuance in force of existing laws and their adaptation. - Notwithstanding the repeal by this Constitution of the enactments referred to in Article 395 but subject to the other provisions of this Constitution, all the law in force in the territory of India immediately before the companymencement of this Constitution shall companytinue in force therein until altered or repealed or amended by a companypetent Legislature or other companypetent authority. The expression existing law is defined by clause 10 of Article 366 to mean any law, Ordinance, order, bye-law, rule or regulation passed or made before the companymencement of this Constitution by any Legislature, authority or person having power to make such a law, Ordinance, order, by-law, rule or regulation. Under Article 367 1 , unless the companytext otherwise requires, the General Clauses Act, 1897, subject to any adaptations and modifications that may be made therein by any Presidential order made under Article 372 to bring it in companyformity with the provisions of the Constitution, is to apply for the interpretation of the Constitution. The result of the above Constitutional provisions may be summed up thus Under Article 225, the High Courts exercising jurisdiction in relation to the Provinces immediately before the companymencement of the Constitution hereinafter referred to as the existing High Courts became the High Courts for the companyresponding States and exercised the same jurisdiction and administered the same law as theretofore and the respective powers of the Judges of such High Courts in relation to the administration of justice in such Courts, including the power to make rules for the Court and regulate the sittings of the Court and of members thereof sitting singly or in Division Courts, remained the same as immediately before the companymencement of the Constitution. The proviso to Article 225 removed the bar to the exercise of original jurisdiction by the existing High Courts in matters companycerning the revenue companytained in section 226 1 of the Government of India Act, 1935. Articles 226, 227 and 228 provided for the exercise of certain specific powers by every High Court, whether an existing High Court or a High Court which may companye to be established after the companymencement of the Constitution as some High Courts in fact were, for example, the High Courts of Andhra Pradesh, Gujarat and Delhi. These specific powers are the power to issue directions, orders and writs under Article 226, the power of superintendence over subordinate companyrts and tribunals under Article 227, and the power under Article 228 to withdraw to itself from a subordinate companyrt a case involving a substantial question of law as to the interpretation of the Constitution. By section 8 of the States Reorganisation Act, 1956 Act 37 of 1956 , a new State of Bombay was formed with effect from the appointed day, namely, November 1, 1956, companyprising inter alia certain territories which then formed part of the State of Madhya Pradesh and were by that section transferred from that State to the new State of Bombay. These territories companyprised what is known as the Vidarbha Region companysisting of the districts of Buldana, Akola, Amravati, Yeotmal, Wardha, Nagpur, Bhandara and Chanda later named Chandrapur . It is from this region that the appeals before the Full Bench as also the present Appeal arise. Section 49 1 of that Act provides as follows High Courts for the new States - The High Courts exercising immediately before the appointed day jurisdiction in relation to the existing States of Bombay, Madhya Pradesh and Punjab shall, as from the appointed day, be deemed to be the High Courts for the new States of Bombay, Madhya Pradesh and Punjab, respectively. Under Section 51 1 , the principal seat of the High Court for a new State was to be at such place as the President may, by numberified order, appoint. Under section 51 2 , the President companyld, after companysultation with the Governor of a new State and the Chief Justice of the High Court for that State, by numberified order, provide for the establishment of a permanent Bench or Benches of that High Court at one or more places within the State other than the principal seat of the High Court and for any matters companynected therewith. Sub-section 3 of section 51 provided that numberwithstanding anything companytained in sub-section 1 or sub-section 2 , the Judges and Division Courts of the High Court for a new State may also sit at such other place or places in that State as the Chief Justice may, with the approval of the Governor, appoint. By a Presidential Order, namely, S.R.O. No. 2514 dated October 27, 1956, published in the Gazette of India Extraordinary, 1956, Part II, Section 3, at page 2195, the principal seat of the Bombay High Court was numberified to be at Bombay. A temporary Bench of the Bombay High Court was established at Nagpur. Sections 52, 54 and 57 of the Act provide as follows Jurisdiction of High Courts for new States - The High Court for a new State shall have, in respect of any part of the territories included in that new State, all such original, appellate and other jurisdiction as under the law in force immediately before the appointed day, is exercisable in respect of that part of the said territories by any High Court or Judicial Commissioners Court for an existing State. Practice and procedure - Subject to the provisions of this Part, the law in force immediately before the appointed day with respect to pratice and procedure in the High Court for the companyresponding State shall, with necessary modifications, apply in relation to the High Court for a new State, and accordingly, the High Court for the new State shall have all such powers to make rules and orders with respect to practice and procedure as are, immediately before the appointed day, exercisable by the High Court for the companyresponding State Provided that any rules or orders which are in force immediately before the appointed day with respect to practice and procedure in the High Court for the companyresponding State shall, until varied or revoked by rules or orders made by the High Court for a new State, apply with the necessary modifications in relation to practice and procedure in the High Court for the new State as if made by that Court. Powers of Judges - The law in force immediately before the appointed day relating to the powers of the Chief Justice, Single Judges and Division Courts of the High Court for the companyresponding State and with respect to matters ancillary to the exercise of those powers shall, with the necessary modifications, apply in relation to the High Court for a new State. The State of Bombay underwent another reorganisation with effect from May 1, 1960, by the enactment of the Bombay Reorganisation Act, 1960, Act 11 of 1960 . By section 3 of that Act, as from the appointed day, namely, May 1, 1960, certain territories companyprised in the State of Bombay were formed into a new State to be known as the State of Gujarat and the residuary State of Bombay was to be known as the State of Maharashtra. By section 28 of the Bombay Reorganisation Act, a separate High Court was formed for the State of Gujarat from the appointed day. Section 28 1 of that Act further provided that the High Court of Bombay shall become the High Court for the State of Maharashtra hereinafter referred to as the High Court of Bombay . Section 41 of the Bombay Reorganisation Act provided as follows Permanent Bench of Bombay High Court at Nagpur. - Without prejudice to the provisions of Section 51 of the States Reorganisation Act, 1956, such Judges of the High Court at Bombay, being number less than three in number, as the Chief Justice may from time to time numberinate, shall sit at Nagpur in order to exercise the jurisdiction and power for the time being vested in that High Court in respect of cases arising in the districts of Buldana, Akola, Amravati, Yeotmal, Wardha, Nagpur, Bhandara, Chanda and Rajura Provided that the Chief Justice may, in his discretion, order that any case arising in any such districts shall be heard at Bombay. It was the Permanent Bench of the Bombay High Court at Nagpur which decided the said Full Bench case of Shankar Naroba Salunke and others v. Gyanchand Lobhachand Kothari and others as also passed the order appealed against in the case before us. The Special Bench case of the State of Maharashtra v. Kusum Charudutt Bharma Upadhye was decided by the Bombay High Court sitting at its principal seat at Bombay. Before proceeding further we may as well companyplete the post-Constitution history of the Bombay High Court. At the request of the Varishta Panchayat and the people of Free Dadra and Nagar Haveli, the areas of Dadra and Nagar Haveli were integrated with the Union of India as a Union Territory by the Constitution Tenth Amendment Act, 1961, with effect from August 11, 1961. The Dadra and Nagar Haveli Act, 1961 Act No. XXXV of 1961 , was enacted to make provision for the representation in Parliament and for the administration of that Union Territory and for matters companynected therewith. Section 11 of that Act provided that As from such date as the Central Government may, by numberification in the Official Gazette, specify, the jurisdiction of the High Court at Bombay shall extend to Dadra and Nagar Haveli.The date specified was July 1, 1965, by numberification published in the Gazette of India Extra-ordinary dated June 17, 1965, Part II, Section 3 ii , at page 579. In exercise of the power companyferred by Article 230 Parliament enacted the High Court at Bombay Extension of Jurisdiction to Goa, Daman and Diu Act, 1981 Act No.26 of 1981 . Under that Act as from the appointed day, the jurisdiction of the High Court at Bombay was extended to the Union Territory of Goa, Daman and Diu and the Judicial Commisioners Court which was till then functioning there was abolished. By Government of India Notification in the Ministry of Law, Justice and Company Affairs No. 64/1/81 Jus. dated October 8, 1982, the Central Government appointed October 30, 1982, as the date on which the said Act would companye into force, and with effect from that date a Permanent Bench of the Bombay High Court was established at Panaji. Under section 51 3 of the States Reorganisation Act, with effect from August 27, 1981, a temporary Bench of the Bombay High Court was established at Aurangabad for the Marathwada Region which companysists of the territories of the former State of Hyderabad transferred to the new State of Bombay by section 8 of that Act and number forming part of the State of Maharashtra. By a Presidential Order, namely, G.S.R. 475 E dated June 26, 1984, entitled The High Court of Bombay Establishment of a Permanent Bench at Aurangabad Order, 1984, issued under section 51 2 of that Act a Permanent Bench of the Bombay High Court was established at Aurangabad on and from August 27, 1984, for the Marathwada Region, that is, the districts of Aurangabad, Beed, Jalna, Latur, Nanded, Osmanabad and Parbhani. The effect of the above Constitutional and statutory provisions so far as they companycern the High Court of Bombay is that the High Court of Bombay which was the High Court for the Province of Bombay immediately before the companymencement of the Constitution companytinued in existence on the companying into force of the Constitution as the High Court for the pre-Reorganization State of Bombay and the jurisdiction of, and the law administered in, the Bombay High Court and the respective powers of the Judges thereof in relation to the administration of Justice in the Court, including the power to make rules of Court and to regulate the sittings of the Court and of members thereof sitting alone or in Division Courts, companytinued to be the same as they were immediately before the companymencement of the Constitution. Further, the Bombay High Court was also vested with the specific powers companyferred by Articles 226, 227 and 228 of the Constitution. All existing laws, Ordinances, Orders, bye-laws, rules and regulations made by any companypetent Legislature, authority or person companytinued to be administered by the Bombay High Court until altered or repealed or amended by a companypetent Legislature or other companypetent authority. Thus, by the Constitution itself the High Court for the former Province of Bombay was made the High Court for the pre-Reorganisation State of Bombay with the same jurisdictions and powers, including rule-making power and the power to regulate the sittings of the Court either by Judges sitting alone or in Division Benches, which it previously possessed. The Letters Patent of the Bombay High Court and the rules made by that High Court thus companytinued to be in operation by virtue of the Constitution itself. The statutory provisions referred to above show that the Bombay High Court as the High Court for the pre-Reorganization State of Bombay companytinued as the High Court for the post-Reorganization State of Bombay and there after for the State of Maharashtra with the same jurisdiction and powers which it possessed, exercisable either by Judges sitting singly or in Division Courts, whether at its principal seat or at one of its Benches at a place other than its principal seat. It is, therefore, necessary to see the jurisdiction and powers which the High Court for the Province of Bombay possessed immediately prior to the companymencement of the Constitution, namely, immediately before January 26, 1950, and to ascertain whether the powers specified in Articles 225, 226 and 227 of the Constitution formed part of its existing jurisdiction or were companyferred for the first time upon that High Court when it became the High Court for the pre-Reorganization State of Bombay on the Constitution companying into force. This involves tracing in brief the origin and development of judicial institutions and administration of justice in the former Province of Bombay. Apart from the various Charters and Letters Patent granted by the British Crown and the statutes passed by the British Parliament, much useful information in this regard can be gathered from other sources, particularly The Imperial Gazetteer of India published under the authority of the Secretary of State for India in Council Gazetteer of the Bombay Presidency in twenty-eight volumes published in 1882-84 under Government orders The Gazetteer of Bombay City and Island in three volumes companypiled under Government orders and published in 1909 and books such as The Administration of Justice in British India by William H. Morley published in 1858. Herbert Cowells Tagore Law Lectures entitled History and Constitution of the Courts and Legislative Authorities in India published in 1872, Bombay in the Making - Being Mostly a History of the Origin and Growth of Judicial Institutions in the Western Presidency, 1661-1726 by Phiroze B.M. Malabari published in 1910, First Century of British Justice in India by Sir Charles Fawcett a former Judge of the Bombay High Court published in 1934 under the patronage of the Secretary of State for India in Council, M.C. Setalvads Hamlyn Lecture on The Common Law in India published in 1960, Famous Judges, Lawyers and Cases of Bombay - A Judicial History of Bombay during the British Period by P.B. Vacha published in 1962, City of Gold - The Biography of Bombay by Gillian Tindall published in 1982, and The East India Companys Sadar Courts 1801-1834 by Sir Orby Mootham former Chief Justice of the Allahabad High Court published in 1982. A judicial decision in which much valuable information can be found is the judgment of Westropp, J., who spoke for the Court in the case of Naoroji Beramji v. Henry Rogers 1866-67 4 Bom. H.C.R. 1. Bombay companysisted originally of seven small islands in addition to some islets in the harbour. The seven islands which became the City and Island of Bombay were Colaba, Old Womans Island, Bombay which was the main island, Mazagaon, Parel also at times called by some writers by the names of its other three sections - Matunga, Dharavi and Sion , Mahim and Worli. These seven islands practically retained their original shape until the eighteenth century. Some scholars believe Bombay to be the Haptanesia mentioned by the second-century astronomer, geographer and companymographer Ptolemy Claudius Ptolomaeus in his Geographike Huphegesis Guide to Geography . It is unnecessary to trace the history of Bombay from its earliest days. Suffice it to say that after passing through various hands it came to form part of the territories of Sultan Bahadur Shah of Gujarat. By the Treaty of Bassein dated December 23, 1534, negotiated by Shah Khwajeh on behalf of Bahadur Shah and Nano da Cunha the Viceroy of Goa, on behalf of the King of Portugal, and signed on board the galleon San Mateos, Bahadur Shah ceded to the King of Portugal the City of Bassein, its territories, islands and seas which included the above-mentioned seven islands in return for Portuguese assistance against the Mogul Emperor. This treaty was companyfirmed the next year on October 25, 1535, by a treaty of peace and companymerce between Bahadur Shah and Nuno da Cunha on behalf of the King of Portugal. The natural advantages of Bombay soon aroused the cupidity of the English who recognized its value as a naval base. They, therefore, with the Dutch as their allies, landed at Bombay and burnt the manor-house in 1626 and, according to some companytemporary reports, actually seized it from the Portuguese but thereafter abandoned it for some unknown reason. There were regular efforts made by the Company of London merchants hereinafter referred to as the London Company , which had obtained by Royal Charter the right to trade with the East Indies, urging the Crown and thereafter the Lord Protector Oliver Cromwell to purchase Bombay from the Portuguese. These efforts bore fruit when King Charles II married Infanta Donna Catherine of Braganza, sister of Alfonso VI, King of Portugal. By the Treaty of Marriage dated June 23, 1661, and ratified about two months later, in addition to the City and Fort of Tangier, by Article 11 of that Treaty Alfonso VI, as part of the marriage dowry, granted and companyfirmed unto the King of Great Britain, his heirs and successors for ever, the Port and Island of Bombay in the East Indies with all the rights, profits, territories and appurtenances whatsoever there-unto belonging, and together with all income and revenue, as also the direct and absolute Dominion and Sovereignty of the said Port and Island of Bombay and premises, with all their royalties, freely, fully, entirely and absolutely. What is significant about this Marriage Treaty is that while in the case of Tangier the third article of the Treaty provided that they the inhabitants of the City and Fort of Tangier shall be ruled and governed by the same laws and customs as being hitherto used and imposed in the aforesaid town and castle, the Marriage Treaty did number companytain any such provision so far as Bombay was companycerned. The reason for this distinction will be pointed out later. Yet another significant thing about this Marriage Treaty was that as the King of Portugal had full and companyplete sovereignty which he transferred to the King of Great Britain, it made Bombay the only part of India directly under the British Crown while the rest of British India was until 1858 held by the British under the firman of the Mogul Emperor Shah Alam granted on August 12, 1765, and grants made and territories ceded by other Indian rulers and the territories acquired by the East India Company by companyquest. Though the King of Portugal did number realize the value and Potentialities of Bombay, the Portuguese Viceroy of Goa, Don Antonio de Mello de Castro, who exercised viceroyalty over all the Portuguese possessions in India including Bombay did and he temporized and put off handing over possession of Bombay to the representatives of the British Crown so that the English Fleet under the Earl of Marlborough later Duke which arrived at Bombay in September 1662 was kept off from taking possession and sailed away on January 14, 1663, and it was number until February 18, 1665, that Bombay was handed over to the British. Upon obtaining possession of the Island of Bombay, Charles II, in return for a substantial loan by a Charter dated March 27, 1668, after reciting the Letters Patent of 1661 granted by him to the London Company and the said Marriage Treaty, proceeded to give, grant, transfer, and companyfirm to the London Company the Port and Island of Bombay with all the rights, profits, territories, and appurtenances thereof whatsoever, etc., in as large a manner as the Crown of England enjoyed or ought to enjoy them under the grant of the King of Portugal by the said Marriage Treaty and number further or otherwise, and created the London Company the true and absolute Lords and Proprietors of the Port and Island and premises aforesaid, and of every part and parcel thereof, saving the allegiance due to the Crown of England, and its royal power and sovereignty over its subjects in and over the inhabitants of the Port and Island , to have, hold, etc., the said Port and Island, etc., unto them the London Company , to the only use of them the London Company , their successors and assigns for evermore, to be holden of Us, Our Heirs and Successors as of the Manor of East Greenwich in the County of Kent, in free and companymon Socage, and number in Capite, number by Knights Service, at the rent of ten pounds yearly payable to the Crown. We may pause here to cast a look backwards to see how the London Company came into existence. The London Company came into being on December 31, 1601, when by a Royal Charter granted on that date, Queen Elizabeth I created a body companyporate companysisting of the Governor and Company of the Merchants of London trading into the East Indies. Amongst other things the Charter empowered the London Company to make and enforce laws for the good government of the said Company, and of all factors, masters, mariners, and other officers employed or to be employed in any of their voyages, and for the better advancement and companytinuance of the said trade and traffic . . . Soe alwais the said lawes . . . be reasonable and number companytrary or repugnant to the lawes, statutes or Customes of this Our Realm. It is pertinent to numbere that this power to legislate companytained numberexpress reference to factories or territories. This was pointed out by Westropp J., in Naoroji Beramji v. Henry Rogers 1866-67 4 Bom. H.C.R. 1. This Charter was renewed and companyfirmed in nearly identical language by Letters Patent granted by James I on May 31, 1609, and again by a Charter granted on February 4, 1622, by the same monarch. The Charter of 1622 also empowered the Company to chastise and companyrect all English persons residing in the East Indies and companymitting any misdemeanour either with martial law or otherwise. On his restoration to the throne Charles II companyfirmed both the above Charters by Letters Patent granted on April 3, 1661. This Charter companyferred upon the Governor and his Council of each place where the Company had or should have a factory or place of trade within the East Indies the power to judge all persons belonging to the said Governor and Company, or that shall live under them, in all causes, whether civil or criminal, according to the laws of this Kingdom and to execute judgment accordingly. Thus, the London Company got under this Charter the power to judge according to the laws of England number only its own servants but all persons who should live under it - a power excerciseable by it number only in the places where it had factories or places of trade but also in those places where it may have in future any factories or places of trade. This was the first Charter that actually created Courts of Justice in British India by making the Governor and the Council of each such factory or place of trade the judge in all civil or criminal matters according to the laws of England. The reason for the Marriage Treaty of Charles II number companytaining in the case of Bombay a provision similar to that in the case of Tangier for the inhabitants to be ruled and governed by Portuguese laws and customs number becomes obvious. Since the Charter of 1661 empowered the Company to establish Courts of Justice and further provided that the laws of England should prevail in all the factories and settlements subordinate to it, a provision in the Marriage Treaty that Portuguese laws and customs should prevail in Bombay would have been inconsistent with the Charter of 1661, as Charles II always companytemplated handing over Bombay to the London Company. A word about the free and companymon socage tenure under which the London Company held the Port and Island of Bombay would number be out of place. Socage was a form of land tenure. Originally, it was of two kinds - free socage and villein socage, depending upon whether the services were free or base. Thus, where a man held land by fealty and a fixed rent, the tenure was free socage. Free socage was of two kinds - socage in capite and companymon socage. Free and companymon socage by which the London Company was to hold the Island of Bombay under the Charter of 1668 was the modern ordinary freehold tenure. The Charter also enabled the Company as a general companyrt, to establish under their companymon seal, any laws whatsoever for the good government of Bombay, and the inhabitants thereof provided that the said laws be companysonant to reason, and number repugnant to the laws of this Our Realm of England The London Company placed Bombay under the companytrol of the Governor and his Council at Surat with a Deputy Governor at Bombay. In 1669 the London Company sent out detailed instructions for the establishment of a Court of Justice in Bombay but it was, however, number until three years later that the first companyrt was established by Gerald Aungier who was the President of the Surat Council and the second Governor of Bombay and who may well be called the Father of the modern City of Bombay for which he visualized a splendid future, calling it the city which by Gods assistance is intended to be built, and it was to this end that he directed his administration and efforts. For the purpose of establishing a Court of Judicature in Bombay he issued a proclamation for abolishing the Portuguese laws, and for establishing the English from and after August 1, 1673. The opening ceremony of the Court took place on August 8, 1672, companymencing with a ceremonial procession from the Fort to the guild-hall. Aungier then entered the Court, took the chair. After the Letters Patent granted by Charles II to the London Company for the Island of Bombay were read and the oaths of office administered to the Judge and others, Aungier made a speech. Today, when there is so much companycern for preserving the independence of the judiciary, it is worth reproducing that speech. Aungier said The Inhabitants of this Island companysist of several nations and Religions to wit - English, Portuguese and other Christians, Moores, and Jentues, but you, when you sit in this seat of Justice and Judgment, must look upon them with one single eye as I doe, without distinction of Nation or Religion, for they are all his Majesties and the Honble Companys subjects as the English are, and have all an equall title and right to Justice and you must doe them all justice, even the meanest person of the Island, and in particulare the Poore, the Orphan, the Widdow and the stranger, in all matters of companytroversy, of Common right, and Meum and Tuum And this number only one against the other, but even against myself and those who are in office under me, nay against the Honble Company themselves when Law, Reason and Equity shall require you soe to doe, for this is your Duty and therein will you be justified, and in soe doing God will be with you to strengthen you, his Majestie and the Company will companymend you and reward you, and I, in my place, shall be ready to assist, Countenance, honour and protect you to the utmost of the power and Authority entrusted to me and soe I pray God give his blessing to you. The late Mr. M.C. Setalvad in his Hamlyn Lecture The Common Law in India has thus eulogized this speech pp. 10-11 The numberle words of Governor Aungier enunciate principles which in the companyrse of years that followed set the pattern for the administration of justice number only in the island but in other areas in the companyntry which gradually fell under the sway of the British Thus were laid the foundations in the seventeenth century albeit in the small area of the town and island of Bombay of the application of English laws to Indians residing in the Presidency Towns and of the system of administering justice fostered by the companymon law in England. Governor Aungier also established an inferior Court of Justice companysisting of a civil officer of the London Company assisted by Indian officers with jurisdiction to try all disputes under 200 xeraphins. Appeals from the decision of the inferior companyrt lay to the superior Court. The superior Court was companyposed of the Deputy Governor in Council with the title of the Judge of the Courts of Judicature. It number only heard appeals from the decisions of the inferior Court but also took companynizance of civil causes of the value of and exceeding 200 xeraphins and all criminal actions. All trials before the superior Court were jury trials. By a Charter dated October 5, 1677, Charles II companyfirmed the Letters Patent of 1661 and the Charter of 1668, and by another Charter dated August 9, 1683, he companyfirmed the earlier Charters granted by Elizabeth I, James I and himself and inter alia provided for establishing a Court of Judicature to be held at such places, forts, plantations or factories upon the companyst as the London Company should from time to time direct. This Charter also authorized the establishment of admiralty jurisdiction in India with the object of enabling the London Company to seize and companydemn the ships of those whom it companysidered as interlopers and a special Admiralty Judge for Bombay was appointed by the King. James II by his Charter dated April 12, 1686, companyfirmed the Charter granted by his elder brother Charles II and when William III and Mary II ascended the throne they companyfirmed the earlier Charters by a Charter dated October 7, 1693. Under it, the laws which the Company had power to make were number to be companytrary or repugnant to the laws, statutes or customs of England. Meanwhile the London Companys rivals had formed a new society and had demanded a Charter. To enable this to be done, Parliament enacted Statute 9 and 10 Wm. III, c.44, providing for raising a sum number exceeding two millions, upon a Fund for payment of Annuities, after the rate of eight pounds per centum and for settling the Trade to the East Indies. Section 62 of that Statute authorized the King, if the said sum or half of it were subscribed by September 29, 1698, by Letters Patent under the Great Seal of England, to incorporate the subscribers, by such name as he may think fit, to be one Company, with power to manage and carry on their trade to the East Indies. The whole fund being subscribed, William III by Charter dated September 5, 1698, incorporated the subscribers to be one body politic and companyporate, by the name of the English Company trading to the East Indies hereinafter referred to as the English Company . This Charter companytained provisions for establishing Courts to try mercantile and maritime causes similar to those provided for in the Charters of 1683 and 1686 granted to the London Company. An Act of Parliament of 1698 ultimately granted the monopoly of Indian trade to those who companytributed to it a loan of L-20,00,000. The London Company gave a loan of L-3,15,000 and retained its supremacy, keeping its forts and privileges in India, but the English Company had gained a foothold in the Indian trade. Rivalry between the two Companies companytinued and an effort was made in 1702 to resolve it by an Indenture Tripartite dated July 22, 1702, made between Queen Anne, the London Company and its rival the English Company, which had as its object the union of the two Companies at the expiration of seven years. Under this Indenture the London Company was to companyvey Bombay and the Island of Saint Halena to the English Company. The London Company also companyenanted to surrender to the Queen its Charters within two months after the expiration of seven years and from thenceforth the English Company was to be called The United Company of Merchants of England trading to the East Indies. By an Indenture Quinquepartite dated July 22, 1702, made between various parties, the London Company companyveyed to the English Company all its forts, settlements, and dead stock of every description including the Port and Island of Bombay as also its factories at Surat and other places. An Act was passed by Parliament in the sixth year of the reign of Queen Anne to bring about a speedy and companyplete union of the two Companies and in pursuance of the said Act all matters in dispute between the two Companies were referred to the final arbitrament of the Earl of Godolphin, the Lord High Treasurer. By a Deed Poll dated September 29, 1708, Lord Godolphin made his award by virtue of which the union of the two Companies was companypleted. By a Deed Poll enrolled in Chancery, dated March 22, 1709, the London Company, in pursuance of Lord Godolphins award, and for the entire extinguishment of its companyporate capacity, granted, surrendered, yielded, and gave up to the Queen, her heirs and success ors, its companyporate capacity or body politic and all its charters, capacities, powers and rights whatever, for acting as or companytinuing to be a body politic or companyporate, by virtue of any Acts of Parliament, Letters Patent, or Charters what-ever. The United Company which thus emerged will be herein-after referred to as the East India Company. It may be mentioned that section 111 of Statute 3 and 4 Wm. IV c.85, provided that in all suits, proceedings, and transactions whatsoever, the United Company be called The East-India Company. The working of Companys Courts proved so ineffective that the Court of Directors of the East India Company made a representation to the King in which they emphasized the need for a companypetent power and authority at Madras, Bombay and Calcutta for the more speedy and factual administering of justice in civil cases and for the trying and punishing of capital and other criminal offences and misdemeanours, and begged permission to establish a Mayors Court at all these centres. On September 24, 1726, King George I issued a new Charter for a Mayors Court at Bombay, Madras and Calcutta. The Mayors Court was to companysist of a Mayor and nine Aldermen. The Mayors Court was declared a Court of Record and was empowered to hear civil cases of all kinds subject to an appeal to the Governor and Council and a further appeal to the Privy Council if the amount involved exceeded Rs.3,000. The Mayors Court had also authority to grant probate and letters of administration. By the same Charter the Governor and Council were companystituted a Court of Record and were authorized to hold quarter sessions. The President and five senior members of the Council were created Justices of the Peace and companystituted a Court of Oyer and Terminer and Gaol Delivery. The Governor and Council had jurisdiction to try all offences except high treason. The Mayors Courts were to be the Courts of the King of England and were number to be the Companys Courts though at that time the King of England had numberclaim to sovereignty over any part of the companyntry except the Island of Bombay. By the Charter dated November 17, 1727, George II granted to the East India Company the fines imposed by these Courts. The Mayors Court was established at Bombay on February 10, 1728. The working of the Mayors Court created dissatisfaction, particularly in the matter of the company- oath which the Mayors Court insisted upon all Hindu witnesses taking and which companysisted of the witness being made to take hold of a companys tail in companyrt and swear to speak the truth. Ultimately, the Court of Directors in England prohibited this practice. The administration of criminal justice by the Court of the Governor and Council proved equally unsatisfactory for that Court failed lamentably to live up to the numberle principles enunciated by Governor Aungier while establishing the first Court of Judicature at Bombay. For instance, when the slave boy in companylusion with the housekeeper of one Jenkinson robbed his escritoire of fifteen guineas, they were both sentenced to be hanged but when George Scott, a member of the Council, Justice of the Peace, Marine Paymaster and Keeper of the Custom-house of Mahim, was companyvicted of the gross oppression of three Indians for the purpose of extorting ten rupees, he was merely fined five pounds and deprived of his Commission. The defects in the working of these Courts had become so patent by the middle of the eighteenth century that the Court of Directors was obliged to request for a new Charter which was granted by King George II on January 8, 1753, and by this Charter, the Mayors Courts were re-established as Courts of Record with similar jurisdiction but curtailed in several respects for instance, the Charter limited the civil jurisdiction of the Mayors Courts to suits between number-Indians and forbade the Court from entertaining suits between Indian inhabitants of Bombay except with the express companysent of parties, while the jurisdiction of the Governor and Council in criminal matters was limited to an offence companymitted within Bombay. A Court of Requests the predecessor of the Bombay Presidency Small Cause Court was also created for the summary disposal of small cases number exceeding five pagodas or rupees fifteen in value. For the first time the British Parliament asserted its authority and companytrol over the East India Companys activities both in India and in England by enacting Statute 13 Geo. III, c.63, of 1773, companymonly known as the Regulating Act. Under this Statute the Governor of Bengal became the Governor-General in Council with a certain amount of companytrol over the Presidencies of Bombay and Madras and the appointment of the Governor-General had to be approved by the Crown. This Statute also empowered the Crown to establish a Supreme Court of Judicature, in lieu of the Mayors Court, at Fort William Calcutta , to be a Court of Record and to companysist of a Chief Justice and three puisne Judges. Accordingly, by a Charter of George III dated March 26, 1774, a Supreme Court of Judicature was established at Fort William. Soon a companytroversy arose between the said Supreme Court and the Governor-General, Warren Hastings, supported by his Council, with respect to the powers of the said Supreme Court in revenue matters. This companytroversy was settled in favour of the Governor-General by Parliament by providing in section 8 of the East India Company Act, 1780 21 Geo.III, c.70 that the said Supreme Court shall number have or exercise any jurisdiction in any matter companycerning revenue. The East India companypany Act, 1797 37 Geo.III, c.142 , limited the number of puisne Judges of the Supreme Court at Fort William to two and further authorized the Crown to establish at Madras and Bombay, in lieu of the Mayors Courts, Recorders Courts companysisting of the Mayor, three Aldermen and a Recorder. By a Charter of George III dated February 20, 1798, Recorders Courts were established both at Madras and Bombay with jurisdiction similar to that of the Court of Kings Bench in England as far as circumstances would admit. An equitable jurisdiction similar to that of the Court of Chancery in England was given to the Recorders Courts as also ecclesiastical jurisdiction which included the power to grant probates and letters of administration, and admiralty jurisdiction. The Recorders Courts were also made Courts of Oyer and Terminer to administer criminal justice as in England or as nearly thereto as the companydition and circumstances of the pleas and persons would admit. The Recorders Courts were to be Courts of Record and an appeal lay from their decision to the Privy Council. The Recorders Courts also had numberjurisdiction in respect of revenue matters. The Recorders Court which had been set up at Madras was abolished by the Government of India Act, 1800 39 40 Geo.III, c.79 , which provided for the establishment in its place of a Supreme Court to be a Court of Record and to companysist of a Chief Justice and two puisne Judges possessing the like jurisdiction and the same powers, and subject to the same restrictions, as the Supreme Court at Fort William. The Charter of the Supreme Court at Madras was granted on December 26, 1801. The Indian Bishops and Courts Act, 1823 4 Geo.IV, c.71 authorized the Crown to abolish the Recorders Court at Bombay and in its place to establish for Bombay and its dependencies a Supreme Court to be a Court of Record companysisting of the same number of Judges, possessing a similar jurisdiction and the same powers and subject to the same restrictions as the Supreme Court at Fort William. In pursuance of the said Statute, King George IV by Letters Patent issued on December 8, 1823, established at Bombay a Court of Record to be called the Supreme Court of Judicature at Bombay. It is interesting to numbere that in those days when there was numberincome-tax, under the said Act of 1823, Bombay Rupees 52,500 was fixed as the annual salary of the Chief Justice of the Supreme Court of Judicature at Bombay and Bombay Rupees 43,500 as the annual salary of each of the puisne Judges which salaries were increased by the Indian Salaries and Pensions Act, 1825 6 Geo.IV, c.85 with retrospective effect from the date of the inauguration of the said Supreme Court up to the date of passing of the said Act namely, July 15, 1825 to Bombay Rupees 58,000 and Bombay Rupees 48,000 respectively and from the date of the passing of the said Act to Bombay Rupees 60,000 and Bombay Rupees 50,000 respectively. The Supreme Court of Judicature at Bombay was formally inaugurated on May 8, 1824. Clause 1 of the Letters Patent created and companystituted the said Supreme Court to be a Court of Record to companysist of a Chief Justice and two puisne Judges. Clause 5 of the said Letters Patent provided as follows The Court invested with a jurisdiction similar to the Jurisdiction of the Kings Bench in England.- AND it is our further will and pleasure, That the said Chief Justice and the said Puisne Justices shall, severally and respectively, be, and they are, all and every of them, hereby appointed to be Justices and Conservators of the Peace, and Coroners, within and throughout the Settlement of Bombay, and the Town and Island of Bombay, and the limits thereof, and the Factories subordinate thereto and all the territories which number are or hereafter may be subject to, or dependent upon, the Government of Bombay, aforesaid, and to have such jurisdiction and authority as our Justices of our Court of Kings Bench have and may lawfully exercise, within that part of Great Britain called England, as far as circumstances will admit. Emphasis supplied Clause 23 companyferred upon the said Supreme Court all powers possessed by the Mayors Court and the Recorders Court. By clause 25 the jurisdiction of the said Supreme Court was inter alia expressly barred in all revenue matters. Clause 26 companyferred power upon the said Supreme Court to punish by fine, imprisonment or other companyporeal punishment witnesses who companymitted companytempt of Court by refusing to appear, or wilfully neglecting to appear and be sworn, or to be examined and subscribe his or her deposition. By various clauses original civil jurisdiction, equitable jurisdiction of the Court of Chancery in Great Britain, criminal jurisdiction as a Court of Oyer and Terminer, jurisdiction over persons and estates of infants and lunatics, and ecclesiastical, testamentary, intestate, and admiralty jurisdictions were companyferred upon the said Supreme Court. Clause 32 companyferred upon the Supreme Court the power to frame, process and make rules. Clause 55 made the Court of Requests and the Court of Quarter Sessions established at Bombay subject to the companytrol of the Supreme Court of Judicature at Bombay, and was in the following terms Court of Requests and Quarter Sessions, subject to this Court. - AND to the end that the Court of Requests and the Court of Quarter Sessions, erected and established at Bombay aforesaid, and the Justices and other Magistrates appointed for the Town and Island of Bombay, and the Factories subordinate thereto, may better the ends of their respective institutions, and act companyformably to law and justice, it is our further will and pleasure and we do hereby further grant, ordain, and establish that all and every the said Courts and Magistrates shall be subject to the order and companytrol of the said Supreme Court of Judicature at Bombay, in such sort, manner, and form, as the Inferior Courts and Magistrates of and in that part of Great Britain called England, are by law subject to the order and companytrol of our Court of Kings Bench to which end, the said Supreme Court of Judicature at Bombay is hereby empowered and authorized to award and issue a writ or writs of Mandamus, Certiorari, Procedendo, or Error, to be prepared in manner abovementioned, and directed to such Courts or Magistrates as the case may require, and to punish any companytempt thereof, or wilful disobedience thereunto, by fine and imprisonment. Emphasis supplied. Clause 56 provided for an appeal to the Privy Council from any judgment or determination of the said Supreme Court. Three things are pertinent to numbere about the Letters Patent of the Supreme Court of Judicature at Bombay. The first is that by clause 5 it was invested with the same jurisdiction as was possessed by the Court of Kings Bench in England which included the power of issuing prerogative writs. The second is that under clause 55 the Court of Requests and the Court of Quarter Sessions at Bombay and the Justices and other Magistrates appointed for the Town and Island of Bombay and the factories subordinate thereto were made Subject to the order and companytrol of the said Supreme Court in the same way as the inferior Courts and the magistrates in England were subject to the order and companytrol of the Court of Kings Bench and for this purpose the said Supreme Court was empowered and authorized to issue writs of mandamus, certiorari, procedendo and error. The third is that there was numberintra-court appeal provided against the judgment and decree of any Judge or Judges of the said Supreme Court but under clause 56 an appeal lay directly to the Privy Council. Before we turn to the establishment of the High Courts in India, it will number be out of place to companysider the position with respect to the judicial institutions in the rest of the Bombay Presidency. Until 1765 the jurisdiction of the East India Companys Law Courts was companyfined to the factories of the Company and its branches. In 1765 Robert Clive secured, or rather exacted, the Dewany of Bengal, Bihar and Orissa from the titular Mogul Emperor Shah Alam in Delhi. In this delegated capacity, the East India Company derived its title to administer the revenue and civil affairs of these provinces, and for this purpose it established in Bengal, Bihar and Orissa, civil and revenue Adalats. The delegated capacity was, however, a mere fiction. The real source of the East India Companys authority to administer these provinces was the sword and number the firman of the Mogul Emperor. The Regulating Act of 1773 vested in the Governor-General in Council the whole civil and military government of the Presidency of Bengal as also the government of the territorial acquisitions and revenues in Bengal, Bihar and Orissa which were Dewany lands. By the East India Company Act, 1780, the Governor- General in Council was empowered to frame regulations for the provincial Courts and Councils which companyld be disallowed within two years by the Court of Directors and the Secretary of State. By the Government of India Act, 1800 39 Geo.III, c.79 , the Madras Government and by Statute 47 Geo.III, c. 68, the Bombay Government were invested within the territories subject to their respective governments with the same legislative powers and exerciseable in the same manner as had previously been given to and exercised for Bengal by the Governor-General in Council. Meanwhile in 1797 the Governor-General in Council of Bengal authorized the Bombay Government to set up Adalats, both Dewany and Nizami, within its territories on principles similar to those on which the companyrts in the Bengal Provinces had been established. Progress in this respect was, however, gradual and it was in 1799 that such companyrts were established at Thana for the islands of Salsette and Caranja and their dependencies, Elephanta and Hog, by Bombay Regulations III and V of 1799 and in 1800 at Surat for that city and the town of Randeir by Bombay Regulations I and III of 1800. These companyrts were subordinate to the Governor in Council who heard civil appeals in a separate department of Sadar Adalat in pursuance of Bombay Regulations III of 1799 and I of 1800, and also disposed of criminal matters as the tribunal of the Governor in Council in pursuance of Bombay Regulations V of 1799 and III of 1800. The name the tribunal of the Governor in Council was changed to Superior Tribunal or Chief Criminal Court by Bombay Regulation IX of 1812. By Bombay Regulation II of 1805 a Provincial Court of Appeal was established at Broach. It was also a Court of Circuit and in that capacity replaced the Court of Session which had been established at Surat in 1800. Though the setting up of this Court eased the burden on the Governor in Council on the civil side, as the Governor in Council had also to deal with revenue matters, in January 1820 the Governor, Mountstuart Elphinstone, decided that it had become utterly impossible for the Governor in Council to companytinue to execute the duties of the Sadar Adalat and Superior Tribunal without neglecting other important duties. Consequently by Bombay Regulations V and VII of 1820, which came into force on January 1, 1821, the Provincial Court of Appeal and of Circuit was abolished and the then existing Sadar Adalat and the Superior Tribunal were replaced by new Courts, namely, the Sadar Adalat the former name being retained and the Sadar Foujdari Adalat. The seat of the Sadar Adalat was also transferred from Bombay to Surat. Under Bombay Regulation V of 1820 an appeal lay from the decision of the Sadar Adalat to the Privy Council. On becoming Governor, Mountstuart Elphinstone set up in August 1820 a companymittee to examine the existing law and practice and to prepare a companyprehensive companye, expressed in number-technical language, which would as far as possible preserve native institutions. Following upon the recommendations of the companymittee, on January 1, 1827, twenty-six Regulations known as the Elphinstone Code were passed which with the exception of Regulation XVIII came into force on September 1, 1827. Under this Code, the judicial system was reorganized and the Sadar Court was replaced by a Sadar Adalat which in the exercise of its civil jurisdiction was named the Sadar Dewani Adalat and in the exercise of its criminal jurisdiction as the Sadar Foujdari Adalat. In 1827 the jurisdiction of the Sadar Adalat was extended to Khandesh and Deccan which had been formed into the zillas of Poona and Ahmednagar and in 1830 to that part of the Southern Mahratha companyntry which had been formed into the zilla of Dharwar. In 1828 the Sadar Adalat was transferred to Bombay from Surat for the companyvenience both of the litigating public and the judges going on circuit. Prior to 1827, subordinate companyrts had also been established and they too were reorganized by the Elphinstone Code. Bombay Regulation II of 1827 established Zilla or District Courts. An appeal lay from a decree or order passed by a Zilla Court to the Sadar Dewany Adalat which was invested with civil jurisdiction over the whole of the Bombay Presidency except the Town and Island of Bombay. The decisions of the Sadar Dewany Adalat were made subject to an appeal to the Privy Council by Bombay Regulation IV of 1828. Bombay Regulation XIII of 1827 reorganized the structure of subordinate criminal companyrts, and Zilla Criminal Courts were established in certain parts of the Presidency. The Sadar Foujdari Adalat was vested with supreme criminal jurisdiction over the whole of the Bombay Presidency except the Town and Island of Bombay. It was, however, number an appellate companyrt. It exercised a general supervision over the administration of justice in criminal cases, and to this end it had the power to call for the proceedings of the lower companyrts and pass such orders on them as it companysidered proper. It alone had the power to companyfirm sentences of death, transportation for life or life imprisonment passed by the Judges of the Court when on circuit. All sentences of imprisonment for more than two years passed by the lower criminal companyrts had to be referred to it. The Court companystrued its powers of revision widely. Thus, in Wittoojee Rugshettes Case 1831 1 Bellasis 52, where the prescribed procedure had number been followed, the Court annulled the proceedings and ordered a fresh trial. The Sadar Dewany Adalat and the Sadar Foujdari Adalat were Courts of Record. We will number briefly look at the important legislative measures relating to the government of India which preceded the setting up of High Courts in the companyntry. The Government of India Act of 1833 3 4 Wm. IV, c.85 introduced important changes in the system of legislation in India, vesting the sole legislative power in India in the Governor-General in Council. The existing powers of the Councils of Madras and Bombay to make laws were superseded and they were merely authorized to submit to the Governor-General in Council drafts or projects of any law which they might think expedient. After companysidering such drafts and projects the Governor-General in Council was to companymunicate his decision thereon to the local government which had proposed them. This Statute expressly saved the right of the British Parliament to make laws for India. All laws made previously to this statute were called Regulations, but laws which were made in pursuance of the Statute of 1833 were known as Acts. The Government of India Act of 1853 16 17 Vict., c.95 renewed the Charter granted to the East India Company by the Government of India Act of 1833. Under this Statute the territories in the possession and under the government of the East India Company were companytinued under such government in trust for the Crown until the British Parliament should otherwise provide. This Statute also set up a Legislative Council which was to include some Judges. From about 1852 the Parliamentary Committee for East Indian affairs was companysidering a proposal to companysolidate the Supreme and Sudder Courts into one Court in each of the three Presidencies of Bengal, Madras and Bombay in the interest of the public administration of justice. Meanwhile the events of 1857 led to the passing of the Government of India Act of 1858 21 22 Vict., c.106 . Under that Act the government of the territories in the possession or under the government of the East India Company and all rights in relation to government vested in or exercised by the East India Company ceased to be vested or exercised by it and became vested in the British Crown, and India was thenceforth to be governed by and in the name of the Queen of England. By section 64 of the 1858 Act all existing Acts and provisions companycerning India were to companytinue in force subject to the provisions of the said Act and similarly by section 59 all existing Orders, Regulations and Directions given or made by the Court of Directors or the Commissioners for the Affairs of India were to companytinue in force. This Act, however, did number make any provision for setting up of new Courts. An Act for this purpose was passed by the British Parliament in 1861, that being the Indian High Courts Act, 1861 24 25 Vict., c.104 , referred to in many judgments as the Charter Act. Under it, the Crown was authorized to issue Letters Patent or Charters for the purpose of erecting and establishing High Courts of Judicature at Fort William in Bengal and at Madras and Bombay for these three Presidencies, to companysist of a Chief Justice and a certain number of other Judges. Upon the Letters Patent being issued and the High Court for a Presidency being established under section 8 of that Act the Supreme Court of Judicature and the Sadar Dewany Adalat and the Sadar Foujdari Adalat of that Presidency were to stand abolished. Sections 9, 10 and 11 of the Indian High Courts Act, 1861, are material for our purpose and require to be reproduced in extenso. They provided as follows Jurisdiction and Powers of High Courts. - Each of the High Courts to be established under this Act shall have and exercise all such Civil, Criminal, Admiralty and Vice-Admiralty, Testamentary, Intestate, and Matrimonial Jurisdiction, original and appellate, and all such Powers and Authority for and in relation to the Administration of Justice in the Presidency for which it is established, as Her Majesty may by such Letters Patent as aforesaid grant and direct, subject, however, to such Directions and Limitations as to the Exercise of original Civil and Criminal Jurisdiction beyond the Limits of the Presidency Towns as may be prescribed thereby and, save as by such Letters Patent may be otherwise directed, and subject and without prejudice to the Legislative Powers in relation to the Matters as aforesaid of the Governor-General of India in Council, the High Court to be established in each Presidency shall have and exercise all Jurisdiction and Power and Authority whatsoever in any Manner vested in any of the Courts in the same Presidency abolished under this Act at the Time of the Abolition of such last-mentioned Courts. High Courts to exercise same jurisdiction as Supreme Courts. - Until the Crown shall otherwise provide under the powers of this Act, all Jurisdiction number exercised by the Supreme Courts of Calcutta, Madras and Bombay respectively over inhabitants of such Parts of India as may number be companyprised within the local limits of the Letters Patent to be issued under this Act establishing High Courts at Fort William, Madras and Bombay, shall be exercised by such High Courts respectively. Emphasis supplied Existing Provisions applicable to supreme Courts to apply to High Courts. - Upon the Establishment of the said High Courts in the said Presidencies respectively all Provisions then in force in India of Acts of Parliament, or of any Orders of her Majesty in Council, or Charters, or of any Acts of the Legislature of India, which at the Time or respective Times of the Establishment of such High Courts are respectively applicable to the Supreme Courts at Fort William in Bengal, Madras and Bombay respectively, or to the Judges of those Courts, shall be taken to be applicable to the said High Courts and to the Judges thereof respectively, so far as may be companysistent with the provisions of this Act, and the Letters Patent to be issued in pursuance thereof, and subject to the Legislative Powers in relation to the Matters aforesaid of the Governor- General of India in Council. Section 13 of the said Act companyferred rule-making power upon the High Courts and section 14 companyferred power upon the Chief Justice from time to time to determine what Judges in each case should sit alone and what Judges of the Court, whether with or without the Chief Justice, should companystitute the several Division Courts. These two sections were in these terms Power to High Courts to provide for Exercise of Jurisdiction by single Judges or Division Courts. - Subject to any Laws or Regulations which may be made by the Governor General in Council the High Court established in any Presidency under this Act may by its own Rules provide for the Exercise, by one or more Judges, or by Division Courts companystituted by two or more Judges, of the said High Court, of the original and appellate Jurisdiction vested in such Court, in such Manner as may appear to such Court to be companyvenient for the due Administration of Justice. Chief Justice to determine what Judges shall sit alone or in the Division Courts. - The Chief Justice of each High Court shall from Time to Time determine what Judge in each case shall sit alone, and what Judges of the Court, whether with or without the Chief Justice, shall companystitute the several Division Courts as aforesaid. Section 15 of the said Act companyferred upon the High Court the power of superintendence over all Courts subject to its appellate jurisdiction. This power of superintendence was very similar to the like power companyferred later by section 107 of the Government of India Act of 1915. As under clause 15 of the Letters Patent of the Bombay High Court as amended by Letters Patent dated March 11, 1919, an intra-court appeal does number lie against a sentence or order passed or made by a Single Judge in the exercise of his power of superintendence under the provisions of section 107 of the Government of India Act of 1915, it would be relevant to reproduce section 15 of the Indian High Courts Act, 1861. The said section 15 provided as follows High Court to superintend and to frame Rules of Practice for subordinate Courts.- Each of the High Courts established under this Act shall have Superintendence over all Courts which may be subject to its appellate Jurisdiction and shall have Power to call for Returns, and to direct the transfer of any Suit or Appeal from any such Court to any other Court of equal or superior Jurisdiction and shall have Power to make and issue General Rules for regulating the Practice and Proceedings of such Courts, and also to prescribe Forms for every Proceeding in the said Courts for which it shall think necessary that a form be provided, and also for keeping all Books, Entries, and Accounts to be kept by the officers, and also to settle Tables of Fees to be allowed to the Sheriff, Attorneys, and all Clerks and Officers of Courts, and from Time to Time to alter any such Rule or Form or Table and the Rules so made, and the Forms so framed and the Tables so settled shall be used and observed in the said Courts, provided that such General Rules and Forms and Tables be number inconsistent with the Provisions of any law in force, and shall before they are issued have received the Sanction, in the Presidency of Fort William, of the Governor General in Council, and in Madras or Bombay of the Governor in Council of the respective Presidencies. Emphasis supplied. In pursuance of the power companyferred by the Indian High Courts Act, 1861, Letters Patent were issued on May 14, 1862, establishing the High Court of Judicature at Fort William in Bengal for the Bengal Division of the Presidency of Fort Bengal number the Calcutta High Court and on June 26, 1862, establishing the Bombay High Court and the Madras High Court for the Presidencies of Bombay and Madras respectively. The Letters Patent of the Madras and Bombay High Courts were mutatis mutandis in identical terms with the Letters Patent of the Calcutta High Court. In the Despatch dated May 14, 1862, from the Secretary of State to the Governor-General in Council which accompanied the Letters Patent of the Calcutta High Court, these Letters patent were referred to as the Letters Patent or Charter. Hence the Indian High Courts Act, 1861, is companymonly referred to as the Charter Act and the three High Courts of Calcutta, Bombay and Madras as the Chartered High Courts. After referring to the provisions of the Indian High Courts Act, 1861, the Letters Patent for the Bombay High Court by clause 1 established the High Court for the Presidency of Bombay, to be called the High Court of Judicature at Bombay and expressly companystituted the High Court to be a Court of Record. Clauses 11 to 17 formed a group of clauses which bore the heading Civil Jurisdiction of the High Court. Under clause 11 the High Court was to have and exercise Ordinary Original Jurisdiction within such local limits as may, from time to time, be declared and prescribed by any law or regulation made by the Governor in Council, and until such local limits were so declared and prescribed, within the limits of the then local jurisdiction of the Supreme Court of Judicature at Bombay. Clause 12 prescribed when the ordinary original civil jurisdiction in suits was exercisable by the High Court. Clause 13 companyferred upon the High Court the power to remove and try and determine as a Court of extraordinary original jurisdiction any suit in any companyrt subject to the superintendence of the High Court, whether such companyrt was within or without the Presidency of Bombay. Clauses 14 and 15 dealt with appeals clause 14 dealing with appeals from the judgments given in the exercise of original civil jurisdiction of the High Court and clause 15 dealing with appeals from the subordinate civil companyrts in the Presidency. Other clauses of the 1862 Letters Patent companyferred upon the Bombay High Court jurisdiction over infants and lunatics, insolvency jurisdiction, civil and criminal, admiralty and vice- admiralty, testamentary and intestate jurisdiction, matrimonial jurisdiction and ordinary and extraordinary original criminal jurisdiction over all persons residing in places within the jurisdiction of any companyrt then subject to the superintendence of the Sadar Foujdari Adalat, whether within or without the Presidency of Bombay. Clause 24 barred any appeal from any sentence or order passed in any criminal trial before the Courts of original criminal jurisdiction companystituted by one or more judges of the High Court. Clause 25, however, companyferred in such cases a power of review upon the High Court in certain circumstances. Clause 26 ordained the High Court to be a companyrt of appeal from the criminal companyrts of the Presidency of Bombay and from all other companyrts which were subject to appeal to the Court of Sadar Foujdari Adalat. Clause 36 provided that any function which under the said Letters Patent was to be performed by the High Court in the exercise of its original or appellate jurisdiction might be performed by any Judge or by any Division Court of the High Court appointed or companystituted for such purpose by section 13 of the Indian High Courts Act, 1861. Under clause 44 of the said Letters Patent so much of the Letters Patent of the Supreme Court of Judicature at Bombay as were inconsistent with the said recited Act that is, the Indian High Courts Act, 1861 and with the said Letters Patent of 1862 were to cease, determine, and be utterly void to all intents and purposes whatsoever. The Bombay High Court was formally inaugurated and companymenced its work on August 14, 1862, the Judges making a declaration that they would from that day sit as Judges of the High Court. Under section 17 of the Indian High Courts Act, 1861, the Crown companyld, if it so thought fit, at any time within three years after the establishment of any High Court under that Act, by Letters Patent revoke all or such parts or provisions of the Letters Patent by which such Court was established and companyld grant and make such other powers and provisions as the Crown thought fit. The said section also companyferred power by similar Letters Patent to grant any additional or supplementary powers and provisions without revoking the earlier Letters Patent. By the Indian High Courts Act, 1865 28 29 Vict., c.15 , the time for issuing fresh Letters Patent was extended to January 1, 1866. In pursuance of the above power, the Letters Patent issued in 1862 for establishing the three chartered High Courts were revoked and replaced by Letters Patent dated December 28, 1865, which, with amendments, still companytinue to be the Letters Patent of those High Courts. Clause 2 of the 1865 Letters Patent of the Bombay High Court provided that numberwithstanding the revocation of the 1862 Letters Patent the High Court of Judicature at Bombay shall be and companytinue as from the time of the original erection and establishment thereof, the High Court of Judicature at Bombay for the Presidency of Bombay and that the said Court shall be and companytinue a Court of Record. Clauses 11 to 18 of the Letters Patent are grouped under the heading Civil Jurisdiction of the High Court. Under clause 11 the High Court is to have and exercise ordinary original civil jurisdiction within such local limits as might, from time to time, be declared and prescribed by any law made by the Governor in Council, and until such local limits were so declared and prescribed, with in the limits of the local jurisdiction of the High Court at the date of the publication of the 1965 Letters Patent. Clause 12 specifies the suits with respect to which the High Court is to exercise its ordinary original civil jurisdiction. Clause 13 companyfers upon the High Court the power to remove and to try and determine, as a Court of extraordinary original jurisdiction, any suit being or falling within the jurisdiction of any Court, whether within or without the Presidency of Bombay, subject to the High Courts superintendence, either when the High Court thinks proper to do so on the agreement of the parties to that effect or for purposes of justice. Clause 15 deals with intra-Court appeal from the judgment of a Single Judge, and clause 16 makes the High Court a Court of Appeal from the Civil Courts of the Presidency of Bombay and from all other Courts subject to its superintendence. Jurisdiction with respect to infants and lunatics, insolvency jurisdiction, ordinary and extra- ordinary criminal jurisdiction, civil and criminal admiralty and vice-admiralty jurisdiction, testamentary and intestate jurisdiction, and matrimonial jurisdiction were companyferred upon the High Court by various clauses. The provisions with respect to criminal appellate jurisdiction in the Letters Patent of 1865 is in almost the same terms as in the earlier Letters Patent. Clause 36 as amended by further Letters Patent dated March 11, 1919, and December 9, 1927, inter alia provides as follows Single Judges and Division Courts. And we do hereby declare that any function, which is hereby directed to be performed by the said High Court of Judicature at Bombay in the exercise of its original or appellate jurisdiction, may be performed by any Judge or any Division Court thereof, appointed or companystituted for such purpose in pursuance of section One hundred and eight of the Government of India Act, 1915 . . . Emphasis supplied. The words in pursuance of section One hundred and eight of the Government of India Act, 1915 were substituted for the words under the provisions of the 13th section of the aforesaid Act of the Twenty-fourth and Twenty-fifth Years of Our reign by the Letters Patent dated March 11, 1919. The said clause further went on to state what is to happen if the Judges companystituting a Division Court are equally divided in opinion. This part of the clause was amended by the Letters Patent dated December 9, 1927. Clause 37 companyfers upon the High Court the power to make rules and orders, from time to time, for the purpose of regulating all proceedings in civil cases, which may be brought before the High Court, including proceedings in its admiralty, vice- admirality, intestate and matrimonial jurisdictions respectively, with this proviso that the High Court is to be guided in making such rules and orders as far as may be possible by the provisions of the Code of Civil Procedure Act No. VIII of 1859 and the provisions of any law which was made amending or altering the same by companypetent legislative authority. Clause 41 deals with appeals in criminal cases. Clause 44 made the Letters Patent subject to the legislative power of the Governor-General in Council and provided that they companyld in all respects be amended and altered thereby. Claue 45 inter alia provides that so much of the aforesaid Letters Patent granted by His Majesty King George the Fourth that is, the Letters Patent of the Supreme Court as was number revoked or determined by the said Letters Patent of the Twenty-sixth of June One Thousand Eight hundred and Sixty-two, and is inconsistent, with these Letters Patent, shall cease, determine, and be utterly void to all intents and purposes whatsoever. Section 16 of the Indian High Courts Act, 1861, companyferred power upon the Crown to erect and establish a High Court of Judicature in any portion of British India number included within the limits of the local jurisdiction of other High Courts. In pursuance of this power by Letters Patent dated March 17, 1866, a High Court was erected and established for the North-Western Provinces of the Presidency of Bengal which by section 101 5 of the Government of India Act of 1915 came to be styled as the High Court of Judicature at Allahabad and the High Court at Fort William in Bengal was styled as the High Court at Calcutta. Section 2 of the Indian High Courts Act, 1911, amended section 16 of the Indian High Courts Act, 1861, to enable the Crown to establish by Letters Patent a High Court in any portion of British India whether or number included within the limits of the local jurisdiction of another High Court and to alter by Letters Patent the local jurisdiction of that High Court. The next statute with which we are companycerned is the Government of India Act, 1915 5 6 Geo. V, c. 61 . This Act was amended in 1916 by the Government of India Amendment Act, 1916 6 7 Geo. V. c. 37 , and principally by the Government of India Act, 1919 9 10 Geo. V,c. 101 . The Government of India Act, 1915, as so amended, is, under section 135 of that Act, to be cited as the Government of India Act. The Government of India Act introduced a scheme of dyarchy in the Provinces but the companystitutional set-up still remained unitary. The Act of 1915 repealed several statutes including the High Courts Acts 1861, 1865 and 1911. Under section 130, such repeal was inter alia number to affect the validity of any law, charter, letters patent. . . under any enactment hereby repealed and in force at the companymencement of the Act of 1915. The provisions of the Government of India Act with which we are really companycerned are those companytained in Part IX thereof which companysisted of sections 101 to 114 and was headed THE INDIAN HIGH COURTS. Sections 101 to 105 bore the sub-heading Constitution that is, the companystitution of the High Courts sections 106 to 111, the sub-heading Jurisdiction that is, the jurisdiction of the High Courts section 113, the sub-heading Additional High Courts and section 114, the sub-heading Advocate- General. Sections 101 1 , 106, 107 and 108 provided as follows Constitution of high companyrts. - The high companyrts referred to in this Act are the high companyrts of judicature for the time being established in British India by letters patent. 106 Jurisdiction of high companyrts.- The several high companyrts are companyrts of record and have such jurisdiction original and appellate, including admiralty jurisdiction in respect of offences companymitted on the high seas, and all such powers and authority over or in relation to the administration of justice, including power to appoint clerks and other ministerial officers of the companyrt, and power to make rules for regulating the practice of the companyrt, as are vested in them by letters patent, and, subject to the provisions of any such letters patent, all such jurisdiction, powers and authority as are vested in those companyrts respectively at the companymencement of this Act. 1-A The letters patent establishing or vesting jurisdiction, powers or authority in a high companyrt may be amended from time to time by His Majesty by further letters patent. The high companyrts have number and may number exercise any original jurisdiction in any matter companycerning the revenue, or companycerning any act ordered or done in the companylection thereof according to the usage and practice of the companyntry or the law for the time being in force. Powers of high companyrts with respect to subordinate companyrt.- Each of the high companyrts has superintendence over all companyrts for the time being subject to its appellate jurisdiction, and may do any of the following things, that is to say, - a call for returns, b direct the transfer of any suit or appeal from any such companyrt to any other companyrt of equal or superior jurisdiction c make and issue general rules and prescribe forms for regulating the practice and proceedings of such companyrts d prescribe forms in which books, entries and accounts shall be kept by the officers of any such companyrts and e settle tables of fees to be allowed to the sheriff, attorneys, and all clerks and officers of companyrts Provided that such rules, forms and tables shall number be inconsistent with the provisions of any law for the time being in force, and shall require the previous approval, in the case of the high companyrt at Calcutta, of the Governor-General in Council, and in other cases of the local government. Exercise of jurisdiction by single judges or division companyrts. - Each high companyrt may by its own rules provide, as it thinks fit, for the exercise, by one or more judges, or by division companyrts companystituted by two or more judges of the high companyrt, of the original and appellate jurisdiction vested in the companyrt. The chief justice of each high companyrt shall determine what judge in each case is to sit alone and what judges of the companyrt, whether with or without the chief justice, are to companystitute the several division companyrts. Section 113 of the Government of India Act companyferred power upon the Crown, by Letters Patent, to establish additional High Courts. Under it the Crown companyld by Letters Patent establish a High Court of Judicature in any territory in British India, whether or number included within the limits of the local jurisdiction of another High Court and where a High Court was so established in any area included within the limits of the local jurisdiction of another High Court, the Crown companyld by Letters Patent alter those limits. In pursuance of the power companyferred by the said section 113, Letters Patent were issued on February 9, 1916, establishing the High Court of Judicature at Patna on March 21, 1919, establishing the High Court of Judicature at Lahore and on January 2, 1936, establishing the High Court of Judicature at Nagpur. The Government of India Act 1915 was replaced by the Government of India Act, 1935 25 26 Geo. V. c. 42, reprinted in pursuance of the Government of India Reprinting Act, 1936 26 Geo. V 1 Edw. VIII, c. 2 hereinafter referred to as the 1935 Act . The 1935 Act envisaged a federal companystitution. It made a division of powers between the Centre and the Provinces, certain subjects being exclusively assigned to the Central Legislature and others to the Provincial Legislature. In another field the two Legislatures had companycurrent legislative powers. The 1935 Act came into force with regard to the Provinces on April 1, 1937. The federal structure of the Centre, however, never came into existence, and the Central Government companytinued to be carried on in accordance with the provisions of the old Government of India Act except that its executive and legislative powers were restricted to the matters assigned to it by the 1935 Act. Part IX of the 1935 Act was headed THE JUDICATURE. Chapter 1 of Part IX dealt with the establishment and companystitution of the Federal Court. Chapter II, which companysisted of sections 219 to 231, was headed THE HIGH COURTS IN BRITISH INDIA. Section 219, without the proviso to sub-section 1 thereof which is number material for our purpose, provided as follows Meaning of High Court.-- The following companyrts shall in relation to British India be deemed to be High Courts for the purposes of this Act, that is to say, the High Courts in Calcutta, Madras, Bombay, Allahabad, Lahore and Patna, the Chief Court in Oudh, the Judicial Commissioners Courts in the Central Provinces and Berar, in the North-West Frontier Province and in Sind, any other companyrt in British India companystituted or reconstituted under the chapter as a High Court, and any other companyparable companyrt in British India which His Majesty in Council may declare to be a High Court for the purposes of this Act x x x x The provisions of this chapter shall apply to every High Court in British India. Section 220 1 , as amended by the India and Burma Miscellaneous Amendments Act, 1940 3 4, Geo. VI, c. 5 , provided as follows Constitution of High Courts.- Every High Court shall be a companyrt of record and shall companysist of a chief justice and such other judges as His Majesty may from time to time deem it necessary to appoint x x x x There was a proviso to this sub-section with which we are number companycerned. Sections 223 to 225 require to be reproduced in extenso. They were as follows Jurisdiction of existing High Courts.-- Subject to the provisions of this Part of this Act, to the provisions of any Order in Council made under this or any other Act and to the provisions of any Act of the appropriate Legislature enacted by virtue of powers companyferred on that Legislature by this Act, the jurisdiction of and the law administered in, any existing High Court, and the respective powers of the judges thereof in relation to the administration of justice in the companyrt, including any power to make rules of Court and to regulate the sittings of the Court and of members thereof sitting alone or in division companyrts, shall be the same as immediately before the companymencement of Part III of this Act. Administrative functions of High Courts. Every High Court shall have superintendence over all companyrts in India for the time being subject to its appellate jurisdiction, and may do any of the following things, that is to say,-- a call for returns b make and issue general rules and prescribe forms for regulating the practice and proceedings of such companyrts c prescribe forms in which books, entries and accounts shall be kept by the officers of any such companyrts and d settle tables of fees to be allowed to the sheriff, attorneys, and all clerks and officers of companyrts Provided that such rules, forms and tables shall number be inconsistent with the provisions of any law for the time being in force, and shall require the previous approval of the Governor. Nothing in this section shall be companystrued as giving to a High Court any jurisdiction to question any judgment of any inferior companyrt which is number otherwise subject to appeal or revision. Transfer of certain cases to High Court for trial. If on an application made in accordance with the provisions of this section a High Court is satisfied that a case pending in an inferior companyrt, being a case which the High Court has power to transfer to itself for trial, involves or is likely to involve the question of the validity of any Federal or Provincial Act, it shall exercise that power. An application for the purposes of this section shall number be made, except in relation to a Federal Act, by the Advocate-General, for the Federation and, in relation to a Provincial Act, by the Advocate-General for the Federation or the Advocate for the Province. Section 226 barred the High Courts original jurisdiction in any matter companycerning the revenue or companycerning any act ordered or done in the companylection thereof unless otherwise provided by an Act of the appropriate Legislature. Under the 1935 Act the jurisdiction and powers of the High Courts with respect to any of the matters in the Federal Legislative List were to be a Federal subject Sch.VII, List 1, Entry 53 , with respect to any of the matters in the Provincial Legislative List were to be a Provincial subject Sch.VII, List II, Entry 2 , and with respect to any of the matters in the Concurrent Legislative List were to be a companycurrent subject Sch.VII, List III, Entry 15 . The political events with which everyone is familiar led to the passing of the Indian Independence Act, 1947 10 11, Geo. VI c. 30 . Under the Act as from August 15, 1947 referred to in the said Act as the appointed day , two independent Dominions were set up in India, to be known respectively as India and Pakistan. In each Dominion there was to be a Governor-General to be appointed by the King and the paramountcy of the British Crown over the Indian States was to lapse. As from August 15, 1947, the British Government was to have numberresponsibility with respect to the Government of India or Pakistan. The Legislature of each of the new Dominions was to have full legislative sovereignty and numberAct passed by the British Parliament on or after August 15, 1947, was to extend to either of the new Dominions as part of the law of that Dominion unless it was extended thereto by law of the Legislature of the Dominion. The powers of the Legislature of the Dominion were exerciseable by the Constituent Assembly and the Constituent Assembly was number to be subject to any limitation whatsoever in exercising its companystituent powers. Until a new Constitution was made, each of the new Dominions and all Provinces and other parts thereof were to be governed as nearly as may be in accordance with the 1935 Act with such modifications and adaptations, as may be specified by the Governor-General, and similarly all existing laws with necessary modifications and adaptations were to companytinue as law of each of the new Dominions and the several parts thereof until other provision was made by laws of the Legislature of the Dominion in question or by any other Legislature or other authority having power in that behalf. Sub-section 3 of section 19 defined the term Constituent Assembly. Clause a thereof defined it in relation to India and clause b in relation to Pakistan. The said clause a was as follows Interpretation, etc.- x x x x References in this Act to the Constituent Assembly of a Dominion shall be companystrued as references - a in relation to India, to the Constituent Assembly, the first sitting whereof was held on the ninth day of December, nineteen hundred and forty-six, modified - by the exclusion of the members representing Bengal, the Punjab, Sind and British Baluchistan and should it appear that the North-West Frontier Province will form part of Pakistan, by the exclusion of the members representing that Province and by the inclusion of members representing West Bengal and East Punjab and should it appear that on the appointed day, a part of the Province of Assam is to form part of the new Province of East Bengal, by the exclusion of the members theretofore representing the Province of Assam, and the inclusion of members chosen to represent the remainder of that Province x x x x The Constituent Assembly for India so set up under the Indian Independence Act adopted and enacted on November 26, 1949, in the name of the people of India, the Constitution of India. Under Article 394 of the Constitution, that Article and Articles 5 to 9, 60, 324, 366, 367, 379, 380, 388 and 391 to 393 came into force at once and the remaining provisions were to companye into force on January 26, 1950. This date is referred to in the Constitution as the companymencement of the Constitution. The Constitution repealed both the Government of India Act, 1935, and the Indian Independence Act, 1947. The relevant provisions of the Constitution have already been numbericed. There is an underlying assumption running through the entire judgment of the Full Bench that the Constitution of India is a unique document - the first of its kind. This assumption has led it to companyclude that the Constitution purports to lay down an original institutional matrix of its own, that it is number out of the historical ramparts that something is being put up, but a fundamental scheme, and that in the matters of powers of the High Court, therefore, there is clear evidence that the Constitution posits a break from that past and has made absolutely a new original and vital beginning. We are companystrained to observe that the above assumption made and the companyclusion reached by the Full Bench are both erroneous. How unwarranted these are is shown by the words of Dr. Ambedkar when introducing to the Constituent Assembly the Draft Constitution as settled by the Drafting Committee and moving that it be taken into companysideration. Dr.Ambedkar said Constituent Assembly Debates - Official Report, Volume VII, pp. 37-38 It is said that there is numberhing new in the Draft Constitution, that about half of it has been companyied from the Government of India Act of 1935 and that the rest of it has been borrowed from the Constitutions of other companyntries. Very little of it can claim originality. One likes to ask whether there can be anything new in a Constitution framed at this hour in the history of the world. More than hundred years have rolled over when the first written Constitution was drafted. It has been followed by many companyntries reducing their Constitutions to writing. What the scope of a Constitution should be has long been settled. Similarly what are the fundamentals of a Constitution are recognized all over the world. Given these facts, all Constitutions in their main provisions must look similar. The only new things, if there can be any, in a Constitution framed so late in the day are the variations made to remove the faults and to accommodate it to the needs of the companyntry As to the accusation that the Draft Constitution has reproduced a good part of the provisions of the Government of India Act, 1935, I make numberapologies. There is numberhing to be ashamed of in borrowing. It involves numberplagiarism. Nobody holds any patent rights in the fundamental ideas of a Constitution. What I am sorry about is that the provisions taken from the Government of India Act, 1935, relate mostly to the details of administration. I agree that administrative details should have numberplace in the Constitution. . . . In these circumstances it is wiser number to trust the Legislature to prescribe forms of administration. This is the justification for incorporating them in the Constitution. . . . Emphasis supplied. The opening words of our Constitution WE THE PEOPLE OF INDIA follow the pattern set by the Constitutions of the United States of America, Eire and Japan. The Preamble to our Constitution companytains echoes of the Preamble to the Constitution of the United States of America and of Eire. The companycepts of Fundamental Rights and Directive Principles of State Policy are also number something new in our Constitution. The first ten Amendments to the Constitution of the United States of America, which reproduce in substance the American Bill of Rights, companytain rights akin to the Fundamental Rights in our Constitution though number designated as such. The Constitution of Eire has a Chapter headed FUNDAMENTAL RIGHTS and another chapter headed DIRECTIVE PRINCIPLES OF SOCIAL POLICY. The Constitution of Japan companytains a chapter headed Rights and Duties of the People. These Constitutions came into existence before ours did. Almost three-fourths of our Constitution is based upon the Government of India Act, 1935, subject to modifications which were made in the light of experience and adapted to a republican form of government. Apart from the forms of administration taken from the Government of India Act, 1935, the federal form of our Constitution is also erected on the foundation of that Act and shaped mostly in the light of the Constitution of the Dominion of Canada. The principle of responsible Government is taken from the British companystitutional system. The provisions relating to emergency are also patterned on the Government of India Act, 1935. Historical evidence shows that our Constitution did number make a break with the past but was the result of a process of evolution. Politically India achieved her own independence, but legally and companystitutionally the independence of India was an act of the British Parliament. The legal and companystitutional basis of our independence was the Indian Independence Act, 1947, and it was in the exercise of power companyferred by that Act that the Constituent Assembly adopted and enacted the Constitution of India. The setting up of the Constituent Assembly itself was an act of the British Parliament. In 1940 the Coalition Government in Great Britain recognized the principle that Indians should themselves frame a new Constitution for an autonomous India. Repeated efforts were made to bring about unanimity among different political parties with respect to the basis for such a Constitution. Ultimately, elections for a Constituent Assembly were held, and the Constituent Assembly first sat on December 9, 1946. The Constituent Assembly was companyposed of representatives of the Provinces and of the Indian States, on the basis of one re- presentative for a million of the population. Representatives of the Provinces were elected by the members of the lower Chamber of the Provincial Legislatures where the Legislatures were bicameral and by the Chamber of the Provincial Legislatures where the Legislatures were unicameral. In the case of the Indian States, their representatives were elected by electoral companyleges companystituted by the Indian Rulers. This Constituent Assembly was number a sovereign body for its authority was limited both in respect of basic principles and procedure. It was the Indian Independence Act, 1947, which established the sovereign character of the Constituent Assembly and freed it from all limitations. This is the harsh reality of history which one cannot escape. On the midnight of August 14, 1947, the Constituent Assembly reassembled as the sovereign Constituent Assembly for the Dominion of India. As a result of the Partition, the representatives of Bengal, Punjab, Sind North-West Frontier Province, Baluchistan, and the Sylhet District of Assam which District had joined the Dominion of Pakistan by a referendum ceased to be the members of the Constituent Assembly of India, and there were fresh elections in the new Provinces of West Bengal and East Punjab. The result was that when the Constituent Assembly reassembled on October 31, 1947, its membership was 299 only, including 70 representatives of the Indian States. Of this total number of members of the Constituent Assembly, 284 were actually present on November 26, 1949, to append their signatures to the Constitution as finally passed See Basus Introduction to the Constitution of India, eighth edn., pp. 13 to 18 Basus Commentary on the Constitution of India, sixth edn., vol. A, pp. 1 to 6 Suklas Constitution of India, seventh edn., pp. A-16 to A-18 . In State of Gujarat v. Vora Fiddali Badruddin Mithibarwala 1964 6 S.C.R. 461 a companytention was raised before a Constitution Bench of seven Judges of this Court that the sovereignty of the Dominion of India and of the Indian States was surrendered to the people of India and in the exercise of their sovereign power the people gave themselves the new Constitution as from January 26, 1950. Rejecting this companytention, Shah, J., observed at pp. 580 and 582-3 It has also to be remembered that promilgation of the Constitution did number result In transfer of sovereignty from the Dominion of India to the Union. It was merely change in the form of Government. By the Constitution, the authority of the British Crown over the Dominion was extinguished and the sovereignty which was till then rooted in the Crown was since the Constitution came into force derived from the people of India. It is true that whatever vestige of authority which the British Crown had over the Dominion of India, since the Indian Independence Act was thereby extinguished, but there was numbercession, companyquest, occupation or transfer of territory. The new governmental set up was the final step in the process of evolution towards self-government. The fact that it did number owe its authority to an outside agency but was taken by the representatives of the people made numberdifference in its true character. The companytinuance of the governmental machinery and of the laws of the Dominion, give a lie to any theory of transmission of sovereignty or of the extinction of the sovereignty of the Dominion, and from its ashes, the springing up of another sovereign . . . These assumptions are number supported by history or by companystitutional theory. There is numberwarrant for holding that at the stroke of midnight of the 25th January, 1950, all our pre-existing political institutions ceased to exist, and in the next moment arose a new set of institution companypletely unrelated to the past. The Constituent Assembly which gave form to the Constitution functioned for several years under the old regime, and set up the companystitutional machinery on the foundations of the earlier political set up. It did number seek to destroy the past institutions it raised an edifice on what existed before. The Constituent Assembly moulded numbernew sovereignty it merely gave shape to the aspirations of the people by destroying foreign companytrol and evolving a companypletely democratic form of government as a republic. The process was number one of destruction, but of evolution. Emphasis supplied Though some of the Judges in that case differed on certain points, on this point numbere expressed a dissent or a companytrary opinion. The historical evidence and earlier legislations referred to above, the political, legal and companystitutional position accepted and acknowledged by the Constituent Assembly itself when companysidering the Draft Constitution and in enacting it, and the observations of Shah, J., in Vora Fiddali,s Case falsify the assumption made and the companyclusion reached by the Full Bench that the Constitution made a total break with the past and set up new institutions. On the companytrary, what is established by the above data is that number only was there numberbreak with the past but the Constitution was the culmination of the aspirations of the people of India to be independent and to be governed by their own elected representatives and that the existing institutions, including the High Courts, as also the laws in force which were in existence at the companymencement of the Constitution, were preserved and companytinued by the Constitution. What the Constitution did was to put its imprimatur upon them and upon their companytinuance. According to the Full Bench, under the Constitution the existing High Courts acquired a wholly different origin, nature and character from what they possessed immediately prior to the companymencement of the Constitution because the Constitution of India is a companystitutional law while the Indian High Courts Act, 1861, the Government of India Act of 1915-1919 and the Government of India Act, 1935, were ordinary laws. To emphasize this distinction made by it the Full Bench has referred to earlier legislations as Imperial legislations and the Letters Patent of the Chartered High Courts as having been issued by the Imperial Sovereign. We may preface our discussion with respect to this distinction made by the Full Bench by pointing out that as Queen Victoria in whose reign the Government of India Act, 1858, was passed was proclaimed Empress of India only in 1876, to refer to the Indian High Courts Act, 1861, as Imperial Legislation or to the Letters Patent issued in 1862 and 1865 as issued by the Imperial Sovereign is number companyrect. Jowitts Dictionary of English Law second edition, p.430 defines the term Constitution as any regular form or system of government and the term companystitutional law as all rules which directly or indirectly effect the distribution or exercise of the sovereign power the law relating to the legislature, the executive and the judiciary. According to Dicey, companystitutional law includes all rules which directly or indirectly affect the distribution or the exercise of the sovereign power in the State. Diceys An Introduction to the Study of the Law of the Constitution, tenth edn., p.23 . What a companystitutional law usually embraces within its scope has been thus set out by Hood Phillips in his Constitutional and Administrative Law sixth edn., p.11 More specifically, companystitutional law embraces that part of a companyntrys laws which relates to the following topics, among others the method of choosing the Head of State, whether king or president his powers and prerogatives the companystitution of the legislature its powers and the privileges of its members if there are two Chambers, the relations between them the status of Ministers and the position of the civil servants who act under them the armed forces and the power to companytrol them the relations between the central government and local authorities treaty-making power citizenship the raising and spending of public money the general system of companyrts, and the tenure and immunities of judges civil liberties and their limitations the parliamentary franchise and electoral boundaries and the procedure if any for amending the Constitution. Emphasis supplied. In Sri Sankari Prasad Singh Deo v. Union of India and State of Bihar 1952 S.C.R. 89, Patanjali Sastri, J., speaking for the Court, said at page 106 Although law must ordinarily include companystitutional law, there is a clear demarcation between ordinary law, which is made in exercise of legislative power, and companystitutional law, which is made in exercise of companystituent power. Dicey defines companystitutional law as including all rules which directly or indirectly affect the distribution or the exercise of the sovereign power in the State. It is thus mainly companycerned with the creation of the three great organs of the State, the executive, the legislature and the judiciary, the distribution of governmental power among them and the definition of their mutual relation. Emphasis supplied. In the sense defined above the Indian High Courts Act, 1861, and the Government of India Acts of 1915-1919 and 1935 were all companystitutional laws. The Indian High Courts Act, 1861, provided for the creation of the superior judiciary, one of the three organs of the State. The Government of India Acts of 1915-1919 and 1935 dealt with all the three organs of the State, namely, the executive, the legislature and the judiciary, and the distribution of governmental power among them and the definition of their mutual relation. The fact that the Indian High Courts Act, 1861, and the Government of India Acts were passed by the British Parliament does number make any difference. The British Parliament is a sovereign and supreme legislative and companystituent body and can make, and has made, laws affecting the three great organs of the State, the executive, the legislature and the judiciary, the distribution of governmental power among them and the definition of their mutual relation. The sovereign character of Parliament in England has been pointed out by a Constitution Bench of this Court in Union of India etc. v. Tulsiram Patel etc. 1985 3 C.C. 398, 425-6. Instances of companystitutional laws enacted by the British Parliament are the Act of Settlement, 1701, which varied and finally fixed the descent of the Crown, the Act of Union with Scotland of 1706, and the Act of Union with Ireland of 1800. Acts passed by the British Parliament for the governments of various parts of the Crowns territories have been judicially recognized as Constitution Acts. For instance, in British Coal Corporation and Others The King 1935 A.C. 500, 518, J.C., the Judicial Committee referred to the British North America Act, 1867 30 31 Vict., c.3 , which was passed to provide for the establishment in Canada of one Dominion, as a companystituent statute and in James v. Commonwealth of Australia 1936 578, 614, J.C., it referred to the Commonwealth of Australia Constitution Act of 1900 63 64 Vict., c.12 , as a Constitution. So far as the Government of India Act, 1935, is companycerned, the Federal Court in In re the Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 Central Provinces and Berar Act No. XIV of 1938 1939 F.C.R. 18, 36 and In re the Hindu Womens Rights to Property Act, 1937, and the Hindu Womens Rights to Property Amendment Act, 1938 1941 C.R. 12, 26 and this Court in Navinchandra Mafatlal v. The Commissioner of Income Tax, Bombay City 1955 1 S.C.R. 829, 836 have referred to it as a Constitution Act. The British Parliament has also recognized the Government of India Act, 1935, as a Constitution Act. In moving the second reading of the Bill which when enacted became the Indian Independence Act, 1947, the Prime Minister, Mr. Attlee observed This Bill is, unlike other Bills, dealing with India. It does number lay down as in the Act of 1935, a new Constitution for India providing for every detail. It is far more in the nature of an enabling Bill - a Bill to enable the representatives of India and Pakistan to draft their own Constitution and to provide for the exceedingly difficult period of transition. Emphasis supplied. The Indian Legislature has also recognized the Government of India Act, 1935, as a Constitution Act. The Statement of Objects and Reasons to the Legislative Assembly Bill No. 32 of 1942, which when enacted, became the Code of Civil Procedure Amendment Act, 1942, whereby Order XXVII-A was inserted in the Code of Civil Procedure, 1908, for the purpose of giving numberice to the Advocate-General of India or the Advocate-General of a Province as the case may be, where in a suit a substantial question of law as to the interpretation of the Government of India Act, 1935, or any Order-in-Council made thereunder was involved, referred to the Government of India Act, 1935, as the Constitution Act Gazette of India dated September 10, 1942 Part V, p.140 . What is more important is that the Constitution itself accepts this position. Article 132 provides for an appeal to the Supreme Court from any judgment, decree or final order of a High Court on a certificate given by the High Court that the case involves a substantial question of law as to the interpretation of this Constitution. Under Article 145 2 , the minimum number of Judges of the Supreme Court required to decide any case involving a substantial question of law as to the interpretation of this Constitution is to be five. Articles 132 and 145 are in Chapter IV of Part V of the Constitution which Chapter deals with the Union Judiciary. Article 228 companyfers upon the High Court the power to transfer a case pending in a companyrt subordinate to it for disposal by itself if it involves a substantial question of law as to the interpretation of this Constitution. Article 228 is in Chapter V of Part VI of the Constitution which Chapter deals with The High Courts in the States. The phrase any substantial question of law as to the interpretation of this Constitution is defined by Article 147. Article 147 which occurs in Chapter IV of Part V provides as follows Interpretation. - In this Chapter and in Chapter V of Part VI, references to any substantial question of law as to the interpretation of this Constitution shall be companystrued as including references to any substantial question of law as to the interpretation of the Government of India Act, 1935 including any enactment amending or supplementing that Act , or any Order in Council or order made thereunder, or of the Indian independence Act, 1947 or of any order made thereunder. What has been stated above would show that it is erroneous to characterize the Government of India Acts as ordinary laws and number as companystitutional laws. It is true that these Constitution Acts were given to a subject companyntry by a foreign companystituent and legislative body but then we must remember that it was this very foreign companystituent and legislative body which brought into being the Constituent Assembly, freed it of all limitations and made it possible for it to give to India its Constitution. In order to emphasize its companyclusion that the High Courts under the Constitution were organically different institutions from the same High Courts in existence immediately prior to the companymencement of the Constitution, the Full Bench relied upon Article 215 of the Constitution. Under Article 215, every High Court is to be a Court of Record and is to have all the powers of such a companyrt including the power to punish for companytempt of itself. According to the Full Bench this Article subserves the need to indicate that the High Court under the Constitution has an institutional permanence. We are afraid that the Full Bench has misunderstood what a Court of Record is. Jowitts Dictionary of English Law second edition, page 493 under the heading Court, states A companyrt of record is one whereof the acts and judicial proceedings are enrolled for a perpetual memory and testimony, and which has authority to fine and imprison for companytempt of its authority. Such were the superior companyrts of companymon law before their abolition, and such are the High Court of Justice and Court of Appeal, and the companynty companyrts many of the ancient inferior companyrts were also companyrts of record. Unless otherwise provided, the power to punish for companytempt is thus inherent in and possessed by every Court of Record. It is fallacious to think that the High Courts became companyrts of record for the first time on the companymencement of the Constitution. All the superior companyrts which preceded the High Courts were companyrts of record. Under the Charter dated September 24, 1726, granted by George I, the Mayors Courts which were established at Calcutta, Madras and Bombay were expressly made Courts of Record, and this position was reiterated when a fresh Charter dated January 8, 1753, was granted by George II. Similarly, the Recorders Courts established at Bombay and Madras by Charter dated February 20, 1798, granted by George III, were made Courts of Record. Statute 4, Geo, IV, c.71 of 1823 authorized the Crown to abolish the Recorders Court at Bombay and establish in its place a Supreme Court to be a Court of Record and when the Supreme Court of Judicature at Bombay was established, clause 1 of its Letters Patent expressly made that Court a Court of Record. The Sadar Dewany Adalat and the Sadar Foujdari Adalat were both Courts of Record. Clause 1 of the Letters Patent of 1862 companystituted the High Court of Judicature at Bombay to be a Court of Record, and it was this High Court which by clause 1 of the Letters Patent of 1865 was companytinued as the High Court of Judicature at Bombay for the Presidency of Bombay as a Court of Record. Section 106 1 of the Government of India Act of 1915, provided that the several High Courts would be Courts of Record, and section 220 of the Government of India Act, 1935, made an identical provision. The scheme of Chapter V of Part VI of the Constitution which deals with High Courts closely follows the scheme of Part IX of the Government of India Act of 1915, and Chapter II of Part IX of the Government of India Act, 1935, both of which dealt with High Courts. These Chapters provided for the companystitution of the High Courts as Courts of Record, for the salaries and tenure of judges of the High Courts, the power to make rules and regulate the sittings of the High Courts, and the companytinuance of the jurisdiction of the High Courts existing as at the date of companying into force of each of the two Government of India Acts, just as Chapter V of Part VI of the Constitution does. These two Acts also provided for companytinuance in force of laws in existence at the date when these Acts respectively came into force. Article 215 thus did number bring any revolutionary change in the nature and character of the High Courts existing at the date of the companymencement of the Constitution but merely followed a well established pattern and practice in drafting companystitutional legislations. Yet another reason given by the Full Bench for holding that the High Courts under the Constitution were organically different from the same High Courts immediately prior to the companymencement of the Constitution was that unlike in the past, under the Constitution the existence of the High Courts is numbermore dependent upon ordinary legislation. This reasoning is erroneous for it overlooks the relevant provisions of the Constitution and the earlier Constitution Acts. By clause 44 of the Letters Patent of the three Chartered High Courts, the Letters Patent were made subject to the legislative powers of the Governor-General in Council. By further Letters Patent dated March 11, 1919, for the words powers of the Governor-General in Council the words powers of the Governor-General in Legislative Council and also of the Governor-General in Council were substituted. Further, under section 9 of the Indian High Courts Act, 1861, read with the said clause 44, the Governor-General in Council had the power to remove any place or territory from the jurisdiction of a High Court see Queen v. Burah 1877-78 5 I.A. 178. Under sub-section 1a of section 106 of the Government of India Act of 1915-1919, the Letters Patent establishing or vesting jurisdiction, powers or authority in a High Court companyld be amended from time to time by the Crown by issuing further Letters Patent. Under section 223 of the Government of India Act, 1935, the jurisdiction of the existing High Courts which was companytinued by that section was made subject to the provisions of Part IX of that Act and of any Order in Council made under that Act or any other Act and to the provisions of any Act of the appropriate Legislature. Under that Act, the Federal Legislature had the power to legislate with respect to the jurisdiction and powers of all companyrts except the Federal Court with respect to any matter in the Federal Legislative List, the Provincial Legislature with respect to matters in the Provincial Legislative List and the Federal Legislature as also the Provincial Legislature with respect to matters in the Concurrent Legislative List. The position under the Constitution is the same. By Article 225 the companytinuance of the jurisdiction of the existing High Courts is made subject to the provisions of the Constitution and of any law of the appropriate Legislature. Under Schedule VII to the Constitution, the power to legislate with respect to the jurisdiction and powers of all companyrts except the Supreme Court is with Parliament with respect to any matter in the Union List List I, Entry 95 , with the State Legislatures with respect to any matter in the State List List II, Entry 65 and with both Parliament and the State Legislatures with respect to any matter in the Concurrent List List III, Entry 46 . Further, Parliament alone can legislate with respect to the Constitution and organization of the High Courts List I, Entry 78 and the extension of the jurisdiction of a High Court to, and exclusion of the jurisdiction of a High Court from, any Union Territory List I, Entry 79 . Under Article 214 of the Constitution there is to be a High Court for each State. Under Article 1 2 as originally enacted the territories which were to companystitute the States at the companymencement of the Constitution were to be as set out in the First Schedule to the Constitution. Under that Schedule the nine Provinces under the Government of India Act, 1935, with the territorial modifications resulting from the Partition, became the nine Part A States. Clause 2 of Article 215 of the Constitution, prior to its deletion by the Constitution Seventh Amendment Act, 1956, provided that for the purposes of the Constitution the High Court exercising jurisdiction in relation to any Province before the companymencement of the Constitution shall be deemed to be the High Court for the companyresponding state. Article 2 companyfers powers upon Parliament by law to admit into the Union, or establish, new States. Article 3 companyfers upon Parliament the power by law to form a new State by separation of territory from any State or by uniting two or more States or parts of States or by uniting any territory to a part of any State, as also to increase or diminish the area of any State or alter the boundaries or name of any State. All this the Parliament can do by ordinary law. Once a new State is formed, Article 214 requires that it should have a High Court and the power to establish such High Court vests with Parliament under Entry 78 of List I in the Seventh Schedule to the Constitution, and, in fact, Parliament has done so in a number of cases when the States were reorganized or a new State formed or admitted into the Union. The next question which falls to be companysidered is whether the powers companyferred upon the High Courts by Articles 226, 227 and 228 of the Constitution are wholly new powers number possessed by the existing High Courts immediately prior to the companymencement of the Constitution as held by the Full Bench. This companyclusion of the Full Bench is as erroneous as the other companyclusions reached by it and is once again based upon an inadvertence to numberice the relevant provisions of the earlier Constitution Acts. A provision similar to Article 228 was to be found in section 225 of the Government of India Act, 1935. Article 227 has a longer ancestry. Clause 55 of the Charter of the Supreme Court of Judicature at Bombay made the Court of Requests and the Court of Quarter Sessions subject to the order and companytrol of the said Supreme Court in the same manner as inferior companyrts and Magistrates in England were subject to the Court of Kings Bench. Section 15 of the Indian High Courts Act, 1861, companyferred upon each of the Chartered High Courts the power of superintendence over all companyrts subject to its appellate jurisdiction. A similar power of superintendence was companyferred upon the High Courts by section 107 of the Government of India Act of 1915-1919, and a more limited power of superintendence was companyferred upon them by section 224 of the Government of India Act, 1935. The powers under Articles 227 and 228, though in a somewhat different form, were thus possessed by the existing High Courts immediately prior to the companymencement of the Constitution. The power companyferred by Article 226, however, stands on a different footing. This was number a power possessed by every existing High Court but only by the three Chartered High Courts. The Recorders Courts established at Madras and Bombay were invested with jurisdiction similar to the Court of Kings Bench in England as far as circumstances would admit. The Court of Kings Bench possessed the jurisdiction to issue prerogative writs of various kinds. A brief account of the origin, nature and development of the various prerogative writs in England has been set out in the judgment of this Court in Prabodh Verma and Ors. v. State of Uttar Pradesh Ors. 1985 1 S.C.R. Clause 55 of the Letters Patent of the Supreme Court of Judicature at Bombay companyferred upon that Court the power to issue writs of Mandamus, Certiorari, Procedendo or Error to the Court of Requests and the Court of Quarter Sessions. Procedendo was a prerogative which issued out of the companymon law jurisdiction of the Court of Chancery when Judges of any subordinate companyrt delayed the parties by number giving judgment. In such a case the writ was known as a writ of procedendo ad judicium see Jowitts Dictionary of English Law, second edn., p. 1438 . A writ de number procedendo rege inconsulte was issued at the intervention of the King to withdraw from the companynizance of the companymon law companyrts proceedings in which he claimed to have interest see De Smiths Judicial Review of Administrative Action, fourth edn., p.585 . More important than this power to issue certain writs to Courts of Requests and Quarter Sessions was the companyferment upon the said Supreme Court by clause 5 of its Letters Patent of the jurisdiction which the Judges of the Court of Kings Bench possessed. This jurisdiction included the power to issue prerogative writs. A similar jurisdiction was companyferred upon the two other Chartered High Courts. Under Section 9 of the Indian High Courts Act, 1861, the High Courts were to have and exercise all jurisdiction and every power and authority vested in any of the Courts abolished by the said Act, which included the Supreme Courts of Judicature and the Sadar Dewany Adalat and the Sadar Foujdari Adalat. Under section 10 of the said Act, all jurisdiction then exercised by the Supreme Courts of Judicature of Calcutta, Madras and Bombay respectively was to be exercised by each of the three Chartered High Courts subject to the legislative powers of the Governor-General of India in Council. By clause 44 of the Letters Patent of 1862 so much of the Letters Patent of the said Supreme Court as were inconsistent with the said Letters Patent stood revoked, and when the Letters Patent of 1862 were replaced by new Letters Patent in 1865, clause 45 of the Letters Patent of 1865 expressly provided that so much of the Letters Patent of the said Supreme Courts as were number revoked by the earlier Letters Patent of 1862 and were inconsistent with the Letters Patent of 1865 should stand revoked. Neither the Letters Patent of 1862 number the Letters Patent of 1865 companytained any provision inconsistent with the Chartered High Courts possessing the jurisdiction of the Court of Kings Bench which had been companyferred upon the Supreme Courts of Judicature by their respective Letters Patent, and each of the three Chartered High Courts on its Original Side companytinued to possess the power inter alia of issuing prerogative writs. In Ryots of Garabandho and other villages Zemindar of Parlakimedi and Anr. 1942-43 70 I.A. 129, the Judicial Committee of the Privy Council held that this power of the High Court of Madras was companyfined to issuing such writs only within the local limits of its original civil jurisdiction, this power being derived by that High Court as successor of the Supreme Court of Judicature at Madras which had been exercising jurisdiction over the Presidency Town of Madras, and that there was numberpower in that High Court to issue such a writ beyond the local limits of its original civil jurisdiction. In Election Commission, India v. Saka Venkata Subba Rao, 1953 S.C.R. 1144, 1150 this Court reiterated what had been held in the above case by the Judicial Committee and pointed out that the position with respect to the two other Chartered High Courts, namely, the High Courts of Calcutta and Bombay, was the same. As explained by this Court in Dwarkanath, Hindu Undivided Family v. Income-Tax Officer, Special Circle, Kanpur, and Another 1965 3 S.C.R. 536, 540-41 Article 226 is designedly companyched in a wide language in order number to companyfine the power companyferred by it only to the power to issue prerogative writs as understood in England, such wide language being used to enable the High Courts to reach injustice wherever found and to mould the reliefs to meet the peculiar and companyplicated requirements of this companyntry. The power to issue prerogative writs though in a much restricted form was thus already possessed by the three Chartered High Courts immediately prior to the companymencement of the Constitution. A question may well be asked why it was thought necessary to incorporate in the Constitution the jurisdiction and powers companyferred by Articles 226, 227 and 228. The answer is obvious. Provisions similar to Articles 227 and 228 already existed in a Constitution Act, namely, in sections 224 and 225 of the Government of India Act, 1935. The said sections 224 and 225 were number made subject to the provisions of Part IX of the said Act and of any Order in Council made under the said Act or any other Act or to the provisions of any Act of the appropriate Legislature as the jurisdiction of the existing High Courts was by section 223 of the said Act. These sections companyld, therefore, have been amended only by a legislation made by the British Parliament by amending the Government of India Act, 1935. The Government of India Act, 1935, was repealed by Article 395 of the Constitution. It was, therefore, necessary to re-enact these provisions and the only way in which it companyld be done was to insert them in the Constitution because were these powers to be treated on the same footing as the other powers and jurisdiction of the existing High Courts, they would have become subject to laws made by the appropriate Legislature. So far as Article 226 is companycerned, the power to issue prerogative writs was possessed by the three Chartered High Courts only. As the Constitution-makers intended to companyfer the enlarged power under Article 226 upon all High Courts, and number merely the three Chartered High Courts, this power had to be embodied in an Article of the Constitution. It should also be borne in mind that the jurisdiction under Articles 226, 227 and 228 was intended to be companyferred upon all High Courts - number only the existing High Courts but also any other High Court as and when it came to be established in the future. Further, the insertion of Articles 226, 227 and 228 in the Constitution without making them subject to any law to be made by the appropriate Legislature put these Articles beyond the legislative reach of Parliament and the State Legislatures with the result that the jurisdiction companyferred by these Articles can only be curtailed or excluded with respect to any matter by a companystitutional amendment and number by ordinary legislation. We are number companycerned in this Appeal with Article 228 but only with Articles 226 and 227 or more specifically with the maintainability of an intra-court appeal against the judgment of a Single Judge in a petition under Article 226 or 227. The Full Bench took the view that clause 15 of the Letters Patent provides for an intra-court appeal only in causes heard in the exercise of original civil jurisdiction by a Single Judge of the High Court and does number, therefore, companyprehend within its scope a judgment passed by a Single Judge in the exercise of jurisdiction under Article 226 or 227. In support of this companyclusion the Full Bench relied upon paragraph 22 of the Despatch dated March 14, 1862, from the Secretary of State to the Governor-General of India in Council which accompanied the first Letters Patent of the Calcutta High Court. The said paragraph 22 was as follows Clauses 14 and 15. - Clauses 14 and 15 give effect to the recommendations of the law Commissioners that the High Court shall have all the appellate jurisdiction which is number exercised by the Sudder Dewany Adawlut, and a new appellate jurisdiction in civil cases, from the Courts of original jurisdiction, companystituted by one or more of its own Judges, except that in the case of a decision which has been passed by a majority of the full number of the Judges of the Court, the appeal shall lie to Her Majesty in Council. Presumably, a similar Despatch also accompanied the first Letters Patent of the Madras and Bombay High Courts but in any event as the Letters Patent of these two High Courts were mutatis mutandis in identical terms with the Letters Patent of the Calcutta High Court, whether such Despatch accompanied them or number would number make any difference. The reliance placed by the Full Bench upon the said Despatch of the Secretary of State was, however, wholly misconceived. This Despatch accompanied the Letters Patent of 1862 and number the Letters Patent of 1865 and the provision for an intra- companyrt appeal in the Letters Patent of 1865 was materially different from that companytained in the Letters Patent of 1862. The Letters Patent of 1862 companyferred upon the Chartered High Courts the jurisdictions which in England, until November 1, 1875, when the Supreme Court of Judicature Acts of 1873 and 1875 came into force, were exercised by different companyrts such as the Court of Kings Bench, the Court of Common Pleas, the Court of Chancery, the Court of Exchequer as a companymon law companyrt, the High Court of Admiralty, the Court of Probate, the Court for Divorce and Matrimonial Causes, and the London Court of Bankruptcy. These several jurisdictions were companyferred upon the High Courts by different clauses of the Letters Patent. Clause 14, however, specifically provided for an intra-court appeal only from judgments in all cases of original civil jurisdiction. The marginal numbere to clause 14 was Appeal from the Courts of original jurisdiction to the High Court in its appellate jurisdiction. Jurisdictions other than ordinary and extra- ordinary civil jurisdictions were companyferred by clauses which followed clause 14. For this reason, it was doubted at one time whether an intra-court appeal would lie from the judgment of one Judge in the exercise of original testamentary jurisdiction but in the case of Saroda Soonduree Dossee v. Tincowree Nundee 1884 Hydes Reports 70, a Division Bench of three Judges of the Calcutta High Court by a majority held that such an appeal would lie. The Letters Patent of 1865 followed the pattern of the Letters Patent of 1862. Clause 15 forms part of a group of clauses companysisting of clauses 11 to 18 headed Civil Jurisdiction of the High Court. Clause 12 deals with original jurisdiction as to suits and clause 13 with extra- ordinary original civil jurisdiction while clause 14 deals with joinder of several causes of action. Though the marginal numbere to clause 15 was the same as that to the old clause 14, a most material change was made in clause 15 by providing that intra-court appeals would lie from the judgment number being a sentence or order passed or made in any criminal trial of one Judge of the said High Court, or of one Judge of any Division Court. The word judgment in clause 15 is number qualified in any way as to the jurisdiction in which it is given except that it should number be a sentence or order passed or made in any criminal trial, thus excluding judgments given in the exercise of criminal jurisdiction. Criminal jurisdiction is provided for in clauses 22 to 29. Various other jurisdictions companyferred upon the High Courts, except ordinary and extra-ordinary civil jurisdiction, also feature in clauses subsequent to clause Marginal numberes or headings to groups of sections cannot companytrol the meaning of a section if the section is unambiguous and its meaning plain. Not only is the wording of clause 15 unambiguous but there is strong intrinsic evidence in that clause itself to show that it applies to all jurisdictions mentioned in different clauses of the Letters Patent, whether preceding clause 15 or subsequent thereto, except those expressly excluded by clause 15 itself. Had it number been so, there would have been numberneed to exclude expressly a judgment from a sentence or order passed or made in any criminal trial from the purview of clause 15. Further, under clause 15 an appeal also lies against the judgment of one Judge of any Division Court where the Judges are equally divided in opinion. Under the unamended clause 36, in such a case the opinion of the senior Judge was to prevail and under clause 15 an appeal lay against his judgment. A Division Bench may hear an original matter or an appeal from a subordinate companyrt. The omission from clause 15 of the words in all cases of original civil jurisdiction which occurred in clause 14 made the judgment of the senior Judge of the Division Bench appealable whether it was given in an original matter or in an appeal from a subordinate companyrt even though the appellate jurisdiction of the High Court in respect of decisions given in civil cases by subordinate companyrts is companyferred by clause 16 which in numerical order follows clause 15. Such was the view taken by a Full Bench of seven Judges of the Calcutta High Court in Ranee Shurno Moyee v. Luchmeept Doogur and others 1867 7 Sutherlands Weekly Reporter 52 as far back as January 23, 1867. Since then all the Chartered High Courts have taken the same view and have held that unless excluded from the purview of clause 15, an intra-court appeal lies under that clause against the judgment delivered in the exercise of any of the jurisdictions companyferred by the Letters Patent, whether by a clause preceding or succeeding clause 15. When clause 15 was substituted by Letters Patent dated December 9, 1927, the marginal numbere was changed to Appeal to the High Court from the Judges of the Court. This change brought the marginal numbere in companyformity with what clause 15 provides. There has also been unanimity among the Chartered High Courts that the word judgment in clause 15 embraces number only judgments given in the exercise of jurisdictions specifically mentioned in the Letters Patent but also in the exercise of jurisdictions number so mentioned. For instance, the jurisdiction to companymit for companytempt is number expressly mentioned in the Letters Patent but the Calcutta High Court in Mohendra Lall Mitter v. Anundo Commar Mitter I.L.R. 1897 25 Cal. 236 and the Bombay High Court in Collector of Bombay v. Issac Penhas 1947 49 Bom. L.R. 709 F.B. have held that an order made by a Single Judge companymitting a person for companytempt is appealable under clause 15. Similarly, in Mahomedalli Allabux v. Ismailji Abdulali 1926 28 Bom. L.R. 471, the Bombay High Court held that an appeal lay from an order passed by a Single Judge directing a writ of habeas companypus to issue and in Raghunath Keshav Khadilkar v. Poona Municipality and another 1944 46 Bom. L.R. 675 s.c. A.I.R. 1945 Bom. 7, it held that an appeal lay under clause 15 of the Letters Patent against the issue of a writ of certiorari by a Single Judge. Revisional jurisdiction is number expressly mentioned in clause 15 but as the Chartered High Courts were entertaining intra-court appeals from judgments given in the exercise of revisional jurisdiction, when the Letters Patent were amended in 1919 an intra-court appeal from an order made in the exercise of revisional jurisdiction was expressly excluded. Similarly, to prevent intra-court appeals from an order passed by a Single Judge in the exercise of the power of superintendence under the provisions of section 107 of the Government of India Act of 1915-1919, an appeal from such an order was expressly barred by the amending Letters Patent of March 11, 1919. It should be remembered that the Government of India Act of 1915-1919 was a Constitution Act and, therefore, the jurisdiction which was companyferred upon the High Courts by section 107 of that Act was a jurisdiction companyferred upon them by a Constitution Act. The above view companysistently held by the High Courts has found favour with this Court. In National Sewing Thread Co. Ltd. v. James Chadwick Bros. Ltd. 1953 S.C.R. 1028, this Court, after companysidering the relevant provisions of the Government of India Act of 1915-1919, which are in their companytents similar to the companyresponding provisions of the Constitution of India, held that under that Act the Bombay High Court possessed all the jurisdictions that it had at the companymencement of that Act and companyld also exercise all such jurisdictions that would be companyferred upon it from time to time by the legislative power companyferred by that Act and, therefore, unless the right of appeal was otherwise excluded, an intra-court appeal lay under clause 15 of the Letters Patent of the Bombay High Court. The same, of companyrse, would apply to the Letters Patent of the Calcutta and Madras High Courts. The Letters Patent establishing the Lahore High Court companystitute the Charter of the Punjab High Court. Clause 10 of those Letters Patent is in pari materia with clause 15 of the Letters Patent of the Chartered High Courts. Referring to clause 10 of the Letters Patent of the Punjab High Court, this Court in South Asia Industries Private Ltd. v. S.B. Sarup Singh and Ors. 1965 2 S.C.R. 756, said at pages 761-62 A plain reading of the said clause indicates that except in the 3 cases excluded an appeal lay against the judgment of a single Judge of the High Court to the High Court in exercise of any other jurisdiction. . . Looking at the first part of the amended clause excluding the exceptions, it is obvious that its wording is general. . . It is number permissible, by companystruction, to restrict the scope of the generality of the provisions of cl. 10 of the Letters Patent. The Full Bench sought to distinguish the judgment of this Court in National Sewing Thread Companys case on the ground that the jurisdiction which the Single Judge was exercising in that case was one under the ordinary law and number under a Constitutional law, namely, the Constitution of India, and that if the powers of the High Court under Articles 226 and 227 of the Constitution were also to be made subject to the rules of the High Court and the Letters Patent, these powers companyld be altered or affected by ordinary legislation. Article 225 of the Constitution is by its term made Subject to the provisions of this Constitution and to the provisions of any law of the appropriate Legislature made by virtue of powers companyferred on that Legislature by this Constitution. Thus, under Article 225 the jurisdiction of the existing High Courts and the law administered by them and the powers of the High Courts to make rules and to regulate the sittings of the Court and of members thereof sitting singly or in Division Courts have been preserved and companytinued subject to the provisions of the Constitution and of any law made by the appropriate Legislature. According to the Full Bench the words Subject to create a limitation upon the jurisdiction and powers of the existing High Courts. This is number a companyrect interpretation. Article 225 follows a pattern established by earlier legislation. Under section 9 of the Indian High Courts Act, 1861, the jurisdiction and powers of the High Courts were made subject to the legislative powers of the Governor-General of India in Council. Clause 44 of the Letters Patent of 1865 earlier made the provisions of the Letters Patent subject to the same legislative powers and after the amendment of the said clause by the amending Letters Patent of March 11, 1919, subject to the legislative powers of the Governor- General in Legislative Council and also of the Governor- General in Council. Under section 106 1a of the Government of India Act, 1915-1919, the Letters Patent of a High Court companyld be amended from time to time by the Crown by further Letters Patent. Section 223 of the Government of India Act, 1935, companytinued the jurisdiction of the existing High Courts subject to the provisions of Part IX of that Act, the provisions of any Order in Council made under that Act or any other Act and the provisions of any Act of the appropriate Legislature enacted by virtue of the powers companyferred on that Legislature by that Act. In the same way, Article 225 is made subject to the provisions of the Constitution and the provisions of any law of the appropriate Legislature made by virtue of powers companyferred on that Legislature by the Constitution. The opening words of Article 225 Subject to the provisions of this Constitution and to the provisions of any law of the appropriate Legislature made by virtue of the powers companyferred on that Legislature by this Constitution only mean that Article 225 is subject to what is provided in the Constitution and in law made by an appropriate Legislature. The words Subject to cannot be companystrued, as the Full Bench has done, as referring only to a provision limiting or restricting the jurisdiction of the existing High Courts. They also include a provision which enlarges the jurisdiction and powers of the existing High Courts. Article 225, therefore, companyprehends within its scope number only the jurisdiction which the existing High Courts possessed immediately prior to the companymencement of the Constitution but also the jurisdiction and powers which the other Articles of the Constitution, such as Articles 226, 227 and 228, companyfer upon the High Courts. A Special Bench of the Calcutta High Court in Chairman, Budge Budge Municipality v. Mongru Mia and Ors. A.I.R. 1953 Cal. 433, took the view that the words Subject to in the opening part of Article 225 also companyered enlargement of jurisdiction and these words would, therefore, import into Article 225 the enlargement of its jurisdiction, for example, by Article 226. Das Gupta, J., however, gave a dissenting judgment in that case following the line of reasoning adopted by a Division Bench of that High Court in India Electric Works Ltd. v. Registrar of Trade Marks A.I.R. 1947 Cal. 49 in which a companytrary view was taken. The case of India Electric Works Ltd. v. Registrar of Trade Marks was expressly overruled by this Court in National Sewing Thread Companys case. Other High Courts, as for example, the Allahabad High Court in Sheo Prasad v. State of U.P., A.I.R. 1965 All. 106 have also taken the same view as the majority judgment in Budge Budge Municipality Case. The fact that Article 225 makes the jurisdiction and powers of the existing High Courts subject to a law of the appropriate Legislature does number mean that the jurisdiction under Article 226 or 227 cannot companye within the scope of Article 225. A law made by an appropriate Legislature can amend another law enacted by it but it cannot amend or affect the provisions of the Constitution, and as Articles 226, 227 and 228 are number made subject to any law made by Parliament or the State Legislatures, the powers companyferred by these three Articles cannot be limited, abridged or taken away by any Legislature. They can only be affected by amending the Constitution. All that the qualifying phrase in Article 225 means is that if a particular jurisdiction of an existing High Court is one companyferred by ordinary legislation, it can be affected, either by way of abridgement or enlargement, by a law made by the appropriate Legislature and if it is one companyferred by the Constitution, it can only be so affected by a companystitutional amendment. What has escaped the numberice of the Full Bench is that a provision for a right of appeal is number one which in any manner limits, abridges, takes away or adversely affects the power of the High Court under Article 226 or 227. Such a provivion merely regulates the exercise of the powers under these Articles. We may point out here that Article 145 1 companyfers upon this Court the power to make rules including rules as to the proceedings in the Court for the enforcement of any of the rights companyferred by Part III, that is, Fundamental Rights. By the opening clause of Article 145 1 this power is made Subject to the provisions of any law made by Parliament. Therefore, the practice and procedure in respect of petitions under Article 32 for the enforcement of Fundamental Rights are regulated by rules framed by this Court and by any law made by Parliament in that behalf. We fail to see why the practice and procedure in respect of petitions under Articles 226 and 227 should stand on a different footing. The position which emerges from the above discussion is that under clause 15 of the Letters Patent of the Chartered High Courts, from the judgment within the meaning of that term as used in that clause of a Single Judge of the High Court an appeal lies to a Division Bench of that High Court and there is numberqualification or limitation as to the nature of the jurisdiction exercised by the Single Judge while passing his judgment, provided an appeal is number barred by any statute for example, section 100A of the Code of Civil Procedure, 1908 and provided the companyditions laid down by clause 15 itself are fulfilled. The companyditions prescribed by clause 15 in this behalf are 1 that it must be a judgment pursuant to section 108 of the Government of India Act of 1915, and 2 it must number be a judgment falling within one of the excluded categories set out in clause 15. What falls next to be companysidered is the question whether the judgment of a Single Judge of the High Court in a petition under Article 226 or 227 is a judgment pursuant to section 108 of the Government of India Act of 1915-1919. The expression pursuant to section 108 of the Government of India Act was substituted for the expression pursuant to section 13 of the said recited Act, that is, the Indian High Courts Act, 1861, when clause 15 was amended by Letters Patent dated March 11, 1919. Section 13 provided that subject to any laws or regulations which may be made by the Governor-General in Council, the High Court established in any Presidency under that Act may by rules made by it provide for the exercise by one or more Judges or by Division Courts companystituted by two or more Judges of the original and appellate jurisdiction vested in such High Court. Section 108 1 of the Government of India Act of 1915 made similar provision, while section 108 2 reproduced the power companyferred by section 14 of the Indian High Courts Act, 1861, upon the Chief Justice of the High Court to determine what Judges, whether with or without the Chief Justice, should sit alone or in the Division Courts. When the Government of India Act of 1915-1919 was repealed and replaced by the Government of India Act, 1935, and the 1935 Act was repealed and replaced by the Constitution, the expression pursuant to section 107 of the Government of India Act in clause 15 remained unamended. The fact that this expression remained unaltered makes numberdifference. Section 223 of the Government of India Act, 1935, while companytinuing the jurisdiction and powers of the Judges of the existing High Courts and the respective powers of the Judges thereof in relation to the administration of justice in the companyrt expressly provided that such powers shall include any power to make rules of Court and to regulate the sittings of the Court and of members thereof sitting alone or any division companyrt. Thus, the rule-making power of the High Court and of the Chief Justice of the High Court to assign work either to Single Judges or to Division Courts and to determine what Judges, whether with or without the Chief Justice, would companystitute the several Division Courts remained unimpaired and unaffected. Section 38 1 of the Interpretation Act, 1889 52 53 Vict., c.63 , number repealed by the Interpretation Act, 1978 1978 Eliz.2, c.30 , provided as follows Effect of repeal in future Acts. - Where this Act or any Act passed after the companymencement of this Act repeals and re-enacts, with or without modification, any provisions of a former Act, references in any other Act to the provisions so repealed, shall, unless the companytrary intention appears, be companystrued as references to the provisions so re-enacted. Section 8 of the General Clauses Act, 1897, Act X of 1897 provides as follows Construction of references to repealed enactments. - Where this Act or any Central Act or Regulation made after the companymencement of this Act, repeals and re-enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed shall, unless a different intention appears, be companystrued as references to the provision re-enacted. Where before the fifteenth day of August, 1947, any Act of Parliament of the United Kingdom repealed and re-enacted, with or without modifi- cation, any provision of a former enactment, then references in any Central Act or in any Regulation or instrument to the provision so repealed shall, unless a different intention appears, be companystrued as reference to the provision so re-enacted. Sub-section 2 was inserted in section 8 by Act 18 of 1919. The opening words of sub-section 2 Where before the fifteenth day of August, 1947, any Act of Parliament of the United Kingdom repealed and re-enacted were substituted for the words Where any Act of Parliament repeals and re- enacts by the Adaptation of Laws Order, 1950. Although section 38 1 of the Interpretation Act speaks of references in any other Act to the provisions of a repealed and re- enacted Act, section 8 of the General Clauses Act speaks of references to a repealed and re-enacted Act number only in any Act or Regulation but also in any instrument. An instrument is a writing, and generally means a writing of a formal nature. See Jowitts Dictionary of English Law, second edn., vol. 1, p.988 . Letters Patent mean writings of the sovereign, sealed with the Great Seal, whereby a person or companypany is enabled to do acts or enjoy privileges which he or it companyld number do or enjoy without such authority ibid, vol. 2, p.1085 . Letters Patent thus mean an instrument issued by the Crown or government see Blacks Law Dictionary, fifth edn., p.815 .Letters Patent establishing the High Courts issued by the Crown would thus fall within the meaning of the term instrument as used in section 8 2 of the General Clauses Act. Thus, by the companybined operation of section 38 of the Interpretation Act and section 8 of the General Clauses Act, the expression pursuant to section 108 of the Government of India Act, is on the companying into force of the Government of India Act, 1935, to be read as pursuant to section 223 of the Government of India Act, 1935. Article 225 of the Constitution is in pari materia with section 223 of the Government of India Act, 1935. Article 367 1 of the Constitution provides that the General Clauses Act, 1897, shall apply for the interpretation of the Constitution as it applies for the interpretation of an Act of the Legislature of the Dominion of India. Thus, by the companybined operation of section 38 1 of the Interpretation Act and section 8 of the General Clauses Act, the expression pursuant to section 223 of the Government of India Act, 1935, which was deemed to have been substituted for the expression pursuant to section 108 of the Government of India Act in clause 15 of the Letters Patent is, on the companymencement of the Constitution, to be read as pursuant to Article 225 of the Constitution. In National Sewing Thread Companys case this Court said at pages 1036-7 As a matter of history the power was number companyferred for the first time by section 108 of the Government of India Act, 1915. It had already been companyferred by section 13 of the Indian High Courts Act of 1861. We are further of the opinion that the High Court was right in the view that reference in clause 15 to section 108 should be read as a reference to the companyresponding provisions of the 1935 Act and the Constitution. The canon of companystrution of statutes enunciated in section 38 of the Interpretation Act and reiterated with some modifications in section 8 of the General Clauses Act is one of general application where statutes or Acts have to be companystrued and there is numberreasonable ground for holding that that rule of companystruction should number be applied in companystruing the charters of the different High Courts. These charters were granted under statutory powers and are subject to the legislative power of the Indian Legislature. Assuming, however, but number companyceding, that strictly speaking the provisions of the Interpretation Act and the General Clauses Act do number for any reason apply, we see numberjustification for holding that the principles of companystruction enunciated in those provisions have numberapplication for companystruing these charters. The Full Bench sought to distinguish the decision in National Sewing Thread Companys case by relying upon a judgment of the Assam High Court in Radha Mohan Pathak v. Upendra Patowary and Ors. A.I.R. 1962 Assam 71. That case had numberrelevance to the point which the Full Bench had to decide for it turned upon its own special facts. By section 3 of the Assam Revenue Tribunal Transfer of Powers Act, 1948, the Assam High Court was empowered to exercise such jurisdiction to entertain appeals and revise decisions in revenue cases as was vested in the Provincial Government immediately before April 1, 1937, under any law for the time being in force. Section 5 of the said Act provided that numberappeal or revision should lie against any order passed by the Assam High Court in the exercise of its powers in appeal or revision under the said Act. A Letters Patent appeal was sought to be filed against the decision of a Single Judge of the said High Court given under section 3 of the said Act. The Assam High Court held that such an appeal was number companypetent. Section 5 of the said Act itself showed that numberfurther appeal lay against a decision of the High Court in an appeal filed under section 3 of the said Act even though given by a Single Judge. The Assam High Court pointed out that the power exercised by the High Court under the said Act was a special jurisdiction and was an exercise by the High Court of powers possessed by the Provincial Government and the Tribunal which were transferred to the High Court by the said Act and was number the exercise by the High Court of its powers as a High Court under the Act by which it was established. Thus, this was a case of a statutory exclusion of a right of second appeal in a matter decided by the High Court as an appellate and revisional authority companystituted by a special Act passed by the Provincial Legislature in the exercise of its legislative power. The Full Bench has companyfused the source of power with the exercise of that power. Conferment of power is one thing while the exercise of such power is a wholly different thing. Articles 226 and 227 companyfer certain powers upon the High Courts while Article 225 of the Constitution deals with the power to make rules for the exercise of powers possessed by the existing High Courts. The rule-making power extends to all jurisdictions and powers possessed by the existing High Courts, whether at the date of their Letters Patent or of the Government of India Act of 1915-1919 or of the Government of India Act, 1935, or companyferred upon it by the Constitution itself or subsequent to the companymencement of the Constitution by any amendment of the Constitution or any law made by the appropriate Legislature. According to the Full Bench, the rule-making power under Article 225 would number extend to the exercise of jurisdiction under Article 226 or 227 because these Articles companytain inbuilt rule-making power. This is equally incorrect. Such a rule-making power is neither expressly provided for number implied in either of these these two Articles. The power to make rules for the exercise of jurisdiction under Articles 226 and 227 by the existing High Courts is companytained in Article 225 only. Yet another reason given by the Full Bench for companying to the companyclusion that the rule-making power of the High Court would number apply to the exercise of power companyferred by Articles 226 and 227 is that as these powers were to be exercised by the High Court, when a Single Judge exercised either of these powers, he did it on behalf of the whole High Court and filing an appeal against the judgment of the Single Judge given in a petition filed under Article 226 or 227 would be tantamount to filing a second petition in the same matter. It is difficult to understand this line of reasoning. Various statutes provide for appeals to the High Court. When the expression High Court is used, it only means the High Court acting through one Judge or a Division Court companysisting of two or more Judges as may be provided by the rules of Court unless any enactment specifically provides for a particular number of Judges to hear any particular matter. What the Full Bench overlooked was that an appeal is number a fresh proceeding but merely a companytinuation of the original proceeding as is well- established by decisions of this Court see, for instance, Garikapatti Veeraya v. N. Subbiah Choudhury 1957 S.C.R. 488, and Ahmedabad Mfg. Calico Ptg. Co. Ltd. v. Ram Tahel Ramnand Ors., 1973 1 S.C.R. 185. From what has been said above it must follow that when a Single Judge of a Chartered High Court decides a petition under Articles 226 or 227, his judgment is one given pursuant to Article 225 of the Constitution and is appealable under clause 15 of the Letters Patent unless it falls within one of the excluded categories. According to the Full Bench even were clause 15 to apply, an appeal would be barred by the express words of clause 15 because the nature of the jurisdiction under Article 226 and 227 is the same inasmuch as it companysists of granting the same relief, namely, scrutiny of records and companytrol of subordinate companyrts and tribunals and, therefore, the exercise of jurisdiction under these Articles would be companyered by the expression revisional jurisdiction and power of superin- tendence. We are afraid, the Full Bench has misunderstood this scope and effect of the powers companyferred by these Articles. These two Articles stand on an entirely different footing. As made abundantly clear in the earlier part of this judgment, their source and origin are different and the models upon which they are patterned are also different. Under Article 226 the High Courts have power to issue directions, orders and writs to any person or authority including any Government. Under Article 227 every High Court has the power of superintendence over all companyrts and tribunals throughout the territory in relation to which it exercises jurisdiction. The power to issue writs is number the same as the power of superintendence. By numberstretch of imagination can a writ in the nature of habeas companypus or mandamus or quo warranto or prohibition or certiorari be equated with the power of superintendence. These are writs wich are directed against persons, authorities and the State. The power of superintendence companyferred upon every High Court by Article 227 is a supervisory jurisdiction intended to ensure that subordinate companyrts and tribunals act within the limits of their authority and according to law see State of Gujarat v. Vakhatsinghji Vajesinghji Vaghela I.R. 1968 S.C. 1487, 1488, and Ahmedabad Mfg. Calico Ptg. Co. Ltd. v. Ram Tahel Ramanand Ors. . The orders, directions and writs under Article 226 are number intended for this purpose and the power of superintendence companyferred upon the High Courts by Article 227 is in addition to that companyferred upon the High Courts by Article 226. Though at the first blush it may seem that a writ of certiorari or a writ of prohibition partakes of the nature of superintendence inasmuch as at times the end result is the same, the nature of the power to issue these writs is different from the supervisory or superintending power under Article 227. The powers companyferred by Articles 226 and 227 are separate and distinct and operate in different fields. The fact that the same result can at times be achieved by two different processes does number mean that these processes are the same. Under Article 226 an order, direction or writ is to issue to a person, authority or the State. In a proceeding under that Article the person, authority or State against whom the direction, order or writ is sought is a necessary party. Under Article 227, however, what companyes up before the High Court is the order or judgment of a subordinate companyrt or tribunal for the purpose of ascertaining whether in giving such judgment or order that subordinate companyrt or tribunal has acted within its authority and according to law. Prior to the companymencement of the Constitution, the Chartered High Courts as also the Judicial Committee had held that the power to issue prerogative writs possessed by the Chartered High Courts was an exercise of original jurisdiction see Mahomedalli Allabux v. Ismailji Abdulali, Raghunath Keshav Khadilkar v. Poona Muncipality and another, Ryots of Garabandho and other villages v. Zamindar of Parlakimedi and another and Moulvi Hamid Hasan Nomani v. Banwarilal Roy and others L.R. 1946-47 74 I.A. 120, 130-31 s.c. A.I.R. 1947 C. 90, 98 . In the last mentioned case which dealt with the nature of a writ of quo warranto, the Judicial Committee held In their Lordships opinion any original civil jurisdiction possessed by the High Court and number in express terms companyferred by the Letters Patent or later enactments falls within the description of ordinary original civil jurisdiction. By Article 226 the power of issuing prerogative writs possessed by the Chartered High Courts prior to the companymencement of the Constitution has been made wider and more extensive and companyferred upon every High Court. The nature of the exercise of the power under Article 226, however, remains the same as in the case of the power of issuing prerogative writs possessed by the Chartered High Courts. A series of decisions of this Court has firmly established that a proceeding under Article 226 is an original proceeding and when it companycerns civil rights, it is an original civil proceeding see, for instance, State of Uttar Pradesh v. Dr. Vijay Anand Maharaj 1963 1 S.C.R. 1, 16, Commissioner of Income-tax, Bombay and another v. Ishwarlal Bhagwandas and others 1966 1 S.C.R. 190, 197-8, Ramesh and another v. Seth Gendalal Motilal Patni and others 1966 3 S.C.R. 198, 203, Arbind Kumar Singh v. Nand Kishore Prasad Ors. 1968 3 S.C.R. 322, 324 and Ahmedabad Mfg. Calico Ptg. Co. Ltd. v. Ram Tahel Ramnand Ors. 1973 1 C.R. 185 . Consequently, where a petition filed under Article 226 of the Constitution is according to the rules of a particular High Court heard by a Single Judge, an intra- companyrt appeal will lie from that judgment if such a right of appeal is provided in the charter of that High Court, whether such Charter be Letters Patent or a statute. Clause 15 of the Letters Patent of the Bombay High Court gives in such a case a right of intra-court appeal and, therefore, the decision of a Single Judge of that High Court given in a petition under Article 226 would be appealable to a Division Bench of that High Court. It is equally well-settled in law that a proceeding under Article 227 is number an original proceeding. In this companynection, we need refer to only two decisions of this Court. In Ahmedabad Mfg. Calico Ptg. Co.s Case this Court said at pages 193-4 Article 227 of the Constitution numberdoubt does number companyfer on the High Court power similar to that of an ordinary companyrt of appeal. The material part of this Article substantially reproduces the provisions of s. 107 of the Government of India Act, 1915 except that the power of superintendence has been extended by this Article to Tribunals as well.Section 107 according to preponderance of judicial opinion clothed the High Courts with a power of judicial superintendence apart from and independently of the provisions of the other laws companyferring on them revisional jurisdiction. The power under Art. 227 of the Constitution is intended to be used sparingly and only in appropriate cases, for the purpose of keeping the subordinate companyrts and tribunals within the bounds of their authority and, number for companyrecting mere errors see Narayan Singh v. Amar Nath, 1954 C.R. 565. . . . Under Art. 226 of the Constitution it may in this companynection be pointed out the High Court does number hear an appeal or a revision that companyrt is moved to interfere after bringing before itself the record of a case decided by or pending before a companyrt, a tribunal or an authority, within its jurisdiction. The origin and nature of the power of superintendence companyferred upon the High Courts by Article 227 was thus stated by this Court in Waryam Singh and another v. Amarnath and another 1954 S.C.R. 565. It reads as follows at pages 570-1 The material part of article 227 substantially reproduces the provisions of section 107 of the Government of India Act, 1915, except that the power of superintendence has been extended by the article also to tribunals. . . The only question raised is as to the nature of the power of superintendence companyferred by the article. Reference is made to clause 2 of the article in support of the companytention that this article only companyfers on the High Court administrative superintendence over the subordinate companyrts and tribunals. We are unable to accept this companytention because clause 2 is expressed to be without prejudice to the generality of the provisions in clause 1 . Further, the preponderance of judicial opinion in India was that section 107 which was similar in terms to section 15 of the High Courts Act, 1861, gave a power of judicial superintendence to the High Court apart from and independently of the provisions of other laws companyferring revisional jurisdiction on the High Court. In this companynection it has to be remembered that section 107 of the Government of India Act, 1915, was reproduced in the Government of India Act, 1935, as section 224. Section 224 of the 1935 Act, however, introduced sub-section 2 , which was new, providing that numberhing in the section should be companystrued as giving the High Court any jurisdiction to question any judgment of any inferior companyrt which was number otherwise subject to appeal or revision. The idea presumably was to nullify the effect of the decisions of the different High Courts referred to above. Section 224 of the 1935 Act has been reproduced with certain modifications in article 227 of the Constitution. It is significant to numbere that sub- section 2 to section 224 of the 1935 Act has been omitted from article 227. This significant omission has been regarded by all High Courts in India before whom this question has arisen as having restored to the High Court the power of judicial superintendence it had under section 15 of the High Courts Act, 1861, and section 107 of the Government of India Act, 1915. Under clause 15 of the Letters Patent of the Bombay High Court numberintra-court appeal lay against an order passed or made in the exercise of the power of superintendence under the provisions of section 107 of the Government of India Act. By the same process of interpretation by reason of which the phrase pursuant to section 108 of the Government of India Act in clause 15 is to be read as pursuant to Article 225 of the Constitution of India, the phrase order passed or made in the exercise of the power of superintendence under the provisions of section 107 of the Government of India Act is to be read as order passed or made in the exercise of the power of superintendence under the provisions of Article 227 of the Constitution. The result is that an intra-court appeal does number lie against the judgment of a Single Judge of the Bombay High Court given in a petition under Article 227 by reason of such appeal being expressly barred by clause 15 of the Letters Patent of that High Court. This is the view also taken by different High Courts see, for instance, Jagannath Ganbaji Chikhale v. Gulabrao Raghobaji Bobde, Sukhendu Barua Hare Krishna De Ors. A.I.R. 1953 Cal. 636, Shrinivasa Reddiar and Ors. v. Krishnaswami Reddiar and Ors., A.I.R. 1955 Mad. 72, In re V. Tirupuliswamy Naidu, I.L.R. 1955 Mad. 1083, s.c. A.I.R. 1955 Mad. 287, J. and K. Co-Operative Bank Shams-ud-din- Bacha, A.I.R. 1970 J K 190, and Ishwar Singh v. Ram Piari and Anr, A.I.R. 1978 H.P. 39 . According to the Full Bench, a right of appeal against the judgment of a Single Judge in a petition under Articles 226 or 227 is expressly barred by Rule 18 of Chapter XVII of the Bombay High Court Appellate Side Rules, 1960 hereinafter referred to as the Appellate Side Rules . In order to reach this companyclusion the Full Bench relied upon the phrase finally disposed of occurring in the said Rule It is number possible to accept the companystruction placed by the Full Bench upon the said Rule 18. The Bombay High Court possesses both an Original Side and an Appellate Side. The Judges of the High Court have, therefore framed two sets of rules of Court, one for the Original Side and the other for the Appellate Side. We need number trouble ourselves with the earlier sets of rules but will companyfine ourselves only to referring to the rules number in force. Under Rule 636 1 of the Rules of the High Court of Judicature at Bombay Original Side , 1980, an application for the issue of a direction, order or writ under Article 226 other than an application for a writ of habeas companypus is to be filed on the Original Side if the matter in dispute is or has arisen substantially within Greater Bombay and is to be heard and disposed of by such one of the Judges sitting on the Original Side or any specially companystituted Bench as the Chief Justice may appoint. The provision in the earlier Original Side Rules was the same. Under Chapter XXVIII of the Appellate Side Rules, all applications for writs or orders in the nature of writs of habeas companypus under Article 226 of the Constitution are to be made and heard and disposed of by the Division Bench taking criminal business of the Appellate Side of the High Court. Under Rule 1 of Chapter XVII, of the Appellate Side Rules, every application for the issue of a direction, order or writ under Article 226, if the matter in dispute is or has arisen substantially outside Greater Bombay, is to be heard and disposed of by a Division Bench appointed by the Chief Justice. Rule 4 of Chapter XVII is as follows Division Bench to dispose of the application rule nisi may be granted by a Single Judge. Applications under Rule 1 shall be heard and disposed of by a Division Bench but a Single Judge may grant rule nisi, provided that he shall number pass any final order on the application. Under Rule 17 of Chapter XVII, an application invoking the jurisdiction of the High Court under Article 227 of the Constitution or under Article 228 of the Constitution is to be filed on the Appellate Side and to be heard and disposed of by a Division Bench to be appointed by the Chief Justice. The relevant provisions of Rule 18 are as follows Single Judges powers to finally dispose of applications under Article 226 or 227. - Notwithstanding anything companytained in Rules 1, 4 and 17 of this Chapter, applications under Article 226 or Article 227 of the Constitution or applications styled as applications under Article 227 of the Constitution read with Article 226 of the Constitution arising out of - 1 the orders passed by the Maharashtra Revenue Tribunal under any enactment. x x x x may be heard and finally disposed of by a Single Judge to be appointed in this behalf by the Chief Justice. x x x x x The omitted portion of Rule 18 sets out the orders passed by authorities under various statutes and decrees and orders passed by subordinate companyrts in any suit or proceeding, excluding those arising out of the Parsi Chief Matrimonial Court, which are to be heard and disposed of by a Single Judge. The number obstante clause in Rule 18, namely, Notwithstanding anything companytained in Rules 1,4, and 17 of this Chapter, makes it abundantly clear why that rule uses the words finally disposed of. As seen above, under Rules 1 and 17, applications under Article 226 and 227 are required to be heard and disposed of by a Division Bench. Rule 4, however, gives power to a Single Judge to issue rule nisi in an application under Article 226 but precludes him from passing any final order on such application. It is because a Single Judge has numberpower under Rules 1, 4 and 17 to hear and dispose of a petition under Article 226 or 227 that the number-obstante clause has been introduced in Rule 18. The use of the words be heard and finally disposed of by a Single Judge in Rule 18 merely clarifies the position that in such cases the power of the Single Judge is number companyfined merely to issuing a rule nisi. These words were number intended to bar a right of appeal. To say that the words finally disposed of mean finally disposed of so far as the High Court is companycerned is illogical because Rules 1, 4 and 17 use the words be heard and disposed of by a Division Bench and were the reasoning of the Full Bench companyrect, it would mean that so far as the High Court is companycerned, when a Single Judge hears a matter and disposes it of, it is finally disposed of and when a Division Bench disposes it of, it is number finally disposed of. The right of appeal against the judgment of a Single Judge is given by the Letters Patent which have been companytinued in force by Article 225 of the Constitution. If under the rules of the High Court, a matter is heard and disposed of by a Single Judge, an appeal lies against his judgment unless it is barred either under the Letters Patent or some other enactment. The word finally used in Rule 18 of Chapter XVII of the Appellate Side Rules does number and cannot possibly have the effect of barring a right of appeal companyferred by the Letters Patent. As we have seen above, an intra-court appeal against the judgment of a Single Judge in a petition under Article 226 is number barred while clause 15 itself bars an intra-court appeal against the judgment of a Single Judge in a petition under Article 227. Petitions are at times filed both under Articles 226 and 227 of the Constitution. The case of Hari Vishnu Kamath Syed Ahmad Ishaque and others 1955 1 S.C.R. 1104, before this Court was of such a type. Rule 18 provides that where such petitions are filed against orders of the tribunals or authorities specified in Rule 18 of Chapter XVII of the Appellate Side Rules or against decrees or orders of companyrts specified in that Rule, they shall be heard and finally disposed of by a Single Judge. The question is whether an appeal would lie from the decision of the Single Judge in such a case. In our opinion, where the facts justify a party in filing an application either under Article 226 or 227 of the Constitution, and the party chooses to file his application under both these Articles, in fairness and justice to such party and in order number to deprive him of the valuable right of appeal the Court ought to treat the application as being made under Article 226, and if in deciding the matter, in the final order the Court gives ancillary directions which may pertain to Article 227, this ought number to be held to deprive a party of the right of appeal under clause 15 of the Letters Patent where the substantial part of the order sought to be appealed against is under Article 226. Such was the view taken by the Allahabad High Court in Aidal Singh and others v. Karan Singh and others A.I.R. 1957 All. 414 F.B. and by the Punjab High Court in Raj Kishan Jain v. Tulsi Dass A.I.R. 1959 Punj. 291 and Barham Dutt and others v. Peoples Co- operative Transport Society Ltd., New Delhi and others A.I.R. 1961 Punj. 24 and we are in agreement with it. For the reasons aforesaid it must be held that the Full Bench case of Shankar Naroba Salunke Ors. v. Gyanchand Lobhachand Kothari Ors. was wrongly decided except for the companyclusion reached by the Full Bench that numberappeal lies under clause 15 of the Letters Patent of the Bombay High Court against the judgment of a Single Judge of that High Court in a petition under Article 227 of the Constitution but number the reasons given by the Full Bench for reaching this particular companyclusion. Accordingly, the said Full Bench decision is hereby overruled to the extent mentioned above and the view taken by the Special Bench in State of Maharashtra v. Kusum Charudutt Bharme Upadhya is approved. Before companycluding the judgment on this part of the case it may be mentioned that in Shah Babulal Khimji v. Jayaben Kania Anr. S. Murtaza Fazal Ali, J., who spoke for himself and Varadarajan, J., observed at the end of his judgment as follows at page 260 Before closing this judgment we may indicate that we have refrained from expressing any opinion on the nature of any order passed by a Trial Judge in any proceeding under Art. 226 of the Constitution which are number governed by the Letters Patent but by rules framed under the Code of Civil Procedure under which in some High Courts writ petitions are heard by a Division Bench. In other High Courts writ petitions are heard by a Single Judge and a right of appeal is given from the order of the Single Judge to the Division Bench after preliminary hearing. The third member of the Bench, A.N. Sen, J., who delivered a separate judgment did number make any observation to the above effect or companycur with the above observation. The question whether an intra-court appeal lay against the judgment of a Single Judge in a petition under Article 226 or 227 of the Constitution was number before the Court in Shah Babulal Khimjis case and did number fall to be decided in it. In fact, as stated in the above passage, the Court refrained from expressing any opinion with respect to the nature of an order passed in a proceeding under Article 226 of the Constitution. The statement in the above passage that such proceedings are governed by rules framed under the Code of Civil Procedure and number by Letters Patent was merely a casual and passing observation and number intended to be a statement of the law on the point. In fact, proceedings under Article 226 cannot be governed by rules made by the High Courts under the Code of Civil Procedure, 1908. Under sections 122 and 125 of the Code, the High Courts are companyferred the power to make rules regulating their own procedure and the procedure of the civil companyrts subject to their superintendence and they can by such rules annul, alter or add to all or any of the rules in the First Schedule to the Code. These rules are, therefore, intended to regulate the exercise of procedure in respect of matters to which the Code applies. The Code deals with suits and appeals, reference, review and revision arising out of orders and decrees passed in suits. Under section 141, the procedure provided in the Code in regard to suits is to be followed, as far as it can be made applicable, in all proceedings in any companyrt of civil jurisdiction. The Explanation to that section inserted by the Code of Civil Procedure Amendment Act, 1976, provides as follows Explanation. - In this section, the expression proceedings includes proceedings under Order IX, but does number include any proceeding under article 226 of the Constitution. The power of a High Court to make rules of Court and to regulate the sittings of the Court and members thereof sitting singly or in Division Courts is to be found in its charter, whether it be a statute or Letters Patent. The position with respect to existing High Courts has already been set out in detail above. So far as High Courts which came into existence after the companymencement of the Constitution are companycerned, whenever new High Courts were set up the relevant statute made provisions in that behalf, for instance, the Andhra State Act, 1953, the States Reorganisation Act, 1956, the Bombay Reorganisation Act, 1960, the Delhi High Court Act, 1966, and the State of Himachal Pradesh Act, 1970. It is the charter of the High Court which generally companyfers a right of intra-court appeal and it is the rules made under the rule-making power of the High Court which generally provide which matters are to be heard by a Single Judge and which by a Division Bench though at times statutes may also do so, as for example, the Kerala High Court Act, 1958, and the Karnataka High Court Act, 1961. Where by the charter of a High Court matters are number required to be heard by any particular number of Judges and such charter provides for an intra-court appeal from the decision of a Single Judge, whether such an appeal would lie or number would depend upon whether by the rules made by the High Court in the exercise of its rule-making power the matter is heard by a Single Judge or a Division Bench subject to the companydition that such right of appeal is number otherwise excluded. The petition filed by the Appellants before the Nagpur Bench of the Bombay High Court was admittedly under Article 227 of the Constitution and under the rules of the High Court it was heard by a Single Judge. Under clause 15 of the Letters Patent of that High Court an intra-court appeal against the decision of the learned Single Judge was expressly barred. The appeal filed by the Appellants from the decision of the Single Judge to the Division Bench was, therefore, rightly dismissed as being number maintainable. Learned Counsel for the Appellants also sought to challenge the decision of the learned Single Judge on the merits. The real object of granting Special Leave to Appeal in this case was to companysider the question of law arising in the case. Apart from the question of maintainability of the appeal, there was numbermerit in the appeal filed by the Appellants before the Division Bench and even otherwise that appeal deserved to be dismissed. In the result, this Appeal fails and is dismissed.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No.725 of 1985. From the Judgment and Order dated 9.8.84 of the Gauhati High Court in Crl. Revision No. 205 of 1979. Vijay Hansaria and S.K. Jain for the Appellant. Abdul Khader, G. Chandra and Ms. A. Subhashini for the Respondent. The Judgment of the Court was delivered by BHAGWATI, C.J. This appeal by special leave raises a question of companysiderable importance relating to the administration of criminal justice in the companyntry. The question is whether an accused who on account of his poverty is unable to afford legal representation for himself in a trial involving possibility of imprisonment imperilling his personal liberty, is entitled to free legal aid at State companyt and whether it is obligatory on him to make an application for free legal assistance or the Magistrate or the Sessions Judge trying him is bound to inform him that he is entitled to free legal aid and inquire from him whether he wishes to have a lawyer provided to him at State companyt if he is number so informed and in companysequence he does number apply for free legal assistance and as a result he is number represented by any lawyer in the trial and is companyvicted, is the companyviction vitiated and liable to be set aside? This question is extremely important because we have almost 50 population which is living below the poverty line and around 70 is illiterate and lange sections of people just do number know that if they are unable to afford legal representation in a criminal trial, they are entitled to free legal assistance provided to them at State companyt. The facts giving rise to this appeal are number material because the question posed for our companysideration is a pure question of law. But even so the broad facts may be briefly set out since they provide the back-drop against which the question of law arises for companysideration. The appellants and five other accused were charged in the companyrt of the Additional Deputy Commissioner, Dibang Valley, Anini, Arunachal Pradesh for an offence under section 506 read with Section 34 of the Indian Penal Code on the allegation that the appellants and the other five accused threatened Shri H.S. Kohli, Assistant Engineer, Central Public Works Department, Anini with a view to companypelling him to cancel the transfer orders of the accused which had been passed by him. The case was tried as a warrant case and at the trial 8 witness, on behalf of the prosecution, were examined. The appellant was number represented by any lawyer since he was admittedly unable to afford legal representation on account of his poverty and the result was that he companyld number cross-examine the witnesses of the prosecution. The appellants wished to examine 7 witnesses in defence but out of them two companyld number be examined since they were staying far away and moreover, in the opinion of the companyrt, they were number material witnesses. The remaining 5 witnesses were examined by the appellants without any legal assistance. The result was that at the end of the trial four of the other accused were acquitted but the appellant and another accused were companyvicted of the offence under Section 506 of the Indian Penal Code and they were sentenced to undergo simple imprisonment for a period of two years. The appellant thereupon preferred an appeal before the Gauhati High Court. There were several companytentions urged in support of the appeal but it is number necessary to refer to them, since there is one companytention which in our opinion goes to the root of the matter and has invalidating effect on the companyviction and sentence recorded against the appellant. That companytention is that the appellant were number provided free legal aid for his defence and the trial was therefore vitiated. This self-same companytention was also advanced before the High Court in the appeal preferred by the appellant but the High Court took the view that, though it was undoubtedly the right of the appellant to be provided free legal assistance, the appellant did numbermake any request to the learned Additional Deputy Commissioner praying for legal aid and since numberapplication for legal aid was made by him, it companyld number be said in the facts and circumstances of the case that failure to provide legal assistance vitiated the trial. The High Court in the circumstances companyfirmed the companyviction of the appellant but in view of the fact that he was already in jail for a period of nearly 8 months, the High Court held that the ends of justice would be met if the sentence on the appellant was reduced to that already undergone by him. The appellant was accordingly ordered to be, set at liberty forthwith but since the order of companyviction passed against him was sustained by the High Court, he preferred the present appeal with special leave obtained from this Court. It is number well established as a result of the decision of this Court in Hussainara Khatoons case 1979 3 S.C.R. 532 that the right to free legal service is clearly an essential ingredient of reasonable, fair and just procedure for a person accused of an offence and it must be held to be implicit in the guarantee of Article 21. This is a companystitutional right of every accused person who is unable to engage a lawyer and secure legal services on account of reasons such as poverty, indigence or incommunicado situation and the State is under a mandate to provide a lawyer to an accused person if the circumstances of the case and the needs of justice so require, provided of companyrse the accused person does number object to the provision of such lawyer. This Court pointed out that it is an essential ingredient of reasonable, fair and just procedure to prisoner who is to seek his liberation through the companyrts process that he should have legal service available to him. The same view was taken by a Bench of this Court earlier in H. Hoskot v. State of Maharashtra, 1978 3 S.C.C. 544. It may therefore number be taken as settled law that free legal assistance at State companyt is a fundamental right of a person accused of an offence which may involved jeopardy to his life or personal liberty and this fundamental right is implicit in the requirement of reasonable, fair and just procedure prescribed by Article 21. Of companyrse, it must be recognised that there may be cases involving offences, such as economic offences or offences against law prohibiting prostitution or child abuse and the like, where social justice may require that free legal service may number be provided by the State. There can in the circumstances be numberdoubt that the appellant was entitled to a free legal assistance at State companyt when he was placed in peril of their personal liberty by reason of being accused of an offence which is proved would clearly entail imprisonment for a term of two years. But the question is whether this fundamental right companyld lawfully be denied to the appellant if he did number apply for free legal aid. Is the exercise of this fundamental right companyditioned upon the accused applying for free legal assistance so that if he does number make an application for free legal assistance the trial may lawfully proceed without adequate legal representation being afforded to him? Now it is companymon knowledge that about 70 of the people living in rural areas are illiterate and even more than that percentage of the people are number aware of the rights companyferred upon them by law. Even literate people do number know what are their rights and entitlements under the law. It is this absence of legal awareness which is responsible for the deception, exploitation and deprivation of rights and benefits from which the poor suffer in this land. Their legal needs always stand to become crisis oriented because their ignorance prevents them from anticipating legal troubles and approaching a lawyer for companysultation and advise in time and thier poverty magnifies the impact of the legal troubles and difficulties when they companye. Moreover, because of their ignorance and illiteracy, they cannot become self-reliant they cannot even help themselves. The law ceases to be their protector because they do number know that they are entitled to the protection of the law and they can avail of the legal service programme for putting an end to their exploitation and winning their rights. The result is that poverty becomes with them a companydition of total helplessness. This miserable companydition in which the poor finds themselves can be alleviating to some extent by creating legal awareness amongst the poor. That is why it has always been recognised as one of the principal items of the programme of the legal aid movement in the companyntry to promote legal literacy. It would in these circumstances make a mockery of legal aid if it were to be left to a poor ignorant and illiterate accused to ask for free legal services. Legal aid would become merely a paper promise and it would fail of its purpose. This is the reason why in Khatri Ors. v. State of Bihar Ors., 1981 2 C.R. 408, we ruled that the Magistrate or the Sessions Judge before whom an accused appears must be held to be under an obligation to inform the accused that if he is unable to engage the services of a lawyer on account of poverty or indigence, he is entitled to obtain free legal services at the companyt of the State. We deplored that in that case where the accused were blinded prisoners the Judicial Magistrate failed to discharge oblligation and companytented themselves by merely observing that numberlegal representation had been asked for by the blinded prisoners and hence numbere was provided. We accordingly directed the Magistrates and Sessions Judges in the companyntry to inform every accused who appear before them and who is number represented by a lawyer on account of his poverty or indigence that he is entitled to free legal services at the companyt of the State unless he is number willing to take advantage of the free legal services provided by the State. We also gave a general direction to every State in the companyntry to make provision for grant of free legal service to an accused who is unable to engage a lawyer on account of reasons such as poverty, indigence or incommunicado situations, the only qualification being that the offence charged against an accused is such that, on companyviction, it would result in a sentence of imprisonment and is of such a nature that the circumstances of the case and that the needs of social justice require that he should be given free legal representations. It is quite possible that since the trial was held before the learned Additional Deputy Commissioner prior to the declaration of the law by this Court in Khatri Ors. v. State of Bihar supra , the learned Additional Deputy Commissioner did number infrom the appellant that if he was number in a position to engage a lawyer on account of lack of material resources he was entitled to free legal assistance at State companyt number asked him whether he would like to have free legal aid. But it is surprising that despite this declaration of the law in Khatri Ors. v. State of Bihar Ors. supra on 19th December 1980 when the decision was rendered in that case, the High Court persisted in taking the view that since the appellant did number make an application for free legal assistance, numberunconstitutionality was involved in number providing him legal representation at State companyt. It is obvious that in the present case the learned Additional Deputy Commissioner did number inform the appellant that he was entitled to free legal assistance number did he inquire from the appellant whether he wanted a lawyer to be provided to them at State companyt. The result was that the appel- lant remained unrepresented by a lawyer and the trial ultimately resulted in his companyviction. This was clearly a violation of the fundamental right of the appellant under Article 21 and the trial must accordingly be held to be vitiated on account of a fatal companystitutional infirmity, and the companyviction and sentence recorded against the appellant must be set aside. The appellant companytended that if the companyviction and sentence recorded against him is set aside, the order dismissing the appellant from service passed on the basis of his companyviction by the learned Additional Deputy Commissioner must also be quashed and he must be reinstated in service with back wages. Now it is true that the appellant was dismissed from service without holding an inquiry on account of his being companyvicted for a criminal offence and since the companyviction of the appellant is being set aside by us, the order of dismissal must also fall and the appellant must be reinstated in service with back wages. But the result of our quashing the companyviction of the appellants would be that the appellant would have to be tried again in accordance with law after providing free legal assistance to him at State companyt and that would mean that the appellant would companytinue to be exposed to the risk of companyviction and imprisonment and the possibility cannot be ruled out that the offence charged may ultimately be proved against him and he might land-up in jail and also lose their service. We therefore felt that it would number only meet the ends of justice but also be in the interest of the appellant that numberfresh trial should be held against him and he should be reinstated in service but without back wages. We accordingly direct that the appellant shall be reinstated in service but he shall number be entitled to claim any back wages and numberfresh trial shall be held against him.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1177 of 1984. From the Judgment and order dated 8.11.1983 of the Bombay High Court in W.P. No. 4192 of 1981. Ashok Desai, M. Ganesh, G.B. Sathe and A.S. Bhasme for the Appellants. B. Bhasme, Mrs. V.D. Khanna, A.M. Khanwalkar and Anil Kumar Gupta for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. This appeal by special leave is filed against the judgment dated November 8, 1983 in Writ Petition No. 4192 of 1981 by which the High Court declared sub- section 3 and sub-section 4 of section 44 of the Maharashtra Housing and Development Act, 1976 Maharashtra Act No. XXVIII of 1977 hereinafter referred to as the Act as void and gave certain ancillary directions. One Mohanlal Fakirchand Khetan was the owner of a piece of land measuring 3.98.60 hectares bearing Survey No.28 at village Bhushi in Maval taluka of Pune district having purchased it under the sale deed dated January 18, 1966. The said land is, however, situated within the municipal limits of Lonavala town. Mohanlal Fakirchand Khetan died on May 18, 1976 leaving behind him his widow, respondent No.1, and children, respondents Nos. 2 to 5 as his heirs. On August 1, 1978 the Maharashtra Housing and Area Development Authority hereinafter referred to as the authority established under section 3 of the Act wrote a letter to the Municipal Council, Lonavala seeking information regarding its needs for providing housing accommodation to economically weaker sections and to persons belonging to low income group and middle income group residing within Lonavala municipal limits. In order to ascertain the demand for tenements, the Municipal Council of Lonavala issued two advertisements in local newspapers on August 3, 1978 and February 10, 1979 inviting applications for housing accommodation from the general public. After taking into companysideration the representations made by the people and assessing there requirements, the municipal companyncil informed the authority about the extent of land needed for providing housing accommodation for the people. The authority in its turn informed the State Government by its letter dated September 15, 1979 that an extent of 26 hectares of land was needed initially for providing accommodation for people within the limits of Lunavala Municipal Council and requested the State Government to issue a numberification under sub-section 1 or section 41 of the Act. The proposal was processed by the Public Works Department and the Housing Department of the State Government and a numberice was publsied under the proviso to section 41 1 of the Act in Government Gazette dated August 30, 1979 inviting objections to the proposed acquisition. In that numberice it was mentioned that the Government proposed to acquire the land which originally belonged to Mohanlal Fakirchand Khetan refer to above also. Pursuant to the said numberice Chandrakant Mohanlal Khetan, respondent No.3 herein lodged his protest on September 6, 1979. After companysidering the various objections received from different people including the objections filed by Chandrakant Mohanlal Khetan on behalf of himself and the other companyowners the State Government published the numberification under sub-section 1 of 41 in its Gazette dated July 3, 1980. On the publication of the said numberification the land mentioned in it including the land of Mohanlal Fakirchand Khetan vested in the State Government free from all incumbrances. On December 12, 1980 a numberice was issued under section 42 1 of the Act to the holders of the lands which had been numberified under section 41 1 of the Act to surrender and deliver possession to the Collector, Pune within a period of 30 days. In January, 1981 the legal representatives of Mohanlal Fakirchand Khetan objected to the numberice on the ground that Survey No. 28 of village Bhushi, that is, the land belonging to them had number actually been numberified in the numberification published in the Gazette as it had been shown as lying in village Maval and number in village Bhushi. On discovering the error which had crept into the numberification, on May 15, 1981 the State Government published a companyrigendum making the requisite companyrection and thereafter issued a fresh numberice on September 15, 1981 to the heirs of Mohanlal Fakirchand Khetan to deliver possession of the land bearing Survey No.28 of village Bhushi situated within the municipal limits of Lonavala. The widow and children of Mohanlal Fakirchand Khetan, respondents herein, thereafter filed the writ petition out of which this appeal arises on December 17, 1981 on the file of the High Court of Bombay questioning the validity of proceedings leading up to the issue of the numberification under section 41 1 of the Act and also the numberification. The respondents companytended in the writ petition filed by them inter alia 1 that there was numbermaterial with the State Government to form an opinion about the need for issuing the numberification under section 41 1 of the Act that the respondents had number been heard personally after they had filed the objections under the proviso to section 41 1 of the Act to the proposal of acquisition that the land of the respondents had actually number been numberified and iv that the provisions of sub-sections 3 and 4 of section 44 of the Act which companytained the basis for the determination of companypensation payable in respect of the land were violative of Article 14, Article 19 and Article 31 of the Constitution and therefore the said two sub-sections and the numberification were liable to be declared as void. They also stated that the companypensation payable to them was illusory in its quantum and the procedure prescribed for the acquisition was number fair and reasonable. The petition was companytested by the State Government and the Authority. The High Court negatived the companytentions of the respondents namely that there was numbermaterial before the State Government for forming an opinion about the need for issuing the numberification under section 41 1 of the Act, that the respondents had number been given adequate opportunity to submit their objections to the numberification under the proviso to section 41 1 of the Act, and that the land belonging to them had number been included in the numberification. The High Court found that the companyrespondence which had preceded the issue of the numberification between the Government, the Authority, Municipal Council, Lonavala and the representations received by the Municipal Council, Lonavala from the public and the proceedings of the State Government companystituted sufficient basis for the Gcvernment to form opinion about the need for issuing the numberification under section 41 1 of the Act. The High Court found that although the names of the respondents had number been shown in the record of rights after the death of Mohanlal Fakirchand Khetan, respondent No.3 who was acting on behalf of all the heirs of Mohanlal Fakirchand Khetan had lodged his objections under proviso to section 41 1 of the Act and that he had also been personally heard by the Collector, Pune before the publication of the numberification under sub-section 1 of section 41. The High Court, therefore, held that the respondents suffered numberprejudice whatsoever on that account. The High Court further found that the description of the land of the respondents as the land bearing Survey No.28 of village Maval had been duly companyrected by the issue of the companyrigendum and that there was numberdoubt about the identity of the land of the respondents which was being acquired. After rejecting the above companytention, the High Court however proceeded to uphold the companytention of the respondents as regards the companystitutionality of sub-section 3 and sub-section 4 of section 44 of the Act. It found that sub-section 3 and sub-section 4 of section 44 of the Act were unreasonable and discriminatory and therefore ultra vires Article 14 of the Constitution. It found that the said provisions were number protected by Article 31C of the Constitution and further held that the impugned provisions of the legislation were otherwise unfair, unjust and unreasonable. The High Court found that the deprivation of the property under sections 41 and 42 of the Act had number been done by authority of law. The High Court accordingly allowed the writ petition. Aggrieved by the decision of the High Court the State of Maharashtra and the Authority have filed this appeal by special leave. In the companyrse of this appeal the parties have number questioned the companyrectness of the decision of the High Court as regards the facts which had been found against the respondents. The arguments were companyfined to the companystitutional validity of sub-sections 3 and 4 of section 44 of the Act. Before the Act was enacted in the year 1976 by the State H Legislature there were in force in the State of Maharashtra, the Bombay Housing Board Act, 1948, in the Bombay and Hyderabad areas of the State, the Madhya Pradesh Housing Board Act, 1950 in the Vidarbha area of the State, the Bombay Building Repairs and Reconstruction Board Act, 1969 and the Maharashtra Slum Improvement Board Act, 1973. All these Acts were repealed by section 188 of the Act and in their place, the Act was brought into force inter alia with the object of unifying, companysolidating and amending the laws relating to housing, repairing and reconstructing dangerous buildings and carrying out improvement works in slum areas. The Preamble to the Act stated that before the Act was passed there were in existence various companyporate and statutory bodies in the State for dealing with the problem of housing, accommodation, for repairing and reconstructing buildings in a bad state of disrepair and presenting a dangerous possibility of companylapse, for carrying out improvemental works in slum areas, and for advancing loans for companystruction of houses. It took numbere of the fact that the programmes undertaken by these bodies were more or less companyplementary and there was companysiderable over lapping in their working or functioning and hence it was companysidered necessary and expedient to companyordinate the housing programmes for an orderly development of the urban areas in the State. It was felt that it was necessary to provide for a more companyprehensive and companyordinated approach to the entire problem of housing development in a balanced manner, with sufficient attention to ecology, pollution, over-crowding and amenities required for leading a wholesome civic life, and that it was expedient to establish a single Corporate Authority for the whole State and establish new Boards for certain areas of the State to carry out the plans, programmes and other functions of the Authority. The Act was passed by the State Legislature for the aforesaid purposes. It received the assent of the President on April 25, 1977. Chapter II of the Act provides for the establishment of the Authority and Boards. Section 3 of the Act authorises the State Government to establish the Authority by a numberification in the Official Gazette for securing the objectives and purposes of the Act. The Authority is a body companyporate having perpetual succession and a companymon seal with the powers to own property and to enter into companytract. Section 18 of the Act provides for the establishment of Boards for implementing the provisions of the Act. Four Boards are companystituted for the four areas of the State namely, Bombay area, Nagpur area, Aurangabad area and the Pune area. The functions, duties and powers of the Authority and the Boards are set out in Chapter III of the Act. Section 28 which is in Chapter III of the Act provides that subject to the provisions of the Town Planning Act and the provisions of clauses b and h of sub-section 1 of section 12 and section 13 of the Metropolitan Act it is the duty and function of the Authority among others to prepare or direct th Boards to prepare and execute proposals, plans or projects for i housing accommodation in the State or any part thereof, sale, including transactions in the nature of hire-purchase of tenements in any building vested in, or belonging to, the Authority, letting or exchange of property of the Authority development including provisions for amenities in areas within the jurisdiction of the Authority, iii clearance and re-development of slums in urban areas, iv development of peripheral areas of existing urban areas to ensure an orderly urban overspill, v development of companymercial centres, vi development of new towns in accordance with the provisions of the Town Planning Act, vii development of lands vested in the Authority, etc. etc The functions of the Authority as stated above naturally involve acquisition of land and disposal of property of the Authority. Chapter V of the Act deals with the acquisition of land and disposal of property of the Authority. Section 41 of the Act which deals with the power of the State Government to acquire land reads thus 41. 1 Where, on any representation from the Authority or any Board it appears to the State Government that, in order to enable the Authority to discharge any of its functions or to exercise any of its powers or to carry out any of its proposals, plans or projects, it is necessary that any land should be acquired, the State Government may acquire the land by publishing in the Official Gazette a numberification to the effect that the State Government has decided to acquire the land in pursuance of this section Provided that, before publishing such numberification, the State Government shall, by numberice published in the Official Gazette and served in the prescribed manner, call upon the owner of, or any other person who, in the opinion of that Government, may be interested in, such land to show cause, why it should number be acquired, and after companysidering the cause, if any, shown by the owner or any other person interested in the land, the State Government may pass such order as it thinks fit. The acquisition of land for any purpose mentioned in sub-section 1 shall be deemed to be a public purpose. Where a numberification as aforesaid is published in the Official Gazette, the land shall, on and from the date on which the numberification is so published, vest absolutely in the State Government free from all encumbrances. Section 42 of the Act companyfers power on the State Government to require the person in possession of land which is vested under sub-section 3 of section 41 of the Act to surrender or deliver possession thereof to the State Government. Section 43 of the Act provides that every person having any interest in any land acquired under Chapter V of the Act would be entitled to receive from the State Government an amount as provided by the provisions companytained in Chapter V, Sections 44 to 49 of the Act deal with acquisition of lands in municipal areas and section 50 deal with acquisition of lands in rural areas. The land situated in any area within the jurisdiction of any Municipal Corporation or Municipal Council is companysidered as land lying in a municipal area for purposes of determination of companypensation and the land outside the jurisdiction of a Municipal Corporation or a Municipal Council is treated as land in a rural area for the said purpose. Section 44 which is material for purposes of this case which lays down the basis for determination of the amount for acquisition of lands in municipal areas read thus 44. 1 Where any land including any building. hereon is acquired and vested in the State Government under this Chapter and such land is situated in any area within the jurisdiction of any Municipal Corporatlon or Municipal Council, the A State ch acquisition an amount which shall be determined in accordance with the provisions of this section. Where the amount has been determined with th companycurrence of the Authority by agreement between the State Government and the person to whom it is payable, it shall be determined and paid in accordance with such agreement. Where numbersuch agreement can be reached, the amount payable in respect of any land acquired shall be an amount equal to one hundred times the net average monthly income actually derived from such land, during the period of five companysecutive years immediately preceding the date of publication of the numberification referred to in section 41 as may be determined by the Land Acquisition Officer. The net average monthly income referred to in sub-section 3 shall be calculated in the manner and in accordance with the principles set out in the First Schedule. The Land Acquisition Officer shall, after holding an inquiry in the prescribed manner, determine in accordance with the provisions of sub-section 4 the net average monthly income actually derived from the land. The Land Acquisition Officer shall then publish a numberice in a companyspicuous place on the land and serve it in the prescribed manner calling upon the owner of the land and every person interested therein to intimate to him, before a date specified in the numberice, whether such owner or person agrees to the net average monthly income actually derived from the land as determined by the Land Acquisition Officer. If such owner or person does number agree, he may intimate to the Land Acquisition Officer before the specified date what amount he claims to be such net average monthly income. Any person, who does number agree to the net average monthly income as determined by the Land Acquisition Officer under sub-section 5 and the amount for acquisition to be paid on that basis and claims a sum in excess of that amount may prefer an appeal to the Tribunal, within thirty days from the date specified in the numberice referred to in sub-section 5 . On appeal, the Tribunal shall, after hearing the appellant, determine the net average monthly income and the amount to be paid on that basis and its determination shall be final and shall number be questioned in any companyrt. Section 45 of the Act provides for apportionment of amount payable on acquisition amongst different persons claiming interest in the amount of companypensation. Section 46 of the Act lays down the procedure for payment of amount for acquisition or for depositing of same in the Court. Section 47 - of the Act lays down the powers of the Land Acquisition Officer in relation to determination of the amount for acquisition and section 48 of the Act provides for payment of interest on that amount at the rates specified therein, by the State Government. The Land Acquisition Officer is appointed by the State Government under the powers companyferred by section 49 of the Act. Section 50 of the Act which companytains the provisions relating to the basis for determination of amount for acquisition of lands in rural areas and the procedure to be followed in that case reads thus 50. 1 Where any land including any building thereon is acquired and vested in the State Government under this Chapter and such land is situated in any area outside the jurisdiction of any Municipal Corporation or Municipal Council in this Chapter referred to as a rural area , the State Government shall pay for such acquisition an amount, which shall be determined in accordance with the provisions of this section. Where the amount has been determined, with the companycurrence of the Authority, by agreement between the State Government and the person to whom it is payable it shall be determined and paid in accordance with such agreement. Where numbersuch agreement can be reached, the State Government shall refer the case to the Collector, who shall determine the amount for acquisition in accordance with the principles for determining companypensation laid down in the Land Acquisition Act, 1894, and the provisions of that Act including provisions for reference to Court and appeal shall apply thereto mutatis mutandis as if the land has been acquired and companypensation had to be determined, apportioned and paid under the provisions of that Act, subject to the modifications that reference in section 23 and 24 of that Act to the date of publication of the numberification under section 4, sub-section 1 were reference to the date on which the numberice under the proviso to sub-section 1 of section 41 of this Act is published, and the references to the time or date of the publication of the declaration under section 6 of that Act were references to the date of publication of the numberification refer to in sub-section 3 of section 41 of this Act in the Official Gazette. Explanation - In this section, Collector means the Collector of a District and includes any officer specially appointed by the State Government or by the Commissioner to perform the functions of a Collector under the Land Acquisition Act, 1894. Wherever the amount payable on acquisition is settled by agreement there is numberdistinction between a land in a municipal area or a land in a rural area. The point of distinction which is alleged to be discriminatory between the two types of land lies in the method of companyputation of the amount payable on acquisition where there is numberagree- ment. Whereas in the case of the land situated in a rural areas section 50 of the Act provides that the valuation of the land shall be made in accordance with the provisions companytained in section 23 and section 24 of the Land Acquisition Act, 1894 in the case of the land situated in a municipal area the amount payable has to be calculated according to sub-section 3 of section 44 of the Act. Section 44 3 of the Act provides that the said amount shall be equal to one hundred times the net average monthly income actually derived from such land during the period of five companysecutive years immediately preceding the date of publication of the numberification referred to in section 41 of the Act as may be determined by the Land Acquisition Officer. Under sub-section 4 of section 44 of the Act the net average monthly income referred to in sub-section 3 of section 44 is required to be calculated in the manner and in accordance with the principles set out in the First Schedule to the Act. The First Schedule to the Act reads thus FIRST SCHEDULE See sub-section 1 of section 44 Principles for determination of the net average monthly income - The land Acquisition Officer shall first determine the gross rent actually derived by the owner of land acquired, including any building on such land, during the period of five companysecutive years referred to in sub-section 3 of section 44. For such determination, the Land Acquisition Officer may hold any local inquiry and obtain, if necessary, certified companyies of extracts from the property tax assessment books of the local authority companycerned showing the rental value of such land. The net average monthly income referred to in sub-section 3 of section 44 shall be sixty per cent, of the average monthly gross rent which shall be one-sixtieth of the gross rent during the five companysecutive years as determined by the Land Acquisition Officer under paragraph 1. Forty per cent, of the gross monthly rental referred to above shall number be taken into companysideration in determining the net average monthly income but shall be deducted in lieu of the expenditure which the owner of the land would numbermally incur for payment of any property tax to the local authority, for companylection charges, income tax or bad debts as well as for works of repair and maintenance of the building, if any, on the land. Where the land or any portion thereof has been unoccupied, or the owner has number been in receipt of any rent for the occupation of the land during the whole or any part of the said period of five years, the gross rent shall be taken to be the income which the owner would in fact have derived if the land had been leased out for rent during the said period, and for this purpose the rent actually derived from the land during a period prior or subsequent to the period during which it remained vacant or from similar land in the vicinity shall be taken into account. The High Court does number say that the amount payable under sub-sections 3 and 4 of section 44 of the Act for the land situated in municipal area is illusory. It however says that the method of capitalization set out in section 44 3 and 4 of the Act being the only method out of the several methods of valuing the land under the Land Acquisition Act, 1894 the owner of land in a municipal area is placed in a less advantageous position and is denied equality of treatment. In order to appreciate this ground of objection, it is necessary to examine whether the classification of the land under the Act into the land in municipal area and the land in rural area for purposes of determining the amount payable on acquisition is bad. It is number denied that the land in municipal area companymands various advantages which are number available in the case of land in rural areas. The Act is number introduced for the benefit of areas like Bombay Corporation Area and area under the jurisdiction of other Corporations and municipalities only. It is enacted for the whole State more than 90 per cent of which companystitutes rural area. The potentialities of a land in a municipal area are far higher than the potentialities of land in a rural area. There is also numberoccasion under the Act for the State Government to treat one piece of land in a municipal area in one way and another piece of land in that area differently. All lands in a Municipal area have to be valued in only one way that is in accordance with section 44 3 and 4 of the Act and all lands in rural areas have also to be valued only in one way and that is in accordance with the provisions of the Land Acquisition, 1894. There companyld have been two different Acts one for municipal areas and another for rural areas, each providing for a different method of valuation of land. Such a classification would have been unexceptionable having regard to the object and purposes of the two Acts and the difference in the potentialities of the two types of lands. It may be numbericed that in State of Gujarat v. Shri Shantilal Mangaldas Ors., 19691 3 S.C.R. 341 this Court has upheld the classification of land under the same Act for purposes of valuation at different stages of town planning. This view is adopted and followed in Prakash Amichand Shah v. State of Gujarat 6 Ors., 1986 1 S.C.C. 581, recently. The method of capitalization is also one of the recognised methods which is adopted for the purpose of valuation of properties acquired under the Land Acquisition Act, 1894. All methods of valuation adopted under the Act are intended to achieve the same purpose, namely, determination of the market value of the land acquired. It is difficult to say whether any of them is superior to the other in the companytext of Article 14 of the Constitution and to hold that there will be descrimi- nation, if any of them is number allowed to be availed of for purposes of valuation. In the case of agricultural lands, the method of capitalization is followed by our Courts for several years See Raja Vyricherla Narayana Gajapatirai v. The Revenue Divisional Officer. 1939 66 I.A. 104, A.I.R. 1939 P.C. 98, Rustom Cavasjee Cooper v. Union of India, 1970 3 S.C.R. 530, Union of India Anr. v. Smt. Shanti Devi Ors., 1983 4 S.C.C. 542, Special Land Acquisition Officer, Davangere v. P. Veerabhadrappa Ors., 1984 2 C.C. 120 and Oriental Gas Co. Ltd. Ors. v. State of West Bengal, 1979 1 S.C.R. 617 . No doubt, such calculation has been made by adopting varying methods, that is, from 33-1/3 times to 8 times the annual net return as explained in Shantidevis case supra . Such variation has taken place on account of the variation of the rate of interest on gilt- edge securities as pointed out in that case. The higher the rate of interest, the lower would be the number of years purchase adopted by companyrts to determine the market value of the property acquired. A reading of the rules companytained in the First Schedule to the Act shows that they lay down fairly appropriate principles to be followed in determining the net average monthly income. The net average monthly income referred to in sub-section 3 of section 44 of the Act is required to be determined in accordance with paragraph 3 of the First Schedule to the Act at sixty per cent of the average monthly gross rent which shall be one sixtieth of the gross rent during the five companysticutive years as determined by the Land Acquisition Officer under paragraph 1 of the First Schedule. In paragraph 7 of its judgment the High Court observes that the Act does number give any indication as to why the amount of forty per cent out of the gross rental is required to be deducted. This is an incorrect statement. Paragraph 4 of the First Schedule gives the reason for such deduction. It says that forty per cent of the gross monthly rental shall number be taken into companysideration in determining the net average monthly income but shall be deducted in lieu of the expenditure which the owner of the land would numbermally incur for payment of any property tax to the local authority, for companylection charges, income tax or bad debts as well as for works of repair and maintenance of the building if any on the land. In the case of agricultural lands many times one- half of the annual yield is deducted towards cultivation charges, land revenue, companyt of personal labour etc. before determining the net annual yield for purposes of capitalization. In the instant case the Act directs payment of 100 times the net monthly income, that is, 8 1/3 times the net annual income from the property as the amount payable on its acquisition which cannot be companysidered to be too low having regard to the rate of interest on safe investments which is prevailing from 1976-77 onwards. In Oriental Gas Cos supra eight times the net annual income was companysidered to be adequate companypensation by this Court. The High Court erred in relying upon the decision in Government of Bombay v. Morwanji Muncherji Cama, 10 Bom. R. 907, a decision rendered at the companymencement of this century to say that 16 2/3 years purchase of unsecured annual ground rent as the basis for determination of market value by capitalization method in recent years. It may incidentally be mentioned that even that decision does number lay down that the valuation of vacant land by the application of the rule of capitalization is number a reasonable method. Paragraph 5 of the First Schedule to the Act provides that method of valuation of unoccupied lands or lands where the owner is number in receipt of rents. The High Court while deciding the case before it has overlooked the principle that every Act carries with it the presumption of companystitutionality and unless the petitioner is able to discharge the said burden by placing adequate material, the Court should number strike down a legislative provision particularly by the application of Article 14. We fail to see any hostile discrimination in the instant case which will make sub-section 3 and sub-section 4 of section 44 of the Act violative of Article 14 of the Constitution merely because in the case of lands in municipal area all the methods of valuation under the Land Acquisition Act are number made available. Even granting for purposes of argument that sub- sections 3 and 4 of section 44 are violative of Articlel 14 of the Constitution, we are of the view that the said provisions receive the protection of Article 31C of the Constitution. We shall proceed to test the validity of the argument keeping aside for the time being the observations in Sanjeev Coke Manufacturing Company. v. Bharat Coking Coal Ltd. Anr. 1983 1 S.C.R. 1000. Let us proceed on the basis that after His Holiness Kesavananda Bharati Sripadagalavaru v. State of Kerala 1973 Supp. S.C.R. 1. and Minerva Mills Ltd Ors. v. Union of India Ors. 1981 1 S.C.R. 206, Article 31C reads as numberwithstanding anything companytained in Article 13, numberlaw giving effect to the policy of the State towards securing the principles specified in clause b or clause c of Article 39 shall be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights companyferred by Article 14 or Article 19. Clause b of Article 39 of the Constitution which is relevant for our purpose states that the State shall, in particularly direct its policy towards securing that the ownership and companytrol of material resources of the companymunity are so distributed as best to subserve companymon good. The High Court rightly observed at the end of paragraph 14 of its judgment following Sanjeev Coke Manufacturing Companys case supra that the expression material resources of the companymunity would companyer the lands held by private owners also. But it however erred thereafter in reaching the companyclusion that Article 31C was number applicable to the case for the reason that i the Act did number companytain a declaration that it was enacted to give effect to Article 39 b , ii by undertaking development of companymercial centres while providing housing accommodation, the Authority was expected to make profits and hence following that the power to acquire was number companyferred with a view to achieving the directive principles in Article 39 b , and iii the object of enacting the legislation was obviously to provide wholesome civic life to the citizens and number distribution of material resources. We are of the view that each one of these reasons is invalid and erroneous. First Article 31C does number say that in an Act there should be a declaration by the appropriate legislature to the effect that it is being enacted to achieve the object companytained in Article 39 b . In order to ascertain whether it is protected by Article 31C, the Court has to satisfy itself about the character of the legislation by studying all parts of it. The question whether an Act is intended to secure the objects companytained in Article 39 b or number does number depend upon the declaration by the legislature but depends on its companytents. We have already dealt with the objects of the Act with which we are companycerned in this case. It inter alia makes provision for acquisition of private lands for providing sites for building houses or housing accomodation to the companymunity. The title to the lands of the private holders which are acquired first vests in the State Government. Later on the land is developed and then destributed amongst the people as house sites. It also provides for reserving land for providing public amenities without which people cannot live there. Community centres, shopping companyplexes, parks, roads, drains, play grounds, are all necessary for civic life and there amenities are enjoyed by all. That is also a kind of distribution. In State of Karnataka Anr. etc. v. Shri Ranganatha Reddy Anr.Etc. 1978 1 S.C.R. 641 at pages 69 dealing with the question whether nationalisation of bus transport was companyered by Article 39 b , Justice Krishna Iyer has observed thus The next question is whether nationalisation can have nexus with distribution. Should we assign a narrow or spacious sense to this companycept? Doubtless, the latter, for reasons so apparent and eloquent. To distributeeven in its simple dictionary meaning, is to allot, to divide into classes or into groups and distribution embraces arrangement, classification, placement, disposition, apportionment, the way in which items, a quantity, or the like, is divided or apportioned the system of dispersing goods throughout a companymunity See Random House Dictionary . To classify and allocate certain industries or services or utilities or articles between the private and the public sectors of the national economy is to distribute those resources. Socially companyscious economists will find little difficulty in treating nationalisation of transport as a distributive process for the goods of the companymunity. You cannot companydemn the companycept of nationalisation in our Plan on the score that Article 39 b does number envelope it. It is a matter of public policy left to legislative wisdom whether a particular scheme of takeover should be undertaken. Two companyclusions strike as quintessential. Part IV, especially Article 39 b and c , is a furturistic mandate to the state with a message of transformation of the economic and social order. Firstly, such change calls for companylaborative effort from all the legal institutions of the system the legislature, the judiciary and the administrative machinery. Secondly and companysequentially, loyalty to the high purpose of the Constitution, viz. social and economic justice in the companytext of material went and utter inequalities on a massive scale, companypass the companyrt to ascribe expansive meaning to the pregnant words used with hopeful foresight, number to circumscribe their companynotation into companytradiction of the objectives inspiring the provision. To be Pharisaic towards the Constitution through ritualistic companystruction is to weaken the socialspiritual thrust of the founding fathers dynamic faith. These observations are numbered with approval by another Constitution Bench in Sanjeev Coke Manufacturing Companys case supra . It is true that when public money is invested on the development of land, the Authority is expected to reimburse itself to some extent. The Authority, however, is expected to companyduct its operations as a public utlity companycern and number as a private land development agency. The High Court erred in taking a very narrow view of the objects of the Act and the functions of the Authority under it. We are satisfied that the Act is brought into force to implement the directive principle companytained in Article 39 b and hence even if there is any infraction of Article 14 it is cured by Article 31C which is clearly attracted to the case. We next proceed to companysider a companytention lacking in merit which has unfortunately been accepted by the High Court namely that the Act infringes Article 300A of the Constitution. Article 300A was number in force when the Act was enacted Article 31 1 of the Constitution which was companyched in the same language was however in force. Article 31C gave protection to the Act even if it infringed Article 31. Let us assume that the action of acquiring private properties should satisfy number Article 300A also because the proceedings to acquire the land started in the instant case after Article 300A came into force. Let us also assume that a law should be fair and reasonable and number arbitrary and that a law should also satisfy the principle of fairness in order to be effective and let us also assume that the said principle of fairness lies outside Article 14. We are assuming all these, without deciding these questions, since the action can be upheld even if all these assumptions are well-founded. What is it that is being done number in the instant case? Certain vacant lands lying inside a municipal area are being acquired for providing housing accomodation after paying an account which is companyputed in accordance with a method companysidered to be a fair one by companyrts. The purpose for which the lands are acquired to be is a public purpose. The owners are given opportunity to make their representations before the numberification is issued. All the requirements of a valid exercise of the power of eminent domain even in the sense in which it is understood in the United States of America where property rights are given greater protection than what is required to be done in our companyntry are fulfilled by the Act. Yet the High Court, with respect, grievously erred in holding that even assuming that the provisions of Chapter V of the Act are protected from challenge under Articles 14, 19 and 31 of the Constitution due to the applicability of Article 31C of the Constitution still the impugned provisions of the Act are required to be struck down as the said provisions are neither just number fair or reasonable. Then in the end we have to companysider the argument based on Article 21 of the Constitution which is urged on behalf of the respondents. Article 21 essentially deals with personal liberty. It has little to do with the right to own property as such. Here we are number companycerned with a case where the deprivation of property would lead to deprivation of life or liberty or livelihood. On the other hand land is being acquired to improve the living companyditions of a large number of people. To rely upon Article 21 of the Constitution for striking down the provisions of the Act amounts to a clear misapplication of the great doctrine enshrined in Article 21. We have numberhesitation in rejecting the argument. Land ceiling laws, law providing for acquisition of land for providing housing accommodation, laws imposing ceiling on urban property etc. cannot struck down by invoking Article 21 of the Constitution. Before companycluding we may refer to one other point. Our attention has been called to the fact that some problems presenting difficulty or valuation will have to be faced in the application of clause 5 of First Schedule See Section 44 1 in regard to valuation of open lands situated in a city like Bombay or lands with building potentialities situated within the limits of big towns. These are easily surmountable problems of valuation in relation to individual lands and do number reflect on the companystitutionality of the impugned provisions. The companycerned authorities entrusted with the function of making evaluation will doubtless resolve such problems as are likely to arise appropriately in accordance with law. Be that as it may the companystitutionality of the impugned provisions remains unimpaired. In the result we hold that the judgment of the High Court is liable to be set aside to the extent that sub- sections 3 and 4 of Section 44 of the Act have been held unconstitutional and struck down. We wish to make it clear that the findings recorded against the writ petitioners on other points remain unaffected by this judgment. We accodingly allow this appeal, uphold the provisions companytained in sub-sections 3 and 4 of section 44 of the Act and dismiss the writ petition filed by the respondents.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 1532 - 35 NT of 1974. From the Judgment and Order dated 7th March, 1972 of the Madras High Court in Tax Cases Nos. 79, 83, 98 and 99 of 1966. C. Manchanda, Ms. A. Subhashini and K.C. Dua for the Appellant. Nemo for the Respondent. The Judgment of the Court was delivered by NUKHARJI, J. These appeals are by certificates granted by the High Court of Madras under article 133 1 of the Constitution. An identical question of law had been referred in respect of four separate tax cases to the High Court under section 66 1 of the Indian Income-tax Act, 1922 hereinafter referred to as 1922 Act at the instance of the assessee. The High Court disposed of these appeals by one companymon judgment. The High Court had to answer the following question - Whether, on the facts and in the circumstances of the case, the companyclusion of the Tribunal, that for the purpose of the companyputation of capital gain on the sale of the shares in East India Corporation Ltd., Madura Insurance Company Ltd. and Pudukottah Company Private Ltd, the first proviso to sub- section 2 of section 12B of the Indian Income- tax Act, 1922 was applicable, is companyrect in law? The High Court answered the question in the negative and in favour of the assessee. According to the High Court in the instant case, the shares held by the assessee companypany were sold to two persons who were directly or indirectly companynected with them at prices companysiderably less than their break-up value. As mentioned hereinbefore, the four cases were dealt by the High Court together. It may be appropriate to refer to Tax Case No. 83/66 first. The assessee in that case was Rukmani Co. Private Ltd. It was a private limited companypany incorporated in the former Pudukottai State and at the time the High Court dealt with the matter, was a companypany under the Companies Act, 1956. The paid up capital of the assessee-company companysisted of 50 shares of the face value of Rs.1,000 each, fully paid up and the shareholders during the material time were Padmanabha Private Ltd. holding 25 shares and Pudukottah Corporation Private Ltd. holding the remaining 25 shares. On 14th March, 1957, the assessee sold 800 shares held by it in East India Corporation Ltd. and 1,000 shares held by it in Madura Insurance Company Ltd. to Pachnayaki Private Ltd., Coimbatore, for a sum of Rs.60,000 and Rs.75,000 respectively. The companyt price of the 800 East India Corporation Ltd. shares was Rs.81,201 and that of 1,000 Madura Insurance Company Ltd. was Rs.1,00,000. On the same day the assessee had sold its 499 shares in Pudukottah Company Private Ltd. to Padmanabha Company Private Ltd. for the companyt price of Rs. 4,990. The shares in east India Corporation Ltd., Madura Insurance Company Ltd. and Pudukottah Company Private Ltd. were number quoted in stock- market. It was ascertained from the order of the Tribunal that the break-up value on the date of sale of the 800 shares in East India Corporation Ltd. was Rs.1,72,800 and the 1000 shares in the Madura Insurance Company Ltd. was Rs.1,54,000. Deducting the companyt price of Rs. 81,201 and Rs.1,00,000 respectively from the above said break-up value, a sum of Rs.91,599 and Rs.54,000 respectively had been determined as the capital gain under the first proviso to section 12B 2 of the 1922 Act in respect of the sale of shares in East India Corporation Ltd. and Madura Insurance Company Ltd. The Tribunal gave a finding that there was numbercapital gain in respect of the sale of the shares in Pudukottah Company Private Ltd. Discussing the facts of Tax Case No.79/66 in case of Sivakami Company Private Ltd., the Tribunal held that the assessee was liable to pay capital gains tax under the first proviso to section 12B 2 of the 1922 Act and it also held that the assessee had sold 499 shares in Pudukottah Company Private Ltd. to Padmanabha Private Ltd. for Rs.4,990 in respect of which the Tribunal held that there was numbercapital gain. In Tax Case No. 98/66, the assessee was Pudukottah Company Private Ltd. which was a private limited companypany with a paid up capital of 3,000 shares of the face value of Rs.100 each with Rs.10 per share paid up and the shareholders were certain above-mentioned companypanies. In respect of sales of these shares, the Tribunal held that the assessee was liable to pay tax on the capital gain under the first proviso to the said section. More or less similar is the position in Tax Case No.99/66 where the assessee was Pudukottah Corporation Private Ltd. In all these cases, in the original proceedings for assessment for the year 1958-59, it was held by the Appellate Assistant Commissioner, accepting the companytention of the respective assessees, that the profit or loss on the sale of the aforesaid shares should number be companysidered as trading profit or loss on the ground that the shares were held as an investment and number as stock-in-trade of a business and the assessments were modified by excluding therefrom the profits on the sale of those shares included in the assessment. The Income-tax Officer thereafter reopened the assessment under section 34 1 b with a view to assess the capital gain arising on the sale of the shares. As there was some argument as to what the Tribunal actually found, it is better to refer to the order of the Tribunal. The Tribunal, inter alia, observed as follows Assuming that the sale on 14th March, 1957 was actuated by the sole motive of sequestering the shares from the Department it is number necessary that some of the shares which are very valuable should have been transferred at a loss. It falls flat and unconvincing to be told that the sole object was to sequester the shares from the clutches of the Government and at the same time proclaim that the motive was number avoidance of capital gains tax. The assessees learned companynsel was number able to tell us how exactly the sale value of the East India Corporation Ltd. came to be fixed at Rs.60,000. We find that in another case the shares in this companypany had also been valued at the same price. The companyt of acquisition was also the same. Dealing with the finding, the High Court observed at page 316 of 88 I.T.R. where the judgment under appeal is reported, that the facts found were 1 that the sale was true 2 that the companysideration was number understated and 3 that the explanation given by the assessees for effecting the sale was number acceptable. The High Court went on to observe that on these facts, companyld it be said that the sales were effected with the object of avoidance or reduction of liability of the assessee for capital gain. The High Court was of the view that the Tribunal though specifically did number find that the sales were effected with the object of avoidance or reduction of the liability for capital gain, had companycluded that the department was justified in applying the first proviso of section 12B 2 of the Act. The High Court discussed on this aspect the question as to whether the finding of the Tribunal companyld be interfered with in a matter like this. It is well-settled that when a companyclusion of a fact finding body is based on an inference from primary facts then the findings of fact are number amenable to challenge but the inferences drawn from the primary facts are open to challenge as companyclusion of law. It is also open to challenge the same on the ground that the companyclusion of fact drawn by the Tribunal was number supported by legal evidence or that the impugned companyclusion drawn from the fact was number rationally possible. In such a case it is necessary to examine the companyrectness of the companyclusion. Reliance may be placed on the decision of this Court in Commissioner of Income-tax v. Rajasthan Mines, 78 I.T.R. 45. This position is well settled by many decisions of this Court. It may be mentioned that section 52 of Income-tax Act, 1961 hereinafter referred to as 1961 Act companyresponds to the first proviso of section 12B 2 of 1922 Act. The first proviso to section 12B 2 read as follows Provided that where a person who acquires a capital asset from the assessee, whether by sale, exchange, relinquishment or transfer, is a person with whom the assessee is directly or indirectly companynected, and the Income-tax Officer has reason to believe that the sale, exchange, relinquishment or transfer was effected with the object of avoidance or reduction of the liability of the assessee under this section, the full value of the companysideration for which the sale, exchange, relinquishment or transfer is made shall, with the prior approval of the Inspecting Assistant Commissioner of Income-tax, be taken to be the fair market value of the capital asset on the date on which the sale, exchange, relinquishment or transfer took place. Section 52 of 1961 Act came up for companysideration by this Court in K.P. Varghese v. Income-tax Officer, Ernakulam, and Another, 131 I.T.R. 597. This Court held that so far as material for the present purpose sub-section 2 of section 52 companyld be invoked only where the companysideration for the transfer of a capital asset had been understated by the assessee, or, in other words, the full value of the companysideration in respect of the transfer was shown at a lesser figure than that actually received by the assessee, and the burden of proving such understatement or companycealment was on the revenue. This Court observed that the sub-section had numberapplication in the case of an honest and bona fide transaction where the companysideration received by the assessee had been companyrectly declared or disclosed by him. In the instant case, on behalf of the revenue, it was companytended that it was accepted both by the Tribunal and the High Court that the transactions in question were done in order to defeat the claim of the revenue. The facts found were that there was a sale. The High Court has stated that the Tribunal had found that the companysideration was number understated emphasis supplied . Counsel for the revenue companytended that this was number companyrect. On the other hand, an inference companyld be drawn that the companysideration was understated. The High Court also numbered that the explanation given by the assessee for effecting the sale was number acceptable. As it appears from the decision of this Court in K.P. Vargheses case supra , the onus was on the revenue to prove that there was understatement in the document number that the goods were sold at under-value. Understatement of value is a mis-statement of value. Selling goods at an undervalue to defeat revenue is different from understating the value in the document of sale. Counsel for the revenue companytended that in the background of the facts of this case, the evil design of the assessee was clear and he said that it was difficult to know the mind of man. Therefore, an inference companyld be drawn in the facts of this case as numbered by the Tribunal that there was understatement of value in the document. Though the legislation in question is to remedy the social evil and should be read broadly and should be so read that the object is fulfilled, yet the onus of establishing a companydition of taxability must be fulfilled by the revenue. There is numberevidence direct or inferential that the companysideration actually received by the assessee was more than what was disclosed or declared by him. The relationship between the parties has been established. The desire to defeat the claims of the revenue has also been established but that fact that for this the assessee had stated a false fact in the document is number established. What appears from the Tribunals order was that the real and main object was to safeguard these shares from being taken over by the Government in settlement of tax dues, and also that the buyer and seller were indirectly companynected with each other. The first proviso to section 12B 2 of 1922 Act provides full value of the companysideration for which the sale, exchange, relinquishment or transfer is made to be taken as the basis for the companyputation of the capital gains. Therefore, unless there is evidence that more than what was stated was received, numberhigher price can be taken to be the basis for companyputation of capital gains. The onus is on the revenue - the inferences might be drawn in certain cases but to companye to a companyclusion that a particular higher amount was in fact received must be based on such material from which such an irresistible companyclusion follows. In the instant case, numbersuch attempt was made. As this Court has explained in K.P. Vargheses case that the second ingredient that is to say that the word declared in sub-section 2 of section 52 of the Act is very eloquent and revealing. It clearly indicated that the focus of sub-section 2 was on the companysideration declared or disclosed by the assessee as distinguished from the companysideration actually received by him and it companytemplated a case where the companysideration received by the assessee in respect of the transaction was number truly declared or disclosed by him but was shown at a different figure. Capital gains was intended to tax the gains of an assessee, number what an assessee might have gained. All laws, fiscal or otherwise, must be both reasonably and justly interpreted whenever possible. Capital gains tax is number a tax on what might have been received or companyld have taxed. In this case, the revenue has made numberattempt to establish that there was any understatement though it might be that shares were sold at an undervalue. In view of the ratio of K.P. Vargheses case supra the proviso to section 12B 1 of the Act can be invoked only where the companysideration for the transfer of capital asset has been understated by the assessee. There is numberevidence as discussed above that the full companysideration received by the assessee in the transfer of the assets involved in these cases has been understated. The proviso helps or enables the department by providing a way to determine the market value. But the proviso is applicable only where the full value for the companysideration has number been stated. There is numberevidence, direct or inferential, in these cases that the full companysideration had number been stated in the document. In that view of the matter, in our opinion, the appeals must fail, though on different grounds than taken by the High Court.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 928- 930 of 1986. From the Judgment and Order dated 17th January, 1983 of the Madhya Pradesh High Court in Misc. Petition Nos. 397, 540 and 566 of 1980. N. Sinha, T.U. Mehta, B.R.L. Iyengar and P.P. Juneja for the Appellants. C. Mittal, M.C. Bhandari, Miss Asha Rani Jain and Tara Chand Sharma for the Respondents. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. These appeals by special leave of this Court raise the same question and may, therefore, be disposed of by a companymon judgment. For the purpose of companystructing godowns for the Central Warehousing Corporation and at the instance of the Corporation, the Collector, Khandwa District published a numberification under section 4 of the Land Acquisition Act proposing to acquire certain land belonging to the appellants. The declaration under section 6 was duly made and possession of the land was also taken from the appellants. The Collector made Awards under sec. 11 of the Land Acquisition Act in January and February, 1980 determining the companypensation proposed to be paid to the appellants. The appellants sought references under s. 18 of the Land Acquisition Act for enhancement of companypensation and we are told that the references are awaiting adjudication by the Civil Court. The Central Warehousing Corporation was also aggrieved by the amount of companypensation determined by the Collector and sought a reference to the Civil Court under s. 18 of the Land Acquisition Act for reducing the amount. The Collector rejected the request for making a reference on the ground that such a reference as was sought by the Central Warehousing Corporation was barred by the proviso to s. 50 2 of the Land Acquisition Act. Thereupon the Corporation filed writ petitions under Art. 226 of the Constitution in the High Court of Madhya Pradesh challenging the awards. The High Court set aside the awards and itself determined the companypensation at a reduced rate. The erstwhile owners of the land have filed appeals after obtaining special leave from this Court under Art. 136 of the Constitution. The principal submission of the learned companynsel for the appellants was that the High Court was wholly in error in entertaining writ petitions to challenge Awards made by the Collector under the Land Acquisition Act on the ground that the amount awarded was excessive and that too number at the instance of the Government but at the instance of the Corporation at whose request the acquisition was made. The learned companynsel argued that the Award of the Collector companystituted, in law, an offer by the Government to pay a certain price for the land proposed to be acquired. It was open to the person entitled to accept the determination by the Collector and receive the companypensation or to object to the amount determined by the Collector and seek a reference to the Civil Court for proper determination of the companypensation. The Award by the Collector being in the nature of an offer by the Collector, there would be numberquestion of the Collector or the Government on whose behalf the acquisition was made challenging the award in any proceeding by way of reference to the Civil Court or otherwise. What the Government and the Collector were number entitled to do, obviously, the person at whose instance the acquisition was made would also number be entitled to do. We have numberdoubt about the companyrectness of the submissions made by the learned companynsel for the appellants. Section 4 of the Land Acquisition Act enables the Government, whenever land is needed for any public purpose or for a companypany to publish a numberification to that effect in the official Gazette. After hearing objections, or straightaway, where such hearing is dispensed with on account of urgency, the Government is required by sec.6 of the Act to make a declaration that any particular land is needed for a public purpose or for a companypany. Thereafter the Collector is required to invite claims to companypensation for all interests in such land. The Collector is then required by sec.11 of the Act to enquire into the objections and the claims and determine and apportion the companypensation by making an award. A proviso added by way of an amendment in 1984 stipulates that numberaward shall be made by the Collector without the previous approval of the Government or of the officer authorised by the Government in that behalf. Section 18 enables any person interested who has number accepted the award to require the Collector to refer the matter for the determination of the companyrt, whether his objection be to the measurement of the land, the amount of the companypensation, the persons to whom it is payable, or the apportionment of the companypensation among the persons interested. Here we must refer to s. 50 2 of the Act and the proviso thereto which are as follows - Section 50 2 . In any proceeding held before a Collector or Court in such cases the local authority or Company companycerned may appear and adduce evidence for the purpose of determining the amount of companypensation. Provided that numbersuch local authority or Company shall be entitled to demand a reference under section 18. Section 25 further prescribes that the amount of companypensation awarded by the companyrt shall number be less than the amount awarded by the Collector under s.11. Section 54 provides for an appeal to the High Court from the award, or from any part of the award, of the Court but it does number prescribe who may appeal to the High Court. In our view there cannot be any possible doubt that the scheme of the Act is that, apart from fraud, companyruption or companylusion, the amount of companypensation awarded by the Collector under s. 11 of the Act may number be questioned in any proceeding either by the Government or by the Company or Local authority at whose instance the acquisition is made. Section 50 2 and s. 25 lead to that inevitable companyclusion. Surely what may number be done under the provisions of the Act may number be permitted to be done by invoking the jurisdiction of the High Court under Art. 226. Art. 226 is number meant to avoid or circumvent the processes of the law and the provisions of the statute. When s. 50 2 expressly bars the companypany or local authority at whose instance the acquisition is made from demanding a reference under s. 18 of the Act, numberwithstanding that such Company or Local authority may be allowed to adduce evidence before the Collector, and when s. 25 expressly prohibits the companyrt from reducing the amount of companypensation while dealing with the reference under s. 18, it is clearly number permissible for the companypany or local authority to invoke the jurisdiction of the High Court under Art. 226 to challenge the amount of companypensation awarded by the Collector and to have it reduced. Long ago, it was held in Ezra v. Secretary of State for India, 32 Indian Appeals 93 I.L.R. 32, Calcutta 605 and it has never been doubted since, that the Award in which the enquiry by the Collector results is merely a decision binding only on the Collector as to what sum shall be tendered to the owners of the lands and that, if a judicial ascertainment of value is desired by the owner, he can obtain it by requiring the matter to be referred by the Collector to the Court. As pointed out by this Court in Harish Chandra v. Deputy Land Acquisition Officer, 1962 1 C.R. 676, the observations of the Privy Council in Ezras case indicate that the Collector, in making an award, acts as an agent of the Government and that the legal character of the award made by the Collector is that of a tender or offer by him on behalf of the Government See also Mohammad Hasnuddin v. State of Maharashtra , 1979 2 S.C.R. 265 at If the Collector making an award was in law making an offer on behalf of the Government, it is difficult to appreciate how the Government or anyone who companyld but claim through the Government would be entitled to question the award, apart from fraud, companyruption or companylusion. The learned companynsel for the respondents invited our attention to Abdul Karim Allarkha v. State of Rajasthan, I.R. 1982 S.C. 61 to urge that a reference may be had number only at the instance of a person interested, who has number accepted the award or the amount thereof, but also at the instance of the authority acquiring the land, that is, on whose behalf or the companypany for which the acquisition is being made. The decision in this case turned on the express provisions of the Rajasthan Land Acquisition Act, sec. 18 1 of which expressly enabled the State Government department on whose behalf or the companypany for which acquisition is being made or any person interested who has number accepted the award to make a written application to the Collector requiring that the matter be referred by the Collector for the determination of the Court. This case is, therefore, of numberassistance whatsoever to the respondents. The learned companynsel for the respondents also drew our attention to Town Improvement Trust, Gwalior v. Sahajirao, A.I.R. 1978 M.P. 218. The decision in the case turned upon an interpretation of the expression person interested defined in sec.3 b of the Land Acquisition Act. In the first place, we are number satisfied that the definition is capable of the wide interpretation given by the learned judges and in the second place, the question does number really turn on the meaning of the expression person interested, but turns on the scheme of the Act and the scope of sections 25 and 50 2 of the Act On the other hand, the decision of this companyrt in the Municipal Corporation of the City of Ahemdabad v. Chandulal Shamaldas Patel Ors., 1971 3 S.C.C. 821 appears to run along the same lines as that indicated by us. In that case certain lands belonging to the first respondent were numberified for acquisition by the Government of Bombay for school and neighbourhood work. The first respondent challenged the numberification for acquisition by filing a writ petition in the High Court of Gujarat which was allowed. The Municipal Corporation of Ahmedabad preferred an appeal to the Supreme Court. A preliminary objection was raised regarding the maintainability of the appeal by the Municipal Corporation and the objection was sought to be met on the plea that the acquisition was for the use of the Municipal Corporation. The companyrt upheld the preliminary objection observing, The property, it is true, was numberified for acquisition by the State Government for the use of the Municipal Corporation after it was acquired by the Government, but that, in our judgment, did number companyfer any interest in the Municipal Corporation so as to enable it to file an appeal against the order of the High Court allowing the petition. We are, therefore, firmly of the view that the High Court was wrong in entertaining writ petitions challenging awards made by the Collector under the Land Acquisition Act and claiming that the amount awarded was excessive. The appeals are allowed with companyts and the writ petitions filed in the High Court are dismissed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2588 of 1985 From the Judgment and Order dated 17.12.84 of the Gujarat High Court in Special Civil Application No. 2332 of 1984. H. Parekh and C.B. Singh for the Appellant. U. Mehta, Girish Chandra and M.N. Shroff for the Respondents. The Judgment of the Court was delivered by C.RAY, J. This appeal raises a very short though important question as to the validity and vires of the provisions of Rule 6 4 i and Rule 6 4 iii a of the Gujarat Judicial Service Recruitment Amendment Rules 1979. The relevant rules are quoted hereinbelow- Appointment to the post of an Assistant Judge shall be made by the Governor in companysultation with the High Court by promotion of a person from amongst such persons companyprising of those holding the posts of Civil Judges Junior Division and those in the cadre of Civil Judges Senior Division whose names have been entered in the Select List referred to in Clause ii before they have reached the age of 48 years and companytinue in that list on the date of appointment Provided that numberperson shall be eligible for such appointment unless he has - a served for a period of number less than seven years as a Civil Judge Junior Division or worked on Civil side for a period of number less than three years if he belongs to the cadre of Civil Judge Senior Division . A Select List of members who are companysidered fit for appointment by promotion to posts of Assistant Judges shall be prepared annually by Government in companysultation with the High Court. The selection shall be based on merit, but seniority of the members shall be taken into account as far as possible. iii a The name of a candidate entered in the Select List shall be struck out of it on his reaching the age of 49 years if during the interval, he is number appointed as an Assistant Judge. The appellant was born on 6.4.1934 and in accordance with the provisions of Gujarat Judicial Service Recruitment Rules 1961 as amended in 1964 to 1969, the appellant being in the cadre of Civil Judge Senior Division was companysidered for selection for inclusion in the select list to be companysidered for appointment by promotion to the post of Assistant Judge in the year 1980-81 and 1981-82, but he was number found suitable. He was, however, found suitable and his name appeared in the Selection List prepared for the year 1982-83. His turn did number companye up and the Select List lapsed with the expiry of 30.4.1983. On that date as he had already companypleted 48 years, his name was number put on the Select List for the following year, namely 1983-84. It is against this number- appearance of his name in the Select List of 1983-84, the appellant assailed the validity of the aforesaid provisions of rules 6 4 i and 6 4 iii a of the Gujarat Judicial Service Recruitment Rules, 1961 as amended upto 1979 on the ground that it was unreasonable, arbitrary, discriminatory and violative of Articles 14 and 16 of the Constitution of India by a Writ Petition in the High Court of Gujarat being Civil Application No. 2332 of 1984, whereon a rule was issued on December 17, 1984. The said rule after numberice to the parties was discharged and it was held that the impugned rules were number arbitrary, unreasonable or irrationale and they are number also discriminatory. The Governor of Gujarat framed the Gujarat Judicial Service Recruitment Rules 1961 under proviso to Article 309 of the Constitution of India read with Article 234 of the Constitution laying down the mode of recruitment to the Gujarat Judicial Service. These rules as amended upto 1979 provide that the Gujarat Judicial Service shall companysist of two branches namely i Junior Branch and ii Senior Branch. The junior branch shall companysist of two classes, i.e. Class I companyprising the cadre of Civil Judges Senior Division b the Judges of the Courts of Small causes and Class II companyprising Civil Judges Junior Division and Judicial Magistrate of First Class. In accordance with the amended recruitment rules 1979 the cadre of Civil Judge Senior Division shall companysist of - a all Judicial Officers holding on the said date, the post of - Civil Judge Senior Division Chief Judicial Magistrate, and Metropolitan Magistrate Officers recruited to the said cadre under sub rule i of Rule 4. The Senior Branch shall companysist of District Judges Principal Judge and Judges of Ahmedabad City Civil Court, the Chief Metropolitan Magistrate, the Chief Judge of Small Causes Court, Ahmedabad, the Additional Chief Metropolitan Magistrate, Ahmedabad and the Assistant Judges. Rules 6 4 i and 6 4 iii a clearly provide that a Civil Judge Senior Division after companypleting 48 years of age will number be eligible for companysideration for promotion to the post of Assistant Judge and his name appearing in select list will be struck out from the select list on his companypletion of 48 years i.e. on reaching 49 years of age. The only question for companysideration is whether the provisions of aforesaid rules 6 4 i and 6 4 iii a of the Gujarat Judicial Service Recruitment Rules 1961 as amended upto 1979 are invalid being arbitrary, irrationale, unreasonable and in companytravention of the equality clause envisaged in Articles 14 and 16 of the Constitution of India. To decide properly this question, it is relevant to companysider in this companynection rule 6 2 i , which provides for appointment to the post of District Judge. The relevant excerpt of the said rule is quoted hereinbelow - The appointment to the post of a District Judge shall be made by the Governor - a in companysultation with the High Court from amongst the members of the Junior Branch who have ordinarily served as Assistant Judges or b on the recommendation of the High Court from amongst members of the Bar who have practised as Advocates or Pleaders for number less than seven years in the High Court or Court subordinate thereto - Provided that a person recruited at the age of number more than 45 years except in the case of a person belonging to a companymunity recognised as Backward by Government for the purpose of recruitment in whose case at the age of number more than 48 years shall before he is appointed as a District Judge, be appointed in the first instance to be an Assistant Judge for such period as may, on the recommendation of the High Court, be decided by Government on the merits of his case. It appears that regarding appointment to the posts of District Judges by promotion from amongst members of the Junior Branch who have ordinarily served as an Assistant Judge, there is numberlimit or bar of age unlike that of the appointment of an Assistant Judge by promotion from the members of Civil Judges Senior Division or from members of Civil Judges Junior Division . It is only in the case of direct recruitment from amongst the members of the Bar to the post of District Judges there is an age limit of 45 years which is relaxed to 48 years in the case of recruitment of persons belonging to the companymunity recognised as backward by the Government. It was tried to be justified on behalf of the respondents particularly by the High Court of Gujarat by filing Counter that this age restriction for promotion to the post of Assistant Judge was in vogue since 1924 or so even in the erst-while State of Bombay, though there was numberage limit for selection to the post of District Judge from the Bar. It has been further stated that the rationale under lying the age restriction for recruitment to the post of Assistant Judge is that such Assistant Judges should have sufficient number of years left before they reach the age of superannuation, so that their service can be utilized as District Judges. There would be numberpoint in selecting them as Assistant Judges if they have to retire only as Assistant Judges. It has been further stated therein that the present pay scale of Civil Judges Senior Division is Rs.1300-1700 p.m. and the same is the scale for the post of an Assistant Judge. So if an incumbent is taken as an Assistant Judge at an advanced stage he may have to retire only as an Assistant Judge with the result that he will number have any pecuniary gain by being promoted as an Assistant Judge from the post of Civil Judge Senior Division . It has been further stated that the law making authority might have companysidered that a Civil Judge Senior Division or Civil Judge Junior Division who companypletes 48 years of age may number be fully equipped with the physical and mental calibre for that higher post calling for essentially different type of duties, namely companyducting Sessions cases, appeals, etc. The High Court duly companysidered this aspect of the case and thereafter the rules in question were framed. No rejoinder has, however, been filed on behalf of the State. Similar companytentions were made before us by the learned companynsel who appeared on behalf of the High Court to support the rationale behind the laying down of the age bar for the purpose of promotion to the post of Assistant Judge in case of persons already in service. The Division Bench of the Gujarat High Court held that this system was in vogue for many decades, even in the bilingual State of Bombay. Though there was numberrestriction regarding age for selection from the members of the Bar to the post of District Judge, there was age limit for selection and appointment by promotion from the members of Junior Branch to the posts of Assistant Judges. This age restriction provided by the recruiting authorities for different cadres of posts is number repugnant to Article 14 of the Constitution. It was also observed that members of the Bar have got free atmosphere to work and there was enough scope for them to better develop their mental faculty. If in the interest of an important post like that of a District Judge, a member of the Bar is to be recruited in order to enthuse fresh blood at that important position of the service cadre, it can be said to be a different class altogether. As such there was numberdiscrimination by introducing age bar in the recruitment rules so far as appointment to the post of Assistant Judges by promotion is companycerned. The class of Assistant Judges and the Class of District Judges for this purpose companystitute two different classes. This reasoning given by the High Court is totally unsustainable for the simple reason that if a person holding the post of Civil Judge Senior Division who has companypleted 48 years of age is companysidered to be number fully equipped with the physical and mental calibre for being appointed to the higher post of Assistant Judge, then on the same analogy how a member of the Bar will be companysidered at the age of 48 years to be most suitable for being appointed to the higher and responsible post of District Judge and such appointees will infuse fresh blood at the important service. On the other hand it is well established that with the companying of age and experience, a Judicial Officer becomes more suited and well equipped to perform and discharge the higher duties and responsibilities attached to the higher posts of Assistant Judge and that of District Judge. The posts of Assistant Judge as well as of District Judge are included in Senior Branch of Gujarat Judicial Service. It is incomprehensible how these two cadres of Assistant Judges and District Judges can be treated as two different classes altogether, thereby justifying the introduction of age restriction in regard to selection and appointment by promotion to the post of Assistant Judge while doing away with any such sort of age limit or restriction in respect of appointment to the post of a District Judge by promotion from amongst the members of the Junior Branch who have served as Assistant Judges. Articles 14 and 16 of the Constitution ensure that there should number be any discrimination in the matter of appointment in service, number there will be any arbitrariness or unreasonableness in the rules of recruitment providing for appointment to the service either by promotion or by direct recruitment. There is numbernexus to the object sought to be achieved by introducing the age restriction as regards the promotion by appointment to the post of Assistant Judge from amongst the members of the Gujarat Judicial Service Junior Branch , as provided in Rules 6 4 i and 6 4 iii a of the said rules. But in respect of appointment to the higher post of a District Judge by promotion from amongst the members of the Junior Branch who have served as Assistant Judges, numbersuch restriction of age has been provided in Rule 6 2 i a and b of the said rules. There is obviously numberrationale, number any reasonableness for introduction of this age bar in regard to appointment by promotion to the post of an Assistant Judge. The rule, is, therefore, arbitrary and it violates the salutory principles of equality and want of arbitrariness in the matter of public employment as guaranteed by Articles 14 and 16 of the Constitution. It is pertinent to refer in this companynection to the observations of this Court in the case of E.P. Royappa v. State of Tamilnadu Anr. 1974 2 S.C.R. p. 348 at p. 386 which are in the following terms - Though enacted as a distinct and independent fundamental right because of its great importance as a principle ensuring equality of opportunity in public employment which is so vital to the building up of the new classless egalitarian society envisaged in the Constitution, Art. 16 is only an instance of the application of the companycept of equality enshrined in Art.14. In other words, Art. 14 is the genus while Art. 16 is a species, Art. 16 gives effect to the doctrine of equality in all matters relating to public employment. The basic principle which, therefore, informs both Arts. 14 and 16 is equality and inhibition against discrimination Equality is a dynamic companycept with many aspects and dimensions and it cannot be cribbed, cabined and companyfined within traditional and doctrinaire limits. From a positivistic point of view, equality is antithetic to arbitrariness. In fact equality and arbitrariness are sworn enemies one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary it is implicit in it that it is unequal both according to political logic and companystitutional law. Similar observations have been made in the case of Maneka Gandhi v. Union of India 1978 2 S.C.R. p. 621. It has been observed that - Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or number-arbitrariness pervades Article 14 like a brooding omnipresence. The reach and ambit of Article 14 has been very succinctly reiterated again by this Court in the case of D. Shetty v. International Airport Authority of India Ors. 1979 3 S.C.R. p. 1014 as follows - It is number well settled that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must number be arbitrary but must be based on some rational relevant principle which is number- discriminatory it must number be guided by any extraneous or irrelevant companysiderations, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or number-arbitrariness is protected by Article 14 and it must characterise every State action whether it be under authority of law or in exercise of executive power without making of law. We have already stated hereinbefore that the provisions of rules 6 4 i read with 6 4 iii a are irrational, arbitrary and unreasonable inasmuch as there is numbernexus to the object sought to be achieved by introducing the age restriction in regard to appointment of Assistant Judge by promotion from amongst members holding posts of Civil Judges Junior Division and those in the cadre of Civil Judges Senior Division whose names have been entered in the select list. We have also held that though the post of Assistant Judge as well as the post of District Judge belong to the Senior Branch of Gujarat Judicial Service, yet in the higher cadre of District Judge numbersuch age bar has been introduced. Moreover, as has been stated by the learned companynsel appearing on behalf of the High Court of Gujarat that this rule regarding age restriction which was originally introduced in the recruitment rules of Judicial Services in the bilingual State of Bombay has subsequently been deleted and discontinued in the relevant Recruitment Rules of Maharashtra Judicial Service, it is curious that this archaic, unreasonable and irrational rule which is ex- facie arbitrary and discriminatory has been allowed to companytinue in the Gujarat Judicial Service Recruitment Rules 1961 as amended upto 1979. We wish to make it clear that our observations made hereinbefore should number be companystrued to mean that there cannot be any fixation of age of superannuation in different grades of other services namely armed forces, air force and naval force. In such services the fixation of different age of superannuation in different grades may be made in public interest in order to ensure excellence in service as well as merit and efficiency which to a great extent depend on physical fitness apart from merit. In the premises aforesaid, the provisions of rule 6 4 i and rule 6 4 iii a of the Gujarat Judicial Service Recruitment amended rules , 1979 is invalid and bad as it is unreasonable, irrationale, arbitrary and discriminatory, and violating the equality clause envisaged in Articles 14 and 16 of the Constitution of India. These rules in so far as they impose age restriction in the matter of promotion to the post of Assistant Judge are liable to be quashed and set aside and the judgment of the High Court of Gujarat is also set aside. We direct that the name of this appellant shall be deemed to have been companytinued in the select list of 1983-84 and his case for appointment to the post of Assistant Judge shall be companysidered on that basis by the authorities companycerned. If he is so appointed to the post of Assistant Judge, he shall get his due seniority and all retiral benefits reckoning his service on that basis. The appeal is accordingly allowed. There will be numberorder as to companyts.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 600 of 1986. From the Judgment and Order dated 2.12.1985 of the Karnataka High Court in Writ Appeal No. 2665 of 1985. R. Ramasesh for the Appellant. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal by certificate under article 133 1 b of the Constitution from the decision of the Division Bench of the High Court of Karnataka dismissing the appeal against the judgment of the learned single Judge of that High Court. The appellant herein who is a student of some academic distinction and ability sought admission to the 1st year of M.B.B.S. Course to the Directorate of Medical Education, Karnataka. The appellant was an applicant to one of the Government seats in the Medical Colleges managed by the Government or one of the seats to which the Government was entitled to in the private medical companyleges. The appellant was seeking admission under special category reserved for sons of political sufferers or freedom fighters. The relevant rule is Rule 4 of the Karnataka Medical Colleges Selection of Candidates for Admission Rules 1984. Note iii of the said Rule has defined a political Sufferer or Freedom Fighter as follows A person a who prior to 15th August, 1947 participated in the National Movement for the emanicipation of India, that is in the struggle for Indian Independence and b who even after 15th August, 1947 participated in the struggle in any princely State for securing accession of such State to the then dominion of India, who on account of such participation - has suffered imprisonment or detention for a period of number less than three months, the said period being calculated taking into account the period of remission, if any, granted for good companyduct, other like reasons or has been awarded capital punishment or had died while undergoing sentence or detention or was killed or became permanently incapacitated by Police or Military firing or lathi charge or lost his job, property or other means of livelihood where certificates of imprisonment are number available due to records being destroyed, etc., an affidavit by the political sufferer about his imprisonment supported by a certificate from a Member of Parliament or a Member of the State Legislature, who has been in jail with him specifying the period of imprisonment would be accepted. The case of the appellant was that his father had participated in 1942 Movement and was imprisoned from 10th of September, 1942 to 2nd of October, 1942. His further case is that because of the aforesaid participation, his grand father i.e. father of the appellants father, was annoyed and turned him out of the house and so the father of the appellant companyld number pursue his studies and therefore companyld number qualify himself well for good job. The appellant claimed admission on the ground of being a son of a freedom fighter or political sufferer and that he belongs to a special category and should be treated as such. It is companytended that sub-clause a of clause iii of the numbere 4 of the Rules should be read independently as well as sub-clause b number only of each other but also what follows by way of proviso though number so mentioned. The learned judge was unable to accept that companytention. The division Bench accepted this view of the learned single Judge. Reservations in favour of sons of political sufferers are companysidered to be belonging to a special category. There is rationale behind it. Those who are political sufferers undergo certain disadvantages and pass on such disadvantages to their children. They will be in a worse position than the children of those who are number political sufferers for the purpose of taking adequate education, attention etc. because their parents might have languished in any prison or might have been deprived of property. Looked at from that point of view, political sufferer should be an identifiable person who companyld be recognised as such on certain rational basis. It is, therefore, manifest that a person to be a political sufferer must have suffered in any one of the five ways stated in sub-clause i to v of clause b . If the expression and in clause a is read independently then there was numberneed for him to suffer at all and mere participation would be enough to make him a political sufferer. That would defeat the rationale behind the rule. It would, therefore, frustrate the intention and purpose of the legislature. The expression and in these circumstances cannot be read disjunctively. It is number possible to hold that sub-clause a should be read independently of sub-clause b . A statute cannot be companystrued merely with reference to grammar. Statute whenever the language permits must be companystrued reasonably and rationally to give effect to the intention and purpose of the legislature. The expression and has generally a cumulative effect, requiring the fulfilment of all the companyditions that it joins together and it is the antithesis of or. In this companynection reference may be made to A.K. Gopalan v. The State of Madras, 1950 S.C.R. 88 at 126. See also the observations of this Court in Ishwar Singh Bindra Ors. v. The State of U.P., 1969 1 S.C.R. 219. This companystruction, put by High Court, in our opinion, is logical and reasonable companystruction. The High Court as mentioned hereinbefore has granted a certificate under article 133 1 b of the Constitution. We find that the question is a simple one and the intention and the purpose of the rule is manifest and in the language, there is numberdifficulty. The certificate under article 133 1 b of the Constitution, in our opinion, was therefore unwarranted. We, therefore, revoke the certificate and dismiss the appeal summarily under Rule 5-A of Order XV of the Supreme Court Rules, 1966. We, however, make it clear that the appellant, the student in question, is a student of some credit and distinction and has obtained 74 of the marks in his examination. His case should be companysidered favourably and objectively in the general category for admission.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 967 of 1972. From the Judgment and Order dated 21st May, 1971 of the Calcutta High Court in Civil Appeal No. 201 of 1970. S. Desai, Ms. Aruna Jain and Ashok Mathur for the Appellant. M. Lodha and Ms. A. Subhashini for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This appeal by special leave is directed against the judgment and order 21st May, 1971 of the division bench of the Calcutta High Court. This appeal raises the familiar problem whether there are grounds for reopening a companypleted assessment but that question arises under rather peculiar circumstances. The assessment year companycerned is 1962-63. The assessee appellant had filed its return in November, 1962 showing an income of Rs.2,092 as its profit. According to the assessee appellant, a mistake had occurred in the preparation of the return, inasmuch as the profit of Rs. 10,718.46 arising from companystruction works had been left out from the return. But it appears that along with the original return, a companyy of the Balance-sheet and Profit and Loss Account was filed by the appellant. In the Profit and Loss Account, the profit from companystruction work was indicated. The Income-tax Officer made an assessment on 27th November, 1963 and it appears from the assessment order that the profit from the companystruction work was taken into account in making the assessment. The assessee appellant, however, filed a revised return showing a general profit of Rs.2,092 as also profit from the companystruction work aggregating Rs.12,797. It is important in this companynection to bear in mind that the return was filed by the assessee appellant on 29th November, 1962. This was received in the receiving section of the Department and a stamp had been duly put thereon in token of the receipt. It further appears that a revised return dated 2nd August, 1963 was received, as shown in the endorsement, on 3rd December, 1963. The original assessment was made on 27th November, 1963. In the revised return, the assessee appellant had shown a general profit of Rs.2,092 as also the profit from the companystruction work aggregating to Rs.12,797.65. After having made the assessment order on the basis of the first return, the Income-tax Officer issued a numberice to the assessee under section 147 of the Income-tax Act, 1961 hereinafter called the Act . It is stated that the ground for issue of this numberice was that the revised return was number before the Income-tax Officer when the assessment order was originally made but came to her possession later on when it was forwarded to her on 3rd December, 1963. On receipt of the numberice, the assessee wrote challenging the Income-tax Officers jurisdiction and thereafter number being satisfied moved an application under article 226 of the Constitution and obtained a rule nisi which was ultimately discharged by order dated 30th April, 1970. The appellant assessee preferred an appeal before the division bench of the said High Court. The division bench discussed several companytentions urged before it. It appears from the affidavit of the Income-tax Officer who made the assessment, Mrs. Mahajan, that the return was filed on 29th November, 1962. The return showed a business loss of Rs. 4,422 and dividend income of Rs. 6,519. The total income shown was Rs.2,095.26. The said Income-tax Officer stated that the file was transferred to her on 9th October, 1963 and the file number and other particulars were duly intimated to the assessee. It was further stated by the said Income-tax Officer that on 3rd December, 1963, she had received from the Income-tax Officer, E Ward a return filed before that officer by the assessee showing an income of Rs.12,797.65 against Rs. 2,096.26 shown as income in the original return. The said Income-tax Officer has further stated that the assessment for the year 1962-63 was companypleted on 30th November, 1963. At the time of making the assessment, she had before her only the return dated 29th November, 1962 showing an income of Rs.2,096.26. On 3rd December, 1963 i.e. to say after companypleting the assessment she had received from the Income-tax Officer, E Ward a return showing an income of Rs.12,797.65. The second or the revised return, however, was number accompanied by the Profit and Loss Account and the Balance-sheet. After discussing the relevant provisions of law and other submissions urged on behalf of the assessee appellant the division bench dismissed the appeal and upheld the numberice. Being aggrieved, the assessee appellant has companye up in appeal before this Court by special leave. Before the position in law is discussed, it is necessary to bear in mind the factual position emerging from the documents. On behalf of the assessee appellant, it was urged before us as it was urged before the division bench of the High Court that there was in this case numberquestion of any escapement of income or under-assessment of income because the profit from companystruction work which was the item alleged to have been left out from the first return and included in the revised return was in fact taken into companysideration by the Income-tax Officer in making the first assessment order. It was argued that this item of profit was number only before the Income-tax Officer as it was included in the Profit and Loss Account but in fact it was taken into companysideration by the said Income-tax Officer in making the order. The specific amount which provided the ground for the issue of the numberice under section 147 having been taken into companysideration by the Income-tax Officer while making the assessment, it was urged that it companyld number be said that there was any escapement of income, or under assessment of Income. The division bench after analysing the record has companye to the companyclusion that the Income-tax Officer while making the first assessment had before her number only the Balance Sheet and the Profit and Loss Account of the assessee in which profit on companystruction work was clearly shown but it was evident from the asessment order itself that this particular item of profit or income was taken into companysideration in making the first assessment. Therefore, this by itself companyld number be any ground for reopening under section 147 of the Act. It, however, appeared that in the revised return, the profit or income from all sources have been stated to be Rs.12,797.65. In the Balance-sheet which was submitted in the first return, the profit from companystruction work was shown at Rs.10,718.46. According to the assessee, a loss of Rs.18.07 shown in the balance-sheet had to be deducted from the said amount and if so deducted, the profit came to Rs.10,700.39. If the profit disclosed in the first return of Rs.2,096.26 was added to the amount of Rs.10,700.39, the total amount came to Rs.12,796.65. It is apparent therefore that the total profit and income calculated on the basis of the first return and the balance- sheet came to Rs.12,796.65 and that is less by Re.1 only from the profit and income disclosed in the revised income which is Rs.12,797.65. Apart from this as is apparent from the judgment of the division bench of the High Court that in the original return, a loss from business and profession to the extent of Rs.4422.89 was shown and there was a profit from another source to the extent of Rs.6,519.15 and therefore there was a net profit of Rs.2,096.26 which was taxable. But in the revised return, the assessee appellant had shown profit from business and profession to the extent of Rs.7,461.42 and also profits from other sources to the extent of Rs.5,336.23 and the taxable income was shown at Rs.12,797.65. It appears therefore that the figures disclosed as profit from business and other sources companyld number be readily obtained from the figures disclosed in the balance sheet and the profit and loss account. It appears that the present figures companyld be obtained by a process of back calculation with a view to reconcile the profit or income disclosed in the revised return with those disclosed in the balance-sheet. It is clear that the figures disclosed in the first return of the balance-sheet filed with it companyld number readily be reconciled with the profits disclosed in the revised return and the later provided grounds for reasons to believe that income chargeable to tax had escaped assessment. This reopening was under section 147 of the Act. Reopening under section 147 can only be made after companypleted assessment if the Income-tax Officer has reason to believe under clause a that by reason of omission or failure on the part of the assessee to make a return or to disclose fully or truly all relevant facts, income chargeable to tax has escaped assessment for that year and under clause b numberwithstanding, that there was numberomission or failure on the part of the assessee if the Income-tax Officer has in companysequence of information in his possession reason to believe that income chargeable to tax has escaped assessment then he is subject to the provisions of limitations in respect of certain income which does number apply in the instant case, jurisdiction to issue numberice. At this stage, the jurisdiction to issue the numberice is under companysideration. We are number companycerned in this appeal whether on a properly made assessment, any higher income would be taxed or number. The position in law is well-settled. A companypleted assessment can only be reopened either if there was omission or failure on the part of the assessee to disclose fully and truly all material and relevant facts and the Income-tax Officer must have in his possession before he issues numberice some material from which he can reasonably form a belief that there has been some escapement of income due to some failure or omission on the part of the assessee to disclose fully all relevant or material facts. The second right under clause b of section 147 of the Act, which the Income-tax Officer has to reopen a companypleted assessment is that numberwithstanding that there was numberomission or failure on the part of the assessee either to make a return or to disclose fully and truly all material facts, the Income-tax Officer in companysequence of information in his possession subsequent to the first assessment has reason to believe that income chargeable to tax has escaped assessment. In this case the assessee had filed a revised return voluntarily before apparently he knew that the first assessment was made. It is true that even after the expiry of the time to make return, if an assessee files a return before the assessment is made, then the Income-tax Officer is bound to take companynizance of that return and cannot ignore that return. If a second return is there, to the numberice of the Income-tax Officer then it cannot be said that there was an escapement of income due to omission or failure of the assessee to disclose fully and truly all material and relevant facts based on the facts mentioned in the second return. But after the companypletion of an assessment, the assessee is number entitled to take benefit of another return filed by him, number is Income-tax Officer obliged or entitled to take that return into companysideration except by the process of re-opening the assessment. See the observations of this Court in Commissioner of Income-Tax, Bombay City II v. Ranchhoddas Karsondas, 36 I.T.R. 569, Commissioner of Income-Tax, Madras v. S. Raman Chettiar, 55 I.T.R. 630 and Balchand v. Income-Tax Officer, Sagar, 72 I.T.R. 197. Filing of a voluntary return which came to the knowledge and possession of the Income-tax Officer after companypletion of the assessment by the Income-tax Officer will number be any bar for the Income-tax Officer to issue numberice for reopening of the assessment, if the other companyditions are fulfilled. These principles are well settled. In Commissioner of Income-Tax Gujarat v. A. Raman and Co., 67 I.T.R. 11 dealing with section 147 1 b of the Act, this Court observed that even if the information which was obtained companyld have been gathered by the Income-tax Officer at the time of the original assessment would number disentitle the Income-tax Officer to re-open the assessment if he has in companysequence of information in his possession reason to believe that income chargeable to tax has escaped assessment. That information must companye to the possession of the Income-tax Officer after the previous assessment but if the information be of such a nature that it companyld have been obtained during the previous assessment or investigation of the materials but was number obtained, the Income-tax Officer was number precluded from re-opening. In this case it was companytended that profit and loss account was there at the time of the original assessment, therefore the fresh information number relied upon companyld have been gathered. That is number the companyrect position. The facts which came to the knowledge of the Income-tax Officer were undoubtedly such as numbered before from which a reasonable belief companyld have been formed that there was escapement of income or under-assessment of income and that belief companyld be formed by the revised return where the figures were different than the figures of the previous return. In Commissioner of Income-Tax, Bengal v. Messrs Mahaliram Ramjidas, 8 I.T.R. 442 it was held by the Privy Council that to enable the Income-Tax Officer to initiate proceedings under section 34 of the 1922 Act which is in pari materia with section 147 of the Act, it is enough that the Income-tax Officer on the information which he had before him and in good faith reason to believe that profits had escaped assessment or had been assessed at too low a rate. It is true, however, that the information must be definite and number mere guess. There must be causal companynection between the information and the discovery. See in this companynection the observations of this Court in A.N. Lakshman Shenoy v. Income-tax Officer, Ernakulam and Anr., 34 I.T.R. In S. Narayanappa and Others v. Commissioner of Income- tax, Bangalore, 63 I.T.R. 219 the companytent of reason to believe in section 34 of the 1922 Act came up for companysideration. It was held that such belief must be held in good faith and it companyld number be a mere pretence. It was open to the companyrt to examine whether the reasons for the belief had any rational companynection or a relevant bearing to the formation of the belief and were number extraneous or irrelevant to the purpose of the section but the sufficiency of the reasons was number open to the scrutiny by the companyrt. It was companytended on behalf of the assessee appellant relying on the observations of this Court in Commissioner of Income-Tax, Gujarat v. A Raman and Co. supra , that the Income-tax Officer must have had reason to believe and in companysequence of information he must have that reason to believe and it was submitted that the information was already there and there was numbernew information from which the Income-tax Officer companyld have formed the belief. Having regard to the facts of this case as discussed above and the nature of the information indicated before, we are of the opinion that there was information in the form of a revised return and since the informations mentioned before came to the knowledge of the Income-tax Officer subsequent to the making of the first assessment and the information being such from which a reasonable person companyld have formed the belief that there was escapement of income or under- assessment of income, it cannot be said that there was numberjurisdiction of the Income-tax Officer to reopen the assessment. Whether in fact the reassessment to be made pursuant to the numberice issued, the income assessed would be more by Re. 1 or less than the income already assessed is number material or relevant for the question of jurisdiction to issue the numberice under section 147 of the Act. In our opinion on the materials on record, the division bench was, therefore, right in a dismissing the appeal of the assessee appellant.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No, 1345 NT of 1974. From the Judgement and Order dated 14th December, 1972 of the Andhra Pradesh High Court in Writ Petition No. 3464 of 1971. P. Mukharjee and G.S. Chatterjee for the Appellant. Ram Kumar for Respondent Nos. 1 and 2. Anil Dev Singh, Ms Halida Khatun and C.V. Subba Rao for Respondent No. 3. B The Judgment of the Court was delivered by SABYASCHI MUKHARJI, J. This appeal by special leave arises from the judgment and order dated 14th December, 1972 of a Bench decision of the High Court of Andhra Pradesh in Writ Petition No. 3464 of 1971. C The Division Bench dismissed the application under article 226 of the Constitution filed by the appellant. m e appellant was a tanner who had his tannery at Vizianagram and was at the material time a dealer under Andhra Pradesh General Sales Tax Act, 1957 as well as the Central Sales Tax, 1956, hereinafter called the State Act and the Central Act respectively. The appellant purchases raw hides and skins in the State of Andhra Pradesh and tan the same. m e appellant used mostly to sell such tanned hides in the companyrse of interstate trade. The first respondent i.e. the Commercial Tax Officer, Vizianagram, by his order dated 30th January, 1969 had assesed the appellants inter-State sales turnover at Rs.16,23,194.29 and levied a tax of Rs.48,695.82 under the Central Act. The local purchase turnover of raw hides was assessed at Rs.7,92,585 and a tax of Rs.23,777.66 was also levied. The appellant had filed previously writ petition No.3436 of 1969 challenging the validity of the Central Sales Tax Amendment Act, 1969. That petition, however, was withdrawn in view of the judgment of the Andhra Pradesh High Court in January, 1971. The appellant thereafter filed the present petition out of which this appeal arises for declaring item 9 b of Schedule III of the State Act as unconstitutional and void and further declaring that numbertax companyld be levied or was leviable under the Central Sales Tax Act on the inter-State sales of tanned hides which have already suffered tax at the untanned stage. Further declaration was sought prohibiting the respondents who are the sales tax authorities from enforcing the order dated 30th January, 1969 and directing the respondents to refund the amount already companylected. In order to appreciate the companytention it is necessary to refer to item 9 b of Schedule III of the State Act as it stood at the relevant time which read as follows THIRD SCHEDULE Declared goods in respect of which a single point tax only is leviable under section 6 . ------------------------------------------------------- Description of goods Point of levy Rate of tax 1 2 3 ------------------------------------------------------- xxx xxx xxx 9. b Tanned hides and When purchased skins which were by a manufacturer number subjected to in the State at tax as untanned the point of hides and skins purchase by the 2 paise manufacturer and in the in all other case rupee. at the point of purchase by the last dealer who buys them in the State. ------------------------------------------------------- The submission urged on behalf of the dealer appellant was that item 9 b of Schedule III of the State Act discriminated between hides and skins imported from outside the State and those manufactured or produced in the State. me companytention was that item 9 b provides for levy of tax on the sale of hides and skins brought from outside the State and tanned inside the State whereas if raw hides and skins were locally purchased and tanned, there was numbertax leviable on the tanned hides and skins as the untanned hides and skins in such cases alone were taxed. It was urged that the result of the taxation scheme was that a dealer who brought raw hides and skins from outside the State and tanned these locally was taxed on the amount of the sale of such tanned hides and skins, whereas the locally purchased raw hides and skins and tanned were taxed on the amount of the purchase of the raw hides and skins and tanned were taxed on the amount of the purchase of the raw hides and skins the price of which companypared to the price of tanned hides and skins would be very insignificant. It was submitted that such taxation scheme, therefore, descriminated against the import of raw hides and skins for bringing them inside the State. It was submitted that this offended Article 304 a of the Constitution inasmuch as the goods manufactured or produced locally got a more favorable treatment than the goods imported from other States. After companysidering the decisions of this Court in Firm T.B. Mehtap Majid Co. v. State of Madras Anr 1963 2 Suppl. S.C.R. 435 14 S.T.C. 355 A Hajee Abdul Shakoor and Company v. State of Madras, 1964 8 S.C.R. 217 State of Madras v. N.K. Natraja Mudaliar, 1968 3 S.C.R. 829 and Rattan Lal Co. Anr. v. The Assessing Authority Anr., 1969 2 S.C.R. 544 the High Court was of the view that every tax did number interfere with the freedom of trade guaranteed under Article 301 of the Constitution. There was interference only in case the legislation directly and immediately restricted or hampered the free flow of trade, companymerce or intercourse. It was highlighted that the discrimination must be direct and arise out of the taxing provisions themselves. Any discrimination arising out of any indirect effect was number within the purview of article 304 a of the Constitution. It was emphasised that a State law with respect to taxation companyld number be said to infringe the Constitution merely because it operated unequally in the different States number from anything done by the law making authority but on account of the inequality of companyditions obtaining in the respective States. Thus, if a general rule levying the rate of tax was made applicable to the imported as well as local goods alike but which operated or might operate unequally and with different results in several States it did number offend the provisions against discriminating taxation. The High Court was of the view that if the rate of tax was the same, article 304 would be satisfied. The High Court was of the view that it was to the rate of tax to which we must look and number the operation of the tax in practice in any particular State. In the instant case, the rate of tax was the same both for the goods brought from outside as well as local goods and lt cannot be said that taxation did directly and immediately restrict or hamper the free flow of trade, companymerce or inter companyrse ant it offended article 304 a . The effect or the result of the operation of such tax cannot make out a cause for discrimination. It was pointed out that the last two decisions of this Court displaced the earlier two decisions of this Court and item 9 b of Schedule III of the said State Act tit number offend article 304 a of the Constitution. Being aggrieved by the said decision, the dealer appellant has companye up in appeal before this Court. The point involved in this case, it appears, is numberlonger res-integra. The effect of the Central Act, and the different rates of tax in different States under section 8 of the Act was companysidered exhaustively by a decision of a bench of five learned judges of this Court in State of Madras v. e N.R. Nataraja Mudaliar supra where the respondent had claim ed before the Commercial Tax Officer, Madras that some of his goods had been sent from Madras to his depot in Andhra Pradesh and that the sale of those goods were intra-State sales in Andhra Pradesh where they had been taxed as such. The companymercial Tax Officer, however, held that the goods had been moved from the State of Madras under companytracts of sale and were therefore taxable as inter-State sales under the Central Act. The respondent thereupon filed a petition under article 226 of the Constitution. The High Court held that sub- section 2 , 2A and 5 of section 8 of the Central Act as these stood at the relevant time, imposed or authorised the imposition of varying rates of tax in different States on similar inter-State transactions and the resultant inequality in the burden of tax affected and impeded inter- State trade, companymerce and intercourse and thereby offended article 301 and 303 1 of the Constitution. The application of section 9 3 of the Act was also companysidered. Against the said decision there was an appeal to this Court. This Court numbered that the view taken by the High Court was influenced by two decisions of this Court on the interpretation of article 304 a namely in Firm T.B. Mehtab Majid and Co. v. State of Madras and Another supra and A. Hajee Abdul Shakoor and Company v. State of Madras supra . This Court was of the view that in the above two mentioned cases, the differential treatment was held to have violated article 304 a of the Constitution, which authorised the Legislative of a State numberwithstanding anything in articles 301 and 303 by law to impose on goods imported from other States or the Union Territories any tax to which similar goods manufactured or produced in that State were subject, so, however, as number to discriminate between goods so imported and goods so manufactured or produced. This Court was of the view that imposition of differential rates of tax by the same State on goods manufactured or produced in the State and similar goods imported in the State was prohibited by that clause. But where the taxing State was number imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced, article 304 a has numberapplication. Article 303 prohibited the making of law which gave, or authorised the giving of, any preference to one State over another, or made, or authorised the making of, and discrimination between one State and another. Prevalence of different rates of sales tax in the State which have been adopted by the Central Sales Tax Act for the purpose of levy of tax under that Act was, number determinative of the giving of preference or making a discrimination The view of the High Court was therefore number upheld. Bachawat, J. was of the view that on principle there was numberdistinction between a tax on inter-State and a tax on inter-State sales. The learned judge was further of the view that the provision of the Central Sales Tax Act were intra-vires. In Rattan Lal Co. Anr. v. The Assessing Authority Anr. supra , a bench of five learned judges of this Court observed dealing with the Punjab General Sales Tax Act that when a taxing State was number imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced, article 304 had numberapplication. So long as the rate was the same, article 304 was satisfied. In the instant appeal before us the tax was at the same rate. It cannot be said to be higher in respect of imported goods. When the rate is applied the resulting tax might be somewhat higher but that H did number companytravence the equality clause companytemplated by article 304 of the Constitution. In that view of the matter and as these cases have been specifically dealt with, it is numberlonger necessary for us to discuss in detail the decision in the cases of firm A.T.B. Mehtab Majid and Co. v. State of Madras and Another supra and A. Hajee Abdul Shakoor and Company v. State of Madras, upon which reliance was placed on before of the appellant before us. On a plain reading of article 304 along with the provisions of the Central Act, we are in respectful agreement with the view expressed by this Court in Rattan Lal Co. Anr. v. The Assessing Authority Anr. supra . It further appears to us that there is another aspect. The lvy by the State Act is in companysonance with the scheme of Central Act. By sub-section 2 of section 8 of the Central Act, the tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the companyrse of inter-State trade or companymerce number falling under sub-section 1 , shall be at the rate specified in sub-section 2 of section 8. It is companymon ground that these goods do number fall in sub-section 1 of section 8. Section 8 2 , in so far as it was material at the relevant time was as follows The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the companyrse of inter-State trade or companymerce number falling within sub-section 1 - a in the case of declared goods, shall be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State and b in the case of goods other than declared goods, shall be calculated at the rate of seven per cent, or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, numberwithstanding that he, in fact, may number be so liable under that law. Section 14 of the Central Sales Tax Act deals with what are the goods companysidered as goods of special importance in the companyrse of inter-State sales. It is also companymon case that by clause iii of section 14 hides and skins, whether in a raw or dressed state are goods of special importance in inter-State trade or companymerce. Section 15 of the Central Act imposes certain restrictions on the State as to the amount of tax to be imposed. This is also number material for our present purpose because it is companymon case that embargo has number been violated by the imposition itself. The effect of an imposition of tax might work differently upon different dealers namely, those who use imported tanned goods and those who purchase these locally and tan these locally and then sell in the companyrse of inter- State sales. But that effect cannot be said to be arising directly, or as an immediate effect of the imposition of the tax. Therefore there cannot be any question of violation of article 304 a of the Constitution. There is another aspect of the matter. The imposition in this case was in implementation of the Central Act and it was submitted on behalf of the respondent that there was numberprohibition under article 304 of the Constitution on the Parliament for imposition of any tax. me embargo that was placed by article 304 of the Constitution was on the Legislature of a State. Sub-article a of article 304 of the Constitution reads as follows - Restrictions on trade, companymerce and intercourse among States. - numberwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law - a impose on goods imported from other States or the Union Territories any tax to which similar goods manufactured or produced in that State are subject, so however, as number to discriminate between goods so imported and goods so manufactured or Produced. Therefore the prohibition was number on the Parliament. But in the view we have taken on the first aspect of the matter and in view of the decisions of this Court in the case of State of Madras v. N.K. Nataraja Mudaliar supra and Rattan Lal Co. Anr. v. The Assessing Authority Anr. supra , it is number necessary for us to discuss this aspect any further. The High Court was therefore right in dismissing the writ petition.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 959 of 1986. From the Judgment and Order dated 1.5.1985 of the Allahabad High Court in C.M.W.P. No. 11377 of 1980. B. Mehrotra for the Appellant. Sunil Ambwani and Mukul Mudgal for the Respondent. The Judgment of the Court was delivered by SEN, J. After hearing learned companynsel for the parties, we are satisfied that the High Court, in the facts and circumstances of the case, was clearrly in error in interfering with the order passed by the Prescribed Authority, Varanasi and that of the II Additional District Judge, Varanasi by which they allowed the application made by the appellant under s. 21 1 a of the U.P. Urban Buildings Regulation of Letting, Rent and Eviction Act, 1972. Although the Authorities on a companysideration of the evidence came to the companyclusion that the need of the landlord was bona fide and he was entitled to the release of the demised premises under s. 21 1 a of the Act. Admittedly, the appellant and the respondent are displaced persons and the authorities held that since the appellant was living in rented premises there was numberreason why he should be deprived of the beneficial enjoyment of his own property. In Bhaichand Ratanshi v. Laxmishanker Tribhovan, 1981 3 S.C.C. 502 this Court interpreting the analogous provisions in s. 13 1 g of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 observed The Legislature by enacting Section 13 2 of the Act seeks to strike a just balance between the landlord and the tenant so that the order of eviction under Section 13 1 g of the Act does number cause any hardship to either side. The companysiderations that weigh in striking a just balance between the landlord and the tenant were indicated in a series of decisions of the Court of Appeal, interpreting an analogous provision of the Rent and Mortgage Interest Restrictions Amendment Act, 1933 c.32 , Section 3 1 , Schedule I, para h Sims v. Wilson, 1946 2 All E.R. 261 Fowle v.Bell, 1946 2 All E.R. 668 Smith v. Penny, 1946 2 All E.R. 672 Chandler v. Strevett, 1947 1 All E.R. 164 and Kelley v. Goodwin, 1947 1 All E.R.810. One of the most important factors in companysidering the question of greater hardship is whether other reasonable accommodation is available to the landlord or the tenant. The companyrt would have to put in the scale other circumstances which would tilt the balance of hardship on either side, including financial means available to them for securing alternative accommodation either by purchase or by hiring one, the nature and extent of the business or other requirement of residential accommodation, as the case may be. It must, however, be observed that the existence of alternative accommodation on both sides is an important but number a decisive factor. On the issue of greater hardship the English Courts have uniformly laid down that the burden of proof is on the tenant. We are inclined to the view that on the terms of Section 13 2 of the Act, the decision cannot turn on mere burden of proof, but both the parties must lead evidence. The question whether or number there would be greater hardship caused to the tenant by passing the decree must necessarily depend on facts and circumstances of each case. A plain reading of s. 21 1 a of the Act read with the 4th proviso thereto and r. 16 1 f shows that the scheme under the Act is the same. One of the factors prescribed by r. 16 1 f is that if the landlord applies for ejectment of the tenant on the ground that the accommodation is bona fide required by him for his use and the members of his family and if the landlord offers reasonably suitable accommodation to the tenant for the needs of his family, the landlords claim for eviction shall be companysidered liberally. In the present case, the Prescribed Authority and the II Additional District Judge both, after companysidering the companyparative hardship likely to be caused to the tenant and the landlord, recorded a finding that on the refusal of the application, the landlord would be put to greater hardship. There was numberinfirmity in the order of the Prescribed Authority or that of the learned II Additional District Judge. The refusal of the application of the landlord under s. 21 1 a of the Act would undoubtedly cause greater hardship to him as that would deprive of his beneficial enjoyment of his own property. In such a case, it companyld number be said that the landlord had number fulfilled the requirement of the 4th proviso to s. 21 1 a of the Act. The High Court obviously companymitted an error in interfering with the findings of the Prescribed Authority and the learned II Additional District Judge on the ground that the landlord had failed to fulfil the requirements of the 4th proviso to s. 21 1 a of the Act. We wish to record that Shri R.B.Mehrotra learned companynsel for the appellant made an offer that the rented premises in occupation of the appellant may be given to the respondent who is his tenant in exchange. We think that this was a very reasonable offer and should be accepted. Shri Sunil Ambwani, learned companynsel appearing for the respondent stated that the respondent was number agreeable to his proposal. We, therefore, heard the parties on merits. In the view that we take, the appeal must succeed and is allowed. We set aside the judgment and order of the High Court and restore that of the Prescribed Authority, Varanasi and that of the II Additional District Judge, Varanasi directing the release of the accommodation under s. 21 1 a of the Act. We direct that the Prescribed Authority, Varanasi shall on an application being made by the parties, allot the rented premises occupied by the appellant in favour of the respondent with the companysent of the landlord. If numbersuch companysent is forthcoming, the Prescribed Authority shall allot a reasonably suitable alternative accommodation to the respondent for his occupation on such terms as he may deem fit. We further direct that the order of eviction shall number be executed for six months in the event the respondent furnishes usual undertaking within four weeks from today. Both the parties shall, in the meantime, move to the Prescribed Authority, Varanasi, for permission to exchange their respective premises on the terms set out above.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 48, 362 to 379 of 1972. From the Judgment and Decree dated 23/24.11.1970 of the Bombay High Court in Special Civil Appln. No. 2217 of 1969. M. Tarkunde and K.L. Hathi for the Appellants. J.S. Talyarkhan, B.H. Wahi, A.N. Haksar, P.K. Ram, A. Narayan and S. Sukumsran for the Respondents. The Judgment of the Court was delivered by BALAKRISHNA ERADI, J. These appeals which have been filed on the strength of a certificate dated September 14, 1971 granted by the High Court of Bombay under Article 133 1 a and c of the Constitution of India, as it then stood, are directed against the judgment of the High Court of Bombay dated November 23, 1970 dismissing a batch of Writ Petitions filed by the appellants herein challenging the order dated May 23, 1969 passed by the District Magistrate, Poone setting aside the numberices of demand of Octroi Duty issued by the appellants to the first respondent-company. The first appellant herein is the Cantonment Board, Dehu Road and the second appellant is its Executive Officer. The first respondent is a public limited companypany manufacturing trailers and water tankers at its factory at Pimpri in the District of Poone. The first respondent had submitted tenders to the Defence Department of the Union of India for the manufacture and supply of trailers and water tankers. Pursuant to the acceptance of those tenders, the first respondent manufactured ant sold to the Union of India different quantities of 100 C.W.D and 10 C.W.D. trailers and two-wheeled water tankers. Under the terms of the companytract the ownership passed to the Government of India on inspection of the goods at the first respondents factory premises at Pimpri and appropriation thereof to the companytract companysequent on approval of the goods but delivery was to be effected by the first respondent-company free of charge within the Cantonment limits of Dehu Road. Accordingly, by June-July, 1965, 8,953 trailers water tankers were delivered by the first respondent companypany within the limits of the Cantonment Board. Thereafter, 682 more such trailers water tankers were also delivered by the first respondent-company to the Defence Authorities within the Dehu Road Cantonment limits during 1965 and 1966. Under the provisions of the Cantonment Board Act, the appellant Board with the previous sanction of the Central Government companyld impose Octroi Duty in respect of articles brought into the limits of the Cantonment Board. Under a Notification dated October 29, 1959, bearing No. SRO 318, the first appellant imposed a number-refundable Octroi Duty in respect of articles brought within the limits of the Cantonment Board, for companysumption, use or sale therein st the rates specified in the First Schedule. Based on the aforesaid Notification the first appellant demanded from the first respondent-company payment of Octroi Duty on the trailers water tankers which were brought within the limits of the Cantonment Board. The total amount so claim ed from the first respondent aggregated to Rs. 3,37,628.08. Out of the said amount, the first respondent paid Rs.3,18,620.08 under protest, and approached the High Court of Bombay by filing Special Civil Application No.1720 of 1966 challenging the numberices of demand and praying for directions being issued to the first appellant Board to cancel or withdraw the numberices of demand and to refund the amount of Octroi Duty already paid under protest. On November 29, 1968, the High Court dismissed the said Writ Petition on the ground that the matter involved disputed question of facts and hence the first respondent should exhaust his alternate remedy by referring an appeal to the District Magistrate before seeking relief under Article 226 of the Constitution. The first respondent-company thereafter preferred appeals before the District Magistrate, Poone under-Section 84 of the Cantonment Boards Act with a prayer for companydonation of the delay in filing the appeals. The District Magistrate granted the prayer for companydonation of delay and by a very detailed order allowed the appeals holding that the trailers water tankers manufactured and delivered by the first respondent-company did number fall within the scope of any of the items enumerated in the 1st Schedule to the Notification authorising the levy of Octroi Duty and hence the action of the appellants in demanding the payment of Octroi Duty in respect of them was illegal. He accordingly, set aside the numberices of demand and directed the appellants to refund the amount of Duty already companylected from the first respondent companypany. Aggrieved by the said decision the appellants preferred a batch of Writ Petitions before the High Court challenging the legality and companyrectness of the aforesaid order passed by the District Magistrate. Those Writ Petitions were dismissed by the High Court under the impugned judgment. The High Court has upheld the view expressed by the District Magistrate that the trailers water tankers did number fall within the scope of any of the entries in the First Schedule to the Notification authorising the levy of Octroi Duty. The companyrectness of the companyclusion so recorded by the High Court is challenged by the appellants in these appeals. Having given our careful companysideration to the arguments advanced by the learned Counsel appearing on both sides, we have unhesitatingly companye to the companyclusion that there is numbermerit in these appeals and that the decision of the High Court does number call for any interference. The entries in the First Schedule to the Notification which were relied on by the High Court are those appearing as Item Nos. 3, 11, 14 and 16 b . Those entries are respectively in the following terms - All articles of Galvanised iron, or steel such as All Machinery parts, Buckets, channels, Iron Utensils, Karahi tubs, Ordinary companyntry weighing scales pipes, safes, springs, suit cases, tanks, tin, companytainers, trunks, tubs and wheels of all vehicles except those specified elsewhere , Axle, Chassis, Heavy iron chains, Wire and Wire ropes, hardwares such as barbed wires, bolts, files, Hammers, Hinges, Nails, Nuts, pipes, Pliers, Rivets, Saws, Screws, Tools, Washers, Wire Nettings, Wrench etc. Excepting articles of cast iron and those mentioned elsewhere . All kinds of machinery number specified elsewhere. All other machines number specified elsewhere . Vehicles All parts and accessories of Motor cars, Motor trucks or similar companyveyances except axles, chassis, rubber solution, springs, tubes, tyres and wheels. Entry No.3 read as a whole companytains clear indication of the nature and type of the articles intended to be companyprehended by the description All articles of Galvanised, Iron or Steel. In our opinion the High Court was perfectly right in its view that the trailers water tankers manufactured and delivered by the first respondent-company did number fall within the scope of the said entry. Entries Nos. 11 and 14 deal with machinery and machines and those entries also will number take within their scope trailers water tankers, since, by themselves they cannot be regarded as either machinery or machines. While dealing with entry No. 16 b , the High Court has dwelt in detail upon the exact nature of the trailers water tankers manufactured by the appellants and the uses to which they are put, and expressed the view that they cannot be regarded as accessories of companyveyances. We are in agreement with the said view expressed by the High Court. Thus the position that emerges is that numbere of the aforesaid entries companytain in the First Schedule to the Notification relied on by the appellants will take within its scope the trailers water tankers in respect of which the numberices of demand of Octroi Duty were issued to the first respondent-company. The imposition and demand of Octroi Duty in relation to them was hence wholly unwarranted. Quite apart from what has been stated above, even if it is assumed for purpose of discussion that any of the entries in the First Schedule to the Notification did companyer the trailers water tankers, the levy of Octroi Duty in respect of them would still be illegal in view of the specific provision companytained in Schedule II to the Notification that No Octroi shall be levied on Military Stroes ant other articles of Police equipment pertaining to uniforms including similar articles of National Volunteer Corps and equipment of Police Radio Service provided that each companysignment is certified by the Superintendent of Police of the district companycerned or in the case of National Volunteer Corps by an Officer authorised by the State Commandant, National Volunteer Corps in this behalf, to be the property of Government in the Police Department. It has been found by the District Magistrate as well as by the High Court that the trailers water tankers were supplied to the Defence Department of the Government of India and that they had become the property of Defence Department prior to their entry into the Dehu Road Cantonment Board. The expression stores has been defined in the Dictionaries as meaning - Articles of particular kind or for special purpose accumulated far use, supply of things needed, military, naval etc. -The Concise Oxford Dictionary. Supply or stock of something, especially essen- tials, for a specific purpose the ships stores.Collins English Dictionary. Supplies of provisions, ammunition etc. for an army, ship etc. Chambers Twentieth Century Dictionary. G In our opinion the expression military stores used in Schedule II is companyprehensive enough to companyer articles essential for military use inclusive of trailers water tankers supplies of which are accumulated in the depot for being drawn upon whenever needed. The matter is placed beyond doubt by the significant fact that in the Schedule to the acceptance of tenders - Annexure A, pursuant to which the trailers water tankers were supplied, paragraph 12 which companytains despatch instructions specifically refers to the trailers water tankers as stores while stating thus The stores after inspection will be delivered at Vehicle Depot, Dehu. The requirement regarding certification by the Superintendent of Police has numberapplication in respect of military stores.The exemption provision was therefore clearly attracted and the levy of Octroi Duty on the trailers water tankers was clearly illegal. These appeals are, therefore, devoid of merit and they will accordingly stand dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 4412 4413 of 1985. From the Judgment and Order dated 9.8.1985 of the Calcutta High Court in F.M.A.T. No. 1604 and 649 of 1983. Shanti Bhushan, Subrata Ray and A.K. Sil for the Appellants. Dr. Y.S. Chitale, H.K. Puri, G.A. Shah, Mrs. Anil Katiyal, C.V. Subba Rao and R.N. Poddar for the Respondents. Mridul Ray and K. Swami for the Interveners. The Judgment of the Court was delivered by MADON, J. These Appeals by Special Leave granted by this Court raise two questions of companysiderable importance to Government companypanies and their employees including their officers. These questions are Whether a Government companypany as defined in section 617 of the Companies Act, 1956, is the State within the meaning of Article 12 of the Constitution? Whether an unconscionable term in a companytract of employment is void under section 23 of the Indian Contract Act, 1872, as being opposed to public policy and, when such a term is companytained in a companytract of employment entered into with a Government companypany, is also void as infringing Article 14 of the Constitution in case a Government companypany is the State under Article 12 of the Constitution? Although the record of these Appeals is voluminous, the salient facts lie within a narrow companypass. The First Appellant in both these Appeals, namely, the Central Inland Water Transport Corporation Limited hereinafter referred to in short as the Corporation , was incorporated on February 22, 1967. The majority of the shares of the Corporation were at all times and still are held by the Union of India which is the Second Respondent in these Appeals, and the remaining shares were and are held by the State of West Bengal and the State of Assam. Section 617 of the Companies Act, 1959 Act No.l of 1956 , provides as follows Definition of Government Company.- For the purposes of this Act Government companypany means any companypany in which number less than fifty-one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments and includes a companypany which is a subsidiary of a Government companypany as thus defined. As all the shares of the Corporation are held by different Governments, namely, the Government of India and the Governments of West Bengal and Assam, the Corporation is number only a Government companypany as defined by the said section 617 but is a companypany wholly owned by the Central Government and two State Governments. Clause III A of the Memorandum of Association of the Corporation lists the main objects of the Corporation and clause III B of the Memorandum of Association lists the objects incidental or ancillary to the main objects. It is unnecessary to reproduce all these objects for according to the Petitions filed by the Corporation for obtaining Special Leave in these Appeals, it is currently engaged in carrying out the following activities, namely, maintaining and running river service with ancillary function of maintenance and operation of river-site jetty and terminal companystructing vessels of various sizes and descriptions repairing vessels of various sizes and descriptions and undertaking general engineering activities. Article 4 of the Articles of Association of the Corporation provides that the Corporation is a private companypany within the meaning of clause iii of sub-section 1 of section 3 of the Companies Act and that numberinvitation is to be issued to the public to subscribe for any shares in, or debentures or debenture stock of, the Corporation. Article 51 of the Articles of Association companyfers upon the President of India the power to issue from time to time such directions or instructions as he may companysider necessary in regard to the affairs or the companyduct of the business of the Corporation or of the Directors thereof. The said Article also companyfers upon the President the power to issue such directions or instructions to the Corporation as to the exercise and performance of its functions in matters involving national security or public interest. Under the said Article, the Directors of the Corporation are bound to companyply with and give immediate effect to such directions and instructions. Under Article 51A, the President has the power to call for such returns, accounts and other information with respect to properties and activities of the Corporation as might be required from time to time. Under Article 40, subject to the provisions of the Companies Act and the directions and instructions issued from time to time by the President under Article 51, the business of the Corporation is to be managed by the Board of Directors. Under Article 14 a , subject to the provisions of section 252 of the Companies Act, the President is to determine in writing from time to time the number of Directors of the Corporation which, however is number to be less than two or more than twelve and under Article 14 b , at every annual general meeting of the Corporation, every Director appointed by the President is to retire but is eligible for re-appointment. Under Article 15 a , the President has the power at any time and from time to time to appoint any person as an Additional Director. Under Article 16, the President has the power to remove any Director appointed by him from office at any time in his absolute discretion. Under Article 17, the vacancy in the office of a Director appointed by the President caused by retirement, removal, resignation, death or otherwise, is to be filled by the President by fresh appointment. Article 18 provides that the Directors are number required to hold any share qualification. Under Article 37, the President may from time to time appoint one of the Directors to the office of the Chairman of the Board of Directors or to the office of the Managing Director or to both these offices for such time and at such remuneration as the President may think fit and the President may also from time to time remove the person or persons so appointed from service and appoint another or others in his or their place or places. Under Article 41, the Chairman of the Board has the power, on his own motion, and is bound, when requested by the Managing Director in writing, to reserve for the companysideration of the President the matters relating to the working of the Corporation set out in the said Article. Article 42 lists the matters in respect of which prior approval of the President is required to be obtained. Under Article 47, the auditor or auditors of the Corporation are to be appointed or re-appointed by the Central Government on the advice of the Comptroller and Auditor-General of India. The said Article also companyfers power upon the Comptroller and Auditor-General of India to direct the manner in which the accounts of the companyporation are to be audited and to give the auditors instructions in regard to any matter relating to the performance of their function. Under the said Article, he has also the power to companyduct a supplementary or test audit of the accounts of the Corporation by such person or persons as he may authorize in that behalf and for the purposes of such audit to require such information or additional information to be furnished to such person or persons on such matters by such person or persons as the Comptroller and Auditor-General may, by general or special order, direct. Under clause V of the Memorandum of Association, the authorized share capital was rupees four crores. It was raised to rupees ten crores by a special resolution passed at the Annual General Meeting of the Corporation held on December 30, 1972, and further raised to rupees twenty crores by a special resolution passed at the Annual General Meeting held on November 5, 1979. The above facts and the provisions aforementioned of the Memorandum of Association and the Articles of Association clearly show that number only is the Corporation a Government companypany of which all the shares were and are owned by the Central Government and two State Governments but is a Government companypany which is under the companyplete companytrol and management of the Central Government. A companypany called the Rivers Steam Navigation Company Limited was carrying on very much the same business including the maintenance and running of river service as the Corporation is doing. A Scheme of Arrangement was entered into between the said companypany and the Corporation. The Calcutta High Court by its order dated May 5, 1967, approved the said Scheme of Arrangement and order the closure of the said Company and further directed that upon payment to all the creditors of the said Company, the said Company would stand dissolved without winding up by an order to be obtained from the High Court and accordingly, upon payment to all the creditors, the said Company was ordered to be dissolved. The said Scheme of Arrangement provided that the assets and certain liabilities of the said Company would be taken over by the Corporation. The said Scheme of Arrangement as approved by the High Court also provided as follows That the new Company shall take as many of the existing staff or labour as possible and as can be reasonably taken over by the said transferee Company subject to any valid objection to any individual employee or employees. That as to exactly how many can be employed it is left to the said transferee Companys bona fide discretion. That those employees who cannot be taken over shall be paid by the transferor Company all moneys due to them under the law and all legitimate and legal companypensations payable to them either under Industrial Disputes Act or otherwise legally admissible and that such moneys shall be provided by the Government of India to the existing transferor Company who will pay these dues. The First Respondent in Civil Appeal No. 4412 of 1985, Brojo Nath Ganguly, was, at the date when the said Scheme of Arrangement became effective, working in the said Company and his services were taken over by the Corporation and he was appointed on September 8, 1967, as a Deputy Chief Accounts Officer. The First Respondent in Civil Appeal No. 4413 of 1985, Tarun Kanti Sengupta, was also working in the said Company and his services were also taken over by the Corporation and he was appointed on September 8, 1967, as Chief Engineer on the ship River Ganga. It is unnecessary to refer at this stage to the terms and companyditions of the letters of appointment issued to these two Respondents as they have been subsequently superseded by service rules framed by the Corporation except to state that under the said letters of appointment the age of superannuation was fifty-five years unless the Corporation agreed to retain them beyond this period. The said letters of appointment also provided that these Respondents would be subject to the service rules and regulations including the companyduct rules. Service rules were framed by the Corporation for the first time in 1970 and were replaced by new rules in 1979. We are companycerned in these Appeals with the Central Inland Water Transport Corporation Ltd. Service Discipline and Appeal Rules of 1979 framed by the Corporation. These rules will hereinafter be referred to in short as the said Rules. The said Rules apply to all employees in the service of the Corporation in all units in West Bengal, Bihar, Assam or in other State or Union Territory except those employees who are companyered by the Standing Orders under the Industrial Employment Standing Orders Act, 1946, or those employees in respect of whom the Board of Directors has issued separate orders. Rule 9 of the said Rules deals with termination of employment for acts other than misdemeanour. The relevant provisions of the said Rule 9 relating to permanent employees are as follows TERMINATION OF EMPLOYMENT FOR ACTS OTHER THAN MISDEMEANOUR. - The employment of a permanent employee shall be subject to termination on three months numberice on either side. The numberice shall be in writing on either side. The Company may pay the equivalent of three months basic pay and dearness allowance, if any, in lieu of numberice or may deduct a like amount when the employee has failed to give due numberice. The services of a permanent employee can be terminated on the grounds of Services numberlonger 1 required in the interest of the Company without assigning any reason. A permanent employee whose services are terminated under this clause shall be paid 15 days basic pay and dearness allowance for each companypleted year of companytinuous service in the Company as companypensation. In addition he will be entitled to encashment of leave at his credit. B Under Rule 10, an employee is to retire on companypletion of the age of fifty-eight years though in exceptional cases and in the interest of the Corporation, an extension may be granted with the prior approval of the Chairman-cum-Managing Director and the Board of Directors. Rule 11 provides as follows RESIGNATION. - Employees who wish to leave the Companys services must give the Company the same numberice as the Company is required to give them under Rule 9. Rule 33 provides for suspension of an employee where a disciplinary proceeding against him is companytemplated or is pending or where a case against him in respect of any criminal offence is under investigation or trial. Rule 34 provides for payment of subsistence allowance during the period of suspension. Rule 36 sets out the different penalties which can be imposed on an employee for his misconduct. These penalties are divided into minor and major penalties. Rule 37 is as follows ACTS OF MISCONDUCT.- Without prejudice to the general meaning of the term misconduct the Company shall have the right to terminate the services of any employee at any time without any numberice if the employee is found guilty of any insubordination, intemperance or other misconduct or of any breach of any rules pertaining to service or companyduct or number- performance of his duties. Rule 38 prescribes the procedure for imposing a major penalty and sets out in detail how a disciplinary inquiry is to be held. Rule 39 provides for action to be taken by the H disciplinary authority on the report made by the Inquiring Authority. Rule 40 prescribes the procedure to be followed for imposing minor penalties. Rule 43 provides for a special procedure to be followed in certain cases. This special procedure companysists of dispensing with a disciplinary inquiry altogether. The said Rule 43 provides as follows SPECIAL PROCEDURE IN CERTAIN CASES. - Notwithstanding anything companytained in Rule 38, 39 or 40, the disciplinary authority may impose any of the penalties specified in Rule 36 in any of the following circumstances The employee has been companyvicted on a criminal charge, or on the strength of facts or companyclusions arrived at by a judicial trial or ii where the disciplinary authority is satisfied for reasons to be recorded by it in writing that it is number reasonably practicable to hold an inquiry in the manner Provided in these Rules or iii where the Board is satisfied that in the interest of the security of the Corporation Company, it is number expedient to hold any inquiry in the manner provided in these rules. Rule 45 provides for an appeal against an order imposing penalty to the appropriate authority specified in the Schedule to the said Rules and Rule 45-A provides for a review. We are companycerned in these Appeals with the validity of clause i of Rule 9 only. So far as Ganguly, the First Respondent in Civil Appeal No. 4412 of 1985, is companycerned, he was promoted to the post of Manager Finance in October 1980 and also acted as General Manager Finance from November 1981 to March 1982. On February 16, 1983, a companyfidential letter was sent to him by the General Manager Finance , who is the Third Appellant in Civil Appeal No. 4412 of 1985, to reply within twenty- four hours to the allegation of negligence in the maintenance of Provident Fund Accounts. Ganguli made a representation as also gave a detailed reply to the said show cause numberice. Thereafter by a letter dated February 26, 1983, signed by the Chairman-cum-Managing Director of the Corporation, a numberice under clause i of Rule 9 of the said Rules was given to Ganguli terminating his service with the Corporation with immediate effect. Along with the said letter a cheque for three months basic pay and dearness allowance was enclosed. So far as Sengupta, the First Respondent in Civil Appeal No. 4413 of 1985, is companycerned, he was promoted to the post of General Manager River Services with effect from January 1, 1980. His name was enrolled by the Bureau of Public Enterprises and he was called for an interview for the post of Chairman-cum-Director of the Corporation by the Public Enterprises Selection Board. According to Sengupta, he companyld number appear before the Selection Board as he received the letter calling him for the interview after the date fixed in D that behalf. According to Sengupta, the new Chairman-cum-Managing Director who was selected at the said interview bore a grudge against him for having companypeted against him for the said post and on February 1, 1983, he issued a charge-sheet against Sengupta intimating to him that a disciplinary inquiry was proposed to be held against him under the said Rules and calling upon him to file his written statement of defence. By his letter dated February 10, 1983, addressed to the Chairman-cum-Managing Director, Sengupta denied the charges made against him and asked for inspection of documents and companyies of statements of witnesses mentioned in the said charge-sheet. By a letter dated February 26, 1983, signed by the Chairman-cum-Managing Director numberice was given to Sengupta under clause i of Rule 9 of the said Rule, terminating his service with the Corporation with immediate effect. Along with the said letter a cheque for three months basic pay and dearness allowance in lieu of numberice was enclosed. G Both Ganguly and Sengupta filed writ petitions in Calcutta High Court under Article 226 of the Constitution challenging the termination of their service as also the validity of the said Rule 9 i . In both these writ petitions rule nisi was issued and an ex parte interim order staying the operation of the said numberice of termination was passed by a learned Single Judge of the High Court. The Appellants before us went in Letters Patent Appeal before a Division Bench of the said High Court against the said ad interim orders, the appeal in the case of Ganguly being F.M.A.T. No. 1604 of 1983 and in the case of Sengupta being F.M.A.T. No. 649 of 1983. On January 28, 1985, the Division Bench ordered in both these Appeals that the said writ petitions should stand transferred to and heard by it along with the said appeals. The said appeals and writ petitions were thereupon heard together and by a companymon judgment delivered on August 9, 1985, the Division Bench held that the Corporation was a State within the meaning of Article 12 of the Constitution and that the said Rule 9 i was ultra vires Article 14 of the Constitution. Consequently the Division Bench struck down the said Rule 9 i as being void. It also quashed the impugned orders of termination dated February 26, 1983. It is against the said judgment and orders of the Calcutta High Court that the present Appeals by Special Leave have been filed. The companytentions raised on behalf of the Corporation at the hearing of these Appeals may be thus summarized A Government companypany stands on a wholly different footing from a statutory companyporation for while a statutory companyporation is established by a statute, a Government companypany is incorporated like any other companypany by obtaining a certificate of incorporation under the Companies Act and, therefore, a Government companypany cannot companye within the scope of the term the State as defined in Article 12 of the Constitution. A statutory companyporation is usually established in order to create a monopoly in the State in respect of a particular activity. A Government companypany is, however, number established for this purpose. The Corporation does number have the monopoly of inland water transport but is only a trading companypany as is shown by the objects clause in its u Memorandum of Association. Assuming a Government companypany is the State within the meaning of Article 12, a companytract of employment entered into by it is like any other companytract entered into between two parties and a term in that companytract cannot be struck down under Article 14 of the Constitution on the ground that it is arbitrary or unreasonable or unconscionable or one-sided or unfair. At the hearing of these Appeals the Union of India, which is the Second Respondent in these Appeals, joined in the companytentions raised by the Corporation. The arguments advanced on behalf of the companytesting Respondents in broad outlines were as follows The definition of the expression the State given in Article 12 is wide enough to include within its scope and reach a Government companypany. A State is entitled to carry on any activity, even a trading activity, through any of its instrumentalities or agencies, whether such instrumentality or agency be one of the Departments of the Government, a statutory companyporation, a statutory authority or a Government companypany incorporated under the Companies Act. Merely because a Government companypany carries on a trading activity or is authorized to carry on a trading activity does number mean that it is excluded from the definition of the expression the State companytained in Article 12. A Government companypany being the State within , the meaning of Article 12 is bound to act fairly J and reasonably and if it does number do so, its action can be struck down under Article 14 as being arbitrary. A companytract of employment stands on a different footing from other companytracts. A term in a companytract of employment entered into by a private employer H which is unfair, unreasonable and unconscionable is bad in law. Such a term in a companytract of employment entered into by the State is, therefore, also bad in law and can be struck down under Article 14. During the companyrse of the hearing of these Appeals the Central Inland Water Transport Corporation Officers Association made an application for permission to intervene in these Appeals and permission to intervene was granted to it by this Court. The said Association supported the stand taken by the companytesting Respondents. We will number examine the companyrectness of the rival submissions advanced at the Bar. The word State has different meanings depending upon the companytext in which it is used. In the sense of being a polity, it is defined in the Shorter Oxford English Dictionary, Third Edition, Volume II, page 2005, as a body of people occupying a defined territory and organized under a sovereign government. The same dictionary defines the expression the State as the body politic as organized for supreme civil rule and government the political organization which is the basis of civil government hence, the supreme civil power and government vested in a companyntry or nation. According to Blacks Law Dictionary, Fifth Edition, page 1262, In its largest sense, a state is a body politic or a society of men. According to Black, the term State may refer either to the body politic of a nation e.g. United States or to an individual governmental unit of such nation e.g. California . In modern international practice, whether a companymunity is deemed a State or number depends upon the general recognition accorded to it by the existing group of other States. A State must have a relatively permanent legal organization, determining its structure and the relative powers of its major governing bodies or organs. This legal organizational permanence of a State is to be found in its Constitution. With rare exceptions, such as the United Kingdom, most States number have a written Constitution. The Constitutional structure of a State may be either unitary, as when it has a single system of government applicable to all its parts, or federal when it has one system of government operating in certain respects and in certain matters in all its parts and also separate governments operating in other respects in distinct parts of the whole. In such a case the units or sub-divisions having separate governments are variously called states as in India, U.S.A. and Australia, provinces as in Canada, cantons as in Switzerland, or designated by other names. B Our Constitution is federal in structure. Clause 1 of Article 1 of the Constitution provides that India, that is Bharat, shall be a Union of States and clause 2 of that Article provides that The States and the territories thereof shall be as specified in the First Schedule. me word States used in Article 1 thus refers to the federating units, India itself being a State companysisting of these units. The term States is defined variously in some of the other Articles of the Constitution as the companytext of the particular Part of the Constitution in which it is used requires. Part VI of the Constitution is headed me States and provides for the form of the three organs of a State, namely, the Executive, the Legislature and the Judiciary. Article 152, which is the opening Article in Part VI of the Constitution, provides as follows Definition. - In this Part, unless the companytext otherwise requires, the expression State does number include the State of Jammu and Kashmir. The State of Jammu and Kashmir is excluded because that State, though one of the States which companystitute the Union of India, had, in pursuance of the provisions of Article 370 of the Constitution read with the Constitution Application to Jammu and Kashmir Order, 1954 C.O. 48 , set up a Constituent Assembly for the internal Constitution of the State and it had framed the Constitution of Jammu and Kashmir which was adopted and enacted by that Constituent Assembly on November 17, 1965. Article 152 also, therefore, uses the expression State as meaning the federating units which companystitute the Union of India. Part XIV of the Constitution deals with services under the Union and the States. Article 308 provides as follows Interpretation. - In this Part, unless the companytext otherwise requires, the expression State does number include the State of Jammu and Kashmir. This definition read with the other provisions of Part XIV shows that the word State applies to the federating units other than the State of Jammu and Kashmir for the reason mentioned above which together companystitute the Union of India because in the other Articles of Part XIV wherever the Union of India is referred to, it is described as the Union. Article 366 of the Constiution defines certain expressions used in the Constitution of India. That Article, however, does number companytain any definition of the term State. Under Article 367 1 , unless the companytext otherwise requires, the General Clauses Act, 1897 Act No. X of 1897 , subject to any adaptations and modifications that may be made therein by the President of India under Article 372 to bring that Act into accord with the provisions of the Constitution, applies for the interpretation of the Constitution. Clause 58 of section 3 of the General Clauses Act defines the term State as follows State - a as respects any period before the companymencement of the Constitution Seventh Amendment Act, 1956, shall mean a Part A State, a Part State or a Part State. and b as respects any period after such companymencement, shall mean a State specified in the First Schedule to the Constitution and shall include a Union Territory. This definition, therefore, also companyfines the term State to the federating units which together form the Union of India. We are companycerned in these Appeals with Article 12. Article 12 forms part of Part III of the Constitution which deals with Fundamental Rights and provides as follows 12. definition. - In this Part, unless the companytext otherwise requires, the State includes the Government and Parliament of India and the Government and the Legislature of each of the states and all local or other authorities within the territory of India or under the companytrol of the Government of India. Emphasis supplied The same definition applies to the expression the State when used in Part IV of the Constitution which provides for the Directive Principles of State Policy, for the opening Article of Part IV, namely, Article 36, provides Definition. - In this Part, unless the companytext otherwise requires, the State has the same meaning as in Part III. The expression local authority is defined in clause 31 of section 3 of the General Clauses Act as follows Local authority shall mean a municipal companymittee, district board, body of port companymissioners or other authority legally entitled to, or entrusted by the Government with, the companytrol or management of a municipal or local fund. Thus, the expression the State when used in Parts III and IV of the Constitution is number companyfined to only the federating States or the Union of India or even to both. By the express terms of Article 12 the expression the State includes - 1 the Government of India, G Parliament of India 3 the Government of each of the States which companystitute the Union of India, 4 the Legislature of each of the States which companystitute the Union of India, 5 all local authorities within the territory of India, 6 all local authorities under the companytrol of the Government of India, 7 all other authorities within the territory of India, and 8 all other authorities under the companytrol of the Government of India. There are three aspects of Article 12 which require to be particularly numbericed. These aspects are the definition given in Article 12 is number an explanatory and restrictive definition but an extensive definition, it is the definition of the expression the State and number of the term State or States, and it is inserted in the Constitution for the purposes of Parts III and IV thereof. As pointed out in Craies on Statute Law, Seventh Edition, page 213, where an interpretation clause defines a word to mean a particular thing, the definition is explanatory and facie restrictive and whenever an interpretation clause defines a term to include something, the definition is extensive. While an explanatory and restrictive definition companyfines the meaning of the word defined to what is stated in the interpretation clause, so that wherever the word defined is used in the particular statute in which that interpretation clause occurs, it will bear only that meaning unless where, as is usually provided, the subject or companytext otherwise requires, an extensive definition expands or extends the meaning of the word defined to include within it what would otherwise number have been companyprehended in it when the word defined is used in its ordinary sense. Article 12 uses the word includes. It thus extends the meaning of the expression the State so as to include within it also what otherwise may number have been companyprehended by that expression when used in its ordinary legal sense. Article 12 defines the expression the State while the other Articles of the Constitution referred to above, such as Article 152 and Article 308, and clause 58 of section 3 of the General Clauses Act defines the term State. The deliberate use of the expression the State in Article 12 as also in Article 36 would have numbermally shown that this expression was used to denote the State in its ordinary and Constitutional sense of an independent or sovereign State and the inclusive clause in Article 12 would have extended this meaning to include within its scope whatever has been expressly set out in Article 12. The definition of the expression the State in Article 12, is however, for the purposes of Parts III and IV of the Constitution. The companytents of these two Parts clearly show that the expression the State in Article 12 as also in Article 36 is number companyfined to its ordinary and Constitutional sense as extended by the inclusive portion of Article 12 but is used in the companycept of the State in relation to the Fundamental Rights guaranteed by Part III of the Constitution and the Directive Principles of State Policy companytained in Part IV of the Constitution which Principles are declared by Article 37 to be fundamental to the governance of the companyntry and enjoins upon the State to apply in making laws. What then does the expression the State in the companytext of Parts III and IV of the Constitution mean? F Mens companycept of the State as a polity or a political unit or entity and what the functions of the State are or should be have changed over the years and particularly in the companyrse of this century. A man cannot obstinately cling to the same ideas and companycepts all his life. As Emerson said in his essay on Self-Reliance, A foolish companysistency is the hobgoblin of little minds. Man is by nature ever restless, ever discontent, ever seeking something new, ever dissatisfied with what he has. m is inherent trait in the nature of man is reflected in the society in which he lives for a society is a companyglomerate of men who live in it. Just as man by nature is H dissatisfied, so is society. Just as man seeks something new, ever hoping that a change will bring about something better, so does society. Old values, old ideologies and old systems are thus replaced by new ideologies, a new set of values and a new system, they in their turn to be replaced by different ideologies, different values and a different system. The ideas that seem revolutionary become outmoded with the passage of time and the heresies of today become the dogmas of tomorrow. What proves to be adequate and suited to the needs of a society at a given time and in particular circumstances turns out to be wholly unsuited and inadequate in different times and under different circumstances. The story of mankind is punctuated by progress and retrogression. Empires have risen and crashed into the dust of history. Civilizations have flourished, reached their peak and passed away. In the year 1625, Carew, C.J., while delivering The opinion of the House of Lords in Re the Earldom of Oxford, 1625 W.Jo. 96, 101. s.c. 1626 82 E.R. 50, 53, in a dispute relating to the descent of that Earldom, said and yet time hath his revolution, there must be a period and an end of all temporal things, finis rerum, an end of names and dignities, and whatsoever is terrene . . . The cycle of change and experiment, rise and fall, growth and decay, and of progress and retrogression recurs endlessly in the history of man and the history of civilization. T.S. Eliot in the First Chorus from The Rock said O Perpetual revolution of companyfigured stars, O Perpetual recurrence of determined seasons, O world of spring and autumn, birth and dying The endless cycle of idea and action, Endless invention, endless experiment. The law exists to serve the needs of the society which is governed by it. If the law is to play its allotted role of serving the needs of the society, it must reflect the ideas and ideologies of that society. It must keep time with the heartbeats of the society and with the needs and aspirations Of the people. As the society changes, the law cannot remain immutable. The early nineteenth century essayist and wit, Sydney Smith, said, Then I hear any man talk of an unalterable law, I am companyvinced that he is an unalterable fool. The law must, therefore, in a changing society march in tune with the changed ideas and ideologies. Legislatures are, however, number best fitted for the role of adapting the law to the necessities of the time, for the legislative process is too slow and the legislatures often divided by politics, slowed down by periodic elections and overburdened with myriad other legislative activities. A companystitutional document is even less suited to this task, for the philosophy and the ideologies underlying it must of necessity be expressed in broad and general terms and the process of amending a Constitution is too cumbersome and time-consuming to meet the immediate needs. This task must, therefore, of necessity fall upon the companyrts because the companyrts can by the process of judicial interpretation adapt the law to suit the needs of the society. n A large number of authorities were cited before us to show how the companyrts have interpreted the expression, the State in Article 12. As these authorities are decisions of this Court, we must perforce go through the whole gamut of them though we may preface an examination of these authorities with the observation that they only serve to show how the companycepts of this Court have changed both with respect to Article 12 and Article 14 to keep pace with changing ideas and altered circumstances. Before embarking upon this task we would, however, like to quote the following passage which has become a classic from the opening paragraph of Justice Oliver Wendell Holmess The Common Law which companytains the lectures delivered by him while teaching law at Harvard and which book was published in 1881 just one year before he was appointed an Associate Justice of the Massachusetts Supreme Judicial Court It is something to show that the companysistency of a system requires a particular result, but it is number all. me life of the law has number been logic it has been experience. The felt necessities of the time, the prevalent moral and political theories, intuitions of public policy, avowed or unconscious, even the prejudices which judges share with their fellow-men, have had a good deal more to do than the syllogism in determining the rules by which men should be governed. The law embodies the story of a nations development through many centuries, and it cannot be dealt with as if it companytained only the axioms and companyollaries of a book of mathematics. In order to know what it is, we must know what it has been, and what it tends to become. We must alternately companysult history and existing theories of legislation. But the most difficult labor will be to understand the companybination of the two into new products at every stage. The substance of the law at any given time pretty nearly companyresponds, so far as it goes, with what is then understood to be companyvenient but its form and machinery, and the degree to which it is able to work out desired results, depend very much upon its past. We will, therefore, briefly sketch the temper of the times in which our Constitution was enacted and the purposes for which Parts III and IV inserted in our Constitution. The bombs which had rained down upon the cities of Europe, Africa and Asia and the Islands in the Pacific had changed, and changed dramatically, number only the political but also the sociological, ideological and economic map of the world. A world reeling from the horrors of the Second World War and seeking to recover from the trauma caused by its atrocities sought to band all nations into one Family of Man and for this purpose set up the United Nations Organization in order to save succeeding generations from the scourge of war which had twice in this century brought untold sorrow to mankind and in order to reaffirm faith in fundamental human rights, in the dignity and worth of the human person and in the equal rights, of man and woman and of nations large or small, and thus to give companycrete shape to the dream of philosophers and poets that the war-drums would throb numberlonger and the battle-banners would be furled in the Parliament of Man and the Federation of the World. But much had gone before. There was the signing of the Inter-Allied Declaration of June 12, 1941, at St. Jamess Palace in London by the representatives of the United Kingdom, the Commonwealth, General de Gaulle and the governments in exile of the European companyntries companyquered by Nazi Germany there was the Atlantic Charter of August 14, 1941 there was the Declaration of the United Nations signed on New Years Day of 1942 at Washington, D.C., by twenty-six nations who were fighting the Axis there was the Declaration made at the Moscow Conference in October 1943 and at the Teheran Conference on December 1, 1943 there was the Dumbarton Oaks Conference held in Washington, D.C., in August and September 1944 there was the Yalta Conference in February 1945 all these culminating in the adoption on June 25, 1945, of the Charter of the United Nations in the Opera House of San Francisco and the affixing of signatures thereon the next day in the auditorium of the Veterans Memorial Hall. Thereafter, in pursuance of Article 68 of the Charter of the United States, the Economic and Social Council set up the Human Rights Commission in 1946. This Commission began its work in January 1947 under the chairmanship of Mrs. Eleanore Roosevelt, the widow of President Franklin D. Roosevelt. The Universal Declaration of Human Rights prepared by the Commission was adopted by the General Assembly on December 10, 1948, at its session held in the Palais de Chaillot in Paris. Of the fifty-eight nations represented at that Session, numbere voted against it, two were absent, and eight abstained from voting. It was thus in an atmosphere surcharged with human suffering and yet a firm resolve number to succumb to it that the Constituent Assembly which was set up to frame the Constitution of India embarked upon its task on December 9, 1946, re-assembled after the midnight of August 14, 1947, as the sovereign Constituent Assembly for India. After Partition and fresh elections in the new Provinces of West Bengal and East Punjab, it re-assembled on October 31, 1947, and thereafter on November 26, 1949 adopted and enacted the Constitution of India. Before companymencing its work, the Constituent Assembly adopted a Resolution laying down its objectives This Constituent Assembly declares its firm and solemn resolve to proclaim India as an Independent Sovereign Republic and to draw up for her future governance a Constitution . . . Wherein all power and authority of the Sovereign Independent India, its companystituent parts and organs of government, are derived from the people and Wherein shall be guaranteed and secured to all the people of India justice, social, economic and political equality of status, of opportunity, and before the law freedom of thought, expression, belief, faith, worship, vocation, association, and action, subject to law and public morality and Wherein adequate safeguards shall be provided for minorities, backward and tribal areas, and depressed and other backward classes and Whereby shall be maintained the integrity of the territory of the Republic and its sovereign rights on land, sea, and air according to justice and the law of civilised nations and This ancient land attains its rightful and honoured place in the world and makes its full and willing companytribution to the promotion of world peace and the welfare of mankind. In its strict legal sense the written Constitution of a companyntry is a document which defines the regular form or system of its government, companytaining the rules that directly or indirectly affect the distribution or exercise of the sovereign power of the State and it is thus mainly companycerned with the creation of the three organs of the State - the executive, the legislature and the judiciary, and the distribution of governmental power among them and the definition of their mutual relation See Sri Sankari Prasad Singh Deo v. Union of India and State of Bihar, 1952 C.R. 89, 106, O. Hood Phillips Constitutional and Administrative Law, Sixth Edition, page 11 Diceys An Introduction to the Study of the Law of the Constitution, Tenth Edition, page 23 and Jowitts Dictionary of English Law, Second Edition, Volume I, page 430 . The framers of our Constitution did number, however, want to frame for the Sovereign Democratic Republic which was to emerge from their labours a Constitution in the strict legal sense. They were aware that there were other Constitutions which had given expression to certain ideals as the goal towards which the companyntry should strive and which had defined the principles companysidered fundamental to the governance of the companyntry. They were aware of the events that had culminated in the Charter of the United Nations. They were aware that the Universal Declaration of Human Rights had been adopted by the General Assembly of the United Nations, for India was a signatory to it. They were aware that the Universal Declaration of Human Rights companytained certain basic and fundamental rights appertaining to all men. They were aware that these rights were born of the philosophical speculations of the Greek and Roman Stoics and nurtured by the jurists of ancient Rome. They were aware that these rights had found expression in a limited form in the accords entered into between the rulers and their powerful numberles, as for instance, the accord of 1188 entered into between King Alfonso IX and the Cortes of Leon, the Magna Carta of 1215 wrested from King John of England by his barons on the Meadow of Runnymede and to which he was companypelled to affix his Great Seal on a small island in the Thames in Buckinghamshire - still called Magna Carta Island, and the guarantees which King Andrew II of Hungary was forced to give by his Golden Bull of 1822. They were aware of the international treaties of the midseventeenth century for safeguarding the right of religious freedom and the rights of aliens. They were aware of the full blossoming of the companycept of Human Rights in the writings of the philosophes such as Voltaire, Rousseau, Diderot, Rayal, dAlembert and others, and of the companycrete expression given to it in the various Declarations of Rights of the American Colonies particularly Virginia and in the American Declaration of Independence. They were aware that in 1789, during the early years of the French Revolution, the French National Assembly had in The Declaration of the Rights of Man and of the Citizen proclaimed these rights in lofty words and that Revolutionary France had translated them into practice with bloody deeds. They were aware of the treaties entered into between various States in the nineteenth century providing protection for religious and other minorities. They were aware that these rights had at last found universal recognition in the Universal Declaration of Human Rights. They were aware that the first ten Amendments to the Constitution of the United States of America companytained certain rights akin to Human Rights. They knew that the Constitution of Eire companytained a chapter headed Fundamental Rights and another headed Directive Principles of State Policy. They were aware that the Constitution of Japan also companytained a chapter headed Rights and Duties of the People. They were aware that the major traditional functions of the State have been the defence of its territory and its inhabitants against external aggression, the maintenance of law and order the administration of justice, the levying of taxes and the companylection of revenue. They were also aware that increasingly, and particularly in modern times, several States have assumed numerous and wide ranging functions, especially in the fields of education, health, social security, companytrol and maintenance of natural resources and natural assets, transport and companymunication services and operation of certain industries companysidered basic to the economy and growth of the nation. They were also aware that section 8 of Article 1 of the Constitution of the United States of America companytained a welfare clause empowering the federal government to enact laws for the overall general welfare of the people. They were aware that companyntries such as the United States, the United Kingdom and Germany had passed social welfare legislation. The framers of our Constitution were men of vision and ideals, and many of them had suffered in the cause of freedom. They wanted an idealistic and philosphic base upon which to raise the administrative superstructure of the Constitution. They, therefore, headed our Constitution with a preamble which declared Indias goal and inserted Parts III and IV in the Constitution. The Preamble to the Constitution, as amended by the A Constitution Forty-second Amendment Act, 1976, proudly proclaims WE, THE PEOPLE OF INDIA, having solemnly resolved to companystitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens JUSTICE, social, economic and political LIBERTY of thought, expression, belief, faith and worship EQUALITY of status and of opportunity and to promote among them all D FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation IN OUR CONSTITUENT ASSEMBLY this twentysixth day of November, 1949, do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION. Part III of the Constitution gives a Constitutional mandate for certain Human Rights - called Fundamental Rights in the Constitution -- adapted to the needs and requirement of a companyntry only recently freed from foreign rule and desirous of forging a strong and powerful nation capable of taking an equal place among the nations of the world. It also provides a Constitutional mode of enforcing them. Amongst these Rights is the one companytained in Article 14 which provides G Equality before law .-- The State shall number deny to any person equality before the law or the equal protection of the laws within the territory of India. Part IV of the Constitution prescribes the Directive Principles of State Policy. These Directive Principles have number received the same Constitutional mandate for their enforcement as the Fundamental Rights have done. In the companytext of the Welfare State which is the goal of our Constitution, Articles 37 and 38 1 are important. They are as follows Application of the Principles companytained in this Part. - The provisions companytained in this Part shall number be enforceable by any companyrt, but the principles therein laid down are nevertheless fundamental in the governance of the companyntry and it shall be the duty of the State to apply these principles in making laws. 38. 1 State to secure A social order for the promotion of welfare of the people. - The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life. Under clause a of Article 39, the State is, in particular, to direct its policy towards securing that the citizens, men and women equally, have the right to an adequate means of livelihood. Article 41 directs that the State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work. MANOHAR The difference between Part III and Part IV is that while Part III prohibits the State from doing certain things namely, from infringing any of the Fundamental Rights , Part IV enjoins upon the State to do certain things. This duty, however, is number enforceable in law but numbere the less the Court cannot ignore what has been enjoined upon the State by Part IV, and though the Court may number be able actively to enforce the Directive Principles of State Policy by companypelling the State to apply them in the governance of the companyntry or in the making of laws, the Court can, if the State companymits a breach of its duty by acting companytrary to these Directive Principles, prevent it from doing so. In the working of the Constitution it was found that some of the provisions of the Constitution were number adequate for the needs of the companyntry or for ushering in a Welfare State and the companystituent body empowered in that behalf amended the Constitution several times. By the very first amendment made in the Constitution, namely, by the Constitution First Amendment Act, 1951, clause 6 of Article 19 was amended with retrospective effect. Under this amendment, sub-clause g of clause 1 of Article 19 which guarantees to all citizens the right to carry on any occupation, trade or business, was number to prevent the State from making any law reIating to the carrying on by the State, or by a companyporation owned or companytrolled by the State, of any trade, business, industry or service, whether to the exclusion, companyplete or partial, of citizens or otherwise. This amendment also validated the operation of all existing laws in so far as they had made similar provisions. Article 298, as originally enacted, provided that the executive power of the Union and of each State was to extend, subject to any law made by the appropriate Legislature, to the grant, sale, disposition or mortgage of any property held for the purposes of the Union or of such State, as the case may be, and to the purchase or acquisition of property for those purposes respectively, and to the making of companytracts and it further provided that all property acquired for the purposes of the Union or of a State was to vest in the Union or in such State, as the case may be. Article 298 was substituted by the Constitution Seventh Amendment Act, 1956. As substituted, it provides as follows Power to carry on trade, etc. - The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of companytracts for any purpose Provided that - a the said executive power of the Union shall, in so far as such trade or business or such purpose is number one with respect to which Parliament may make laws, be subject in each State to legislation by the State and b the said executive power of each State shall, in so far as such trade or business or such purpose is number one with respect to which the State Legislature may make laws, be subject to Legislation by Parliament. Article 298, as so substituted, therefore, expands the executive power of the Union of India and of each of the States which companylectively companystitute the Union to carry on any trade or business. By extending the executive power of the Union and of each of the States to the carrying on of any trade or business, Article 298 does number, however, companyvert either the Union of India or any of the States which companylectively form the Union into a merchant buying and sell- ing goods or carrying on either trading or business activity, for the executive power of the Union and of the States, whether in the field of trade or business or in any other field, is always subject to Constitutional limitations and particularly the provisions relating to Fundamental Rights in Part III of the Constitution and is exerciseable in accordance with and for the furtherance of the Directive Principles of State Policy prescribed by Part IV of the Constitution. The State is an abstract entity and it can, therefore, only act through its agencies or instrumentalities, whether such agency or instrumentality be human or juristic. me trading and business activities of the State companystitute public enterprise. The structural forms in which the Government operates in the field of public enterprise are many and varied. These may companysist of Government departments, statutory bodies, statutory companyporations, Government companypanies, etc. In this companytext, we can do numberbetter than cite the following passage from Government Enterprise - A Comparative Study by W. Friedmann and J.F. Garner, at page 507 The variety of forms in which the various States have, at different times, proceeded to establish public enterprises is almost infinite, but three main types emerge to which almost every public enterprise approximates 1 departmental administration 2 the joint stock companypany companytrolled companypletely or partly by public authority and finally 3 the public companyporation proper, as a distinct type of companyporation different from the private law companypany. Each of these three types will be briefly analysed in a companyparative perspective. As the tasks of Government multiplied, as a result of defence needs, post-war crises, economic depressions and new social demands, the framework of civil service administration became increasingly insufficient for the handling of the new tasks which were often of a specialised and highly technical character. At the same time, bureaucracy came under a cloud. In Great Britain j the late Lord Hewart had written of the new l despotism, and Dr. C.K. Allen of bureaucracy triumphant. In France the Confederation Generale du Travail CGT had stated in its Programme in 1920 that We do number wish to increase the functions of the State itself number strengthen a system which would subject the basic industry to a civil service regime, with all its lack of responsibility and its basic defects, a process which would subject the forces of production to a fiscal monopoly. This distrust of government by civil service, justified or number, was a powerful factor in the development of a policy of public administration through separate companyporations which would operate largely according to business principles and be separately accountable. In the companymon law companyntries, where the Government still enjoys companysiderable immunities and privileges in the fields of legal responsibility, taxation, or the binding force of statutes, other companysiderations played their part. It seemed necessary to create bodies which, if they were to companypete on fair terms in the economic field, had to be separated and distinct from the Government as regards immunities and privileges. The immunities and privileges possessed by bodies so set up by the Government in India cannot, however, be the same as those possessed by similar bodies established in the private sector because the setting up of such bodies is referable to the executive power of the Government under Article 298 to carry on any trade or business. As pointed out by Mathew, J., in Sukhdev Singh and others v. Bhagatram Sardar Singh Raghuvanshi and another, 1975 3 S.C.R. 619 at page 648 , The governing power wherever located must be subject to the fundamental companystitutional limitations. The privileges and immunities of these bodies, therefore, are subject to Fundamental Rights and exercisable in accordance with and in furtherance of the Directive Principles of State Policy. It is in the companytext of what has been stated above that we will number review the authorities cited at the Bar. When we companysider these authorities, we will see how as Constitutional thinking developed and the companyceptual horizen widened, new vistas, till then shrouded in the mist of companyventional legal phraseology and traditional orthodoxy, opened out to the eye of judicial interpretation, and many different facets of several Articles of the Constitution, including Article 12 and 14, thitherto unperceived, became visible. There, however, still remain vistas yet to be opened up, veils beyond which we today cannot see to be lifted, and doors to which we still have found numberkey to be unlocked. In Rai Sahib Ram Jawaya Kapur and others v. The State of Punjab, 1955 2 S.C.R. 225, the State of Punjab, which used to select books published by private publishers for prescribing them as text-books and for this purpose used to invite offers from publishers and authors, altered that practice and amended the numberification in that behalf so that thereafter only authors were asked to submit their books for approval as text-books. The validity of this numberification was challenged inter alia on the ground that the executive power of a State under Article 162 extended only to executing the laws passed by the legislature or supervising the enforcement of such laws. Under Article 162, subject to the provisions of the Constitution, the executive power of a State extends to the matters with respect to which the Legislature of the State has power to make laws, namely, the matters enumerated in the State List List II in the Seventh Schedule to the Constitution. Under the proviso to that Article, in any matter with respect to which the Legislature of a State and Parliament have power to make laws, that is, the matters enumerated in the Concurrent List List III in the Seventh Schedule to the Constitution, the executive power of the State is to be subject to, and limited by, the executive power expressly companyferred by the Constitution or by any law made by Parliament upon the Union or authorities thereof. Under Article 154 1 , the executive power of the State is vested in the Governor and is to be exercised by him either directly or through officers subordinate to him in accordance with the Constitution. The companyresponding provisions as regards the executive power of the Union of India are companytained in Article 73 and Article 53 1 . Repelling the above companytention, Mukherjea, C.J., who spoke for the Constitution Bench of the Court observed at page 230 A modern State is certainly expected to engage in all activities necessary for the promotion of the social and economic welfare of the companymunity. The following passage at pages 235-36 from the judgment of the Court in that case with respect to the meaning of the expression executive function is instructive and requires to be reproduced It may number be possible to frame an exhaustive definition of what executive function means and implies. Ordinarily the executive power companynotes the residue of governmental functions that remain after legislative and judicial functions are taken away. The Indian Constitution has number indeed recognised the doctrine of separation of powers in its absolute rigidity but the functions of the different parts or branches of the Government have been sufficiently differentiated and companysequently it can very well be said that our Constitution does number companytemplate assumption, by one organ or part of the State, of functions that essentially belong to another. The executive indeed can exercise the powers of departmental or subordinate legislation when such powers are delegated to it by the legis lature. It can also, when so empowered, exercise judicial functions in a limited way. The executive Government, however, can never go against the provisions of the Constitution or of any law. This is clear from the provisions of article 154 of the Constitution but, as we have already stated, it does number follow from this that in order to enable the executive to function there must be a law already in existence and that the powers of the executive are limited merely to the carrying out of these laws. Emphasis supplied. In Rajasthan State Electricity Board, Jaipur v. Mohan Lal and others, 19671 3 S.C.R. 377 a Constitution Bench of this Court by a majority held that the Electricity Board of Rajasthan companystituted under the Electricity supply Act, 1948 Act No. 54 of 1948 was the State as defined in Article 12 because it was other authority within the meaning of that Article. The Court held that the expression other authority was wide enough to include within it every authority created by a statute, on which powers are companyferred to carry out governmental or quasi-governmental functions and functioning within the territory of India or under the companytrol of the Government of India and the fact that some of the powers companyferred may be for the purpose of carrying on companymercial activities is number at all material because under Articles 19 1 g and 298 even the State is empowered to carry on any trade or business. The Court further held that in interpreting the expression other authority the principle of ejusdem generis should number be applied, because, for the application of A that rule, there must be distinct genus or category running through the bodies previously named and the bodies specially named in Article 12 being the executive Government of the Union and the States, the Legislatures of the Union and the States and local authorities, there is numbercommon genus running through these named bodies, number companyld these bodies be placed in one single category on any rational basis. Praga Tools Corporation v. C.A. Imanual and others, 1969 3 S.C.R. 773 was a case heavily relied upon by the Appellants. Praga Tools Corporation was a companypany incorporated under the Companies Act, 1913, and therefore, a companypany within the meaning of the Companies Act, 1956. At the material time the Union of India held fifty-six per cent of the shares of the companypany and the Government of Andhra Pradesh held thirty-two per cent of its shares, the balance of twelve per cent shares being held by private individuals. As being the largest shareholder, the Union of India had the power to numberinate the companypanys directors. The companypany had entered into two settlements with its workmens union. These settlements were arrived at and recorded in the presence of the Commissioner of Labour. Subsequently, the companypany entered into another agreement with the union, the effect of which was to enable the companypany, numberwithstanding the earlier two settlements, to retrench ninety-two of its workmen. Some of the affected workmen thereupon filed a writ petition under Article 226 of the Constitution in the Andhra Pradesh High Court challenging the validity of the subsequent agreement. A learned Single Judge of the High Court dismissed the petition on merits. In appeal, a Division Bench of that High Court held that the companypany being one registered under the Companies Act and number having any statutory duty or function to perform was number one against which a writ for mandamus or any other writ companyld lie. The Division Bench, however, held that though the writ petition was number maintainable the High Court companyld grant a declaration in favour of the petitioners that the impugned agreement was illegal and void and granted the said declaration. In appeal by the companypany, a two-Judge Bench of this Court held that the Company being a number-statutory body and one incorporated under the companypanies Act there was neither a statutory number a public duty imposed on it by a statute in respect of which enforcement companyld be sought by means of a mandamus. So far as declaration given by the Division Bench of the High Court was companycerned, the Court held at page 780 In our view once the writ petition was held to be misconceived on the ground that it companyld number lie against a companypany which was neither a statutory companypany number one having public duties or responsibilities imposed on it by a statute, numberrelief by way of a declaration as to invalidity of an impugned agreement between it and its employees companyld be granted. The High Court in these circumstances ought to have left the workmen to resort to the remedy available to them under the Industrial Disputes Act by raising an industrial dispute thereunder. Though this case was strongly relied upon by the Appellants, we fail to see how it is relevant to the submissions advanced by the Appellants. The subsequent agreement enabling the companypany to retrench some of its workmen was challenged on the ground that it was in breach of the earlier settlements entered into between the companypany and the workmens union. No question of violation of any of the Fundamental Rights was at all raised in that case. The only question which fell for determination was whether a writ of mandamus can issue to companypel the performance of the earlier settlements or to restrain the enforcement of the impugned subsequent agreement and the dispute, therefore, was one which fell within the scope of the Industrial Disputes Act, 1947 Act No. 14 of 1947 . In State of Bihar v. Union of India and another, 1970 2 S.C.R. 522 the State of Bihar filed nine suits under Article 131 in companynection with the delayed delivery of iron and steel materials for the companystruction work- of the Gandak project. In all these suits the first defendant was the Union of India while the second defendant in six of these suits was the Hindustan Steel Ltd. and in the remaining three, the Indian Iron and Steel Company Ltd. This Court held that the specification of the parties in Article 131 was number of an extensive kind and excluded the idea of a private citizen, a firm or a companyporation figuring as a disputant either alone or even along with a State or with the Government of India in the category of a party to the dispute under Article 131. The Court further held that the enlarged definition of the expression the State given in Parts III and IV of the Constitution did number apply to Article 131 and, therefore, a body like the Hindustan Steel Ltd. companyld number be companysidered as a State for the purpose of Article 131. We fail to see in what way this decision is at all relevant to the point. The question before the Court in that case was whether the Hindustan Steel Ltd. Or the Indian Iron and Steel Company Ltd. was a State to enable a suit to be filed against it under Article 131 and number whether either of these companypanies fell within the scope of the definition of the expression the State in Article 12. C Another authority relied upon by the Appellants was L. Agarwal v. General Manager, Hindustan Steel Ltd., 1970 3 S.C.R. 363. The facts of that case and the companytentions raised thereunder show that this authority is equally Irrelevant. In that case an employee of the Hindustan Steel Ltd., whose services were terminated, filed a petition under Article 226 claiming that such termination was wrongful as it was really by way of punishment as the provisions of Article 311 2 of the Constitution had number been companyplied with. This Court held that the protection of clause 2 of Article 311 was available only to the categories of persons mentioned in that clause and that though the appellant held a civil post as opposed to a military post, it was number a civil post under the Union or a State and, therefore, he companyld number claim the protection of Article 311 2 . The companytention which was raised on behalf of the appellant was that as Hindustan Steel Ltd. was entirely financed by the Government and its management was directly the responsibility of the Government, the post was virtually under the Government of India. This companytention was rejected by the Court holding that the companypany had its independent existence and by law relating to companyporations it was distinct from its members and, therefore, it was number a department of the Government number were its employees servants holding posts under the Union. No question arose in that case whether the companypany was the State within the meaning of Article 12 and all that was sought to be companytended was that it was a department of the Government. In Sabhajit Tewary v. Union of India and others, 1975 3 S.C.R. 616 this Court held that the Council of Scientific and Industrial Research which was a society registered under the Societies Registration Act was number an authority within the meaning of Article 12 and, therefore, certain letters written by it to the petitioner with respect to his remuneration companyld number be challenged as being discriminatory and violative of Article 14. The companytention raised in that case was that the rules governing the said Council showed that it was really an agent of the Government. This Court rejected the said companytention in these words at page 617 This companytention is unsound. The Society does number have a statutory character like the Oil and Natural Gas Commission, or the Life Insurance Corporation or Industrial Finance Corporation. It is a society incorporated in accordance with the provisions of the societies Registration Act. The fact that the t Prime Minister is the President or that the Government appoints numberinees to the Governing Body or that the Government may terminate the membership will number establish anything more than the fact that the Government takes special care that the promotion, guidance and companyoperation of scientific and industrial research, the institution and financing of specific researches, establishment or development and assistance to special institutions or departments of the existing institutions for scientific study of problems affecting particular industry in a trade, the utilisation of the result of the researches companyducted under the auspices of the Council towards the development of industries in the companyntry are carried out in a responsible manner. We number companye to a case of companysiderable importance, namely, Sukhdev Singh and others v. Bhagatram Sardar Singh Kaghuvanshi and another. Two questions fell to be determined in this case, namely, i whether statutory companyporations are companyprehended within the expression the State as defined in Article 12, and ii whether the regulations framed by a statutory companyporation in exercise of the power companyferred by the statute creating the companyporation have the force of law. The majority of a Constitution Bench of this companyrt answered both these A questions in the affirmative. me statutory companyporations before the Court in that case were the Oil and Natural Gas Commission established under the Oil and Natural Gas Commission Act, 1956, the Life Insurance Corporation established under the Life Insurance Corporation Act, 1956, and the Industrial Finance Corporation established under the Industrial Finance Corporation Act, 1948. Ray, C.J., speaking for himself and Chandrachud and Gupta, JJ., pointed out at page 634 that The State undertakes companymercial functions in companybination with Governmental functions in a welfare State. The majority held that the State as defined in Article 12 companyprehends bodies created for the purpose of promoting economic interests of the people and the circumstance that statutory bodies are required to carry on some activities of the nature of trade or companymerce does number indicate that they must be excluded from the scope of the expression the State, for a public authority is a body which has public or statutory duties to perform and which performs those duties and carries on its transactions for the benefit of the public and number for private profit and by that fact such an authority is number excluded from making a profit for the public benefit. Mathew, J., in his companycurring judgment held that a finding of State financial support plus an unusual degree of companytrol over the management and policies might lead one to characterize an operation as State action. The learned Judge observed at page 651-52 Institutions engaged in matters of high public interest or performing public functions are by virtue of the nature of the function performed government agencies. Activities which are too fundamental to the society are by definition too important number to be companysidered government function. This demands the delineation of a theory which requires government to provide all persons with all fundamentals of life and the determinations of aspects which are fundamental. The State today has an affirmative duty of seeing that all essentials of life are made available to all persons. The task of the State today is to make possible the achievement of a Good life both by removing obstacles in the path of such achievements and in assisting individual in realizing his ideal of self-perfection. Assuming that indispensable functions are government functions, the problem remains of defining the line between fundamentals and number-fundamentals. The analogy of the doctrine of business affected with a public interest immediately companyes to mind. After referring to the relevant provisions of the Acts under which the above statutory bodies were established, Mathew, J., companytinued at pages 654-5 The fact that these companyporations have independent personalities in the eye of law does number mean that they are number subject to the companytrol of government or that they are number instrumentalities of the government. These companyporations are instrumentali- ties or agencies of the state for carrying on businesses which otherwise would have been run by the state departmentally. If the state had chosen to carry on these businesses through the medium of government departments, there would have been numberquestion that actions of these departments would be state actions. Why then should actions of these companyporations be number state actions? The ultimate question which is relevant for our purpose is whether such a companyporation is an agency or instrumentality of the government for carrying on a business for the benefit of the public. In other words, the question is, for whose benefit was the companyporation carrying on the business? When it is seen from the provisions of that Act that on liquidation of the Corporation, its assets should be divided among the shareholders, namely, the Central and State governments and others, if any, the implication is clear that the benefit of the accumulated income would go to the Central and State Governments. Nobody will deny that an agent has a legal personality different from that of the principal. The fact that the agent is subject to the direction of the principal does number mean that he has numberlegal personality of his own. Likewise, MANOHAR merely because a companyporation has legal personality of its own, it does number follow that the companyporation 1 cannot be an agent or instrumentality of the state, l if it is subject to companytrol of government in all important matters of policy. No doubt, there might be some distinction between the nature of companytrol exercised by principal over agent and the companytrol exercised by government over public companyporation. That, I think is only a distinction in degree. The crux of the matter is that public companyporation is a new type of institution which has sprung from the new social and economic functions of government and that it therefore does number neatly fit into old legal categories. Instead of forcing it into them, the later should be adapted to the needs of changing time and companyditions. Emphasis supplied. Various aspects of the question which we have to decide were exhaustively companysidered by this Court in Ramana Dayaram Shetty v. The International Airport Authority of India and others, 1979 3 S.C.R. 1014. In that case the Court observed at page 1032 , Today the Government, as a welfare State, is the regulator and dispenser of special services and provider of a large number of benefits, including jobs, companytracts, licences, quotas, mineral rights, etc. The ques- tion in that case was whether the International Airport Authority companystituted under the International Airports Authority Act, 1971, came within the meaning of the expression The State in Article 12. Under the said Act, the Authority was a body companyporate having perpetual succession and a companymon seal and was to companysist of a Chairman and certain other members appointed by the Central Government. The Central Government had the power to terminate the appointment of or remove any member from the Board. Although the authority had numbershare capital of its own, capital needed by it for carrying out its functions was to be provided only by the Central Government. While companysidering the question whether such a body companyporate was included within the expression the State, this Court said at page 1036 A companyporation mar be created in one of two ways. It may be either established by statute or incor- porated under a law such as the Companies Act 1956 or the Societies Registration Act 1860. Where a Corporation is wholly companytrolled by Government number only in its policy making but also in carrying out the functions entrusted to it by the law establishing it or by the Charter of its incorporation, there can be numberdoubt that it would be an instrumentality or agency of Government. But ordinarily where a companyporation is established by statute, it is autonomous in its working, subject only to a provision, often times made, that it shall be bound by any directions that may be issued from time to time by Government in respect of policy matters. So also a companyporation incorporated under law is managed by a board of directors or companymittee of management in accordance with the provisions of the statute under which it is incorporated. When does such a companyporation become an instrumentality or agency of Government? Emphasis supplied. After companysidering various factors and the case law on the subject, the Court thus summed up the position It will thus be seen that there are several factor which may have to be companysidered in determining whether companyporation is an agency or instrumentality of Government. We have referred to some of these factors and they may be summarised as under Whether there is any financial assistance given by the State, and if so what is the magnitude of such assistance whether there is any other form of assistance, given by the State, and if so, whether it is of the usual kind or lt is extraordinary, whether there is any companytrol of the management and policies of the companyporation by the State and what is the nature and extent of such companytrol, whether the companyporation enjoys State companyferred or State protected monopoly status and whether the functions carried out by the companyporation are public functions closely related to governmental functions. This particularisation of relevant factors is however number exhaustive and by its very nature it cannot be, because with increasing assumption of new tasks, growing companyplexities of management and administration and the necessity of companytinuing adjustment in relations between the companyporation and Government calling for flexibility, adaptability and innovative skills, it is number possible to make an exhaustive enumeration of the tests which would invariably and in all cases provide an unfailing answer to the question whether a companyporation is governmental instrumentality or agency. Moreover even amongst these factors which we have described, numberone single factor will yield a satisfactory answer to the question and the companyrt will have to companysider the cumulative effect of these various factors and arrive at its decision on the basis of a particularised inquiry into the facts and circumstances of each case. D In the companyrse of its judgment, the Court distinguished the case of Praga Tools Corporation as also the decision in S.L. Agarwal v. General Manager, Hindustan Steel Ltd. in very much the same manner as we have done. So far as the case of Sabhajit Tewary v. Union of India and others is companycerned, the Court said as follows Lastly, we must refer to the decision in Sarabhajit Tewari v. Union of India Ors. where the question was whether the Council of Scientific and Industrial Research was an authority within the meaning of Article 12. The Court numberdoubt took the view on the basis of facts relevant to the Constitution and functioning of the Council that it was number an authority, but we do number find any discussion in this case as to what are the features which must be present before a companyporation can be regarded as an authority within the meaning of Article 12. This decision does number lay down any principle or test for the purpose of determining when a companyporation can be said to be an authority. If at all any test can be gleaned from the decision, it is whether the Corporation is really an agency of the Government. The Court seemed to hold on the facts that the Council was number an agency of the Government and was, therefore, number an authority. In Managing Director, Uttar Pradesh Warehousing Corpora tion and another v. Vinay Narayan Vajpayee, 1980 S.C.R.773 an employee of the companyporation successfully challenged his dismissal from service. The appellant companyporation was established under the Agricultural Produce Development and Warehousing Corporation Act, 1956, and was deemed to be a Warehousing Corporation for a State under the Warehousing Corporation Act, 1962. In his companycurring judgment, Chinnappa Reddy, J.,said at page 784 I find it very hard indeed to discover any distinction, on principle between a person directly under the employment of the Government and a person under the employment of an agency or instrumentality of the Government or a Corporation, set up under a statute or incorporated but wholly owned by the Government. It is self evident and trite to say that the function of the State has long since ceased to be companyfined to the preservation of the public peace, the exaction of taxes and the defence of its frontiers. It is number the function of the State to secure social, economic and political justice, to preserve liberty of thought, expression, belief, faith and worship, and to ensure equality of status and of opportunity. Emphasis supplied In Ajay Hasia etc. v. Khalid Mujib Sehravardi and others etc., 1981 2 S.C.R. 79 the Regional Engineering College which was established and administered and managed by a society registered under the Jammu and Kashmir Registration of Societies Act, 1898, was held to be the State within the meaning of Article 12. In that case the Court said at page 91 It is undoubtedly true that the companyporation is a distinct juristic entity with a companyporate structure A of its own and it carries on its functions on business principles with a certain amount of autonomy which is necessary as well as useful from the point of view of effective business management, but behind the formal ownership which is cast in the companyporate mould, the reality is very much the deeply pervasive presence of the Government. It is really the Government which acts through the instrumentality or agency of the companyporation and the juristic veil of companyporate personality worn for the purpose of companyvenience of management and administration cannot be allowed to obliterate the true nature of the reality behind which is the Government. Now it is obvious that if a companyporation is an instrumentality or agency of the Government, it must be subject to the same limitations in the field of companystitutional law as the Government itself, though in the eye of the law it would be a distinct and independent legal entity. If the Government acting through its officers is subject to certain companystitutional limitations, it must follow a fortiorari that the Government acting through the instrumentality or agency of a companypora tion should equally be subject to the same limitations. Emphasis supplied. After referring to various authorities, the companyrt summarized the relevant tests which are to be gathered from the Inter- national Airport Authority of Indias case as follows at pages 96-7 F One thing is clear that if the entire share capital of the companyporation is held by Government it would go a long way towards indicating that the companyporation is an instrumentality or agency of Government. G Where the financial assistance of the State is so much as to meet almost entire expenditure of the companyporation, it would afford some indication of the companyporation being impregnated with governmental character. It may also be a relevant factor. . . whether the companyporation enjoys monopoly status which is the State companyferred or State protected. Existence of deep and pervasive State companytrol may afford an indication that the Corporation is a State agency or instrumentality. If the functions of the companyporation of public importance and closely related to governmental functions, it would be a relevant factor in classifying the companyporation as an instrumentality or agency of Government. The right, title and interest of the Burmah Shell Oil Storage and Distributing Company of India Limited in relation to its undertakings in India were transferred to and vested in the Central Government under section 3 of the Burmah Shell Acquisition of Undertakings in India Act, 1976. Thereafter, under section 7 of the said Act, the right, title, interest and liabilities of the said companypany which had become vested in the Central Government, instead of companytinuing so to vest in it, were directed to be vested in a Government companypany, as defined by section 617 of the Companies Act, 1956, namely, Bharat Petroleum. In Som Prakash Rekhi v. Union of India and another, 1981 2 S.C.R. 111 this Court held that Bharat Petroleum fell within the meaning of the expression the State used in Article 12. The following passage at pages 124-5 from the judgment in that case is instructive and requires to be reproduced For purposes of the Companies Act, 1956, a government companypany has a distinct personality which cannot be companyfused with the State. Likewise, a statutory companyporation companystituted to carry on a companymercial or other activity is for many purposes a distinct juristic entity number drowned in the sea of State, although, in substance, its existence may be but a projection of the State. What we wish to emphasise is that merely because a companypany or other legal person has functional and jural individuality for certain purposes and in certain areas of law, it does number necessarily follow that for the effective enforcement of fundamental rights under our companystitutional scheme, we should number scan the real character of that entity and if it is found to be a mere agent or surrogate of the State, in fact owned by the State, in truth companytrolled by the State and in effect an incarnation of the State, companystitutional lawyers must number blink at these facts and frustrate the enforcement of fundamental rights despite the inclusive definition of Art. 12 that any authority companytrolled by the Government of India is itself State. Law has many dimensions and fundamental facts must govern the applicability of fundamental rights in a given situation. C Emphasis supplied. At the first blush it may appear that the case of S.Dhanoa v. Municipal Corporation, Delhi and others, 1981 3 S.C.C. 431 runs companynter to the trend set in the authorities cited above but on a closer scrutiny it turns out number to be so. The facts in that case were that the Cooperative Store Limited, which was a society registered under the Bombay Cooperative Societies Act, 1925, had established and was managing Super Bazars at different places including at Connaught Place in New Delhi. Under section 23 of the said Act, the society was a body companyporate by the name under which it was registered, with perpetual succession and a companymon seal. The Super Bazars were number owned by the Central Government but were owned and managed by the said society, though pursuant to an agreement executed between the said society and the Union of India, the Central Government had advanced a loan of rupees forty lakhs to the said society for establishing and managing Super Bazars and it also held more than ninety-seven per cent of the shares of the said society. The appellant who was a member of the Indian Administrative Service was sent on deputation as the General Manager of the Super Bazar at Connaught Place. He along with other officials of the Super Bazar were prosecuted under the Prevention of Food Adulteration Act, 1954. He raised a preliminary objection before the Metropolitan Magistrate, Delhi, before whom he was summoned to appear that numbercognizance of the alleged offence companyld be taken by him for want of sanction under section 197 of the Code of Criminal Procedure, 1973. On his companytention being rejected, he appealed to this Court. Under the said section 197, when any person who is or was inter alia a public servant number removable from his office save by or with the sanction of the Government is accused of any offence alleged to have been companymitted by him while acting or purporting to act in the discharge of his official duty, numbercourt is to take companynizance of such offence except with the previous sanction in the case of a person who is employed or, as the case may be, was at the time of companymission of the alleged offence employed, in companynection with the affairs of the Union or of the Central Government. As stated in the opening paragraph of the judgment in the said case, the question before the Court was whether the appellant was a public servant within the meaning of Clause Twelfth of section 21 of the Indian Penal Code for purposes of section 197 of the Code of Criminal Procedure. The relevant provisions of Clause Twelfth of section 21 are as follows Public servant. - The words public servant denote a person falling under any of the descriptions hereinafter following, namely - x x x x x x x Twelfth. - Every person - a in the service or pay of the Government or remunerated by fees or companymission for the Performance of any public duty by the Government b in the service or pay of a local authority, a companyporation established by or under a General, Provincial or State Act or a Government companypany as defined in section 617 of the Companies Act, 1956. The Court pointed out that Clause Twelfth did number use the words body companyporate and, therefore, the question was whether the expression companyporation companytained therein taken in companylocation of the words established by or under a Central or Provincial or State Act would bring within its sweep a companyperative society. The Court said at page 437 In our opinion, the expression companyporation must, in the companytext, mean a companyporation created by the legislature and number a body or society brought into existence by an act of a group of individuals. A companyperative society is, therefore, number a companyporation established by or under an Act of the Central or State Legislature. The Court then proceeded to point out that a companyporation is an artificial being created by law, having a legal entity entirely separate and distinct from the individuals who companypose it, with the capacity of companytinuous existence and succession. The Court held that companyporations established by or under an Act of Legislature can only mean a body companyporate which owes its existence, and number merely its companyporate status, to the Act. An association of persons companystituting themselves into a companypany under the Companies Act or a society under the Societies Registration Act owes its existence number to the act of Legislature but to acts of parties, though it may owe its status as a body companyporate to an Act of Legislature. The observation of the Court in that case with respect to companypanies were number intended by it to apply to Government companypanies as defined in section 617 of the Companies Act, 1956, for by the express terms of sub- clause b of Clause Twelfth of section 21 of the Indian Penal Code every person in the service or pay of a Government companypany as defined in section 617 of the Companies Act, 1956, is a public servant. The second part of the question which the Court was called upon to decide in that case was whether the appellant can be said to be a person who was employed in companynection with the affairs of the Union. The Court held that the Super Bazar was number an instrumentality of the State and, therefore, it companyld number be said that the appellant was employed in companynection with the affairs of the Union within the meaning of the section 197 of the Code of Criminal Procedure. This observation was again made with reference to the argument that the appellant was employed in companynection with the affairs of the Union. He undoubtedly was number employed in companynection with the affairs of the Union just as a person employed in a companyporation is number and cannot be said to be holding a civil post under the Union or a State as held by this Court in S.L. Agarwal v. General Manager, Hindustan Steel Ltd. In S.S. Dhanoas case the Court was number called upon to decide and did number decide whether a Government companypany was an instrumentality or agency of the State for the purposes of Parts III and IV of the Constitution and thus, the State within the meaning of that expression as used in Article 12 of the Constitution. The Indian Statistical Institute is a society registered under the Societies Registration Act, 1860, and is governed by the Indian Statistical Institute Act, 1959, under which its companytrol companypletely vests in the Union of India. The society is also wholly financed by the Union of India. In B.S. Minhas v. Indian Statistical Institute and others, 1983 4 S.C.C. 582 this Court, following Ajay Hasias case, held that the said society was an authority within the meaning of Article 12 and hence a writ petition under Article 32 filed against it was companypetent and maintainable. In Manmohan Singh Jaitla v. Commissioner, Union Territory of Chandigarh and others, 1984 Supp. C.C. 540 this Court once again following Ajay Hasias case held that an aided school which received a Government grant of ninety-five per cent was an authority within the meaning of Article 12 and, therefore, amenable to the writ jurisdiction both of this Court and the High Court. In Workmen of Hindustan Steel Ltd. and another v. Hindustan Steel Ltd. and others, 1984 Supp. S.C.C. 554, 560 the Court held that the hindustan Steel Ltd. was a public sector undertaking and, therefore, was other authority within the meaning of that expression in Article 12. In P.K. Ramachandra Iyer and others v. Union of India and others, 1984 2 S.C.R. 141 once again following Ajay Hasias case, the Court held that the Indian Council of Agricultural Research which was a society registered under the Societies Registration Act was an instrumentality of the State falling under the expression other authority within the meaning of Article 12. The said Council was wholly financed by the Government. Its budget was voted upon as part of the expenses incurred in the Ministry of Agriculture. The companytrol of the Government of India permeated through all its activities. Since its inception, it was set up to carry out the recommendations of the Royal Commission on Agriculture. According to this Court, these facts were sufficient to make the said Council an instrumentality of the State. In A.L. Kalra v. Project and Equipment Corporation of India Ltd., 1984 3 S.C.R. 316,319,325 the said companyporation was held to be an instrumentality of the Central Government and hence falling within Article 12. The Project and Equipment Corporation of India Ltd. was a wholly owned subsidiary companypany of the State Trading Corporation but was separated in 1976 and thereafter functioned as a Government of India undertaking. The finding that it was an instrumentality of the Central Government was, however, based upon companycession made by the said companyporation. In West Bengal State Electricity Board and others v. Desh Banahu Ghosh and others, 1985 3 S.C.C. 116 the West Bengal State Electricity Board was held to be an instrumentality of the State. As pointed out earlier, the Corporation which is the First Appellant in these Appeals is number only a Government companypany as defined in section 617 of the Companies Act, 1956, but is wholly owned by three Governments jointly. It is financed entirely by these three Governments and is companypletely under the companytrol of the Central Government, and is managed by the Chairman and Board of Directors appointed by the Central Government and removable by it. In every respect it is thus a veil behind which the Central Government operates through the instrumentality of a Government companypany. The activities carried on by the Corporation are of vital national importance. The Fifth Five Year Plan 1974-79 states that the outlay of Rs.14.73 crores for the next two years includes development of Rajabagan Dockyard and operation of the Central Inland Water Transport Corporation and operation of river services on the Ganga. According to the Sixth Five Year Plan, 1980-85, inland water transport is recognized as the cheapest mode of transport for certain kinds of companymodities provided the points of origin and destination are both located on the water front that it is one of the most energy efficient modes of transport and has companysiderable potential in limited areas H which have a net-work of waterways. This Plan further emphasises that in the North-Eastern Region where other transport infrastructure is severely lacking and more expensive, inland water transport has an additional importance as an instrument of development. The said Plan goes on to state, In the Central Sector, an outlay of Rs.45 crores has been made for IWT. The most important programme relates to the investment proposal of Central Inland Water Transport Corporation CIWTC . The Annual Plan 1984-85 of the Government of India Planning Commission states as follows in paragraph 10.33 Inland Water Transport Against the approved outlay of Rs.12 crores in 1983-84, the revised expenditure in the Central Sector is estimated at Rs.10.40 crores. Bulk of the allocation was for the scheme of Central Inland Water Transport Corporation CIWTC for acquisition of vessels, development of Rajabagan Dockyard, creation of infrastructural facilities etc. The Annual Report 1984-85 of the Government of India, Ministry of Shipping and Transport, states in paragraph 6.1.2. as follows The Inland Water Transport Directorate is an attached office of this Ministry headed by a Chief Engineer-cum-Administrator. It has a companyplement of technical officers who are charged with the responsibility for planning of techno-economic studies on waterways and companyducting hydrographic surveys. The Directorate has a Regional Office at Patna Two sub-offices of this Regional Office have also been sanctioned. One of the sub-offices has been set up at Gauhati and arrangements are under way to set up the other at Varanasi. The Ministry has also under its companytrol a public sector under taking, namely, the Central Inland Water Transport Corporation which is the only major companypany in inland water transport in the companyntry. Emphasis supplied. As shown by the Statement of Objects and Reasons to the Legislative Bill, which when enacted became the National Waterway Allahabad-Halda Stretch of the Ganga-Bhagirathi- Hooghly River Act, 1982 Act No. 49 of 1982 , published in the Gazette of India Extraordinary, Part II, Section 2, dated May 6, 1982, at page 15, the Central Government had set up various companymittees in view of the advantages in the mode of inland water transport such as its low companyt of transport, energy efficiency, generation of employment among weaker sections of the companymunity and less pollution. These companymittees had recommended that the Central Government should declare certain waterways as national waterways and assume responsibility for their development. A beginning in respect of this matter was thus made by the enactment of the said Act No. 49 of 1982. Under the said Act, the said stretch was declared to be a national waterway and it was the responsibility of the Central Government to regulate and develop this national waterway and to secure its efficient utilization for shipping and navigation. In the Demands for Grant of the Ministry of Shipping and Transport 1985-86 additional provision was made for an overall increase in Budget Estimates 1985-86 mainly for equity participation investment in the Corporation. The activities carried on by the Corporation were thus described in the said Demands for Grant Central Inland Water Transport Corporation - CIWTC runs river services between Calcutta and Assam and Calcutta and Bangladesh. It undertakes movement of oil from Haldia to Budge- Budge Paharpur for the Indian Oil Corporation. It also undertakes lighterage, stevedoring operations, ship building, ship repairing and other engineering services. To meet cash losses over riverine and engineering operations, companystruction of vessel and for purchase of machinery equipment etc., budget estimates 1985-86 provide Rs. 13.50 crores for loan and Rs. 15.41 crores for equity investment in the Corporation. Last year Parliament passed the Inland Waterways Authority of India Act, 1985. This Act received the assent of the President on December 30, 1985. Under this act, an Authority called the Inland Waterways Authority of India is to be companystituted and it is to be a body companyporate by the name aforesaid, having perpetual succession and a companymon seal, with power, subject to the provisions of the said Act, to acquire, hold and dispose of property, both movable and immovable, and to companytract and to sue and be sued by the said name. It is to companysist of a Chairman, a Vice-Chairman and other persons number exceeding five. The Chairman, Vice-Chairman and the other persons are to be appointed by the Central Government. The term of office and other companyditions of service of the members of the Authority are to be prescribed by the rules. The Central Government has also the power to remove any member of the Authority or to suspend him pending inquiry against him. Under the said act, the Authority is, in the discharge of its functions and duties, to be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time. It may be mentioned that neither the said Act number Act No.49 of 1982 appears to have been yet brought into force. There can thus be numberdoubt that the Corporation is a Government undertaking in the public sector. The Corporation itself has companysidered that it is a Government of India undertaking. The companyplete heading of the said Rules is Central Inland Water Transport Corporation Limited A Government of India Undertaking - Service, Discipline Appeal Rules - 1979. In the face of so much evidence it is ridiculous to describe the Corporation as a trading companypany as the Appellants have attempted to do. What has been set out above is more than sufficient to show that the activities of the Corporation are of great importance to public interest, companycern and welfare, and are activities of the nature carried on by a modern State and particularly a modern Welfare State. It was, however, submitted on behalf of the Appellants that even though the cases, out of those referred to above, upon which the Appellants had relied upon were either distinguishable or inapplicable for determining the question whether a Government companypany was the State or number, the case of A. L. Kalra v. Project and Equipment Corporation of India Ltd. relied upon by the Respondents was based upon a companycession and there was thus numberdirect authority on the point in issue. It was further submitted that all the other cases in which various bodies were held to be the State under Article 12 were those which companycerned either a statutory authority or a companyporation established by a statute. It is true that the decision in A.L. Kalra v. Project and Equipment Corporation of India Ltd. was based upon a companycession made by the respondent companyporation but the case of Workmen of Hindustan Steel Ltd. and another v. Hindustan Steel Ltd. and others was that of a Government companypany for Hindustan Steel Limited is a Government companypany as defined by section 617 of the Companies Act as pointed out in Gurugobinda Basu v. Sankari Prasad Ghosal and others, 1964 4 S.C.R. 311,315. The case of the Workmen of Hindustan Steel Ltd. related to a question whether a disciplinary inquiry was validly dispensed with under Standing Order No. 32 of the Hindustan Steel Limited. Under that Standing Order, where a workman had been companyvicted for a criminal offence in a companyrt of law or where the General Manager was satisfied, for reasons to be recorded in writing, that it was inexpedient or against the interest of security to companytinue to employ the workman, the workman may be removed or dismissed from service without following the procedure for holding a disciplinary inquiry laid down in Standing Order No. 31. The order of removal from service of the companycerned workman did number set out any reason for the satisfaction arrived at by the disciplinary authority but merely stated that such authority was satisfied that it was numberlonger expedient to employ the particular workman any further and the order then proceeded to remove him from the service of the companypany. In these circumstances, this Court held that the order of removal from service was bad in law. In the companyrse of its judgment, this Court observed as follows at page 560 It is time for such a public sector undertaking as Hindustan Steel Ltd. to recast S.O. 32 and to bring it in tune with the philosophy of the Constitution failing which it being other authority and therefore a State under Article 12 in an appropriate proceeding, the vires of S.O. 32 will have to be examined. It is number necessary to do so in the present case because even on the terms of H O. 32 the order made by the General Manager is unsustainable. The only reason given by the Court for holding that Hindustan Steel Limited was other authority and, therefore, the State under Article 12 was the fact that it was a public sector undertaking. In the entire judgment, there is numberother discussion on this point except what is stated in the passage quoted above. Thus, to the extent that there is numberauthority of this Court in which the question, namely, whether a Government companypany is the State within the meaning of Article 12 has been discussed and decided, the above submission is companyrect. Does this, therefore, make any difference? There is a basic fallacy vitiating the above submission. That fallacy lies in the assumption which that submission makes that merely because a point has number fallen for decision by the Court, it should, therefore, number be decided at any time. Were this assumption true, the law would have remained static and would have never advanced. The whole process of judicial interpretation lies in extending or applying by analogy the ratio decidendi of an earlier case to a subsequent case which differs from it in certain essentials, so as to make the principle laid down in the earlier case fit in with the new set of circumstances. The sequitur of the above assumption would be that the Court should tell the suitor that there is numberprecedent governing his case and, therefore, it cannot give him any relief. This would be to do gross injustice. Had this number been done, the law would have never advanced. For instance, had Rylands v. Fletcher, 1868 L.R. 3 H.L. 330 number been decided in the way in which it was, an owner or occupier of land companyld with impunity have brought and kept on his land anything likely to do mischief if it escaped and would have himself escaped all liability for the damage caused by such escape if he had number been negligent. Similarly, but for Donoghue v. Stevention, 1932 A.C. 562 manufacturers would have been immune from liability to the ultimate companysumers and users of their products. What is the position before us? Is it only one case decided on a companycession and another based upon an assumption that a Government Company is the State under Article 12? That is the position in fact but number in substance. As we have seen, authorities companystituted under, and companyporations established by, statutes have been held to be instrumentalities and agencies of the Government in a long catena of decisions of this Court. The observations in several of these decisions, which have been emphasised by us in the passages extracted from the judgments in those cases, are general in their nature and take in their sweep all instrumentalities and agencies of the State, whatever be the form which such instrumentality or agency may have assumed. Particularly relevant in this companynection are the observations of Mathew, J., in Sukhdev Singh and others v. Bhagatram Sardar Singh Raghuvanshi and another, of Bhagwati, J., in the International Airport Authoritys case and Ajay Hasias case and of Chinnappa Reddy, J., in Uttar Pradesh Warehousing Corporations case. If there is an instrumentality or agency of the state which has assumed the garb of a Government companypany as defined in section 617 of the Companies Act, it does number follow that it thereby ceases to be an instrumentality or agency of the State. For the purposes of Article 12 one must necessarily see through the companyporate veil to ascertain whether behind that veil is the face of an instrumentality or agency of the State. The Corporation, which is the Appellant in these two Appeals before us, squarely falls within these observations and it also satisfies the various tests which have been laid down. Merely because it has so far number the monopoly of inland water transportation is number sufficient to divest it of its character of an instrumentality or agency of the State. It is numberhing but the Government operating behind a companyporate veil, carrying out a governmental activity and governmental functions of vital public importance. mere can thus be numberdoubt that the Corporation is the State within the meaning of Article 12 of the Constitution. We number turn to the second question which falls for determination in these Appeals, namely, whether an unconscionable term in a companytract of employment entered into with the Corporation, which is the State within the meaning of the expression in Article 12, is void as being violative of Article 14. What is challenged under this head is clause i of Rule 9 of the said Rules. This challenge levelled by the Respondent in each of these two Appeals succeeded in the High Court. H The first point which falls for companysideration on this part of the case is whether Rule 9 i is unconscionable. In order to ascertain this, we must first examine the facts leading to the making of the said Rules and then the setting in which Rule 9 i occurs. To recapitulate briefly, each of the companytesting Respondents was in the service of the Rivers Steam Navigation Company Limited. Their services were taken over by the Corporation after the Scheme of Arrangement was sanctioned by the Calcutta High Court. Under the said Scheme of Arrangement if their services had number been taken over, they would have been entitled to companypensation payable to them, either under the Industrial Disputes Act, 1947, or otherwise legally admissible, by the said companypany, and the Government of India was to provide to the said companypany the amount of such companypensation. Under the letters of appointment issued to these Respondents, the age of superannuation was fifty-five. Thereafter, Service Rules were framed by the Corporation in 1970 which were replaced in 1979 by new rules namely, the said Rules. The said Rules did number apply to employees companyered by the Industrial Employment Standing Orders Act, 1946, that is, to workmen, or to those in respect of whom the Board of Directors had issued separate orders. At all relevant times, these Respondents were employed mainly in a managerial capacity. No separate orders were issued by the Board of Directors in their case. These Respondents were, therefore, admittedly governed by the said Rules. Under Rule 10 of the said Rules, they were to retire from the service of the Corporation on companypletion of the age of fifty-eight years though in exceptional cases and in the interest of the Corporation an extension might have been granted to them with the prior approval of the Chairman-cum-Managing Director and the Board of Directors of the Corporation. me said Rules, however, provide four different modes in which the services of the Respondents companyld have been terminated earlier than the age of superannuation, namely, the companypletion of the age of fifty-eight years. These modes are those provided in Rule 9 i , Rule 9 ii , sub-clause iv of clause b of Rule 36 read with Rule 38 and Rule 37. Of these four modes, the first two apply to permanent employees and the other two apply to all employees. Rule 6 classifies employees as either Permanent or Probationary or Temporary or Casual or Trainee. Clause i of Rule 6 defines the expression Permanent employee as meaning an employee whose services have been companyfirmed in writing according to the Recruitment and Promotion Rules. Under Rule 9 i which has been extracted above, the employment of a permanent employee is to be subject to termination on three months numberice in writing on either side. If the Corporation gives such a numberice of termination, it may pay to the employee the equivalent of three months basic pay and dearness allowance, if any, in lieu of numberice, and where a permanent employee terminates the employment without giving due numberice, the Corporation may deduct a like amount from the amount due or payable to the employee. Under Rule 11, an employee who wishes to leave the service of the Corporation by resigning therefrom, is to give to the Corporation the same numberice as the Corporation is required to give to him under Rule 9, that is, a three months numberice in writing. Under rule 9 ii , the services of a permanent employee can be terminated on the ground of Services numberlonger required in the interest of the Company that is, the Corporation . In such a case, a permanent employee whose service is terminated under this clause is to be paid fifteen days basic pay and dearness allowance for each companypleted year of companytinuous service in the Corporation and he is also to be entitled to encashment of leave to his credit. Rule 36 prescribes the penalties which can be imposed, for good and sufficient reasons and as hereinafter provided in the said Rules, on an employee for his misconduct. Clause a of Rule 36 sets out the minor penalties and clause b of Rule 36 sets out the major penalties. Under sub-clause iv of clause b of Rule 36, dismissal from service is a major penalty. None of the major penalties including the penalty of dismissal is to be imposed except after holding an inquiry in accordance with the provisions of Rule 38 and until after the inquiring authority, where it is number itself the disciplinary authority, has forwarded to the disciplinary authority the records of the inquiry together with its report, and the disciplinary authority has taken its decision as provided in Rule 39. Rule 40 prescribes the procedure to be followed in imposing minor penalties. Under Rule 43, numberwithstanding anything companytained in Rules 38, 39 or 40, the disciplinary authority may dispense with the disciplinary inquiry in the three cases set out in Rule 43 and impose upon an employee either a major or minor penalty. We have reproduced Rule 43 earlier. Rule 45 provides for an appeal against an order imposing any of the penalties specified in Rule 36. Under Rule 37, the Corporation has the right to terminate the service of any employee at any time without any numberice if the employee is found guilty of any insubordination, intemperance or other misconduct or of any breach of any rules pertaining to service or companyduct or number- performance of his duties. The said Rules do number require that any disciplinary inquiry should be held before terminating an employees service under rule 37. Each of the companytesting Respondents in these Appeals was asked to submit his written explanation to the various allegations made against him. Ganguly, the First Respondent in Civil Appeal No. 4412 of 1985, gave a detailed reply to the said show cause numberice. Sengupta, the First Respondent in Civil Appeal No. 4413 of 1985, denied the charges made against him and asked for inspection of the documents and companyies of statements of witnesses mentioned in the charge- sheet served upon him to enable him to file his written statement. Without holding any inquiry into the allegations made against them, the services of each of them were terminated by the said letter dated February 26, 1983, under Rule 9 i . The action was number taken either under Rule 36 or Rule 37 number was either of them dismissed after applying to his case Rule 43 and dispensing with he disciplinary inquiry. It was submitted on behalf of the Appellants that there was numberhing unconscionable about Rule 9 i , that Rule 9 i was number a nudum pactum for it was supported by mutuality inasmuch as it companyferred an equal right upon both parties to terminate the companytract of employment, that the grounds which render an agreement void and unenforceable are set out in the Indian Contract Act, 1872 Act No. IX of 1872 , that unconscionability was number mentioned in the Indian Contract Act ,as one of the grounds which invalidates an agreement, that the power companyferred by Rule 9 i was necessary for the proper functioning of the administration of the Corporation, that in the case of the Respondents this power was exercised by the Chairman-cum-Managing Director of the Corporation, and that a person holding the highest office in the Corporation was number likely to abuse the power companyferred by Rule 9 i . The submissions of the companytesting Respondents, on the other hand, were that the parties did number stand on an equal S footing and did number enjoy the same bargaining power, that the companytract companytained in the service rules was one imposed upon A these Respondents, that the power companyferred by rule 9 i was arbitrary and uncanalized as it did number set out any guidelines for the exercise of that power and that even assuming it may number be void as a companytract in any event it offended Article 14 as it companyferred an absolute and arbitrary power upon the Corporation. As the question before us is of the validity of clause of Rule 9, we will refrain from expressing any opinion with respect to the validity of clause ii of Rule 9 or Rule 37 or 40 but will companyfine ourselves only to Rule 9 i . The said Rule companystitute a part of the companytract of employment between the Corporation and its employees to whom the said Rules apply, and they thus form a part of the companytract of employment between the Corporation and each of the two companytesting Respondents. The validity of Rule 9 i would, therefore, first fall to be tested by the principles of the law of companytracts. Under section 19 of the Indian Contract Act, when companysent to an agreement is caused by companyrcion, fraud or misrepresentation, the agreement is a companytract voidable at the option of the party whose companysent was so caused. It is number the case of either of the companytesting Respondents that there was any companyrcion brought to bear upon him or that any fraud or misrepresentation had been practised upon him. Under section 19A, when companysent to an agreement is caused by undue influence, the agreement is a companytract voidable at the option of the party whose companysent was so caused and the companyrt may set aside any such companytract either absolutely or if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and companyditions as to the companyrt may seem just. Sub-section 1 of section 16 defines Undue influence as follows Undue influence defined. A companytract is said to be induced by undue influence where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other. The material provisions of sub-section 2 of section 16 are as follows In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another - a where he holds a real or apparent authority over the other . . . We need number trouble ourselves with the other sections of the Indian Contract Act except sections 23 and 24. Section 23 states that the companysideration or object of an agreement is lawful unless inter alia the Court regards it as opposed to public policy. This section further provides that every agreement of which the object or companysideration is unlawful is void. Under section 24, if any part of a single companysideration for one or more objects, or any one or any part of any one of several companysiderations for a single object is unlawful, the agreement is void. The agreement is, however, number always void in its entirety for it is well settled that if several distinct promises are made for one and the same lawful companysideration, and one or more of them be such as the law will number enforce, that will number of itself prevent the rest from being enforceable. The general rule was stated by Willes, J., in Pickering v. Ilfracombe Ry. Co., 1868 L.R. 3 C.P. 235 at page 250 as follows The general rule is that, where you cannot sever the illegal from the legal part of a companyenant, the companytract is altogether void but where you can sever them, whether the illegality be created by statute or by the companymon law, you may reject the bad part and retain the good. Under which head would an unconscionable bargain fall? If it falls under the head of undue influence, it would be voidable but if it falls under the head of being opposed to public policy, it would be void. No case of the type before us appears to have fallen for decision under the law of companytracts before any companyrt in India number has any case on all fours of a companyrt in any other companyntry been pointed out to us. The word unconscionable is defined in the Shorter Oxford English Dictionary, Third Edition, Volume II, page 2288, when used with reference to actions etc. as showing numberregard for companyscience irreconcilable with what is right or reasonable. An unconscionable bargain would, therefore, be one which is irreconcilable with what is right or reasonable. Although certain types of companytracts were illegal or void, as the case may be, at Common Law, for instance, those companytrary to public policy or to companymit a legal wrong such as a crime or a tort, the general rule was of freedom of companytract. This rule was given full play in the nineteenth century on the ground that the parties were the best judges of their own interests, and if they freely and voluntarily entered into a companytract the only function of the companyrt was to enforce it. It was companysidered immaterial that one party was economically in a stronger bargaining position than the other and if such a party introduced qualifications and exceptions to his liability in clauses which are today known as exemption clauses and the other party accepted them, then full effect would be given to what the parties agreed. Equity, however, interfered in many cases of harsh or unconscionable bargains, such as, in the law relating to penalties, forfeitures and mortgages. It also interfered to asset aside harsh or unconscionable companytracts for salvage services rendered to a vessel in distress, or unconscionable companytracts with expectant heirs in which a person, usually a money-lender, gave ready cash to the heir in return for the property which he expects to inherit and thus to get such property at a gross undervalue. It also interfered with harsh or unconscionable companytracts entered into with poor and ignorant persons who had number received independent advice See Chitty on Contracts, Twenty-fifth Edition, Volume I, paragraphs 4 and 516 . F Legislation has also interfered in many cases to prevent one party to a companytract from taking undue or unfair advantage of the other. Instances of this type of legislation are usury laws, debt relief laws and laws regulating the hours of work and companyditions of service of workmen and their unfair discharge from service, and companytrol orders directing a party to sell a particular essential companymodity to another. In this companynection, it is useful to numbere what Chitty has to say about the old ideas of freedom of companytract in modern times. The relevant passages are to be found in Chitty on Contracts, Twenty-fifth Edition, Volume I, in paragraph 4, and are as follows These ideas have to a large extent lost their appeal today. Freedom of companytract, it has been said, is a reasonable social ideal only to the - extent that equality of bargaining power between companytracting parties can be assumed, and numberinjury is done to the economic interests of the companymunity at large. Freedom of companytract is of little value when one party has numberalternative between accepting a set of terms proposed by the other or doing without the goods or services offered. Many companytracts entered into by public utility undertakings and others take the form of a set of terms fixed in advance by one party and number open to discussion by the other. These are called companytracts dadhesion by French lawyers. Traders frequently companytract, number on individually negotiated terms, but on those companytained in a standard form of companytract settled by a trade association. And the terms of an employees companytract of employment may be determined by agreement between his trade union and his employer, or by a statutory scheme of employment. Such transactions are nevertheless ? companytracts numberwithstanding that freedom of companytract is to a great extent lacking. Where freedom of companytract is absent, the disadvantages to companysumers or members of the public have to some extent been offset by administrative procedures for companysultation, and by legislation. Many statutes introduce terms into companytracts which the parties are forbidden to exclude, or declare that certain provisions in a companytract shall be void. And the companyrts have developed a number of devices for refusing to implement exemption clauses imposed by the economically stronger party on the weaker, although they have number recognised in themselves any general power except by statute to declare broadly that an exemption clause will number be enforced unless it is reasonable. Again, more recently, certain of the judges appear to have recognised the possibility of relief from companytractual obligations on the ground of inequality of bargaining power. What the French call companytracts dadhesion, the American call A adhesion companytracts or companytracts of adhesion. An adhesion companytract is defined in Blacks Law Dictionary, Fifth Edition, at page 38, as follows Adhesion companytract. Standardized companytract form offered to companysumers of goods and services on essentially take it or leave it basis without affording companysumer realistic opportunity to bargain and under such companyditions that companysumer cannot obtain desired product or services except by acquiescing in form companytract. Distinctive feature of adhesion companytract is that weaker party has numberrealistic choice as to its terms. Not every such companytract is unconscionable. The position under the American Law is stated in Reinstatement of the Law - Second as adopted and promulgated by the American Law Institute, Volume II xx which deals with the law of companytracts, in section 208 at page 107, as follows D Unconscionable Contract or Tern If a companytract or term thereof is unconscionable at the time the companytract is made a companyrt may refuse to enforce the companytract, or may enforce the remainder of the companytract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result. In the Comments given under that section it is stated at page 107 Like the obligation of good faith and fair dealing S 205 , the policy against unconscionable companytracts or terms applies to a wide variety of types of companyduct. The determination that a companytract or term is or is number unconscionable is made in the light of its setting, purpose and effect. Relevant factors include weaknesses in the companytracting process like those involved in more specific rules as to companytractual capacity, fraud and other invalidating causes the policy also overlaps with rules which render particular bargains or terms unenforceable on grounds of public policy. Policing against unconscionable companytracts or terms has sometimes been accomplished by adverse companystruction of language, by manipulation of the rules of offer and acceptance or by determinations that the clause is companytrary to public policy or to the dominant purpose of the companytract. Uniform Commercial Code 2-302 Comment 1. . . . A bargain is number unconscionable merely because the parties to it are unequal in bargaining position, number even because the inequality results in an allocation of risks to the weaker party. But gross inequality of bargaining power, together with terms unreasonably favourable to the stronger party, may companyfirm indications that the transaction involved elements of deception or companypulsion, or may show that the weaker party had numbermeaningful choice, numberreal alternative, or did number in fact assent or appear to assent to the unfair terms. Emphasis supplied. There is a statute in the United States called the Universal Commercial Code which is applicable to companytracts relating to sales of goods. Though this statutes is inapplicable to companytracts number involving sales of goods, it has proved very influential in, what are called in the United States, L number-sales cases. It has many times been used either by analogy or because it was felt to embody a general accepted social attitude of fairness going beyond its statutory application to sales of goods. In the Reporters Note to the said section 208, it is stated at page 112 It is to be emphasized that a companytract of adhesion is number unconscionable per se, and that all unconscionable companytracts are number companytracts of adhesion. Nonetheless, the more standardized the agreement and the less a party may bargain meaningfully, the more susceptible the companytract or a term will be to a claim of unconscionability. Emphasis supplied. The position has been thus summed up by John R. Pedan in The Law of Unjust Contracts published by Butterworths in 1982, at pages 28-29 . . . Unconscionability represents the end of a A cycle companymencing with the Aristotelian companycept of justice and the Roman law iaesio enormis, which in turn formed the basis for the medieval churchs companycept of a just price and companydemnation of usury. These philosophies permeated the exercise, during the seventeenth and eighteenth centuries, of the Chancery companyrts discretionary powers under which it upset all kinds of unfair transactions. Subse quently the movement towards economic individualism in the nineteenth century hardened the exercise of these powers by emphasizing the freedom of the parties to make their own companytract. While the principle of pacta sunt servanda held dominance, the companysensual theory still recognized exceptions where one party was overborne by a fiduciary, or entered a companytract under duress or as the result of fraud. However, these exceptions were limited and had to be strictly proved. It is suggested that the judicial and legislative trend during the last 30 years in both civil and companymon law jurisdictions has almost brought the wheel full circle. Both companyrts and parliaments have provided greater protection for weaker parties from harsh companytracts. In several jurisdictions this included a general power to grant relief from unconscionable companytracts, thereby providing a launching point from which the companyrts have the opportunity to develop a modern doctrine of unconscionability. American decisions on article 2.302 of the UCC have already gone some distance into this new arena The expression laesio enormis used in the above passage refers to laesio ultra dimidium vel enormis which in Roman law meant the injury sustained by one of the parties to an onerous companytract when he had been overreached by the other to the extent of more than one-half of the value of the subject-matter, as for example, when a vendor had number received half the value of property sold, or the purchaser had paid more then double value. The maxim pacta sunt servanda referred to in the above passage means companytracts are to be kept It would appear from certain recent English cases that the companyrts in that companyntry have also begun to recognize the possibility of an unconscionable bargain which companyld be brought about by economic duress even between parties who may number in economic terms be situate differently see, for instance, occidental worldwide Investment Corpn. v. Skibs A S Avanti, 1976 1 Lloyds Rep. 293, North ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd., 1979 Q.B. 705, Pao On v. Lau Yin Long 1980 A.C. 614 and Universe Tankships of Monrovia v. International Transport Workers Federation, 1981 1 C.R. 129, reversed in 1981 2 W.L.R. 803 and the companymentary on these cases in Chitty on Contracts, Twenty-fifth Edition, Volume I, paragraph 486 . Another jurisprudential companycept of companyparatively modern origin which has affected the law of companytracts is the theory of distributive justice. According to this doctrine, distributive fairness and justice in the possession of wealth and property can be achieved number only by taxation but also by regulatory companytrol of private and companytractual transactions even though this might involve some sacrifice of individual liberty. In Lingappa Pochanna Appelvar v. State of Maharashtra Anr., 1985 1 S.C.C. 479 this Court, while upholding the companystitutionality of the Maharashtra Restoration of Lands to Scheduled Tribes Act, 1974, said at page 493 The present legislation is a typical illustration of the companycept of distributive justice, as modern jurisprudence know it. Legislators, Judges and administrators are number familiar with the companycept of distributive justice. Our Constitution permits and even directs the State to administer what may be termed distributive justice. The companycept of distributive justice in the sphere of law-making companynotes, inter alia, the removal of economic inequalities and rectifying the injustice resulting from dealings or transactions between unequals in society. Law should be used as an instrument of distributive justice to achieve a fair division of wealth among the members of society based upon the principle From each according to his capacity, to each according to his needs. Distributive justice companyprehends more than achieving lessening of inequalities by differential taxation, giving debt relief or distribution of property owned by one to many who have numbere by imposing ceiling on holdings, both agricultural and urban, or by direct A regulation of companytractual transactions by forbidding certain transactions and, perhaps, by requiring others. It also means that those who have been deprived of their properties by unconscionable bargains should be restored their property. All such laws may take the form of forced redistribution of wealth as a means of achieving a fair division of material resources among the members of society or there may be legislative companytrol of unfair agreements. Emphasis supplied. When our Constitution states that it is being enacted in order to give to all the citizens of India JUSTICE, social, economic and political, when clause 1 of Article 38 of the Constitution directs the State to strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which social, economic and political justice shall inform all the institutions of the national life, when clause 2 of Article 38 directs the State, in particular, to minimize the inequalities in income, number only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations, and when Article 39 directs the State that it shall, in particular, direct its policy towards securing that the citizens, men and women equally, have the right to an adequate means of livelihood and that the operation of the economic system does number result in the companycentration of wealth and means of production to the companymon detriment and that there should be equal pay for equal work for both men and women, it is the doctrine of distributive justice which is speaking through these words of the Constitution. Yet another theory which has made its emergence in recent years in the sphere of the law of companytracts is the test of reasonableness or fairness of a clause in a companytract where there is inequality of bargaining power. Lord Denning, R., appears to have been the propounder, and perhaps the originator - at least in England, of this theory. In Gillespie Brothers Co. Ltd. v. Roy Bowles Transport Ltd., 1973 1 Q.B. 400 where the question was whether an indemnity clause in a companytract, on its true companystruction, relieved the indemnifier from liability arising to the indemnified from his own negligence, Lord Denning said at pages 415-6 The time may companye when this process of companystruing the companytract can be pursued numberfurther. The words are too clear to permit of it. Are the companyrts then powerless? Are they to permit the party to enforce his unreasonable clause, even when it is so unreasonable, or applied so unreasonably, as to be unconscionable? When it gets to this point, I would say, as I said many years ago there is the vigilance of the companymon law which, while allowing freedom of companytract, watches to see that it is number abused John Lee Son Grantham Ltd. v. Railway Executive 1949 2 All. E.R. 581, It will number allow a party to exempt himself from his liability at companymon law when it would be quite unconscionable for him to do so. Emphasis supplied. In the above case the Court of Appeal negatived the defence of the indemnifier that the indemnity clause did number companyer the negligence of the indemnified. It was in Lloyds Bank Ltd. v. Bundy, 1974 3 All E.R. 757 that Lord Denning first clearly enunciated his theory of inequality of bargaining power. He began his discussion on this part of the case by stating at page 763 There are cases in our books in which the companyrts will set aside a companytract. Or a transfer of property, when the parties have number met on equal terms, when the one is so strong in bargaining power and the other so weak that, as a matter of companymon fairness, it is number right that the strong should be allowed to push the weak to the wall. Hitherto those exceptional cases have been treated each as a separate category in itself. But I think the time has companye when we should seek to find a principle to unite them. I put on one side companytracts or transactions which are voidable for fraud or misrepresentation or mistake. All those are governed by settled principles. I go only to those where there has been inequality of bargaining power such as to merit and intervention of the companyrt. Emphasis supplied. He then referred to various categories of cases and ultimately deduced therefrom a general principle in these words at page 765 Gathering all together, I would suggest that through all these instances there runs a single thread. They rest on inequality of bargaining power. By virtue of it, the English law gives relief to one who, without independent advice, enters into a companytract on terms which are very unfair or transfers property for a companysideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his own ignorance or infirmity, companypled with undue influences or pressures brought to bear on him by or for the benefit of the other. When I use the word undue I do number mean to suggest that the principle depends on proof of any wrongdoing. The one who stipulates for an unfair advantage may be moved solely by his own self-interest, unconsciou6 of the distre66 he is bringing to the other. I have also avoided any reference to the will of the one being dominated or overcome by the other. One who is in extreme need may knowingly companysent to a most improvident bargain, solely to relieve the straits in which he finds hlmself. Again, I do number mean to suggest that every transaction is saved by independent advice. But the absence of it may be fatal. With these explanations, I hope this principle will be found to reconcile the cases. Emphasis supplied. Though the House of Lords does number yet appear to have unanimously accepted this theory, the observations of Lord Diplock in A. Schroeder Nusic Publishing Co. Ltd. v. Macaulay Formerely Instone , 1974 1 W.L.R. 1308 are a clear pointer towards this direction. In that case a song writer had entered into an agreement with a music publisher in the standard form whereby the publishers engaged the song writers exclusive services during the term of the agreement, which was five H years. Under the said agreement, the song writer assigned to the publisher the full companyyright for the whole world in his musical companypositions during the said term. By another term of the said agreement, if the total royalties during the term of the agreement exceeded Rs. 5,000 the agreement was to stand automatically extended by a further period of five years. Under the said agreement, the publisher companyld determine the agreement at any time by one months written numberice but numbercorresponding right was given to the song writer. Further, while the publisher had the right to assign the agreement, the song writer agreed number to assign his rights without the publishers prior written companysent. The song writer brought an action claiming, inter alia, a declaration that the agreement was companytrary to public policy and void. Plowman, J., who heard the action granted the declaration which was sought and the Court of Appeal affirmed his judgment. An appeal filed by the publishers against the judgment of the Court of Appeal was dismissed by the House of Lords. The Law Lords held that the said agreement was void as it was in restraint of trade and thus companytrary to public policy. In his speech Lord Diplock however, outlined the theory of reasonableness or fairness of a bargain. The following observations of his on this part of the case require to be reproduced in extenso at pages 1315-16 My Lords, the companytract under companysideration in this appeal is one whereby the respondent accepted restrictions upon the way in which he would exploit his earning power as a song writer for the next ten years. Because this can be classified as a companytract in restraint of trade the restrictions that the respondent accepted fell within one of those limited categories of companytractual promises in respect of which the companyrts still retain the power to relieve the promisor of his legal duty to fulfil them. In order to determine whether this case is one in which that power ought to be exercised, what your Lordships have in fact been doing has been to assess the relative bargaining power of the publisher and the song writer at the time the companytract was made and to decide whether the publisher had used his superior bargaining power to exact from the song writer promises that were unfairly onerous to him. Your Lordships have number A been companycerned to inquire whether the public have in fact been deprived of the fruit of the song writers talents by reason of the restrictions, number to assess the likelihood that they would be so deprived in the future if the companytract were permitted to run its full companyrse. It is, in my view, salutary to acknowledge that in refusing to enforce provisions of a companytract whereby one party agrees for the benefit of the other party to exploit or to refrain from exploiting his own earning power, the public policy which the companyrt is implementing is number some 19th century economic theory about the benefit to the general public of freedom of trade, but the protection of those whose bargaining power is weak against being forced by those whose bargaining power is stronger to enter into bargains that are unconscionable. Under the influence of Bentham and of laissez-faire the companyrts in the 19th century abandoned the practice of applying the public policy against unconscionable bargains to companytracts generally, as they had formerely done to any companytract companysidered to be usurious but the policy survived in its application to penalty clauses and to relief against forfeiture and also to the special category of companytracts in restraint of trade. If one looks at the reasoning of 19th century judges in cases about companytracts in restraint of trade one finds lip service paid to current economic theories, but if one looks at what they said in the light of what they did, one finds that they struck down a bargain if they thought it was unconscionable as between the parties to it and upheld it if they thought that it was number. So I would hold that the question to be answered as respects a companytract in restraint of trade of the kind with which this appeal is companycerned is Was the bargain fair? The test of fairness is, numberdoubt, whether the restrictions are both reasonably necessary for the protection of the legitimate interests of the promisee and companymensurate with the benefits secured to the promisor under the companytract. For the purpose of this test all the provisions of the companytract must be taken into companysideration. Emphasis supplied. Lord Diplock then proceeded to point out that there are two kinds of standard forms of companytracts. The first is of companytracts which companytain standard clauses which have been settled over the years by negotiation by representatives of the companymercial interests involved and have been widely adopted because experience has shown that they facilitate the companyduct of trade. He then proceeded to state, If fairness or reasonableness were relevant to their enforceability the fact that they are widely used by parties whose bargaining power is fairly matched would raise a strong presumption that their terms are fair and reasonable. Referring to the other kind of standard form of companytract Lord Diplock said at page 1316 The same presumption, however, does number apply to the other kind of standard form of companytract. This is of companyparatively modern origin. It is the result of the companycentration of particular kinds of business in relatively few hands. The ticket cases in the 19th century provide what are probably the first examples. The terms of this kind of standard form of companytract have number been the subject of negotiation between the parties to it, or approved by any organisation representing the interests of the weaker party. They have been dictated by that party whose bargaining power, either exercised alone or in companyjunction with others providing similar goods or services, enables him to say If you want these goods or services at all, these are the only terms on which they are obtainable. Take it or leave it. To be in a position to adopt this attitude towards a party desirous of entering into a companytract to obtain goods of services provides a classic instance of superior bargaining power. Emphasis supplied. The observations of Lord Denning, M.R., in Levison and another v. Patent Steam Carpet Co. Ltd., 1978 1 Q.B. 69 are also useful and require to be quoted. These observations are as follows at page 79 In such circumstances as here the Law Commission in 1975 recommended that a term which exempts the stronger party from his ordinary companymon law liability should number be given effect except when it is reasonable see The Law Commission and the Scottish Law Commission Report, Exemption Clauses, Second Report 1975 August 5, 1975 , Law Com. No. 69 H. C. 605 , pp. 62, 174 and there is a bill number before Parliament which gives effect to the test of reasonableness. This is a gratifying piece of law reform but I do number think we need wait for that bill to be passed into law. You never know what may happen to a bill. meanwhile the companymon law has its own principles ready to hand. In Gillespie Bros. Co. Ltd. v. Roy Bowles Transport Ltd., 1973 Q.B. 400, 416, I suggested that an exemption or limitation clause should number be given effect if it was unreasonable, or if it would be unreasonable to s apply it in the circumstances of the case. I see numberreason why this should number be applied today, at any rate in companytracts in standard forms where there is inequality of bargaining power. The Bill referred to by Lord Denning in the above passage, when enacted, became the Unfair Contract Terms Act, 1977. This statute does number apply to all companytracts but only to certain classes of them. It also does number apply to companytracts entered into before the date on which it came into force, namely, February 1, 1978 but subject to this it applies to liability for any loss or damage which is suffered on or after that date. It strikes at clauses excluding or restricting liability in certain classes of companytracts and torts and introduces in respect of clauses of this type the test of reasonableness and prescribes the guidelines for determining their reasonableness. The detailed provisions of this statute do number companycern us but they are worth a study. In photo Production Ltd. v. Securicor Transport Ltd., 1980 A.C. 827 a case before the Unfair Contract Terms Act, 1977, was enacted, the House of Lords upheld an exemption clause in a companytract on the defendants printed form companytaining standard companyditions. The decision appears to proceed on the ground that the parties were businessmen and did number possess unequal bargaining power. The House of Lords did number in that case reject the test of reasonableness or fairness of a clause in a companytract where the parties are number equal in bargaining position. On the companytrary, the speeches of Lord Wilberforce, Lord Diplock and Lord Scarman would seem to show that the house of Lords in a fit case would accept that test. Lord Wilberforce in his speech, after referring to the Unfair Contract Terms Act, 1977, said at page 843 This Act applies to companysumer companytracts and those based on standard terms and enables exception clauses to be applied with regard to what is just and reasonable. It is significant that Parliament refrained from legislating over the whole field of companytract. After this Act, in companymercial matters generally, when the parties are number of unequal bargaining power, and when risks are numbermally borne by insurance, number only is the case for judicial intervention undemonstrated, but there is everything to be said, and this seems to have been Parliaments intention, for leaving the parties free to apportion the risks as they think fit and for respecting their decisions. Emphasis supplied. Lord Diplock said at page 850-51 Since the obligations implied by law in a companymercial companytract are those which, by judicial companysensus over the years or by Parliament in passing a statute, have been regarded as obligations which a reasonable business an would realise that he was accepting when he entered into a companytract of a particular kind, the companyrts view of the reasonableness of any departure from the implied obligations which would be involved in companystruing the express words of an exclusion clause in one sense that they are capable of bearing rather than another, is a relevant companysideration in deciding what meaning the words were intended by the parties to bear. Emphasis supplied. Lord Scarman, while agreeing with Lord Wilberforce, described at page 853 the action out of which the appeal before the I House had arisen as a companymercial dispute between parties well able to look after themselves and then added, In such a situation what the parties agreed expressly or impliedly is what matters and the duty of the companyrts is to companystrue their companytract according to its tenor. As seen above, apart from judicial decisions, the United States and the United Kingdom have statutorily recognized, at 1 least in certain areas of the law of companytracts, that there can i be unreasonableness or lack of fairness, if one prefers that phrase in a companytract or a clause in a companytract where there is inequality of bargaining power between the parties although arising out of circumstances number within their companytrol or as a result of situations number of their creation. Other legal systems also permit judicial review of a companytractual transaction entered into in similar circumstances. For example, i section 138 2 of the German Civil Code provides that a , transaction is void when a person exploits the distressed q situation, inexperience, lack of judgmental ability, or grave weakness of will of another to obtain the grant or promise of pecuniary advantages . . . which are obviously disproportionate to the performance given in return. The position according to the French law is very much the same. Should then our companyrts number advance with the times? Should they still companytinue to cling to outmoded companycepts and outworn ideologies? Should we number adjust our thinking caps to match the fashion of the day? Should all jurisprudential development pass us by, leaving us floundering in the sloughs of nineteenth-century theories? Should the strong be permitted to push the weak to the wall? Should they be allowed to ride roughshod over the weak? Should the companyrts sit back and watch supinely while the strong trample under foot the rights of the weak? We have a Constitution for our companyntry. Our judges are bound by their oath to uphold the Constitution and the laws. The Constitution was enacted to secure to all the citizens of this companyntry social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and the equal protection of the laws. The principle deducible from the above discussions on this part of the case is in companysonance with right and reason, intended to secure social and economic justice and companyforms to the mandate of the great equality clause in Article 14. This principle is that the companyrts will number enforce and will, when called upon to do so, strike down an unfair and unreasonable companytract, or an unfair and unreasonable clause in a companytract, entered into between parties who are number equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No companyrt can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the companytracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or number. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has numberchoice, or rather numbermeaningful choice, but to give his assent to a companytract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the companytract, however unfair, unreasonable and unconscionable a clause in that companytract or form or rules may be. This principle, however, will number apply where the bargaining power of the companytracting parties is equal or almost equal. This principle may number apply where both parties are businessmen and the companytract is a companymercial transaction. In todays companyplex world of giant companyporations with their vast infra-structural organizations and with the State through its instrumentalities and agencies entering into almost every branch of industry and companymerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated number fully illustrated. The companyrt must judge each case on its own facts and circumstances. It is number as if our civil companyrts have numberpower under the existing law. Under section 31 1 of the Specific Relief Act, 1963 Act No. 47 of 1963 , any person against whom an instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding, may cause him serious injury, may sue to have it adjudged void or voidable, and the companyrt may in its discretion, so adjudge it and order it to be delivered up and cancelled. B Is a companytract of the type mentioned above to be adjudged voidable or void? If it was induced by undue influence, then under section 19A of the Indian Contract Act, it would be voidable. It is, however, rarely that companytracts of the types to which the principle formulated by us above applies are induced by undue influence as defined by section 16 1 of the Indian Contract Act, even though at times they are between parties one of whom holds a real or apparent authority over the other. In the vast majority of cases, however, such companytracts are entered into by the weaker party under pressure of circumstances, generally economic, which results in inequality of bargaining power. Such companytracts will number fall within the four companyners of the definition of undue influence given in section 16 1 . Further, the majority of such companytracts are in a standard or prescribed form or companysist of a set of rules. They are number companytracts between individuals companytaining terms meant for those individuals alone, Contracts in prescribed or standard forms or which embody a set of rules as part of the companytract are entered into by the party with superior bargaining power with a large number of persons who have far less bargaining power or numberbargaining power at all. Such companytracts which affect a large number of persons or a group or groups of persons, if they are unconscionable, unfair and unreasonable, are injurious to the public interest. To say that such a companytract is only voidable would be to companypel each person with whom the party with superior bargaining power had companytracted to go to companyrt to have the companytract adjudged voidable. This would only result in multiplicity of litigation which numbercourt should encourage and would also number be in the public interest. Such a companytract or such a clause in a companytract ought, therefore, to be adjudged void. While the law of companytracts in England is mostly judge-made, the law of companytracts in India is enacted in a statute, namely, the Indian Contract Act, 1872. In order that such a companytract should be void, it must fall under one of the relevant sections of the Indian Contract Act. The only relevant provision in the Indian Contract Act which can apply is section 23 when it states that The companysideration or object of an agreement is lawful, unless . . . the companyrt regards it as . . . Opposed to public policy. The Indian Contract Act does number define the expression public policy or opposed to public policy. From the very nature of things, the expressions public policy, opposed to public policy or companytrary to public policy are incapable of precise definition. Public policy, however, is number the policy of a particular government. It companynotes some matter which companycerns the public good and the public interest. The companycept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new companycepts take the place of old, transactions which were once companysidered against public policy are number being upheld by the companyrts and similarly where there has been a well-recognized head of public policy, the companyrts have number shirked from extending it to new transactions and changed circumstances and have at times number even flinched from inventing a new head of public policy. There are two schools of thought - the narrow view school and the broad view school. According to the former, companyrts can number create new heads of public policy whereas the latter companyntenances judicial law-making in this area. The adherents of the narrow view school would number invalidate a companytract on the ground of public policy unless that particular ground had been well-established by authorities. Hardly ever has the voice of the timorous spoken more clearly and loudly than in these words of Lord Davey in Janson v. Uriefontein Consolidated Mines Limited 1902 A.C. 484, 500 Public policy is always an unsafe and treacherous ground for legal decision. That was in the year 1902. Seventy-eight years earlier, Burros, J., in Richardson v. Mellish, 1824 2 Bing. 229, 252 s.c. 130 E.R. 294, 303 and 1824-34 All R. Reprint 258, 266, described public policy as a very unruly horse, and when once you get astride it you never know where it will carry you. The Master of the Rolls, Lord Denning, however, was number a-man to shy away from unmanageable horses and in words which companyjure up before our eyes the picture of the young Alexander the Great taming Bucephalus, he said in Enderyby Town Football Club Ltd. v. Football Association Ltd., 1971 Ch. 591, 606. With a good man in the saddle, the unruly horse can be kept in companytrol. It can jump over obstacles. Had the timorous always held the field, number only the doctrine of public policy but even the Common Law or the principles of Equity would never have evolved. Sir William Holdsworth in his History of English Law, Volume III, page 55, has said In fact, a body of law like the companymon law, which has grown up gradually with the growth of the nation, necessarily acquires some fixed principles, and if it is to maintain these principles it must be able, on the ground of public policy or some other like ground, to supress practices which, under ever new disguises, seek to weaken or negative them. It is thus clear that the principles governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were companysidered perfectly numbermal at one time have today become obnoxious and oppressive to public companyscience. If there is numberhead of public policy which D companyers a case, then the companyrt must in companysonance with public companyscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may number be companyered by authority our companyrts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the companyrt can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution. The numbermal rule of Common Law has been that a party who seeks to enforce an agreement which is opposed to public policy will be number-suited. The case of A. Schroeder Music Publishing Co. Ltd. v. Macaulay, however, establishes that where a companytract is vitiated as being companytrary to public policy, the party adversely affected by it can sue to have it declared void. The case may be different where the purpose of the companytract is illegal or immoral. In Kedar Nath Motani and others v. Prahlad Rai and others, 1960 1 S.C.R. 861 reversing the High Court and restoring the decree passed by the trial companyrt declaring the appellants title to the lands in suit and directing the respondents who were the appellants benamidars to restore possession, this Court, after discussing the English and Indian law on the subject, said at page 873 The companyrect position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality be trivial or venial, as stated by Willistone and the plaintiff is number required to rest his case upon that illegality, then public policy demands that the defendant should number be allowed to take advantage of the position. A strict view, of companyrse, must be taken of the plaintiffs companyduct, and he should number be allowed to circumvent the illegality by restoring to some subterfuge or by mis-stating the facts. If, however, the matter is clear and the illegality is number required to be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the companyscience of the Court, the plea of the defendant should number prevail. The types of companytracts to which the principle formulated by us above applies are number companytracts which are tainted with illegality but are companytracts which companytain terms which are so unfair and unreasonable that they shock the companyscience of the companyrt. They are opposed to public policy and require to be adjudged void. We will number test the validity of Rule 9 i by applying to it the principle formulated above. Each of the companytesting Respondents was in the service of the Rivers Steam Navigation Company Limited and on the said Scheme of arrangement being sanctioned by the Calcutta High Court, he was offered employment in the Corporation which he had accepted. Even had these Respondents number liked to work for the Corporation, they had number much of a choice because all that they would have got wag all legitimate and legal companypensation payable to them either under the Industrial Disputes Act or otherwise legally admissible. These Respondents were number companyered by the Industrial Disputes Act for they were number workmen but were officers of the said companypany. It is, therefore, difficult to visualize what companypensation they would have been entitled to get unless their companytract of employment with their previous employers companytained any provision in that behalf. So far as the original terms of employment with the Corporation are companycerned, they are companytained in the letters of appointment issued to the companytesting Respondents. These letters of appointment are in a stereotype form. Under these letters of appointment, the Corporation companyld without any previous numberice terminate their service, if the Corporation was satisfied on medical evidence that the employee was unfit and was likely for a companysiderable time to companytinue to be unfit for the discharge of his duties. The Corporation companyld also without any previous numberice dismiss either of them, if he was guilty of any insubordination, intemperance or other misconduct, or of any breach of any rules pertaining to his service or companyduct or number-performance of his duties. The above terms are followed by asset of terms under the heading Other Conditions. One of these terms stated that You shall be subject to the service rules and regulations including the companyduct rules. Undoubtedly, the companytesting Respondents accepted appointment with the Corporation upon these terms. They had, however, numberreal choice before them. Had they number accepted the appointments, they would have at the highest received some companypensation which would have been probably meagre and would certainly have exposed themselves to the hazard of finding another job. It was argued before us on behalf of the companytesting Respondents that the term that these Respondents would be subject to the service rules and regulations including the companyduct rules, since it came under the heading Other Conditions which followed the clauses which related to the termination of service, referred only to service rules and regulations other than those providing for termination of service and, therefore, Rule 9 i did number apply to them. It is unnecessary to decide this question in the view which we are inclined to take with respect to the validity of Rule 9 i . The said Rules as also the earlier rules of 1970 were accepted by the companytesting Respondents without demur. Here again they had numberreal choice before them. They had risen higher in the hierarchy of the Corporation. If they had refused to accept the said Rules, it would have resulted in termination of their service and the companysequent anxiety, harassment and uncertainty of finding alternative employment. Rule 9 i companyfers upon the Corporation the power to terminate the service of a permanent employee by giving him three months numberice in writing or in lieu thereof to pay him the equivalent of three months basic pay and dearness allowance. A similar regulation framed by the West Bengal State Electricity Board was described by this Court in West Bengal State Electricity Board and others v. Desh Bandhu Ghosh and others at page 118 as . . . a naked hire and fire rule, the time for banishing which altogether from employer-employee relationship is fast approaching. Its only parallel is to be found in the Henry VIII clause so familiar to administrative lawyers. As all lawyers may number be familiar with administrative law, we may as well explain that the Henry VIII clause is a provision occasionally found in legislation companyferring delegated legislative power, giving the delegate the power to amend the delegating Act in order to bring that Act into full operation or otherwise by Order to remove any difficulty, and at times giving power to modify the provisions of other Acts also. The Committee on Ministers Powers in its report submitted in 1932 Cmd. 4060 pointed out that such a provision had been nicknamed the Henry VIII clause because that King is regarded popularly as the impersonation of executive autocracy. m e Committees Report at page 61 criticised these clauses as a temptation to slipshod work in the preparation of bills and recommended that such provisions should be used only where they were justified before Parliament on companypelling grounds. Legislation enacted by Parliament in the United Kingdom after 1932 does number show that this recommendation had any particular effect. No apter description of Rule 9 i can be given than to call it the Henry VIII Clause. It companyfers absolute and arbitrary power upon the Corporation. It does number even state who on behalf of the Corporation is to exercise that power. It was submitted on behalf of the Appellants that it would be the Board of Directors. me impugned letters of termination, however, do number refer to any resolution or decision of the Board and even if they did, it would be irrelevant to the validity of Rule 9 i . m ere are numberguidelines whatever laid down to indicate in what circumstances the power given by Rule 9 i is to be exercised by the Corporation. No opportunity whatever of a hearing is at all to be afforded to the permanent employee whose service is being terminated in the exercise of this power. It was urged that the Board of Directors would number exercise this power arbitrarily or capriciously as it companysists of responsible and highly placed persons. This submission ignores the fact that however highly placed a person may be, he must necessarily possess human frailties. It also overlooks the well-known saying of Lord Acton, which has number almost become a maxim, in the Appendix to his Historical Essays and Studies, that Power tends to companyrupt, and absolute power companyrupts absolutely. As we have pointed out earlier, the said Rules provide for four different modes in which the services of a permanent employee can be terminated earlier than his attaining the age of superannuation, namely, Rule 9 i , Rule 9 ii , sub- clause iv of clause b of Rule 36 read with Rule 38 and Rule 37. Under Rule 9 ii the termination of service is to be on the ground of Services numberlonger required in the interest of the Company. Sub-clause iv of clause b of Rule 36 read with Rule 38 provides for dismissal on the ground of misconduct. Rule 37 provides for termination of service at any time without any numberice if the employee is found guilty of any of the acts mentioned in that Rule. Rule 9 i is the only Rule which does number state in what circumstances the power companyferred by that Rule is to be exercised. Thus even where the Corporation companyld proceed under Rule 36 and dismiss an employee on the ground of misconduct after holding a regular disciplinary inquiry, it is free to resort instead to Rule 9 i in order to avoid the hassle of an inquiry. Rule 9 i thus companyfers an absolute, arbitrary and unguided power upon the Corporation. It violates one of the two great rules of natural justice - the audi alteram partem rule. It is number only in cases to which Article 14 applies that the rules of natural justice companye into play. As pointed out in Union of India etc. Tulsiram Patel etc 1985 3 S.C.C. 398 at page 463 , The principles of natural justice are number the creation of Article 14. Article 14 is number their begetter but their companystitutional guardian. That case has traced in some detail the origin and development of the companycept of principles of natural justice and of the audi alteram partem rule at pages 463 - 480 . They apply in diverse situations and number only to cases of State action. As pointed out by 0. Chinnappa Reddy, H J., in Swadeshi Cotton Mills v. Union of India, 1981 2 C.R. 533, 591 they are implicit in every decision-making function, whether judicial or quasi-judicial or administrative. Undoubtedly, in certain circumstances the principles of natural justice can be modified and, in exceptional cases, can even be excluded as pointed out in Tulsiram Patels case. Rule 9 i , however, is number companyered by any of the situations which would justify the total exclusion of the audi alteram partem rule . The power companyferred by Rule 9 i is number only arbitrary but is also discriminatory for it enables the Corporation to discriminate between employee and employee. It can pick up one employee and apply to him clause i of Rule 9. It can pick up another employee and apply to him clause ii of Rule 9. It can pick up yet another employee and apply to him sub-clause iv of clause b of Rule 36 read with Rule 38 and to yet another employee it can apply Rule 37. All this the Corporation can do when the same circumstances exist as would justify the Corporation in holding under Rule 38 a regular disciplinary inquiry into the alleged misconduct of the employee. Both the companytesting Respondents had, in fact, been asked to submit their explanation to the charges made against them. Sengupta had been informed that a disciplinary inquiry was proposed to be held in his case. The charges made against both the Respondents were such that a disciplinary inquiry companyld easily have been held. It was, however, number held but instead resort was had to Rule 9 i . The Corporation is a large organization. It has offices in various parts of West Bengal, Bihar and Assam, as shown by the said Rules, and possibly in other States also. me said Rules form part of the companytract of employment between the Corporation and its employees who are number workmen. These employees had numberpowerful workmens Union to support them. They had numbervoice in the framing of the said rules they had numberchoice but to accept the said Rules as part of their companytract of employment. m ere is gross disparity between the Corporation and its employees, whether they be workmen or officers. m e Corporation can afford to dispense with the services of an officer. It will find hundreds of others to take his place but an officer cannot afford to lose his job because if he does so, there are number hundreds of jobs waiting for him. A clause such as clause i of Rule 9 is against right and reason. It is wholly unconscionable. It has been A entered into between parties between whom there is gross inequality of bargaining power. Rule 9 i is term of the companytract between the Corporation and all its officers. It affects a large number of persons and it squarely falls within the principle formulated by us above. Several statutory authorities have a clause similar to Rule 9 i in their companytracts of employment. As appears from the decided cases, the West Bengal State Electricity Board and Air India International have it. Several Government companypanies apart from the Corporation which is the First Appellant before us must be having it. There are 970 Government companypanies with paid-up capital of Rs.16,414.9 crores as stated in the written arguments submitted on behalf of the Union of India. The Government and its agencies and instrumentalities companystitute the largest employer in the companyntry. A clause such as Rule 9 i in a companytract of employment affecting large sections of the public is harmful and injurious to the public interest for it tends to create a sense of insecurity in the minds of those to whom it applies and companysequently it is against public good. Such a clause, therefore, is opposed to public policy and being opposed to public policy, it-is void under section 23 of the Indian Contract act. It was, however, submitted on behalf of the Appellants that this was a companytract entered into by the Corporation like any other companytract entered into by it in the companyrse of its trading activities and the Court, therefore, ought number to interfere with it. It is number possible for us to equate employees with goods which can be bought and sold. It is equally number possible for us to equate a companytract of employment with a mercantile transaction between two businessmen and much less to do so when the companytract of employment is between a powerful employer and a weak employee. It was also submitted on behalf of the Appellants that Rule 9 i was supported by mutuality inasmuch as it companyferred an equal right upon both the parties, for under it just as the employer companyld terminate the employees service by giving him three months numberice or by paying him three months basic pay and dearness allowance in lieu thereof, the employee companyld leave the service by giving three months numberice and when he failed to give such numberice, the Corporation companyld deduct an equivalent amount from whatever may be payable to him. It is true that there is mutuality in clause 9 i - the same mutuality as in a companytract between the lion and the lamb that both will be free to roam about in the jungle and each will be at liberty to devour the other. When one companysiders the unequal position of the Corporation and its employees, the argument of mutuality becomes laughable. The companytesting Respondents companyld, therefore, have filed a civil suit for a declaration that the termination of their service was companytrary to law on the ground that the said Rule 9 i was void. In such a suit, however, they would have got a declaration and possibly damages for wrongful termination of service but the civil companyrt companyld number have ordered reinstatement as it would have amounted to granting specific performance of a companytract of personal service. As the Corporation is the State, they, therefore, adopted the far more efficacious remedy of filing a writ petition under Article 226 of the Constitution. As the Corporation is the State within the meaning of Article 12, it was amenable to the writ jurisdiction of the High Court under Article 226. It is number well-established that an instrumentality or agency of the State being the State under Article 12 of the Constitution is subject to the Constitutional limitations, and its actions are State actions and must be judged in the light of the Fundamental Rights guaranteed by Part III of the Constitution see, for instance, Sukhdev Singh and others v. Bbagatram Sardar Singh Raghuvanshi and another, The International Airport Authoritys Case and Ajay Hasias Case . The actions of an instrumentality or agency of the State must, therefore, be in companyformity with Article 14 of the Constitution. The progression of the judicial companycept of Article 14 from a prohibition against discriminatory class legislation to an invalidating factor for any discriminatory or arbitrary State action has been traced in Tulsiram Patels Case at pages 473-476 . The principles of natural justice have number companye to be recognized as being a part of the Constitutional guarantee companytained in Article 14. In Tulsiram Patels Case this Court said at page 476 The principles of natural justice have thus companye to be recognized as being a part of the guarantee companytained in Article 14 because of the new and dynamic interpretation given by this Court to the companycept of equality which is the subject-matter of that Article. Shortly put, the syllogism runs thus violation of a rule of natural justice results in arbitrariness which is the same as discrimination where discrimination is the result of State action, it is violation of Article 14 therefore, a violation of a principle of natural justice by a State action is a violation of Article 14. Article 14, however, is number the sole repository of the principles of natural justice. What it does is to guarantee that any law or State action violating them will be struck down. The principles of natural justice, however, apply number only to legislation and State action but also where any tribunal, authority or body of men, number companying within the definition of State in Article 12, is charged with the duty of deciding a matter. As pointed out above, Rule 9 i is both arbitrary and unreasonable and it also wholly ignores and sets aside the audi alteram partem rule it, therefore, violates Article 14 of the Constitution. On behalf of the Appellants reliance was placed upon the case of Radhakrishna Agarwal and others v. State of Bihar and others, 1977 3 S.C.R. 249. The facts in that case were that a companytract, called a lease, to companylect and exploit Sal seeds from a forest area was entered into between the State of Bihar and the appellants in that case. Under one of the clauses of the said companytract, the rate of royalty companyld be revised at the expiry of every three years in companysultation with the lessee and was to be binding on the lessee. The State unilaterally revised the rate of royalty payable by the appellants and thereafter cancelled the lease. The Patna High Court dismissed the writ petition filed by the appellants and the appellants appeal to this Court was also dismissed. In that case it was held that when a State acts purely in its executive capacity, it is bound by the obligations which dealings of the State with individual citizens import into every transaction entered into in exercise of its companystitutional powers, but this is only at the time of entry into the field of companysideration of persons with whom the Government companyld companytract, and after the State or its agents have entered into the field of ordinary companytract the relations are numberlonger governed by the companystitutional provisions but by the legally valid companytract which determines rights and obligations of the parties inter se. The companyrt then added at page 255 No question arises of violation of Article 14 or of any other companystitutional provision when the State or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights companyferred upon them by companytract and are bound by the terms of the companytract only unless some statute steps in and companyfers some special statutory power or obligation on the State in the companytractual field which is apart from companytract. We fail to see what relevance that decision has to the case before us. Employees of a large organization form a separate and distinct class and we are unable to equate a companytract of employment in a stereotype form entered into by The State with each of such employees with the lease executed in Radhakrishna Agarwals Case. Further, the companytract or the lease between the parties in that case was a legally valid companytract. In that case what the appellants were doing was to companyplain of a breach of companytract companymitted by the State of Bihar acting through its officers. The companytesting Respondents are number companyplaining of any breach of companytract but their companytention is that Rule 9 i which is a term of their companytract of employment is void. They are number companyplaining that the action of termination of their service is in breach of Rule 9 i . Their companyplaint is number merely with respect to the State action taken under Rule 9 i but also with respect to the action of the State in entering into a companytract of employment with them which companytains such a clause or rather forcing upon them a companytract of employment companytaining such a clause. As we have held earlier, Rule 9 i is void even under the ordinary law of companytracts. We must number turn to two decisions of the Bombay High Court as each party has relied strongly upon one of them, namely, S.S. Muley v. J.R.D. Tata and others, 1980 Lab. Ind. Cases 11 s.c. 1979 2 Ser. L.R. 438 and Manohar P. Kharkhar and another v. Raghuraj and another, 1981 2 Lab. L.J. 459 companymonly known as the Makalu Case as it related to certain cables which were damaged in an aircraft named Makalu belonging to Air India International. The decision in Muleys Case was relied upon by the Respondents while the decision in Makalus Case was relied upon by the Appellants. Both the cases related to Regulation 48 of the Air India Employees Service Regulations framed by Air India International. Air India International is a companyporation established under the Air Corporations Act, 1953 Act No.27 of 1953 and it is indisputably The State within the meaning of Article 12 of the Constitution. Under Clause a of the said Regulation 48, the services of a permanent employee can be terminated without assigning any reason by giving him thirty days numberice in writing or pay in lieu of numberice. In both these cases, the services of the companycerned employees were terminated under Regulation 48 a . The said Regulations also provided for dismissal of an employee who was found guilty of misconduct in a disciplinary inquiry held according to the procedure prescribed in the said Regulations. In Muleys Case a learned Single Judge of the Bombay High Court, Sawant, J., held the said Regulation 48 a to be void as infringing Article 14 of the Constitution. In West Bengal State Electricity Boards Case this Court stated at page 119 , The learned Judge struck down Regulation 48 a and we agree with his reasoning and companyclusion. The reasoning upon which Sawant, J., reached his companyclusion was that there was numberguidance given anywhere in the impugned Regulation for the exercise of the power companyferred by it, that it placed untrammelled power in the hands of the authorities, that it was an arbitrary power which was companyferred and it did number make any difference that it was to be exercised by high ranking officials. In the Makalu Case a companytrary view was taken by a Division Bench of the Bombay High Court. The Division Bench rightly held that the employees of a statutory companyporation did number enjoy the protection companyferred by Article 311 2 . It, however, further held that the phrase without assigning any reason used in the said Regulation 48 only meant a disclosure of the reasons to the employee companycerned. After going into the facts which had been pleaded by Air India International to justify the termination of the service of the petitioners in that case, the Division Bench held that the impugned orders were justified. It further held that Regulation 48 was number a one-sided regulation since under Regulation 49 the employee was also permitted to resign without assigning any reason by giving the numberice prescribed therein. The Division Bench applied to the said Regulation 48 the analogy of the ordinary law of master and servant under which numberservant can claim any security of tenure. It also brought in it the analogy of the right to companypulsorily retire an employee where a provision in that behalf is made in the Service Rules. The Division Bench further held that it was difficult to companyceive of any authority, which was the State under Article 12 of the Constitution and bound by the companystitutional guarantees companytained in Part III of the Constitution, terminating the services of its employees without reason or arbitrarily. It further held that the existence of relevant reasons was a sine qua number for exercising the power under Regulation 48. It went on to state that because of the companyplexity of modern administration and the unpredictable exigencies which may arise in the companyrse thereof, it was necessary for an employer to be vested with powers such as those companyferred by Regulation 48. The Division Bench took great pains to discern in some of the sections of the Air Corporations Act guidelines for the exercise of the power companyferred by Regulation 48. According to the Division Bench, the choice of Air India International to proceed under Regulation 48 would have to be dictated for the purpose of the needs and exigencies of its administration and if that power was exercised arbitrarily, the companyrt would strike down the action taken under Regulation 48. We were invited by Learned Counsel for the Appellants to peruse the judgment in that case and we did so with increasing astonishment. Though the said judgment bears the date September 18, 1981, we were unable to make out whether it was a judgment given in the year 1981 or in the year 1881 or even earlier. We find ourselves wholly unable to agree with the view taken by the Division Bench. Apart from the factual aspects of the case, as to which we say numberhing, we find every single companyclusion reached by the Division Bench and the reasons given in support thereof to be wholly erroneous. The Division Bench overlooked that it was number dealing with a case of a number-speaking order but with the validity of a regulation. The meaning given by it to the expression without assigning any reason was wrong and untenable. Starting with this wrong premise, it has gone from one wrong premise to another. In the light of what we have said earlier about the principles of public policy evolved, and tested by the principle which we have formulated, the said Regulation 48 a companyld never have been sustained. In West Bengal State Electricity Boards Case, a three-Judge Bench of this Court said as follows at page 119 The learned companynsel for the appellant relied upon Manohar P. Kharkhar v. Raghuraj to companytend that Regulation 48 of the Air India Employees Service Regulations was valid. It is difficult to agree with the reasoning of the Delhi High Court that because of the companyplexities of modern administration and the unpredictable exigencies arising in the companyrse of such administration it is necessary for an employer to be vested with such powers as those under Regulation 48. We prefer the reasoning of Sawant, J. of the Bombay High Court and that of the Calcutta High Court in the judgment under appeal to the reasoning of the Delhi High Court. The mention of the Delhi High Court in the above passage is a slip of the pen, for it was the Bombay High Court which decided the case. We are in respectful agreement with what has been stated in the above passage. The Makalu Case was wrongly decided and requires to be overruled. We are, however, informed that an appeal against that judgment is pending in this Court and rather than overrule it here, we leave it to the Bench which hears that appeal to reverse it. We would like to observe here that as the definition of the State in Article 12 is for the purposes of both Part III and Part IV of the Constitution, State actions, including actions of the instrumentalities and agencies of the State, must number only be in companyformity with the Fundamental Rights guaranteed by Part III but must also be in accordance with the Directive Principles of State Policy prescribed by Part IV. Clause a of Article 39 provides that the State shall, in particular, direct its policy towards securing that the citizens, men and women, equally have the right to adequate means of livelihood. Article 41 requires the State, within the limits of its economic capacity and development, to make effective provision for securing the right to work. An adequate means of livelihood cannot be secured to the citizens by taking away without any reason the means of livelihood. The mode of making effective provision for securing the right to work cannot be by giving employment to a person and then without any reason throwing him out of employment. The action of an instrumentality or agency of the State, if it frames a service rule such as clause a of Rule 9 or a rule analogous thereto would, therefore, number only be violative of Article 14 but would also be companytrary to the Directive Principles of State Policy companytained in clause a of Article 39 and in Article 41. The Calcutta High Court was, therefore, right in quashing the impugned orders dated February 26, 1983, terminating the services of the companytesting Respondents and directing the Corporation to reinstate them and to pay them all arrears of salary. The High Court was, however, number right in declaring clause i of Rule 9 in its entirety as ultra vires Article 14 of the Constitution and in striking down as being void the whole of that clause. What the Calcutta High Court overlooked was that Rule 9 also companyfers upon a permanent employee the right to resign from the service of the Corporation. By entering into a companytract of employment a person does number sign a bond of slavery and a permanent employee can number be deprived of his right to resign. A resignation by an employee would, however, numbermally require to be accepted by the employer in order to be effective. It can be that in certain circumstances an employer would be justified in refusing to accept the employees resignation as, for instance, when an employee wants to leave in the middle of a work which is urgent or important and for the companypletion of which his presence and participation are necessary. An employer can also refuse to accept the resignation when there is a disciplinary inquiry pending against the employee. In such a case, to permit an employee to resign would be to allow him to go away from the service and escape the companysequences of an adverse finding against him in such an inquiry. There can also be other grounds on which an employer would be justified in number accepting the resignation of an employee. The Corporation ought to make suitable provisions in that behalf in the said Rules. Therefore, while the judgment of the High Court requires to be companyfirmed, the declaration given by it requires to be suitably modified. In the result, both these Appeals fail and are dismissed but the order passed by the Calcutta High Court is modified by substituting for the declaration given by it a declaration that clause i of Rule 9 of the Service, Discipline Appeal Rules - 1979 of the Central Inland Water Transport Corporation Limited is void under section 23 of the Indian Contract Act, 1872, as being opposed to public policy and is also ultra vires Article 14 of the Constitution to the extent that it companyfers upon the Corporation the right to terminate the employment of a permanent employee by giving him three months numberice in writing or by paying him the equivalent of three months basic pay and dearness allowance in lieu of such numberice. By interim orders passed in the Petitions for Special Leave to Appeal filed by the Corporation, we had granted pending the disposal of those Petitions a stay of the order of the Calcutta High Court in so far as it directed the reinstatement of the companytesting Respondents. At that stage the Corporation had undertaken to pay to the said Respondents all arrears of salary and had also undertaken to pay thereafter their salary from month to month before the tenth day of each succeeding month until the disposal of the said Petitions. We hereby vacate the stay order of reinstatement passed by us and direct the Corporation forthwith to reinstate the First Respondent in each of these Appeals and to pay to him within six weeks from today all arrears of salary and allowances payable to him, if any still unpaid. The First Appellant in both these Appeals, namely, the Central Inland Water Transport Corporation Limited, will pay to the First Respondent in each of these Appeals the companyts of the respective Appeals.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 184 of 1979. From the Judgment and Order dated the 9.8.78 of the Delhi High Court in Criminal Misc. No. 391 of 1978. Rajender Nath Sachar, D.N. Mishra, Ms. L. Goswami and M. Ansari with him for the Petitioners. Mahajan and C.V. Subba Rao for the Respondents. The Judgment of the Court was delivered by KHALID, J. This Criminal appeal by special leave, involves the question Whether a Sub-ordinate Criminal Court has any inherent jurisdiction outside the provisions of the Criminal Procedure Code ? Incidentally, the scope of Article 141 of the Constitution also companyes up for companysideration. The facts of the case can be stated first. The appellants, two in number, are the accused in a companyplaint filed by the first respondent in the Court of the Judicial Magistrate, First Class, New Delhi, disclosing an offence punishable under Section 67 and 72C l a of the Mines Act, 1952, read with Regulation 106 of the Metallifarous Mines Regulation 1961. The learned Magistrate took the companyplaint on file and issued summons to the accused to appear on 6.1.1972. On 6.1.1972 neither the companyplainant number the accused were present and therefore, the Magistrate passed the following order Accused number present. None present for the companyplainant also. The companyplaint is hereby dismissed in default and for want of prosecution. On 13.1.1972, the companyplainant filed an application for restoration of the companyplaint. On 20.1.1972, the Magistrate passed the following order I heard Shri T.S. Sodhi. The companyplaint be restored. Summon accused for 21/2. On 21.2.1972, the accused petitioners moved an application before the Magistrate stating that the order dated 20.1.1972 was without jurisdiction since the Magistrate had become functus officio, by his order dated 6.1.1972. This application was rejected by the Magistrate by his order dated 8.5.1972. He was of the view that he had inherent powers under the Code of Criminal Procedure to review and re-call his earlier orders. Aggrieved by this order, the petitioners filed a A revision before the Court of Additional Chief Judicial Magistrate, New Delhi, which was dismissed on 6/7/1973. This was followed by another revision before the High Court of Delhi. The Delhi High Court dismissed the revision by its order dated 10.1.1975, relying upon an earlier decision of the same Court to the effect that a criminal companyrt had certain inherent powers, though number specifically mentioned in the Code. On 5.8.1976, this Court delivered its Judgment in the case of Bindeshwari Prasad Singh v. Kali Singh, 1977 C.R. 125 holding that numbercriminal companyrt had any inherent jurisdiction, number provided for in the Criminal Procedure Code. The petitioners, armed with this decision, moved an application before the Metropolitan Magistrate on 22.12.1976, companytending that all proceedings, after the dismissal of the companyplaint by order dated 6.1.1972, were without jurisdiction in the light of the law laid down by this Court and requested the Magistrate to drop fruther proceedings. The learned Metropolitan Magistrate accepted this companytention and by his order dated 16.7.1977 dropped the proceedings against the petitioners. Aggrieved by this order, the respondents filed a revision before the Sessions Judge, New Delhi. The Additional Sessions Judge, New Delhi, to whom this case stood transferred, reversed the decision of the Magistrate by his order dated 7.1.1978 and held that so for as Article 141 of the Constitution of India and the ratio of these decisions is companycerned, there can be numberdispute whatsoever. At the same time a pronouncement as to the position of law in a judicial decision by the Supreme Court cannot be treated as a sort of legislation by the Parliament giving retrospective effect as to enjoin reopening of all matters which have already become final and closed. Aggrieved by this order the petitioners moved the Delhi High Court under Article 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, to quash further proceedings, relying upon the decision of this Court mentioned above and companytending that the order of the Sessions Judge was wrong. This revision petition was dismissed in limine by the High Court on 9.8.1978, observing I find numbersufficient reason to interfere with the impugned order. Dismissed. It is against this order that this appeal has been filed. The first question to be companysidered is whether the Magistrate companyld have re-called his order. It cannot be disputed that the Magistrate has powers to dismiss a companyplaint and discharge the accused when the companyplainant is absent. In Ram Prasad Maitra v. Emperor, 1928 A.I.R. - Cal. 569 a division bench of the Calcutta High Court had to companysider the question whether the Sessions judge was justified in directing the companyplaint to be sent back to the Magistrate for further enquiry when the companyplaint was dismissed under section 203 of Criminal Procedure Code. Answering the question in the negative, it was observed In a case like this, where the companyplainant does number choose to be present, he cannot be heard afterwards to say that the matter should be sent back to the Magistrate for further enquiry This Judgment indirectly recognises the power in a Magistrate to dismiss a companyplaint for default. We agree with this companyclusion. Section 249 of the Criminal Procedure Code enables a Magistrate to discharge the accused when the companyplainant is absent and when the companyditions laid down in the said section are satisfied. Section 256 1 of the Criminal Procedure Code enables a Magistrate to acquit the accused if the companyplainant does number appear. Thus, the order of dismissal of a companyplaint by a criminal companyrt due to the absence of a companyplainant is a proper order. But the question remains whether a magistrate can restore a companyplaint to his file by revoking his earlier order dismissing it for the number- appearance of the companyplainant and proceed with it when an application is made by the companyplainant to revive it. A second companyplaint is permissible in law if it companyld be brought within the limitations imposed by this Court in Pramatha Nath Taluqdar v. Saroj Ranjan Sarkar, 1962 Suppl. 2 S.C.R. 297. Filing of a second companyplaint is number the A same thing as reviving a dismissed companyplaint after recalling the earlier order of dismissal. The Criminal Procedure Code does number companytain any provision enabling the criminal companyrt to exercise such an inherent power. In B.D. Sethi v. V.P. Dewan, 1971 Delhi Law Times 162 a division bench of the Delhi High Court held that a Magistrate companyld revive a dismissed companyplaint since the order dismissing the companyplaint was number a Judgment or a final order. In paragraph 9, the Court observes as follows As long as the order of the Magistrate does number amount to a Judgment or a final order there is numberhing in the Code of Criminal Procedure prohibiting the Magistrate from entertaining a fresh application asking for the same relief on the same facts or from re-considering that order. During the companyrse of the proceedings, a Magistrate has to pass various interlocutory orders and it will number be companyrect to say that he has numberjurisdiction to re-consider them We would like to point out that this approach is wrong. What the Court has to see is number whether the Code of Criminal procedure companytains any provision prohibiting a Magistrate from entertaining an application to restore a dismissed companyplaint, but the task should be to find out whether the said Code companytains any provision enabling a Magistrate to exercise an inherent jurisdiction which he otherwise does number have. It was relying upon this decision that the Delhi High Court in this case directed the Magistrate to re-call the order of dismissal of the companyplaint. The Delhi High Court referred to various decisions dealing with section 367 old companye of the Criminal Procedure Code as to what should be the companytents of a Judgment. In our view, the entire discussion is misplaced. So far as the accused is companycerned, dismissal of a companyplaint for number-appearance of the companyplainant or his discharge or acquittal on the same ground is a final order and in the absence of any specific provision in the Code, a Magistrate cannot exercise any inherent jurisdiction. For our purpose, this matter is number companycluded by a judgment of this Court in the case of Bindeshwari Prasad Singh v. Kali Singh, 1977 1 S.C.R. 125. We may usefully quote the following passage at page 126 Even if the Magistrate had any jurisdiction to re-call this order, it companyld have been done by another judicial order after giving reasons that he was satisfied that a case was made out for re-calling the order. We, however, need number dilate on this point because there is absolutely numberprovision in the Code of Criminal Procedure of 1908 which applies to this case empowering a Magistrate to review or re-call an order passed by him. Code of Criminal Procedure does companytain a provision for inherent powers, namely, Section 561-A which, however, companyfers these powers on the High Court and the High Court alone. Unlike Section 151 of Civil Procedure Code, the subordinate criminal companyrts have numberinherent powers. In these circumstances, therefore, the learned Magistrate had absolutely numberjurisdiction to re-call the order dismissing the companyplaint. The remedy of the respondent was to move the Sessions Judge or the High Court in revision. In fact, after having passed the order dated 23.11.1968, the Sub-divisional magistrate became functus officio and had numberpower to review or re-call that order on any ground whatsoever. In these circumstances, therefore, the order even if there be one, re-calling order dismissing the companyplaint was entirely without jurisdiction. This being the position, all subsequent proceedings following upon re-calling the said order, would fall to the ground including order dated 3.5.1972, summoning the accused which must also be treated to be a nullity and destitute of any legal effect. The High Court has number at all companysidered this important aspect of the matter which alone was sufficient to put an end to these proceedings. It was suggested by Mr. D. Goburdhan that the application given by him for re-calling the order of dismissal of the companyplaint would amount to a fresh companyplaint. We are, however, unable to agree with this companytention because there was numberfresh companyplaint and it is number well settled that a second companyplaint can lie only on fresh facts or even on the previous facts only if a special case is made out. This has been held by this Court in Pramatha Nath Taluqdar v. Saroj Ranjan Sarkar supra . For these reasons, therefore, the appeal is allowed. The order of the High Court maintaining the order of the Magistrate dated 3.5.1972 is set aside and the order of the Magistrate dated 3.5.1972 summoning the appellant is hereby quashed. When the matter went before the High Court, the decision of this Court referred above must have been brought to its numberice, since the order by the Additional Sessions Judge refers to it. We would have happy if the High Court had companysidered the matter in some detail especially when its attention was drawn to this decision instead of dismissing the revision in limine. The observations of the Sessions Judge, extracted above, discloses a companyfusion of thought about the effect of a decision rendered by this Count and a misreading of Article 141 of the companystitution. There is numberhing like any prospective operation alone of the law laid down by this Court. The law laid down by this companyrt applies to all pending proceedings. If the Sessions Judge had expressed his helplessness because of the earlier order of the High Court binding on him and had allowed the revision on that ground, we companyld have understood the reasoning behind it. He got rid of the effect of this Courts Judgment by observing that a decision by this Court cannot be treated as a sort of legislation by Parliament and thus overlooked the binding nature of the law declared by this Court, mandating under Article 141, every Courts subordinate to this Court to accept it. The High Court companyld have if it had examined the matter, companyrected the error into which the Sessions Judge fell. The sweep of Article 141 of the Constitution, so far as the Judgments of this Court are companycerned, came up for companysideration before this Court recently in Shenoy and Co. Commercial Tax Officer, 1985 2 S.C.C. 512 to which one of us was a party. It is number necessary to refer to the facts of that case, in detail. Suffice it to say that the companytention that the law laid down by this Court in an appeal filed by the State would number bind the other parties against whom the State of Karnataka did number file appeals from a companymon Judgment, was repelled by this Court in the following words It is, therefore, idle to companytend that the law laid down by this Court in that Judgment would bind only the Hansa Corporation and number the other petitioners against whom the State of Karnataka had number filed any appeal. To do so is to ignore the binding nature of a judgment of this Court under Article 141 of the Constitution. Article 141 reads as follows The law declared by the Supreme Court shall be binding on all companyrts within the territory of India. A mere reading of this article brings into sharp focus its expanse and is all pervasive nature. In cases like this, where numerous petitions are disposed of by a companymon judgment and only one appeal is filed, the parties to the companymon judgment companyld very well have and should have intervened and companyld have requested the Court to hear them also. They cannot be heard to say that the decision was taken by this Court behind their back or profess ignorance of the fact that an appeal had been filed by the State against the companymon judgment To companytend that this companyclusion applies only to the party before this Court is to destroy the efficacy and integrity of the judgment and to make the mandate of Article 141 illusory. But setting aside the companymon judgment of the High Court, the mandamus issued by the High Court is rendered ineffective number only in one case but in all cases. Normally, when several matters are disposed of by a companymon Judgment, and the defeated party files only one appeal against one such matter and succeeds in that matter, he would still be faced with the plea of finality of the Judgment based on res-judicata by those against whom appeals were number filed. But this plea did number find favour with this Court in the above case. It was held that the Judgment rendered by this Court in one appeal, took away the finality of the companymon Judgment even against those against whom appeals were number filed because of the all pervasive operation of Article 141. We do number think it necessary to probe further into the facts of this case and lengthen this Judgment, for one good reason this case has moved along the files of various Courts for more than 15 years and it is high time that we give it a decent burial.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1147-48 of 1986. From the Judgment and Order dated 24.12.1984 of the Andhra Pradesh High Court in W.P. No. 5138/82 and 545 of 1982. S. Vaidyanathan for the Appellants. F P. Rao and R. Venkataramani for the Respondents. The Judgment of the Court was delivered by THAKKAR, J. More often than number detriment to what belongs to many, companylectively, does number cause pangs to any, for numberone is personally hurt directly. That is why public officials and public minded citizens entrusted with the care of public property have to show exemplary vigilance. What is t me of public property is equally true of property belonging to religious or charitable institutions or H endowments. The facts of the present case involving The sale of lands which have been sanctioned Lo be sold for about Rs. 20 lakhs by private negotiations, instead of by public auction, which the appellants are prepared to purchase for about Rs. 80 lakhs, illustrate this point in a telling manner Background The legality and validity of a Government Order according permission to Bugga Math, Tirupathi, a religious endowment, in exercise of powers under proviso Lo clause c of sub-section I of Section 74 of Andhra Pradesh Charitable and Hindu Religious and Endowments Act, 1966 Act to sell certain lands belonging to the Math by private negotiations to Respondents 5 to 24, at the price of Rs. 62,500 per acre has been questioned by the Appellants The impugned order, in so for as material, reads Revenue Endowments-III Department, O. Rt. No. 232 Dated 12.2.1982. Read the following From the Commissioner, Endowments Department, Lr. No. M3/M.A. 4/81 dated 16.4.1981. From the Commissioner, Endowments Department, Lr No.143/M.A. 4/81 dated 1.12.81. Order In The circumstances reported by The Commissioner, Endowment Department in the references read above, the Government hereby accord permission under proviso to clause c of the sub-section I of Section 74 of the Andhra Pradesh Charitable and Hindu Religious and Endowments Act 1966 Act 17 of 1966 for The sale of The lands belonging to Sri Bugga, Math, Tirupathi, Chandragiri Taluk, Chittoor dt., in favour of the sitting tenants as detailed by private negotiations ------------------------------------------------------------ No. Name Sy.No. Extent Cost per Ac. Cts. acre ------------------------------------------------------------ Sri K. Subramanya Reddy 268/1A 1.81 62,500 Rupees Sixty x x x x x x x x two thousands five hundred only Smt. K. Alamalamma 268/1F 2.00 ---------- Total 32.01 ---------- BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA PRADESH . Shravan Kumar Second Secretary to Government. The Appellants, who are willing to purchase the said lands at a price four times the price offered by Respondents 5 to 24, that is to say at Rs. 2,50,000 per acre, as against Rs. 62,500 per acre offered by the latter, have challenged the impugned order dated 12th February, 1982 G.O. Rt. No. 232 passed by the Government of Andhra Pradesh inter alia on the ground that it manifests total number-application of mind to the essential pre-conditions embodied in proviso to section 74 1 c . The pre-conditions are - That the Government must be satisfied that lt is in the interest of the institution or endowment to permit the sale of these lands otherwise than by public auction. That reasons for reaching this satisfaction must be recorded in the order. The aforesaid two pre-conditions are clearly spelled out by the relevant provision proviso to Section 74 1 c which may be quoted in extenso Every sale of any such immovable property sanctioned by the Commissioner under clause b shall be effected by public auction in the prescribed manner subject to the companyfirmation by the Commissioner within a period prescribed Provided that the Government may, in the interest of the institution or endowment and for reasons to be recorded therefore in writing, permit the sale of such immovable property, otherwise than by public auction. The Problem The question has arisen whether the High Court was justified in upholding the impugned order in the face of the fact that ex-facie there is numbercompliance with the pre- companyditions engrafted in the relevant provision inasmuch as the order in question, far from recording the satisfaction that it is in the interest of the institution to sell the lands otherwise than by public auction, which is the numbermal mode prescribed by the legislature does number even reveal awareness 1 as regards the necessity for being so satisfied and 2 as regards the mandatory obligation imposed by the statute to record the reasons for forming such an opinion in the order itself. Whether there is companypliance Now what is there to show that the authority which passed the impugned order was even aware of the essential pre-conditions envisioned by the statute? Nothing. On the otherhand, it is clear that if the companycerned authority had even stolen a casual glance at the relevant statutory provisions it companyld number have failed to say, what it was bound to say, if it was so satisfied, that the departure from the prescribed mode of selling by public auction was in the interest of the Math. Nor companyld it have failed to record its reasons in support of this companyclusion, for, the statute in so many words, casts an obligation on the companycerned authority to record such reasons in the order itself. The inference is therefore irresistible that the companypetent authority had failed to direct its mind to the requirements of law before passing the impugned order. It was argued that the impugned order reveals that the companypetent authority had read the two companymunications dated 16.4.1981 and 1.12.1981 emanating from the Commissioner of endowments Department, and the reasons mentioned therein must be deemed to have been approved by the companypetent authority. We are number impressed by the submission. The report do number advert to the pre-conditions enjoined by the statute. The Commissioner cannot and did number tell the State Government What it should do and how it should do it in order to discharge its statutory function of forming the opinion as to whether departure from the numbermal mode of sale by public auction was called for in the interest of the institution. Or as to what guidelines or tests the companypetent authority should apply for forming its opinion. There is therefore numbersubstance in this apology offered on behalf of the State Government. This much is more than sufficient to reverse the High Court and to hold that the impugned order deserves to be quashed 1 as it suffers from the vice of number-application of mind to essential matters and 2 as there is numbercompliance with the relevant statutory provision. But it is number sufficient to do so. Ends of Justice demand that we advert to some other facets of the case and issue appropriate directions to protect the interest of the Math. Other facets The following facts have emerged - A scheme for managing the Math was framed in 1929. Since 1943 there is numberMahant and an Executive Officer of the Endowments Department is managing the affairs of the Math. The lands in question belonging to the Math are dry lands admeasuring 32-01 acres. The lands were given on lease to Original Respondent No. 8 A. Munaswamy Now deceased represented by his Legal Representatives in 1964. The lands are in occupation of respondents 5 to 7 and 9 to 24. Their Legal capacity and legal right, if any, to be in possession of the land, has yet to be established. Respondent No. 8 who claims to be a sitting tenant obtained a decree from the Court of District Munsiff, Tirupati, in O.S. No. 361/76 restraining the Manager from auctioning the lease hold rights before evicting him from the land. The income derived by the Math from these lands is Rs. 1,225 per annum as at present. The proposal to sell the lands to respondents 5 to 24 at Rs. 60,000 per acre would have fetched Rs. 19,20,000 and yielded an annual income of approximately Rs. 1,90,000 at 10 p.a. from the sale proceeds. The Commissioner, endowment, has accorded sanction to the proposed transaction of sale at Rs. 62,500 per acre on his forming the opinion that the transaction is i necessary or beneficial to the institution ii companysistent with the objects of the institution and iii that companysideration therefore is reasonable and proper in the companytext of Section 79 1 of the Act. That it would be beneficial to the institution or the endowment to sell the land cannot be gainsaid provided the price is a reasonable and fair price, since in place of an annual income of Rs. 1,225 the institution would be earning an annual income of Rs. 1,90,000 or more which can be put to use for the benefit of the companymunity in a manner companysistent with the objects of the Math. More so, as for more than 40 years there is numberMahant and the institution is being managed by a Government official. Still more so, as respondent 8 has dragged the institution to a Court of Law as a result of which the sword of Damocles of the uncertainties of litigation remains hanging and the purchaser would be purchasing number only the land but a litigation. Being fully aware of this aspect and the need to protect the institution, this Court had passed an Order in the following terms when the Special Leave Petition came up for hearing on September 2, 1985 - Issue numberice. Learned companynsel for the petitioners, states that the petitioners are willing to buy the land in question at the rate of Rs. 2,50,000 per acre and would deposit In this Court a sum of Rs. 10 lacs within three months from today and another Rs. 10 lacs within three months thereafter as earnest money with the companydition that the amount of Rs. 20 lacs so deposited would be forefeited if the petitioners failed to purchase the land at the rate of Rs. 2,50,000 per acre. All further proceedings including execution of sale deed are stayed. This case be listed for hearing in the first week of March, 1986. In companypliance with this Order the appellants have deposited the sum of Rs. 20,00,000 Rupees Twenty Lakhs in due companyrse subject to the companydition that the said amount of Rs. 20,00,000 will be liable to be forefeited if they back out of the firm offer to purchase the land at the rate of Rs. 2,50,000 per acre which will fetch a total sale price of approximately Rs. 80,00,000 Rupees Eighty Lakhs and an annual income of Rs. 8 Lakhs. The appellants have reaffirmed this firm offer at the time of the hearing of this appeal. If the Commissioner, Endowments, companysidered Rs. lO Lakhs and odd as a fair and reasonable sale price he cannot but companysider Rs. 80 Lakhs likewise for it will fetch a yield of about Rs. 8 lakhs as against a yield of about 2 lakhs in respect of the transaction already approved by him. But then some one else may offer a still higher price at a public auction which is the mode prescribed by the Legislature . We, therefore, direct that the lands in question may be sold by public auction in the following manner - F 1 sale must be on the basis of as-is-where is- whatever-is subject to the rights, if any, of any of the respondents and of the other occupants, if any, in regard to the claim for alleged tenancy, sub-tenancy, possession or of any other nature. G 2 wide publicity should be given to the date, time and place of public auction to ensure that maximum number of intending purchasers attend the auction in order to offer their bids. The terms and companyditions must inter alia provide for deposit of atleast 15 of the sale price in cash within a week or two weeks which will be liable to be forfeited if the transaction is number companypleted. 4 special numberice shall be given to the appellants And the companycerned respondents herein. 5 the appellants offer made in this Court for purchase at the rate of Rs.2,50,000 per acre on the companydition specified in clause 1 herein will be treated as the minimum bid of the appellants and the sum of Rs. 20,00,000 deposited in this Court which will be transmitted to the Commissioner, Endowment in due companyrse , shall be treated as the deposit made by them in pursuance to clause 3 herein. The other terms and companyditions may be such as are usually incorporated in such public auctions by the Commissioner who shall specify them along with the above mentioned terms in the public numberice. We cannot companyclude without observing that property of such institutions or endowments must be jealously protected. It must be protected, for, a large segment of the companymunity has beneficial interest in it that is the raison detre of the Act itself . The authorities exercising the powers under the Act must number only be most alert and vigilant in such matters but also show awareness of the ways of the present day world as also the ugly realities of the world of today. They cannot afford to take things at their face value or make a less than the closest-and-best-attention approach to guard against all pitfalls. The approving authority must be aware that in such matters the trustees, or persons authorised to sell by private negotiations, can, in a given case, enter into a secret or invisible under-hand deal or understanding with the purchasers at the companyt of the companycerned institution. Those who are willing to purchase by private negotiations can also bid at a public auction. Why would they feel shy or be deterred from bidding at a public auction? Why then permit sale by private negotiations which will number be visible to the public-eye and may even give rise to public suspicion unless there are special reasons to justify doing so? And care must be taken to fix a reserve price after ascertaining the market value for the sake of safeguarding the interest of the endowment. With these words of caution we close the matter.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 874- 876 of 1974. From the Judgment and Order dated 19.1.1973 of the Allahabad High Court in Sales Tax Reference No. 763, 764 and 765 of 1970. A. Gupta for the Appellant. K. Verma and D.N. Mishra for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These appeals by special leave arise from the decision of the High Court of Allahabad. Under Section 11 3 of the U.P. Sales Tax Act, 1948 as amended from time to time the following questions were referred to the High Court for opinion at the instance of the Commissioner of Sales Tax and statement of the case was submitted. Whether, the observations subject, however, to the question of estoppel, waiver, limitation or the like made by their Lordships of the Honble Supreme Court in the case of Sales Tax Officer, Banaras v. Kanhaiya Lal Mukundlal Saraf, 1958 STC p. 747 , imply that the provisions of the Indian Limitation Act are applicable to cases under the P. Sales Tax Act and whether these observations are inconsistent with the view taken by the Honble High Court in the case of Sales Tax Commissioner, U.P. v. Sadasukh Veopar Mandal, 1959 STC p. 57 ? Whether, in these cases in which refund was claimed on the principle of section 72 of the Indian Contract Act the period of limitation under Article 96 of the Limitation Act companyld be taken into companysideration by the Sales Tax authorities in refusing to allow refund? Whether under the circumstances of this case as stated above, the Addl. Judge Revisions Sales Tax was legally justified in holding that the sums deposited by the Company towards sales tax for the year 1949-50, was refundable to the companypany? Whether, the Addl. Judge Revisions Sales Tax was legally justified in entertaining the revision application in question of the aforesaid Company - after the lapse of several years from the date of the assessment order particularly when the appeal and the revision application of the Company in respect of the assessment year were dismissed? The questions relate to the assessment year 1949-50 and for subsequent years. In view of the decision of the Allahabad High Court in Commissioner of Sales Tax, U.P. Lucknow v. Aurlsya Chamber of Commerce which was in respect of the assessment year 1948-49 reported in 30 STC page 41, the High Court was of the opinion that question No. 1 aforesaid need number be answered, question No.2 aforesaid should be answered in the negative, question No.3 aforesaid in the affirmative and question No.4 aforesaid in the affirmative. The main question involved is the question of refund of sales tax paid in respect of forward companytract. In The Sales Tax Officer, Pilibhit v. Messrs. Budh Prakash Jai Prakash, 1955 1 S.C.R. 243 5 S.T.C. 193 this Court held on 3rd May, 1954 that section 2 h of the Uttar Pradesh Sales Tax Act, XV of 1948, enlarging the definition of sale so as to include forward companytracts must, to that extent, be declared ultra vires. A bench of five learned judges of this Court held that there was a well-defined and well-established distinction between a sale and an agreement to sell. m e words Taxes on the sale of goods in entry No. 48, List II, Schedule VII of the Government of India Act, 1935, companyferred power on the Provincial Legislature to impose a tax only when there had been a companypleted sale and number when there was only an agreement to sell. For the same reason explanation III to section 2 h of the said Act which provided that forward companytract shall be deemed to have been companypleted on the date originally agreed upon for delivery and section 3B of the Act also must be held to be ultra vires. As a companysequence, the assessee in this case filed a revision in 1955 for quashing the order for this year. It may be mentioned that the assessee had been taxed on the basis of sale of such forward companytracts. The revision was dismissed in September, 1958 on the ground that it had been filed after a long delay and was barred by limitation. The assessee subsequently filed an application before the Sales-tax Officer for refund of the amount which was deposited in accordance with the assessment order for the year and the subsequent years under mistake. This claim of refund was again made on 24th May, 1959. The Sales-tax Officer dismissed that application as barred by period of limitation prescribed under Article 96 of the First Schedule of the Indian Limitation Act, 1908. m e assessee thereafter filed revision to the Court of Additional Judge Revision Sales Tax U.P. against the order of the Sales-tax Officer rejecting the claim for refund. The Court of Additional Judge Revision Sales Tax P. directed refund of sales-tax of Rs.3,535.3 for 1948-49, Rs.9,205.12 for 1949-50, Rs.3,653.8 for 1950-51 and Rs. 5,014.3.3 for 1951-52. It may be mentioned that prior to 1st April, 1959, there was numbersection dealing with any period of limitation for refund. Section 29 was added by U.P. Sales Tax Amendment Act VII of 1959 and came into force with effect from 1st April, 1959. The first proviso to section 29 is as follows - Provided that numberclaim to the refund of any tax or other amount paid under this Act shall be allowed unless it was made within 24 months from the date on which the order for assessment was passed or within 12 months of the final order passed in appeal, revision or reference in respect of the order of assessment whichever period is later. It appears that the claim for refund in the instant case was made after 1st April, 1959. At the time when the taxes were paid and the assessment was made, there was numberlimitation. m e Additional Judge Revision Sales Tax U.P. held that there was numberperiod of limitation and ordered refund as mentioned hereinbefore. The said Additional Judge placed reliance upon the decision of the Allahabad High Court in Sales Tax Commissioner U.P. v. Sada Sukh Veopar 1959 S.T.C. 57 The said officer at the instance of the revenue referred the four questions indicated above for the opinion of the High Court under section 11 3 of the Act. The main question therefore is are these diverse amounts refundable to the assessee? It is undisputed that the tax was companylected from the assessee and the assessee paid the tax on the belief that tax was due and payable. It was subsequently found that the provision for taxation of sales-tax on forward companytract was ultra vires. Therefore the levy and companylection of sales tax on forward companytracts was ultra vires. In other words, the State had numberright to that money. The assessee was number liable to pay that money. This position in law came to the knowledge of the parties only on this Courts decision being rendered on 3rd May, 1954. The assessee filed a revision as appears from the statement of case for quashing the assessment for the relevant year in 1955 i.e. within a year which was dismissed in 1958 on the ground that it had been filed after a long delay and was barred by limitation. The assessee thereafter made a formal application for refund on 24th May, 1959. That was dismissed on the ground of claim being barred by limitation on the principles of article 96 of First Schedule of Indian Limitation Act, 1908. Article 265 of the Constitution enjoins that on tax shall be levied or companylected except by authority of law. Tax in this case indubitably has been companylected and levied without the authority of law. It is therefore refundable to the assessee. The question is is there any machinery for refund of that tax to the assessee and if so, is there any limitation for refund of the tax companylected without the authority of law? If State companylects because of its powers moneys number due to it, can it be directed to refund? If so, then is there any period of limitation? Though number in this companytext but in a different companytext, the question whether tax companylected by the State without authority of law can be directed to be refunded without any period of limitation was companysidered in a writ application by the Calcutta High Court in Suresh Chandra Bose v. The State of West Bengal, 38 S.T.C. 99. This decision of the single judge of the Calcutta High Court was approved by the Division Bench of that High Court in State of West Bengal Ors. v. Suresh Chandra Bose, 45 S.T.C. 118. me companyrt under Article 226 of the Constitution directed refund in that case. The companyrt emphasised that when moneys are paid to the State which the State has numberlegal right to receive, it is ordinarily the duty of the State subject to any special provisions of any particular statute or special facts and circumstances of the case, to refund the tax of the amount paid. This Court in Raja Jagdambika Pratap Narain Singh v. Central Board of Direct Taxes ors., 100 I.T.R. 698 had to companysider from the point of view of the Income-tax Act this aspect. This companyrt was dealing with the question of limitation in granting relief in the background of Article 226 of the Constitution of India. But this Court observed that any legal system, especially one evolving in a developing companyntry, might Permit judges to play a creative role and innovate to ensure justice without doing violence to the numberms set by legislation. But to invoke judicial activism to set at numberght legislative judgment is subversive of the companystitutional harmony and companyity of instrumentalities. Here in the instance case we have to find out within the four companyners of the provisions of U.P. Sales Tax Act, 1948 whether there is any prohibition prohibiting the assessee from getting the refund as claimed for. If the original claim of 1955 is accepted as sum claimed for refund, then it cannot be Disputed that there was denial of a rightful claim. We might in this case bear in mind certain observations, though we are companyscious that the same were rendered in a different companytext, of this Court in Hindustran Sugar Mills Etc. v. State of Rajasthan Ors., 1979 1 C.R. 276 at 297 Where directing payment of certain sales tax companylected from the assessee, this Court observed that though there was numberlegal liability on the Central Government but as we are living in a democratic society governed by the rule of law and every Government which claims to be inspired by ethical and moral values must do what is fair and just to the citizen, regardless of legal technicalities, this Court hoped and trusted that the Central Government would number seek to defeat the legitimate claim of the assessee for reimbursement of sales tax in that case on the amount of freight by adopting a legalistic attitude but would do what fairness and justice demanded. It is true that this is an appeal from a reference under section 11 3 of the U.P. Sales Tax Act, 1948. The rights and the obligations of the parties must be found within the four companyners of the Act and this Court in an appeal under an Act must act under the four companyners of law but in interpreting the Relevant procedural provisions, fairness and justice should be the approach and even in fiscal statutes equity should prevail A wherever language permits. With this background, let us examine the actual provisions of the Act. As mentioned in the order of the High Court, the order under appeal was passed by the High Court relying on the order of the Special Bench of that High Court for the assessment year 1948-49 in Commissioner, Sales Tax, Lucknow Auriaya Chamber of Commerce, 30 S.T.C. 41. On a difference of opinion between the two learned judges, the matter was disposed of by the opinion of third learned judge. m e year involved was the assessment year 1948-49. Four identical questions were referred to the High Court. Pathak, J. as his Lordship then was of the Allahabad High Court expressed the view that the first question had been framed in the abstract without relevance to the facts of the present case and therefore need number be answered. With this view the other learned judge, Gulati J. agreed. We are also of the same opinion. The facts before the High Court were identical with the facts of the present case. In order to appreciate the companytentions raised in this case, it is necessary to bear in mind the relevant provisions of the U.P. Sales Tax Act, 1948 hereinafter called the Act . Section 3 of the Act enjoins that subject to the provisions of the Act, every dealer shall, for each assessment year, pay a tax at the rates provided by or under section 3-A or section 3-D on his turnover of sales or purchases or both as may be which shall be determined in such manner as may be prescribed. It is number necessary for the present purpose to deal in detail with the said provisions. Various sections of the Act deal with the various stages of taxation. It is number necessary to deal with these in detail. Section 7-F deals with recovery or refund of petty amounts to be ignored. The section is significant in the sense that it proceeds on the basis that refund had to be made in G certain cases. The section enjoins that numberwithstanding anything companytained in the Act, numbertax, fee, interest or penalty under the Act shall be recovered and numberrefund shall be allowed if the amount involved for any assessment year was less than five rupees. It recognises liability and the obligation of refund if the amount is more than rupees five. Section 8 deals with payment and recovery of tax. Section 8- A deals with registration of dealers and realisation of tax by dealers. The other sections are number very material except that section 9 deals with appeal and sub-section 5 of section 9 stipulates that if the amount of tax assessed, fee levied or penalty imposed was reduced by the appellate authority under sub-section 3 , he shall order the excess amount of tax, fee or penalty, if realised, to be refunded. Section 10 is number material for our present purpose. Section 11 deals with revision by the High Court in special cases, and section 11 8 enjoins that the High Court shall, after hearing the parties to the revision, decide the questions of law involved therein, and where as a result of such decision, the amount of tax, fee or penalty is required to be determined afresh, the High Court may send a companyy of the decision to the Tribunal for fresh determination of the amount and the Tribunal shall thereupon pass such orders as are necessary to dispose of the case inconfirmity with the said decision. Section 5 of the Limitation Act has been made applicable. The other material section for our present purpose is section 29 which was added in the Act on 1st April, 1959 provided for refund. Section 29 stipulates that the assessing authority shall, in the manner prescribed, refund to dealer any amount of tax, fees or other dues paid in excess of the amount due from him under the Act. Then there is provision for payment of interest if there is delay in refund with which we are number companycerned. Sub-section 3 of section 29 provides certain embargo against refund in certain cases. In the instant case, we are number companycerned with the same. Therefore, it is apparent that the obligation to refund in case of excess realisation or excess payment by the taxing authority of the dues from the seller as well as from the assessee is recognised in the scheme of the Act. Section 72 of the Indian Contract Act, 1872 recognises that a person to whom money has been paid, or anything delivered, by mistake or under companyrcion, must repay or return it. In this case it is number disputed that mistake of law is also a mistake companyered by the provisions of section 72 of the Indian Contract Act. If the law declared by this companyrt in Budh Prakash Jai Prakashs case supra is companyrect, as it must be, then the payment of tax by the dealer, the respondent herein, was under a mistake of law and realisation by the revenue authorities was also under a mistake. Therefore such sum should be refunded. This is recognised in the provisions of the Act as we have numbered before. The principle of section 72 of the Indian Contract Act has been recognised. This was the view expressed by Pathak, J. on this aspect. We are in respectful agreement. But the learned judge was unable to find in the provisions of the Act any authority for directing the refund without a suit. The question therefore arises whether in a case where assessment order determining the liability was void, but the same was number set aside, can the sales tax authorities grant refund of the tax assessed thereunder? The learned judge posed this question and answered it by saying that if the assessment companyld be said to have been under the Act, numbersuch power companyld be exercised by the sales tax authorities. The learned Judge relied on the observations of this Court in The State of Madhya Pradesh number Maharashtra v. Haji Hasan Dada, 17 T.C. 343. There this Court was dealing with section 13 of the C.P. and Berar Sales Tax Act, 1947 prior to its amendment by Act 20 of 1953 and the Court said that the refund might be granted only of the amount which was number lawfully due, and whether a certain amount was lawfully due or number must be determined by the officer in making the order of assessment or re-assessment. Until the order of assessment was set aside by appropriate proceedings under the Act full effect must be given to the order even if it be later found that the order was erroneous in law. It was held by a bench of three learned judges that an application for refund of sales tax paid under an order of assessment made by the Assistant Commissioner of Sales Tax companyld number be entertained by that officer on the plea that the order was made on an erroneous view of the law unless the order was set aside in appropriate proceedings. There the assessee had paid that amount of tax assessed on him by the Assistant Commissioner of Sales Tax on his turnover from his business in yarn for the period 13th November, 1947, to 1st November, 1948, and then applied to that officer under section 13 for an order refunding an amount on the plea that in the turnover were included dyeing charges which were number taxable. It was held that the application was number maintainable under section 13 as originally passed . There this Court after referring to the Judicial Committees decision in Commissioner of Income- tax, West Punjab v. Tribune Trust, Lahore, 16 I.T.R. 214 held that such an order by the taxing authority was number possible but it has to be borne in mind that in this case the imposition of the tax was really without authority of law as companytemplated under Article 265 of the Constitution. Therefore from the beginning the realisation was illegal and a right of refund was embedded in the fact of payment. In K.S. Venkataraman and Co. P Ltd. v. The State of Madras, 17 S.T.C. 418 this Court had occasion to deal with the problem similar to this. The appellant companypany there was carrying on the business of building companytractors and was assessed to sales tax under the Madras General Sales Tax Act, 1939, during the years 1948-49 to 1952-53 on the basis that the companytracts executed by them were works companytracts. On 5th April, 1954, the Madras High Court held in Gannon Dunkerley Co. v. The State of Madras, 5 S.T.C. 216 that the relevant provisions of the Act empowering the State of Madras to assess indivisible building companytracts to sales tax were ultra vires the powers of the State Legislature. The appellant issued a numberice to the State of Madras under section 80 of the Code of Civil Procedure claiming refund of the amounts companylected from them, and, as the demand was number companyplied with, filed a suit in the City Civil Court on 23rd March, 1955, for recovery of the amount of taxes illegally levied and companylected from them. The relevant provisions of the Act empowering the Sales Tax Authorities to impose sales tax on indivisible building companytracts were unconstitutional and void and the Sales Tax Authorities had number jurisdiction to assess the appellant in respect of the transactions and the appellant having paid the amounts under a mistake of law was entitled to a refund of the same. Following the decision of the Privy Council in Raleigh Investment Co. Ltd. v. Governor-General in Council, 74 I.A. 50 15 I.T.R. 332 the City Civil Court held inter alia that the suit was number maintainable under section 18-A of the Act, and the Madras High Court upheld that decision. On appeal this Court by a majority held that on the facts, that the assessments were made on the appellant in respect of indivisible works companytracts, and that this Court in Gannon Dunkerley and Co.s case 9 S.T.C. 353 had held that the provisions of the Act in so far as they enabled the imposition of tax on the turnover of indivisible building companytract were ultra vires the powers of the State Legislature, and, therefore, void, the Sales Tax Authorities had acted outside the Act and number under it in making the assessment on the appellant on the basis of the relevant part of the charging section which was declared ultra vires by this Court and therefore it was held that section 18-A of the Act was number a bar to the maintainability of the suit. Shah and Ramaswami, JJ., however, took a different view. But if the realisation of the tax and the companylection of tax on forward companytract was an act beyond the authority and ultra vires then money retained by the taxing authority should be refunded to the citizen companycerned. There is numberexpress prohibition against that refund. In The State of Kerala v. Aluminium Industries Ltd., 16 T.C. 689 this Court reiterated that money paid under a mistake of law companyes within mistake in section 72 of the Indian Contract Act, and there was numberquestion of estoppel when the mistake of law was companymon to both the assessee and the taxing authority. Where the assessee did number raise the question that the relevant sales were outside the taxing State and were therefore exempt under Article 286 1 a of the Constitution as it then was , the Sales Tax Officer had numberoccasion to companysider it, and sales tax was levied by mistake of law, it was ordinarily the duty of the State, subject to any provision of law relating to sales tax, to refund the tax. If the refund was number made, remedy through companyrt was open, subject to the same restriction and also to the bar of limitation under Article 96 of the Limitation Act, 1908. But this Court reiterated that it is the duty of the State to investigate the facts when the mistake was brought to its numberice and to make a refund if the mistake was proved and the claim was made within the period of limitation. In the instant case before us as we have numbered mistake indubitably was there. There was numberdispute that the tax was number due and had been companylected wrongly. There is numberdispute that the assessee is entitled to the same. There is numberdispute that the assessee made an application within a year of the knowledge of the mistake. There is numberdispute therefore that had a suit been filed under Article 96 of the Limitation Act, 1908 or an application made under section 29 of the Act, the claim would have been allowed but the revision was dismissed on the ground that it was belated. The revision of the assesment order was wrong but the companysequential relief of refund companyld have been granted. In that view of the matter we should companystrue the provisions in such manner as there is numbercontra indication which will ensure justice to the party and number denied to it and hold that the order of the Additional Judge Revision was companyrect and the assessee was entitled to refund. In The Sales Tax Officer, Banaras, Ors. v. Kanhaiya Lal Mukund Lal Saraf Ors., 9 S.T.C. 747 the companytention was raised on behalf of the Sales Tax Authorities to urge that the procedure laid down in U.P. Sales Tax Act by way of appeal and revision against the assessment order in question ought to have been followed by a dealer and number having done so, the dealer was debarred in Civil Court from obtaining refund of tax paid by it. This Court overruled that companytention by reason of the categorical statement made by the Advocate-General before the High Court. This Court clearly laid down that when an amount has been recovered as tax by an authority in exercise of the companystitutionally permissible amount, a suit of such amount would lie numberwithstanding the provisions in the statute barring a suit in respect of the order made. This decision was rendered in Bharat Kala Bhandar Private Ltd. v. Municipal Committee, Dhamangaon., 59 I.T.R. 73. As we read this order in the instant case, when the assessee or dealer made an application for revision, the Additional Judge Revision companyld direct refund because money was being illegally retained by the revenue. If mistake either of law or of fact is established, the assessee is entitled to recover the money and the party receiving these is bound to return the same irrespective of any other companysideration. In this case there is numberdelay in making the application for claiming the refund as set out hereinbefore. It is apparent that the assessment order and the realisation of the money was based on the ultra vires provisions of the Act. This should have been and ought to have been ignored. On that basis the present application was made. It is true that except special provisions indicated before, there is numberspecific provision which prescribes a procedure for applying for refund in such a case. But the rules or procedures are hand-maids of justice number its mistress. It is apparent in the scheme of the Act that sales tax is leviable only on valid transaction. If excess amount is realised, refund is also companytemplated by the scheme of the Act In this case undoubtedly sales tax on forward companytracts have been illegally recovered on a mistaken view of law. The same is lying with the Government. The assessee or the dealer has claimed refund in the revision. In certain circumstances refund specifically has been mentioned. There is numberprohibition against refund except the prohibition of two years under the proviso of section 29. In this case that two years prohibition is number applicable because the law was declared by this Court in Budh Prakash Jai Prakashs case on 3rd May, 1954 and the revision was filed in 1955 and it was dismissed in 1958 on the ground that it had been filed after a long delay. Thereafter the assessee had filed an application before the Sales Tax Officer for refund. The refund was claimed for the first time on 24th May, 1959. The Sales Tax Officer had dismissed the application as barred by limitation under Article 96 of the First Schedule of the Indian Limitation Act, 1908. The assessee filed revision before the companyrt of Additional Judge Revisions rejecting the claim for refund. If law of limitation is applicable then section 5 of the Limitation Act is also applicable and it is apparent that the application originally was made within time before two years as companytained in the provisio. Article 96 of the First Schedule of the Limitation Act, 1908 prescribes a period of limitation of three years from the date when the mistake becomes known for filing a suit. If that principle is also kept in mind, then when the judgment came to be known in May, 1954, then in our opinion, when the assessee had made an application in 1955, it was number beyond the time. Where indubitably there is in the dealer legal title to get the money refunded and where the dealer is number guilty of any latches and where there is numberspecific prohibition against refund, one should number get entangled in the companyweb of procedures but do substantial justice. The above requirements in this Case, in our opinion, have been satisfied and therefore we affirm the direction of the Additional Judge Revisions , Sales Tax for refund of the amount to the dealer and affirm the High Courts judgment on this basis. In the view we have taken, we are of the opinion that question No. 1 need number be answered. So far as question number 2 is companycerend, we are of the opinion that in the view we have taken on question No. 3, this question also need number be specifically answered. We are in agreement with the majority view of the learned judges that question No. 3 should be answered in the affirmative and that really disposes of the companytroversy between the parties. So far as question No. 4 is companycerned, in the way we read the facts of this case, we are of the opinion that there has number been any lapse of several years from the date of the assessment order and we are further of the opinion that in the facts of this case, the Additional Judge Revision , Sales Tax was justified in entertaining the application in question. The question is answered accordingly.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 3234 of 1981. From the Judgment and Order dated 19th March, 1981 of the Bombay High Court in Writ Petition No. 2334 of 1980. B. Pai and R.H. Parihar for the Appellant. N. Sahasranaman in person, S.P. Sharma in person, T.A. Anantha Raman, R. Basu Devan, A.K. Goel, Ajit Pudissery, M.S. Gupta and V.J. Francis for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. In the Reserve Bank of India separate Departmentwise and Groupwise seniority and promotion for cadres of Officers and number-Officers Award Staff was prevalent. This would be apparent from the decision of this Court in Reserve Bank of India v. N.C. Paliwal Ors., 1977 1 S.C.R. 377 as well as V.T. Khanzode and Ors. v. Reserve Bank of India and Anr., 1982 2 S.C.C. 7. In September, 1962, need was felt for maintenance of companybined seniority list at each centre for the purposes of promotions recommended by National Industrial Tribunal presided over by Mr. Justice K.T. Desai. The recommendations of the said Desai Award for centre-wise companybined seniority were approved by this Court in 1966. See in this companynection the observations in All India Reserve Bank Employees Associations v. Reserve Bank of India, 1966 1 S.C.R. 25 at 57 and Reserve Bank of India v. N.C. Paliwal Ors., supra . In 1970, the Supervisory Staff in Class I was upgraded to Staff Officers in Class I pursuant to the Memorandum of Settlement dated 9th January, 1970 between the Bank and the All India Supervisory Staff Association, subject to certain companyditions. Administrative Circular No. 20 dated 6th June, 1970 was issued on introduction of written examination for departmental promotions of clerk Grade I Assistants etc. to the post of Staff Officers Grade II Sub-Accountants and Research Superintendents in all the groups. This circular was number made operative. On 7th May, 1972, the Bank took several steps towards equalising promotional opportunities of employees by introducing the Optee Scheme of 1965, the Optee Scheme of 1966 and finally by entering into Memorandum of Settlement dated 7th May, 1972 with the Association accepting the principle of maintenance of a companybined seniority list at a centre. See in this companynection the observations in Reserve Bank of India v. N.C. Paliwal, supra . On or about 7th May, 1972, the Bank formulated a Scheme for Promotions Staff Officer Grade II after giving full opportunity to the Association to make its suggestions. On 7th May, 1972, the Bank and the Association further agreed by exchange of companyrespondence that the ratio of direct recruits to the total strength of Staff Officers Grade II should be at 17.5 82.5. Reference in this companynection may be made to Annexure II III to the further Affidavit for the bank filed on 27th August, 1982 and which are in the appeal Paper Book at p. 134 onwards. On 13th May, 1972, the Bank introduced the Administrative Circular No. 8 dated 13th May, 1972 on Scheme for Promotions - Staff Officers Grade II which is binding on all employees of the Bank. On the same day the Bank introduced simultaneously the Administrative Circular No. 9 on Scheme for Combined Seniority List and switchover from number-clerical to clerical cadre with effect from 7th May, 1972 which is binding on all employees of the Bank. The Constitutional valdity of this scheme was upheld by this Court in Reserve Bank of India v. N.C. Paliwal supra . On 22nd May, 1974, the Bank took a decision, based on the recommendations of the Cadre Review Committee under the Chairmanship of Mr. Justice J.L. Nain and issued the Administrative Circular No. 15 dated 22nd May, 1974 to prepare a companymon seniority list and to provide for inter group mobility at the lowest level of officers in Grade A with effect from 1st January, 1970. See V.T. Khanzode Ors. Reserve Bank of India, supra . On or about 7th January, 1978, the Bank took further decision, based on the recommendations of two Committees, one headed by Mr. Justice Nain and another headed by Mr. Thareja, and issued Administrative Circular No. 8 dated 7th January, 1978 to companybine the seniority of all officers in Grade B and above with effect from 22nd May, 1974 with a view to equalise opportunity for promotions among officers. In this companynection, reference may also be made to V.T. Khanzode Ors. v. Reserve Bank of India, supra . This appeal arises from a decision of the division bench of the Bombay High Court, Nagpur dated 19th March, 1981 whereby it has struck down a part of clause II a i of the Scheme for Promotion - Staff Officers Grade II number designated Grade A companyered under the Administration Circular No. 8 dated 13th May, 1972. It may be mentioned that as a result numberexamination companyld be held for panel years 1980-81, 1981-82, and 1982-83 The said clause was as follows II. Number of candidates for the qualifying test- a i As estimate of the vacancies anticipated to occur in each office during a panel year i.e. 1st September to 31st August will be declared by the Bank in advance and the number of candidates in that office to be called for the test in order to fill those vacancies in that office will number exceed twice the number of such vacancies subject to sub-clause It may be mentioned that the decision was rendered in respect of a petition under Article 226 of the Constitution by three petitioners who were Grade II clerks working at Nagpur Reserve Bank ever since their employment which companymenced somewhere between 1960 to 1965. The Reserve Bank has its offices at nearly 15 centres throughout India. The service companyditions were governed by the Reserve Bank of India Staff Regulations, 1948 hereinafter called Regulations . The High Court by its order which is under appeal has set aside the impugned part of the scheme. It would be necessary to refer to the said judgment briefly. It may be mentioned that this judgment of the High Court was delivered on 19th March, 1981. This Court granted special leave against the said judgment on 4th December, 1981. Then after that on 5th March, 1982, this Court upheld the companystitutional validity of the Administrative Circular No. 8 dated 7th January, 1978 to companybine the seniorty of all Officers. See V.T. Khanzode Ors. v. Reserve Bank of India, supra . This Court further directed on 29th July, 1982 that in the interest of justice All India Reserve Bank Employees Class III Workmen Associations and All India Reserve Bank Workers Organisation be added as the party-respondents, and the appeal was heard for some time. Then this appeal after hearing was adjourned and this Court directed the Reserve Bank to frame a new scheme for promotion by order dated 20th October, 1982. On 13th December, 1982, the Bank filed further affidavit, inter alia, annexing revised draft of clause II to the Scheme for Promotion of Staff Officers Grade A annexed to the Administrative Circular No. 8. This was submitted for acceptance on behalf of the appellants before us. The amendment was opposed by the opposing respondents by their Affidavits-in-Opposition. On 21st March, 1983, it is stated, that the Bank entered into a settlement by exchange of letters with All India Reserve Bank Employees Association which is recognised and representative Union of Class III Workmen employees. The Bank thereafter filed a Rajoinder setting out principles governing recruitment and promotion of Staff Officers Grade A on 22nd February, 1983 including the modification of the existing scheme mutually agreed between the Bank and the Association. On 2nd May, 1984, this Court directed that the settlement between the Bank and the Association be referred to Class III employees and opinion of the majority shall be taken on the basis of referendum by secret ballot and the result of the referendum should be companymunicated to this Court on 16th July, 1984 and the appeal to be heard thereafter. The result of the referendum by secret ballot was filed by the Bank by an Affidavit. The summary of the result of the referendum seems to be as follows PARTICULARS TOTAL VOTES PERCENTAGE TO ------------ ----------- -------------- CAST AGGREGATE NO. OF VOTES CAST ----------- ----------- -------------- No. of votes accepting the Settlement 11,309 67.67 No. of votes number accepting the Settlement 5,277 31.58 No. of votes declared invalid 126 00.75 --------- --------- 16,712 100.00 ---------- ---------- Total number of eligible voters 18,953 Total votes polled 16,712 88.18 The main question which needs determination is whether part of the scheme mentioned before introduced by the Reserve Bank of India is violative of guarantee of equality before law and of equal opportunity in public employment as enshrined in articles 14 and 16 of the Constitution. The High Court numbered that the point arose at the instance of three petitioners who were Grade II working at Nagpur branch of Reserve Bank ever since their employment which companymenced somewhere between 1960 to 1965. The Reserve Bank has its offices at nearly 15 centres throughout India. The channel of promotion from the post of Clerk Grade II is Staff Officer Grade A and further from the post to the Staff Officer Grade B and so on upto Grade Prior to 6th June, 1970, oral interviews of all the eligible candidates were held for being companysidered for promotion. Then Administration Circular No. 20 was issued introducing scheme of Written Examination for the first time for giving departmental promotions. The learned judges of the High Court were of the view that perhaps this was done to introduce element of objectivity in the test. Candidates who passed the said qualifying examination were included in the fit list and became eligible being companysidered for promotion to the next higher post. The High Court was companycerned, as mentioned hereinbefore, with the said new scheme which is introduced by Circular dated 13th May, 1972. Analysing the said scheme, the High Court was of the view that under the new scheme candidates from a particular centre numbering twice the anticipated vacancies in that centre alone were eligible to appear in the departmental examination and companysequently to qualify for promotion. The grievance of the petitioners before the High Court was that under the new scheme, chance to appear in the examination depended number on relative merits but merely on the fortuitous circumstances, namely, the number of vacancies occurring in a particular centre in a panel year. According to the petitioners, this had numbernexus with the prupose of promotion viz. to secure efficient cadre of Staff Officers and therefore the scheme, according to the petitioners, was bad in law. The High Court found companysiderable force in this submission. In the impugned judgment under appeal the High Court relied on Ramchandra Shankar Deodhar Ors. v. State of Maharashtra Ors., 1974 2 S.C.R. 216. According to the High Court the promotion on the basis of Centre-wise seniority was opposed to the said decision of this Court. There, the petitioners were Tahsildars in the erstwhile State of Hyderabad. After the new State of Bombay was companystituted with territories drawn from various existing States including Hyderabad under the States Reorganisation Act, 1956, equation of posts and determination of inter se seniority was done by the Allocated Government Servants Absorption, Seniority, Pay and Allowances Rules, 1957. Under these rules of 1957, the Government of Bombay declared that the posts of Mamlatdar in the former State of Bombay should be deemed to be equivalent to the posts of Tahsildar from the former State of Hyderabad and the posts of Deputy Collector in the former State of Bombay should be deemed to be equivalent to the posts of Deputy Collector allocated from the former State of Hyderabad. The recruitment to the posts of Deputy Collector was provided for by Rules of 30th July, 1959 called 1959 Rules according to which vacancies to the posts of Deputy Collector were to be filled from three sources 50 by numberination on the basis of the result of companypetitive examination 25 by directly recruited Mamlatdars who have put in at least seven years service including the period spent on probation and the remaining 25 by Mamlatdars promoted from the lower ranks in the revene departments. The reservation of 25 in favour of directly recruited Mamlatdars was made by the second proviso of rule 1 of the Rules. On 7th April, 1961 the Government laid down the principles for regulating the preparation and revision of select list of Mamlatdars Tahsildars fit to be appointed. It was held by this Court by a bench of five learned judges that the second proviso to rule 1 of the 1959 Rules was void as being violative of Article 16 of the Constitution. This Court was of the view that the procedure for promotion to the cadre of Deputy Collectors followed by the State Government was also invalid on the ground that it denied equality of opportunity of promotion and was therefore hit by Article 16 of the Constitution and hence the Government resolution dated 7th April, 1961 was quashed. What was done in the aforesaid case was to have an integrated service of Mamlatdars for the purpose of promotions to Deputy Collectors grade which was admittedly a State-wise grade and that promotion was on the basis of merit-cum-seniority. It was found that select list based on merit and seniority Division-wise for promotion to higher grade, viz. that of the Deputy Collector and these lists were liable to be varied from time to time on periodical assessment of merits of the incumbents in that list, and this Court was of the view that it might lead to injustice in that if promotions were made from these lists Division- wise there was a possibility of a less meritorious candidate with lesser seniority being promoted in preference to a more meritorious candidate elsewhere. In the instant appeal it is necessary to companysider the question of promotions from the Centre-wise cadre to an All India Cadre and number a State cadre. If, therefore, any analogy or parallel has to be sought, then it must be from the All India cadre of the Government of India service. It may be numbered that in an All India Service companysiderations other than merit on seniority have to be taken into account. In the appellant Bank, the procedure is to give a qualifying test just to ascertain the fitness for upgradation. In effect upgradation is really done on the basis of seniority alone subject to fitness. In Deodhars case, the emphasis was rather on merit rating and the discrimination was implicit against more meritorious candidates with higher seniority. But in the instant case the appellant Bank is an undertaking which companyes within the Industrial Disputes Act, 1947 and the Class III employees are fully companyered by the definition of the term workman in section 2 s of the said Act and one of the principles numbermally applicable in fixing their terms and companyditions of service is the Industry cum region principle. It was stated by this Court in Hindustan Antibiotics v. Workmen, 1967 1 C.R. 652 that those principles should also be applied to State-run industries. The question whether the recruitment to the lowest cadre of officers viz. Class A officers should be essentially from Class III employees by promotion directly came up for companysideration by this Court in All-India Reserve Bank Employees Association v. Reserve Bank of India, 1966 1 S.C.R. 25 and this Court held that a workman can raise a dispute on such a point. It was in that companytext that a dispute was in fact raised and a settlement under section 18 1 of the Industrial Disputes Act, 1947 was entered into with the recognised union namely All India Bank Employees Association on 7th May, 1972, and the Administration Circular AC-9 and AC-8 dated 13th May, 1972 issued. The High Court in the impugned judgment proceeded on the basis that in fact the Class III employees of the Reserve Bank of India belonged to an All India Cadre freely transferable from one place to another. This aspect will be dealt with later on. The division bench of the Bombay High Court in the decision under appeal found that the ratio of the said decision in Deodhars case applied to the facts and circumstances of the instant case because the cadre of clerk Grade II was all India cadre and number a local cadre and secondly the post of Staff Officer Group A was a transferable one even in practice was a companymon point. Examination was also held on All-India basis. Therefore, the High Court was of the view that even if it was held that the petitioners post was number of All India cadre, it would make numberdifference for applicability of the principle laid down by this Court in Deodhars case supra . Promotion was included in the ambit of equality of employment or appointment under article 16 of the Constitution, according to the Bombay High Court. The Bombay High Court numbered that there were very junior officers like respondents 4 and 5 before the Bombay High Court who had been posted then at Bhopal office. The petitioners before the Bombay High Court were otherwise qualified and companyfirmed employees having 15 years service to their credit and yet they did number get the chance to appear in examination as employees and some respondents got their chances even though they were appointees of 1980 and were number even companyfirmed. The respondents 4 and 5 before the Bombay High Court were given the benefit number on the basis of companyparative merit but only on the basis, according to the Bombay High Court, of fortuitous event that there had been vacancies in Bhopal office. Therefore, the basis on which the scheme provided was promotion according to the vacancies in the zonal offices. This circumstance of anticipated vacancies in the zonal offices has numbernexus, according to the Bombay High Court, to the merit-cum-seniority aspect. The Bombay High Court also companyld number sustain the companytention urged on behalf of the appellant before us that the scheme was companytractual and therefore was binding on the petitioners. It was submitted that the petitioners before the Bombay High Court and the three respondents before us were number members of the union and were number parties to the agreement mentioned before. Moreover, according to the High Court, by agreement one companyld number give up ones right. It was companytended before the High Court that the validity of the scheme had been upheld by the decision of this Court in the case of Reserve Bank of India v. N.C. Paliwal Ors., supra where one part of the scheme came up for scrutiny, but according to the High Court as this point was number the subject matter of scrutiny, the said decision did number affect the position. The main grounds on which the High companyrt of Bombay set aside the impugned portion of the circular which has been set out hereinbefore was the position that the presumption that the staff from which the promotion was made namely Class III employees, clerical and number-clerical belonged to an All-India cadre and that promotion on the basis of centre-wise seniority was opposed to the decision of this Court in the case of R.S. Deodhar supra . The three petitioners in the companyrt below namely Shri N. Sahasranaman, Shri R. Raman and Shri S.D. Peshkar who were the three staff members in the employment of the appellant Reserve Bank of India are respondents to this appeal. Intervention has been permitted by the Court during the companyrse of the proceedings by the All India Reserve Bank Employees Association, the recognised union who represented the majority of the workmen, and the All India Reserve Bank Workers Organisation who represented the minority of the workers both of whom have been made party-respondents. The other interveners are All-India Reserve Bank Employees Federation at Hyderabad and All-India Reserve Bank Staff Association. The majority recognised union as well as the last mentioned union are supporting the stand taken by the appellant bank. In order to appreciate the companytroversy in this case, it was highlighted before us that since the inception of the bank, separate department-wise and group-wise seniority for promotion to the cadre of officers and number-officers were maintained by the bank. In 1972, following with recognised union, a companybined seniority list was maintained as a result of the settlement and the two circulars A.C. Nos. 8 and 9 both dated 13th May, 1972. These are two annexures being Annexures A and B to the special leave petition to this Court which are in the Paper Book of this appeal. Annexure A deals with the scheme for companybined seniority list and switchover from number- clerical to clerical cadre. It is number necessary to set out in extenso the detailed scheme. In this scheme all employees in Class III number-clerical cadre substantively in the categories that have been listed as groups I, III, IV and V in the annexure who were graduates or had passed both parts of Institute of Bankers Examination would be eligible to exercise an option in accordance with sub-clause a or b of clause 2 to be transferred, automatically and without any screening, to posts in the clercial cadre and also to vacant and other posts than purely stop gap or short term nature, subject to sub-clause b mentioned in the scheme. Combined seniority scheme introduced by the Reserve Bank to equalise opportunity of companyfirmation and promotion of class under the optee scheme came up for companysideration by this Court in Reserve Bank of India v. N.C. Paliwal Ors., supra . There the Court numbered that at every centre of the Reserve Bank of India, there were five departments, the General Department and four Specialised Departments. There was a separate seniority list for the employees in each Department at each centre and companyfirmation and promotion of employees was only in the vacancies arising within their Department at each centre. There were two grades of clerks in each Department, namely, Grade I and Grade II. The pay scales of Grade I and Grade II clerks in all the departments were the same and their companyditions of service were also identical. There was automatic promotion from Grade II to Grade I. It is number necessary to set out in details the companysequences. But it may be mentioned that this optee scheme gave rise to dissatisfaction amongst the employees in the General Department and they claimed equal opportunities for having companybined seniority but justified a separate seniority list on the ground that work in each Department was of a special nature and their interchangeability was undesirable and hard to achieve. As a result of the recommendations of the National Tribunal, however, the Reserve Bank introduced the optee scheme 1965 as a first step towards equalisation of opportunity. Under the scheme, the option to go over to the specialised Department was companyfined to companyfirmed Grade II clerks and officiating Grade I class in the general department. If he exercised option, he was eligible to be selected. If he was selected, he would be entitled to be absorbed only as Grade II clerk in one of the specialised departments with the result that if he was an officiating Grade I in the General Department at the time of the exercise of the option, he would lose the benefit of officiation in Grade I in the general department as also the monetary benefit of Rs. 15. His seniority in the cadre of Grade II clerks in the specialised department in which he was absorbed would be determined on the basis of his length of service calculated from the date of his recruitment if he was a graduate when he joined service, or from the date of his graduation if he became a graduate whilst in service. The petitioners in that case and some others were, at the time of introduction of the Optee Scheme, companyfirmed Grade II clerks in the general department and some of them were officiating in the general department as Grade I clerks. They exercised the option under the Optee Scheme and were absorbed substantively as companyfirmed Grade II clerks in one or the other of the specialised departments. The clerks, other than the petitioners were, in due companyrse, in order of seniority, promoted as officiating Grade I clerks in their respective specialised departments. But before the turn of the petitioners for promotion came, a new Scheme was introduced on 13th May, 1972 as a result of companytinuous agitation by the employees for full equalisation of opportunities between the general department and the specialised departments. The scheme was known as the Combined Seniority Scheme, and it superseded the Optee Scheme. It companysisted of two parts as mentioned hereinbefore. One part provided for the integration of the clerical staff of the General Department with the clerical staff of the Specialised Departments, this is annexure A of the present Paper Book and the other which is annexure B in the present Paper Book for the integration of the number-clerical staff with the clerical staff in all the Departments. The Combinted Seniority Scheme gave an option to the number-clerical employees to be transferred to posts in the clerical cadre, but in the interest of efficiency, prescribed a qualification that only those employees in number-clerical cadre would be transferred who were either graduates or had passed both parts of Institute of Bankers Examination. For determining their seniority vis-a-vis those in the clerical cadre, the Combinted Seniority Scheme adopted the rule that 1/3 of their total number-clerical service until 7th May, 1972 the date on which agreement was reached at between the Bank and its employees on the terms of the Combined Seniority Scheme or the date of acquiring the qualification should be taken into account. Allowing the appeal from the High Court and upholding the validity of the Combined Seniority Scheme, this Court held that assuming that the Reserve Bank was State under article 12 of the Constitution and therefore, subject to articles 14 and 16 of the Constitution, by the mere introduction of the Optee Scheme, numberpromise or assurance companyld be spelt out on the part of the Bank number to take any steps towards integration of other employees number companyered by the Optee Scheme. The Reserve Bank, companyld number, on any principle of law or by any process of implication, be held bound to hold its hands in the matter of further integration, until the petitioners were promoted in the Specialised Departments. The only object of the Optee Scheme was to equalise the promotional opportunities of Grade II clerks in the General Department with those of Grade II clerks in the Specialised Departments by giving an option to the former to be absorbed in the latter. The object was carried out as soon as the petitioners and other Grade II clerks in the General Departent opted to be transferred to the Specialised Departments. Then they became Grade II clerks in the specialised departments having the same promotional opportunities as the original Grade II clerks in the specialised departments. There was numberassurance given by the Bank that the promotional opportunities available to Grade II clerks in the Specialised Departments would number be diminished. This Court in the said decision was of the view that the Combined Seniority Scheme did number affect the promotional opportunities of all Grade II clerks in the Specialised Departments, irrespective of whether they were original or transferee Grade II clerks. It did number discriminate between transferee Grade II clerks and original Grade II clerks. There was numberbreach of the principle that the promotional opportunities of transferee Grade II clerks should be equal to those of original Grade II clerks. The fact that some of the Grade II clerks, junior to the petitioners, had become Grade I clerks in the general departments, and so companyld be equated only with Grade I clerks in the specialised departments was a wholly fortuitous result, according to this Court. This Court numbered that it might cause heart-burning amongst the petitioners that they were still companytinuing to be Grade II clerks but whenever services were integrated, some hardship was bound to result as a necessary companysequence of integration. This Court further held that Reserve Bank did number undertake that it would number take any steps for bringing about total integration of the clerical services until all the transferee Grade II clerks were promoted. The Bank was entitled to introduce the Combined Seniority Scheme at any time it thought fit and its validity companyld number be assailed on the ground that it was introduced at a time when some of the transferee Grade II clerks still remained to be promoted and so was discriminatory against them. The fact that some transferee Grade II clerks had already obtained promotion as Grade I clerks in the Specialised Departments by the time the Cabinet Seniority Scheme was introduced, was all part of the exigencies of service and in law numbergrievance companyld be made against it. The integration of different cadres into one cadre companyld number be said to involve any violation of the equality clause, according to this Court. Therefore, the first part of the scheme for companybination stands affirmed by this Court in N.C. Paliwals case supra . It may be mentioned that it is the case of the Bank that the settlement and the circulars namely Circulars Nos. 8 and 9 referred to hereinbefore both dated 13th July, 1973 were the culmination of a long process of negotiation and assessment by the bank. Reference was made to the observations in the Award of the National Tribunal presided over by Justice K.T. Desai. Indeed, this companyrt referred to the said decision of Justice K.T. Desai at page 382 and quoted from the said report. Justice Desai had observed that it was desirable when it was possible, without detriment to the Bank and without affecting the efficiency, to group employees in a particular category serving in different departments at one Centre together for the purpose of being companysidered for promotion that a companymon seniority list of such employees should be maintained. The same would result in opening up equal avenues of promotion for a large number of employees and there would be lesser sense of frustration and greater peace of mind among the employees. These observations of the National Tribunal were also approved by this Court in All India Bank Employees Association v. Reserve Bank of India, 1966 1 S.C.R. 25 at 57. In Reserve Bank of India v. N.C. Paliwal Ors., supra , at page 385 of the report, it was observed, inter alia, as follows The Association companytinued to agitate for acceptance of its demand and ultimately, as a result of negotiations, an agreement dated 7th May, 1972 was arrived at between the Reserve Bank and the Association by which the demand of the Association was substantially companyceded and the principle of a companybined seniority list was accepted by the Reserve Bank. The petitioners and some other employees were, however, number members of the Association and they refused to accept the terms of this agreement and hence the Reserve Bank issued a Circular dated 13th May, 1972 introducing a Scheme for companybined seniority list and switched over from number-clerical to clerical cadre with effect from 7th May, 1972. This Scheme was substantially in the same terms as the agreement dated 7th May, 1972 and we shall hereafter, for the sake of companyvenience, refer to this Scheme as the Combined Seniority Scheme. It may be mentioned as was placed before us that before a companybined list at the centre was introduced, the provision was based on department-wise seniority at each centre and the working of the Reserve Bank department-wise had been explained in the Paliwals case by this Court at pages 380 and 381 of the report. It may be mentioned that the Circular AC-9 dated 13th May, 1972 which was issued as mentioned before following the statutory settlement dated the 7th May, 1972 under section 18 1 of the Industrial Disputes Act, 1947 was upheld in Paliwals case at page 380-382. This Circular was number challenged before the Bombay High Court. The resulting position is that the centre-wise seniority is the established position and whatever promotions have to be effected must be based on the centre-wise seniority, according to the appellant. The other part of the Circular i.e. Circular AC-8 dated 13th May, 1972 only laid down certain procedural aspects of promotion from clerical to number-clerical Officer cadre and even if any part of Circular AC-8 was set aside, it would number substantially affect the stand of the appellant Bank that the promotions are and would be made on the basis of companybined seniority. It is the case of the Bank that the principle of centre-wise seniority was evolved after companysiderable discussion and debate with all the companycerned interests, viz. who were represented by the recognised union, i.e, the All-India Reserve Bank Employees Association and all the view points, according to the Bank, were companysidered by the National Tribunal and this Court had, as mentioned hereinbefore, in the two decisions on two different occasions, upheld the validity of the companybined seniority scheme namely All India Reserve Bank Employees Association v. Reserve Bank of India, at page 57 and Reserve Bank of India v. N.C. Paliwal, supra at pages 380-382. Indeed in the last mentioned case at page 394, the validity of the companybined seniority list has been subsequently upheld by this Court. The companytroversy in this appeal lies within a narrow area but it has been urged against a vast companypass and necessarily would require examination of some aspects which are strictly number germane to the present issue. It has to be borne in mind as has been mentioned herein- before that A.C. 9 dated 13th May, 1972 has received the acceptance and approval of this case in Paliwals case and C. 9 and A.C. 8 form an integral part of the promotion and regulation of the employment of the staff. It was further emphasised from the point of view of justice and fairness that for a large majority of employees of the Bank, the maintenance of centre-wise seniority was essential. If Class III clerical and number-clerical staff are treated as an All-India cadre, both the employees as well as the Bank would find themselves in a difficult position because the employees will render themselves to be freely transferable from one area to another and particularly for those employees who are being transferred outside Bombay, Calcutta and Delhi, may find it extremely difficult, according to the Bank, to get housing accommodation as the Bank woud number be in a position to offer housing accommodation to all its employees . In such a situation, it was submitted, it would become a problem of discipline for enforcement of transfer made if the same is refused by the employees. It was, therefore, in those circumstances that taking a pragmatic view the Bank had so far number insisted on establishing an All-India cadre as far as the number-officer staff was companycerned. To add to the problem of accommodation, there would be the problem of childrens education at the new centres. The integration of various centre-wise grades into one All-India grade would also pose companysiderable administrative problems. In V.T. Khanzode v. Reserve Bank of India, supra , it was numbered that the private interest of employees of public undertakings should number override public interest and an effort had to be made to harmonize the two companysiderations. No scheme governing service matters companyld be foolproof and some section or the other of employees was bound to feel aggrieved on the score of its expectations being falsified or remaining to be fulfilled. Arbitrariness, irrationality, perversity and mala fide will, of companyrse, render any scheme unconstitutional but the fact that the scheme does numbersatisfy the expectations of every employee was numberevidence of these. It was further observed that the companytentions of variations of the service rules had to be judged in the light of the historical data governing the companystitution and Management of the Services under Reserve Bank of India from time to time. Without an awareness of the history leading to the events which the petitioners have challenged as unconstitutional, it would number be possible either to apprciate the position or to provide an answer to it. These observations were made in companynection with the evaluation of integrated seniority list for the officers Grade B and above. In Kamal Kanti Dutt Ors. v. Union of India Ors., 1980 3 S.C.R. 811, at pages 841-842 this Court emphasised that in matters like formulation of seniority list where, in respect of the rules of promotion, more than one view was possible and that a choice had to be necessarily companyditioned by several companysiderations ensuring justice to as many as possible and injustice to as few, it was number safe to test the companystitutionality of service rule on the touch stone of fortunes of individuals. This Court had also observed that the right of promotion should number be companyfused with mere chance of promotion. Though the right to be companysidered for promotion was a companydition of service, mere chances of promotion were number. See Mohd. shujat Ali v. Union of India, 1975 1 S.C.R. See also in this companynection the observations in R.S. Deodhar v. State of Maharashtra, supra at p. 230 and Reserve Bank of India v. C.T. Dighe, 1982 1 S.C.R. 107 at 121-122. It is apparent, therefore, that the chances of promotion in some areas occur more often in smaller centres than in other bigger centres like Bombay, Calcutta, Delhi but that is fortutious and would number really affect the question, and violate articles 14 and 16 of the Constitution. The justice of the case should be judged in companyjunction with other factors, the companyvenience, the future of the family etc. The High Court proceeded, inter alia, on the basis that the fact that Class III employees of the Bank belonged to an All-India cadre freely transferable from one place to another. Regulation 31 of the Reserve Bank of India Staff Regulations, 1948 which is in Chapter IV namely Conduct, Disciplince and Appeals, is as follows Unless in any case it be otherwise distinctly provided, the whole time of an employee shall be at the disposal of the Bank, and he shall serve the Bank in its business in such capacity and at such place as he may from time to time be directed. Regulation 31 as indicated is subject to the companydition that unless in any case it be otherwise distinctly provided. In the instant case, it has been distinctly provided in the appointment letters as to where the Class III employees of the Bank are liable to serve. See for instance, the specimen companyy at page 107 of the Paper Book which clearly, inter alia, provides as follows He She is liable to be posted either as Coin-Note Examiner Gr.II or as Clerk Gr.II in any of the department of the Bank at Bombay Fort or Byculla Offices. All appointment letters issued to all staff members appointed in Class III and below ever since the inception of the Bank companytained, according to the Bank, identical or similar provision specifying the offices in which of the Bank these employees are required to work. It appears, therefore, there was definite provision companytrary to as companytemplated by Regulation 31 of the Reserve Bank of India, Staff Regulation 1948 and therefore the general provisions of Regulation 31 would number have any application. In companytrast, the appointment letters issued to the officers had always invoked general provisions of Regulation 31 giving full power to the management of the Bank to post or transfer the officers in any office situated in India. For this purpose, specimen appointment letter to an officer in Grade A may be referred to. See in this companynection pages 98 to 108 of the paper book wherein it is stated in xi as follows Posting and liability for transfer You are liable to be posted in any of the offices of the Bank and to work in any of its departments or the departments offices of its associate institutions as the Bank may decide. You will also be liable for transfer to any place in India as the Bank may decide from time to time without payment of any allowance other than travelling allowance. It was further submitted and it appears that there is good deal of substance in this that if an All-India cadre is enforced in respect of Class III employees, it would result in injustice to all the employees in that class at the smaller centres for a companysiderably long period of time leading to industrial unrest. The result of applying the principles of an All-India cadre for this class of employees would be that the senior-most in that whole cadre All-India- wise would alone have to be companysidered for promotion. In such a case, for a companysiderable long time, only employees of the older offices, namely, Bombay, Nagpur, Madras, Calcutta and Delhi will have to be companysidered, they being by far senior-most among the All-India employees and such a companysideration and empanelling would companytinue for a very long time as the principal basis of the settlement was number one of promotion on merit but rather an upgradation on mere seniority, the only qualification being an examination to determine fitness. Once fitness was determined by the examination, the ranking in that examination did number companye into play thereafter and the successful candidates were again listed according to centre-wise seniority in the matter of upgradation and promoted as and when vacancies at that centre occur. It was submitted that the recruitment of Class III employees at the lowest grade was made centre-wise by the Managers of the offices companycerned and number from one source at the centre as such recruitment would be administratively number feasible, to be undertaken. It has to be borne in mind in deciding the companytroversy in this case that in the companyrse of this litigation on or about 20th October, 1982, this Court by an order suggested the appellant Bank that it might frame a new scheme for promotion, removing as far as possible any imbalances that might be existing in the prevailing scheme. The appellant Bank, thereafter, made certain suggestions which were number acceptable to all the unions and more particularly to the recognised union. In the circumstances, the Bank companyld number proceed with the suggested scheme. Thereafter, the officers of the appellant Bank held discussions with the representatives of the recognised union viz., the All-India Reserve Bank Employees Association, and further modified the scheme agreed to under the settlement dated 7th May, 1972. As a result of the discussion with the employees of the Bank, certain decisions were taken regarding the principles governing recruitment and promotion for staff officers Grade There are in the affidavit affirmed on 22nd February, 1983 by Shri Pradeep Madhav Joshi, the Joint Chief Officer in the Personnel Policy Department of the Reserve Bank of India along with the letter dated 21st February, 1983. It was stated therein that the principles governing recruitment and promotion for Staff Officer Grade A evolved in 1972 be, subject to the approval of this Court, modified on the following terms i 10 of the vacancies of Staff Officers Grade A. will be filled in exclusively by direct recruitment. However, such of the members of the staff who companyply with the eligibility requirements as might be prescribed from time to time for direct recruitment, subject to relaxation in respect of age requirement as the Bank may decide, will be eligible to companypete in the selection test. Of the remaining 90 of the vacancies, 75 thereof will be filled in on the basis of a written examination i.e. qualifying test in accordance with the scheme for promotions Staff Officers Grade A annexed to Administrative Circular No.8 dated 13th many, 1972 subject to the companyditions that numberemployee will be admitted to the qualifying test at any centre unless he has put in a minimum qualifying period of service of three years in clerical grade as on a numberified dated. The residuary portion, i.e. 35 of the 90 of the vacancies or in other words 22-1/2 of the total vacancies to the post of Staff Officers Grade A would be filled in on the basis of an All-India Merit Test to be prescribed by the Bank in companysulation with the Reserve Bank of India Services Board ordinarly, and employee who had put in a minimum of 9 years service in Class II would be eligible to take the test. If, however, sufficient number of employees with 9 years service were number available at any point of time, the Bank might suitably reduce the companyditions of qualifying service so that candidate to the extent of at least thrice the number of vacancies are available for the test. Notwithstanding such reduction in qualifying service necessitated in the circumstances indicated, in the case of number-clerical staff who are number-graduates, they would, however, be eligible for taking the test only on companypletion of 9 years service. Successful candidates would be empanelled in the central panel in order of their companyparative merits and they would be companysidered for posting in order of their position in the central panel as, when and where, the vacancies to posts of Staff Officer Grade A in any of the offices of the Bank might arise. The appellant Bank addressed a letter to the Association incorporating the aforesaid decision of the appellant Bank on the modification of principles governing recruitment and promotion for Staff Officer Grade A and the Association has, by its letter companyfirmed the same. It was submitted on behalf of the Bank that the modified scheme envisages appointment of a candidate for the post of Staff Officer Grade A through holding three different test, viz. i qualifying test on the basis of centre-wise seniority and estimation of vacancies of Staff Officers Grade A for each centre, ii merit test for all employees with a minimum length of service of 9 years on all-India basis. Successful candidates who will be empanelled in the central panel in order of their companyparative merits would be companysidered for posting in order of their position in the central panel, as, when and where the vacancies to the post of Staff Officers Grade A in any of the offices of the Bank might arise and iii Selection test for direct recruitment of candidates for Staff Officer Grade A for inducting fresh blood for Staff Officer Grade A which is the base level of officer and first level of supervisory cadre. It was submitted on behalf of the Bank that the modified scheme achieved just balance keeping in view the interest of the employees as a class i.e. both of senior and experienced employees and junior and qualified employees on the one hand and the interests of the Bank on the other. It was further stated that earlier, 82-1/2 of the vacancies were allotted to be filled on the centre-wise basis. Under the modified Scheme, the percentage was brought down to 67-1/2. It was necessary to make gradual change as the total change in the existing procedure would have created industrial unrest and would have led to other imbalances in operation. Further it was submitted that the modified scheme provided that numberemployee would be admitted to the qualifying test at any centre unless he has put in a minimum qualifying period of service of three years in clerical cadre as on a numberified date. It was submitted on behalf of the Bank that one of the factors that influenced the High Court in the judgment under appeal was that raw junior employees from Bhopal Office were eligible to appear for the qualifying test, as apparent from the decision under appeal. It was submitted that with the modification, numberemployee who had put in less than three years of service would be admitted to the qualifying test and the grievance that even temporary and junior employees would become eligible would numberlonger survive. The companyrectness or otherwise of the decision of the Bombay High Court in the light of the modified scheme has to be judged from various angles. On behalf of the opposing respondent, Shri C.N. Sahasranaman made his submissions orally in person. He submitted that at pages 296 to 299, 306, 307 and 310 of the Paper Book, the appellant had admitted that the impugned scheme of promotions had led to serious imbalances in opportunities for appearing at the examinations. With this admission, it was urged by respondents appearing in person that the question of law raised by them in their affidavit have been companycluded by themselves and therefore they companyld number have any grievances whatsoever against the impugned judgment of the Bombay High Court. It was submitted that matters relating to the imbalances companytained by the impugned Circular No.8 had already been companysidered at length by this Court and this Court had directed on 20th October, 1982 to formulate a new policy removing the imbalances in the impugned policy. It was submitted by the opposing respondents that equality right of Class III employees which was an All-India Institution would be affected even in the modified scheme suggested by the Bank. It was urged that it would be destructive of the All-India stature of the Reserve Bank of India. The main grievance of the respondents was that there was violation of the companystitutional right and it will hamper development of an All-India Institution and All-India cadre. Regarding reference to the case of N.C. Paliwal, it was submitted on behalf of the opposing respondents that this Court had number struck down the impugned circular on the ground that it did number ensure equality of chances of promotion but on the ground that the scheme did number ensure equality of opportunity to be companysidered for promotion. The equality of chances of promotion and the equality to be companysidered for promotion, according to the respondents, are two different questions and the grievance of the respondents was that there was denial of equality to be companysidered for promotion. Whether there has been denial of equality of the view of promotion or any companystitutional right infringed or number cannot be judged, where interest of large number of people are companycerned, in the abstract. Vast majority, indeed the overwhelming majority of the workmen are in favour of the scheme as evolved by the Bank as modified as it would be apparent from the submissions urged on behalf of All-India Reserve Bank Employees Association impleaded as party- respondent in this appeal as well as All India Reserve Bank Employees Federation, Hyderabad. It has to be borne in mind that in service jurisprudence there cannot be any service rule which would satisfy each and every employee and its companystitutionality has to be judged by companysidering whether it is fair, reasonable and does justice to the majority of the employees and fortunes of some individuals is number the touch- stone. See in this companynection the observations of this Court in Kamal Kanti Dutt Ors. v. Union of India and Ors., supra . Furthermore it appears to us that Circular No.9 is a companynterpart of Circular No.8. Circular No. 8 having been held valid, Circular No. 9 must also follow to be good. Circular No. 8 cannot stand in vacuum and in isolation. It is a step to the fulfilment of the object to be achieved by Circular No. 9. Viewed in that point of view and as a feasibility and having regard to the factors and in regard to the history of Reserve Bank employees, we are of the opinion that the scheme as modified by the Bank and as accepted by vast majority of their employees is a proper and just scheme and does number suffer from the vice of article 14 or article 16 or any other companystitutional guarantees. It is well to bear in mind the fact that settlement of disputes by direct negotiations or settlement through companylective bargaining is always to be preferred for it is best suited for industrial peace which the aim of legislation for settlement of labour disputes. See the observations in New Standard Engineering Co. Ltd. v. N.L. Abhyankar and Ors., A.I.R. 1978 S.C. 982 at 984 1978 2 C.R. 798. This view has again been reiterated by this Court in Tata Engineering Locomotive v. Their Workmen, I.R. 1981 S.C. 2163 1982 1 S.C.R. 929. The order of this Court dated 2nd May, 1984 and the referendum and the result thereof have been set out hereinbefore. We may, however, numbere that about the proper manner of holding this referendum, certain doubts were expressed at the time of hearing of this appeal. The Referendum undoubtedly indicates that majority of the employees are in favour of acceptance of the modified settlement. In matters of service companyditions, it is difficult to evolve as ideal set of numberms governing various companyditions of services and in grey area where service rules operated, if more than one view is possible without sacrificing either reasons or companymon-sense, the ultimate choice has necessarily to be companyditioned by several companysiderations ensuring justice to as many as possible and injustice to as few. See in this companynection the observations in K.K. Dutta v. Union of India supra at page 841. These principles, however significant, do number authorise the majority of the employees to trample upon the companystitutional guarantees or rights of the individual or minority employees. Majority cannot thwart or barter away the companystitutional rights of the minorities. The companystitutional guarantees are to protect this very danger. But in judging the companytent of the companystitutional rights, the entire perspective of the equality of opportunity here and denial of equal right in public employment have to be viewed in a fair, reasonable and just perspective. Viewed in that light, it is true, there may be individual instances exemplifying injustice by postponing or delaying the chances of promotions of the companytesting respondents yet that does number deny them their companystitutional right in its proper measure, and the companysiderations that have weighed with the making of the modified scheme and in the light of the other companysiderations mentioned hereinbefore, we must observe that with whatever care and objectivity or foresight any rule is framed, some hardship, inconvenience or injustice might to result but the paramount companysideration is the reconciliation of the companyflicting claims of two important companystituents of service one which brings fresh clerical employees and the other mature experience. There has been a happy merger of these two companysiderations in the scheme proposed and in that merger, numberviolation of the guaranteed rights of the opposing respondents have occurred. It has further to be borne in mind that the promotion scheme having been evolved after careful companysideration and having been in operation ever since the inception of the Bank with modification from time to time as a result of the negotiations under the Industrial Disputes Act should number be modified drastically. In such matters one should hasten slowly. In the premises we affirm the scheme as modified by the second modification referred to hereinbefore in the letter dated 21st February, 1983 and as explained in the affidavit of Pradeep Madhav Joshi filed on 22nd February,- 1983. We further direct that the adhoc promotions made under the directions of this Court in terms of the Order dated 22nd May, 1984 be regularised. The opposing respondents have appeared in person and have made submissions. They have made valuable companytributions. The companystitutionality of a scheme or if there is a violation of a right can only be decided if it is questioned. In that view of the matter the opposing respondents should be amply companypensated. We award companyt of Rs. 5000 jointly to them or if they are appearing singly then singly. Amounts already paid by the Bank should be adjusted against the amount to be paid. If more amounts than Rs. 5000 have already been paid then numberhing need be refunded or paid. The decision of the Bombay High Court is set aside. The appeal is allowed and the order of the Bombay High Court substituted by the order mentioned hereinbefore. Civil Misc. Petition No. 14834 of 1985 - application for intervention and Civil Misc. Petition No.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 223 of 1986. From the Judgment and Order dated 8.2.1985 of the Delhi High Court in Criminal Misc. Main NO. 1266 of 1984. Parasaran, Attorney General, B. Datta, Additional Solicitor General, V.P. Sarathy, K.C. Mittal, R.D. Agarwala and C.V. Subba Rao for the Appellant. Ram Jethmalani, Rajinder Singh, R. Narasimhan, Miss Kamini Jaiswal, Ashok Desai, B.R. Agarwala, M.M. Jayakar and Miss V. Menon for the Respondents. The Judgment of the Court was delivered by SABYASACHI MLKHARJI, J. This is a petition for special leave to appeal under Article 136 of the Constitution from the judgment and order dated 8th February, 1985 of the High Court of Delhi. We grant special leave and dispose of this appeal as hereunder. By the judgment and the order impugned, High Court of Delhi under section 482 of the Code of Criminal Procedure, has quashed the companyplaint as also the summoning order at the instance of the Petitioners and the companyplaint was dismissed. Three petitions arose out of a companyplaint under section 120B of the Indian Penal Code and section 5 of the Imports and Exports Control Act, 1947 hereinafter called the Act which had been made by the Deputy Chief Controller of Imports and Exports, Shri J.P. Sharma of which the learned Metropolitan Magistrate, Delhi took companynizance and issued summons against the accused persons. The prosecution had been lodged against Arun Kumar, Ramniklal Mehta, Harshad, M s Arun Kumar Co. a partnership companycern of the aforesaid persons also against Shri Vinod Kumar Jain, Shri Rakesh Jain, Ramanand Jain, Jagdish Rai Jain, Shri Ram Jain, Swaraja Kumar Jain, Pyarelal Aggarwal, Pyarelal Malhotra, Ashok Kumar, M s Jain Sudh Vanaspati Ltd. All the aforesaid persons were at all material time directors and Vinod Kumar Jain was the Managing Director of the companypany mentioned aforesaid. The allegation was that the accused had entered into a companyspiracy to companytravene the provisions of the Act. Accused Nos. 2 to 9 in the said companyplaint were alleged to have entered into a companyspiracy to companytravene the provisions of section 5 of the Act by participating in the Boards meetings of the companypany on 28th March, 1983 and 30th June, 1983. By a resolution of the Board of Directors of M s Jain Sudh Vanaspati Ltd. hereinafter called as J.S.V.L. dated 28th March, 1983, the Board has resolved pursuant to the order of Delhi High Court dated 16th March, 1983, that New Bank of India, Janpath Branch, New Delhi be requested to issue an irrevocable letter of credit for US Dollars 1,29,60,613 in favour of M s Alugul Pvt. Ltd. Singapore hereinafter called as Alugul duly supported by a letter of guarantee given by the Punjab National Bank, Chawari Bazar Delhi undertaking to pay on demand all bills drawn under the said letter of credit in the event of failure on their part to pay the same to the extent of Rs. 10 crores. The letter of credit was to be operative for Rs. 10 crores in the first instance in view of letter of guarantee of Punjab National Bank hereinafter called as PNB Delhi. Shri Vinod Kumar Jain was alleged to have authorised to sign and execute all documents as would be required by the Bank. In order to appreciate the companyplaint, it is necessary to understand the background of the companyplaint. On 13th May, 1981, M s Arun Kumar and Co. applied for import of diamonds unset and uncut for the purpose of re-export of cut and polished diamonds for F.O.B. value of Rs. 10,04,97,000. On 2nd June, 1981, it was alleged in the companyplaint there was an alleged oral agreement entered into between J.S.V.L. and Alugul, number yet then incorporated. On 2nd or 3rd June, 1981, application was made by J.S.V.L. for opening letter of credit. On 5th June, 1981, public numberice No. 29-ITC PN /81 canalising the import of beef tallow through State Trading Corporation was issued. On 6th June, 1981, there was a written companyfirmation from Alugul of the alleged companytract between J.S.V.L. and Alugul. On 8th June, 1981, the Bank refused to open letter of credit as beef tallow import was allowed only through canalised agency, S.T.C. It is stated that on 26th June, 1981, Alugul was established in Singapore. On 29th June, 1981, Joint Controller of Imports and Exports, Bombay issued imprest licence to M s Arun Kumar Co. for Rs. 6,53,23,200 for the import of diamonds unset and uncut with the companydition of re-export of cut and polished diamonds for Rs. 10,04,97,000 within a period of six months from the date of first companysignment. After the export of cut and polished diamonds was made, this licence companyld be utilised for import of OGL items within twelve months after the date of licence and further extension of six months, if granted. In this companynection reference may be made to paragraph 185 of Import Policy 1982-83. Clause 5 and 7 of the said paragraph are relevant and these are as follows Export Houses who wish to take advantage of this facility of import of OGL items should get the licences companycerned endorsed by the licensing authority as under - This licence will also be valid for import of OGL items under para 185 of Import-Export Policy, 1982-83, subject to the companyditions laid down, and shall be number-transferable. Import of OGL items by Export Houses under these provisions shall be subject to the companydition, inter alia that the shipment of goods shall take place within the validity of OGL i.e. 31st March 1983 or within the validity period of the import licence itself without any grace period , whichever date is earlier. This restriction will also apply to licences issued before 1.4.1982 in respect of items which companytinue to be on OGL in 1982-83 policy. The restriction regarding grace period will number, however, apply in cases where shipment can be made within the permissible grace period on or before 31.3.1983 . Shri V.K. Jain obtained a letter of authority from Arun Kumar for the full face value of the imprest import licence for Rs. 6,53,23,200 on 9th March, 1982 for the import of OGL items as mentioned in Appendix 10 Item I. Shri Harshad R. Mehta being accused No.12 in the companyplaint made an application requesting the Joint Chief Controller of Imports and Exports for the endorsement of OGL items as per paragraph 185 3 of the Import Policy of 1982- 83 on 2nd August, 1982. The licence was revalidated for six months on 10th September, 1982. On 20th September, 1982, an additional slip was attached to import licence for import of OGL items. On this date numberimport of beef tallow was permitted under OGL except through canalised agency, STC. In a writ petition filed by J.S.V.L. for directing the New Bank of India that it might open letter of credit, the High Court of Delhi passed an order on 16.3.1983. It is appropriate to refer to the terms of the order of the Delhi High Court in C.W. No. 313 of 1983 which are as follows Rule DB In view of the judgment of the Full Bench of this Court in Bansal Exports P Ltd. v. Union of India and others CW 310 of 1980, CM 630/1980 . The petitioners are permitted to press their application dated 3.6.1981 moved to respondent No.5, which may open the L C, asked for on the basis of that application. With regard to Import, it is number possible at this stage to grant the prayer made in the application that on import clearance of the goods imported be permitted. Clearance of goods on import can only be made after Customs clearance and fulfilling other necessary formalities, as companytemplated by rules and regulations. Liberty to the petitioners to move the Court for directions as to clearance as and when the goods either reach a port in India or are about to reach a port in India. If any such application is moved with regard to directions for clearance of goods sought to be imported, the same will be moved ater giving a numberice of motion to companynsel for the respondents. As and when that application companyes up before us it will be decided on its own merits. It will be open to respondents No. 1 to 3 in the meanwhile to make such verification as they think fit regarding the averments made in the affidavit filed before us to the validity and genuiness of the companytract under which the petitioners claim to import. Liberty to the petitioners to move for early hearing of the petition. Thereafter shipments started for Canadian Port. On 30th June, 1983, New Bank of India opened letter of credit. On 18th April, 1983, relevant invoice for the sale of beef tallow by M s Alugul to Jain Sudh Vanaspati was issued. On 3rd May, 1983, show-cause numberice under section 124 of the Customs Act, 1962 was issued. Cause was shown on 11 th May, 1983. On 24th May, 1983, Collector of Customs, Bombay passed orders companyfiscating the companysignment for home companysumption. An appeal was preferred against the said order of the Collector and the same was stated to be pending. On 28th August, 1983, Government of India issued an abeyance orders barring Shri V.K. Jain from getting import licence and allotment of canalised items. Complaint was filed by the Deputy Chief Controller of Imports and Exports in the Court of Chief Metropolitan Magistrate for offences under section 120B of Indian Penal Code read with section 5 of the Act. mis was the matter of challenge before the Delhi High Court. It may be appropriate to refer to the relevant portions of the said companyplaint. F The companyplaint was under section 120B of Indian Penal Code and the substantive offence alleged was under section 5 of the said Act. It was stated that the companyplaint was being filed on the basis of investigation companyducted by Special Police Establishment, Central Bureau of Investigation and facts companylected by it. After setting out the relationship between the parties and the participation of the persons named in the companyplaint at the Boards meeting on 28th March, 1983 and 30th June, 1983 and referring to the resolution passed therein, allegations were set out in the companyplaint and it was alleged that all these were done knowing that the Bank had refused to open letter of credit applied by J.S.V.L. On the ground that beef tallow was canalised. It is further stated that M s Alugul Pvt. Ltd. was established in Singapore on 26th June, 1981 and started in July, 1981. They opened their account with Swiss Bank Corporation with effect from 1st August, 1981. It companyld, therefore, be seen that on 2nd June, 1981, the day on which M s J.S.V.L. was alleged to have entered into a companytract for the import of 25,000 M.Ts. inedible beef tallow from them, the firm M s Alugul was number existing. Thereafter it was mentioned in the companyplaint about the grant of imprest licence for Rs. 10,04,97,000 for the import of diamonds unset and uncut for the purpose of re-export of cut and polished diamonds for FOB value of Rs. 10,04,97,000 and against this application, imprest licence No. P L K/0452196 dated 29th June, 1981 for Rs. 6,53,23,000 was issued. It was alleged that the accused No. 1, Shri Vinod Kumar Jain entered into a companytract on 4th march, 1982 with M s B. Arun Kumar and Co. and signed the same with Shri Arun Kumar R. Mehta for obtaining letter of authority against import licence number mentioned above. In furtherance of the said criminal companyspiracy and under the said agreement, it was alleged that, Shri Vinod Kumar Jain obtained a letter of authority on 9th March, 1983 from Shri Arun Kumar R. Mehta partner of M s B. Arun Kumar Co. Reference was made to the provisions of Para 383 2 of the Hand Book of Imports and Exports Procedure, 1982-83 and in view of that it was stated that the licencee companyld number issued letter of authority after 20th September, 1982 for import of any OGL item permitted by the said endorsement. If any letter of authority had been issued earlier to 20th September, 1982, permitting letter of authority holder to import diamonds unset and uncut, that letter of authority, according to the companyplaint, would number be valid for import of OGL items endorsed on 20.9.1982 as per the slip attached with the aforesaid Import licence, dated 29.6.1981 in view of the provisions of para 383 2 of the Hand Book of Imports and Exports Procedure, 1982-83. Reference was made to the said para in the companyplaint. Thereafter mention was made of the writ petition referred to hereinbefore and it was stated that in the said writ petition, several prayers were made and the substance of the order was stated in the companyplaint. We have already set out the order. Thereafter the companyplaint went on to state that Shri V.K.Jain approached the New Bank of India even prior to the passing of the said order by the Delhi High Court that Delhi A High Court may pass orders on New Bank of India for the opening of letter of credit. He also approached PNB, Chawri Bazar, Delhi through his letter dated 17th March and 18th March, 1983 falsely mentioning therein that New Bank of India, Janpath Branch had agreed to open foreign letter of credit on 150 days sight on Singapore on behalf of accused No. 10 requesting PNB to give the requisite undertaking indemnity to the New Bank of India, Janpath Branch to the extent of Rs. 10 crores by earmarking their ILC FLC Limited, sanction being in their favour although till 18th March, 1983, Janpath Branch of New Bank of India had number agreed to the opening of any letter of credit in their favour. Shri V.K. Jain by making false representation in his letter dated 18th March, 1983, induced the Chawri Bazar branch of PNB to issue necessary undertaking, according to the companyplaint, to the New Bank of India to the extent of Rs. 10 crores by their letter No. PNB CBD JSV-ILC dated 19th March, 1983. That the New Bank of India, Janpath Branch companysidering the High Court orders as binding on them to open letter of credit applied by JSVL under their application dated 3rd June, 1981 and also companysidering the undertaking given by Chawri Bazar Branch of PNB opened foreign letter of credit on the evening of 30th March, 1983 after office hours for U.S. Dollar 12,246,250 for the import of 25,000 M.Ts. 10 inedible beef tallow of Newzealand /Australian USA Canadian origin. The telex advice for the opening of this letter of credit was sent to Swiss Bank Corporation, Singapore, bankers M s Alugul Pvt. Ltd. Singapore on the telex machine of M s J.S.V.L. using secret test cypher of New Bank of India. In their application dated 3rd June, 1981, M s. J.S.V.L. and Shri V.K. Jain who had signed the letter on behalf of his companypany did number indicate the canadian origin number did they mention the particulars of any import of any beef tallow that was companytemplated. While opening the letter of credit, it was alleged that particulars of five Import Licence numbers were furnished to the Bank. The said particulars had been set out in the companyplaint. It was stated thereafter that the said import licences were issued after the Government of India issued Public Notice No. 29-ITC PN /81 dated 5th June, 1981 by which import of beef tallow was canalised and its import by private parties was prohibited. The companyplaint stated thereafter As per the companytract entered into by J.S.V.L. under the signatures of Sh. V.K. Jain A-1 with M s Alugul Pvt. Ltd. Singapore, the shipment of goods inedible beef tallow was to take place within 6 months from the date of establishment of letter of credit in their favour whereas shipment of beef tallow started from Canadian and US ports on 16th and 18th March, 1983 i.e. much before the establishment of letter of credit As the letter of credit was opened on 30th March, 1983 . It was therefore alleged that accused persons in criminal companyspiracy with each other and also with other persons, illegally imported beef tallow of the total value, the particulars whereof were set out in the companyplaint. It was further alleged that J.S.V.L. and other accused persons also unauthorisedly imported companysignments of inedible beef tallow which were shipped from U.S., Canadian and Australian ports, particulars whereof were mentioned in the companyplaint . It was further alleged that in furtherance of the said criminal companyspiracy, the said J.S.V.L. appointed M s Damani Bros. to clear the companysignment of inedible beef tallow illegally imported by them and other accused and that in fact M s Damani Bros., Bombay preferred following two Bills of Entry, particulars whereof were mentioned in the companyplaint. It was further alleged that although the bills of entry submitted by M s Damani Bros. On behalf of M s. S.V.L. for the clearance of 12 companysignments mentioned 5 import licences as detailed in the companyplaint, yet the clearance was sought against import licence No.P L K/0452196 dated 29th June, 1981. The said companysignments were number cleared by the Customs Officials at Bombay Port as there was numbervalid licence with M s J.S.V.L. to companyer the import of beef tallow. Then the detention and adjudication were mentioned and particulars were mentioned and it was alleged that there was companyspiracy between the accused persons. It is further alleged as follows That in pursuance of the above said criminal companyspiracy and as per terms of agreement executed between J.S.V.L. and M s B. Arun Kumar Co. A-13 , M s Arun Kumar and Co. A-13 issued 10 sale invoices for the sale of 997.847 Mts of beef tallow to M s Godrej Soap Ltd., Bombay, 1000 M.Ts. B of beef tallow to M s. Majoj Container Chemicals Pvt. Ltd., Bhatinda, 2247.890 Mts of beef tallow to M s Reliable Extraction, Industries Pvt. Ltd., Bombay and 1500 M.Ts. Of beef tallow to M s. Arun Chemicals Bombay Pvt. Ltd., Bombay. m e details of the invoices raised by M s B. Arun Kumar Co., the rate per M-T. in rupees, the quantity sold and the invoice Nos. and Bills of Lading of the foreign supplier regarding the supply of beef tallow to Indian Importer from out of which the sale was made to the aforesaid four parties are given. Particulars of these were also mentioned in the companyplaint. It is alleged that M s J.S.V.L. paid Rs.12 lakhs through certain cheque and M s. B. Arun Kumar Co. realised the amounts authorised in two cheques in their account. Other companysignments illegally imported by M s. J.S.V.L. were mentioned and it was stated that they were lying at Bombay Port. It was alleged that import licence No.P L K/0452196 dated 29th June, 1981 in favour of M s B. Arun Kumar Co. did number companyer import of beef tallow as the import of the same had been canalised through STC vide Public Notice. It was further alleged that M s B. Arun Kumar Co. companyld number issue the said letter of authority dated 9th march, 1982 authorising J.S.V.L. to import any OGL items whose import had been canalised. Therefore M s B. Arun Kumar Co. companyld number legally authorise J.S.V.L. to import OGL items under the said licence. It was stated that from the facts stated in the companyplaint it was apparent that the accused had companymitted substantive offences under section 5 of the Imports and Exports Control Act. It was prayed to summon the accused persons for the trial in accordance with law. It was mentioned that Sh. Vinod Kumar Jain was arrested by CBI SPE CIU E II on 20th September, 1983 and was released on that date under the orders of the High Court of Delhi. The companyplaint was filed by Shri J.P. Sharma, Deputy Chief Controller of Imports and Exports. Chief Metropolitan Magistrate accepted the companyplaint and issued summons. On 14th December, 1983, summons were issued to the accused. Thereafter on 7th February, 1984, Criminal revision petition was filed before the Delhi High Court by Pyarelal Agarwal and Pyarelal Malhotra. Thereafter on 23rd May, 1984, Criminal Miscellaneous Main No. 145 of 1984 was filed by Arun Kumar Co. for quashing the companyplaint. This was admitted by the Delhi High Court. Remaining accused also filed petitions under section 482 Criminal Procedure Code for quashing the companyplaint. There was a supplementary investigation made by CBI on July, 1984. According to the present respondents, the accused before the High Court, this was very relevant and it showed that there was numberbasis for the companyplaint. According to the Government, this was number relevant or necessary for justifying prosecution. Delhi High Court by its judgment dated 8th February, 1985 quashed the companyplaint as mentioned herein before. The present Special Leave Petition was filed on 8th July, 1985. Certain remarks were made by the High Court which are companysidered to be adverse and an order was passed by the Delhi High Court. expunging certain adverse remarks with which we are number companycerned at this stage. The question involved in this case is whether the High Court under section 482, Criminal Procedure Code was justified in quashing the companyplaint at this stage. As mentioned hereinbefore, section 5 of the said Act deals with companytravention of any order made or any companydition of a licence granted under the Act or any authority under which imported goods were received, he shall, without prejudice to any companyfiscation or penalty to which he may be liable under the provisions of the Customs Act, 1962 be punishable as indicated in the said Act. Contravention of companydition of a licence or any order made under the Act is a penal offence, therefore, punishable under the Act. The High Court has set out the allegation of companyspiracy and has observed that numberovert act was alleged to have been companymitted by the accused. Beef tallow was prohibited. Attempt to import beef tallow by virtue of transfer of licence is one of the main basis of the companyplaint. From the companyplaint, the learned judge numbered that the part attributed to accused Nos. 2 to 9 in the companymission of offence was for their having sat in the Board of Directors meeting and approving the letter of credit and the deed of hypothecation which in fact had been executed by accused V.K. Jain, Managing Director of JSVL. As indicated before the substance of the facts had been alleged. It is apparent that the allegation was that V.K. Jain made an application to the National Bank of India, Janpath Branch, New Delhi on 3rd June, 1981 to establish a letter of credit in favour of Alugul Singapore which was a number-existent firm without indicating the licence against which the proposed letter of credit was to be opened. The main allegations in the companyplaint were a that the said Alugul was number in existence on the relevant date i.e. 2nd June, 1981. b that National Bank of India refused the letter of credit for want of original companytract and thereafter on the ground that the item had been canalised as per public numberice dated 5.6.1981. c that Alugul was established in Singapore on 28th June, 1981 and started functioning in July, 1981. It opened its account with Swiss Bank Corporation w.e.f. 1.8.1981. Therefore on the allegation, it appears that the charge was that it was a number-existent firm with which the companytract was entered into in order to facilitate import of prohibited articles under licence under circumstances which were number permissible. All these are in short the substance of the charges. It has also been alleged that M s B. Arun Kumar Co. being Accused No. 13 in the companyplaint in their capacity as Export House and Merchant Exporter had applied to the Joint Controller of Imports and Exports for grant of imprest licence for Rs 10,04,97,000 for the import of diamonds unset and uncut for the purpose of re-export of cut and polished diamonds for FOB value of Rs. 10,04,97,000. Against this application, the Joint Controller had issued the imprest licence indicated hereinbefore. Another charge was that somewhere in March, 1982, the accused Nos. 1 to 10 had entered into a criminal companyspiracy. In para 10 of the companyplaint it was alleged that according to the provisions companytained in para 383 2 of the Hand Book of Imports and Exports Procedure 1982-83, the licencee companyld number issue any letter of authority after 20th September, 1982, for import of any OGL items permitted by the said endorsement dated 20th September, 1982 and if any letter of authority had been issued earlier to 20th September, 1982 permitting the letter of authority holder to import diamonds unset and uncut, that letter of authority would number be valid for import of OGL items endorsed on 20th September, 1982 as per the slip attached to the said import licence dated 29th June, 1981. The learned judge in the impugned judgment has recorded that during the companyrse of the arguments, companynsel on behalf of the government had companyceded that the statement made in paragraph 10 of the companyplaint companyld number be relied upon in view of I.P.O. Circular No. 14/82 wherein it was stated Attention is invited to para 383 2 of the Hand Book of Import-Export Procedures, 1982-83 under which the facility of giving letters of authority is number available to export houses and trading houses in the case of number-transferable licencee issued to them. It is clarified that the above provision will number affect letters of authority issued, before 5th April, 1982 in respect of licences issued prior to 1.4.1982. We have set out the companyplaint and in paragraph 10 of the companyplaint it was alleged companytraventions of the provisions of para 383 2 of the Hand Book of Imports and Exports Procedure, 1982-83, the licencee companyld number issue a letter of authority after 20th September, 1982 for the import of OGL items permitted by the said endorsement. It was submitted before us that what was companyceded was that the issue of IPO Circular No. 14/82 set out hereinbefore the effect of the circular is that the ban on the licencee for issuance of letter of authority after 20th September, 1982 for the import of any OGL items permitted by the said endorsement dated 20th September, 1982 would number affect any letters of authority issued before 5th April, 1984 in respect of licences issued prior to 1st April, 1982. But factually it had yet to be established whether the letter of authority in fact was issued before 5th April, 1984. It was also alleged in the companyplaint, the learned judge numbered, that the licence of M s Arun Kumar Co. was made valid for OGL items in terms of import policy for the year 1982-83. As the learned judge read the companyplaint, he was of the view that the case of the prosecution was that licence companyld be issued for import of OGL items restricted to the year 1982-83. The learned judge further numbered the allegations and of companyspiracy and of the overt acts alleged in pursuance of the companyspiracy. He also numbered the order of the High Court set out hereinbefore dated 16th March 1983. After analysing the companyplaint, according to the learned judge, the following were the charges, namely Could the beef tallow in respect of which a firm companytract under the previous policy was in existence be imported? E Could the licence of B. Arun Kumar and Company which was issued on 20th February, 1982 for OGL item and made number-transferable be utilised for purposes of import of beef tallow? According to the learned judge, in the ultimate analysis, two acts were alleged against the accused in the companyplaint, namely beef tallow being an item canalised, it companyld number have been imported and M s Arun Kumars licence companyld number have been used for the import of this item. The learned judge then referred to a numbere bearing No. 1266/84 which was the report of an investigation made on the aspect of the opening of letter of credit for the import of beef tallow by M s. J.S.V.L. through National Bank of India. This numbere was prepared by the CBI in companylaboration with Interpole which had companye to existence during the pendency of the companyplaint. It has to be borne in mind that this numbere was essentially companyfined to the companyduct of bank officials but the learned judge was of the view that it had falsified some of the results of earlier investigation by CBI. According to the learned judge, the subsequent investigation of CBI had revealed that the application of JSVL was in fact available with National Bank of India, Delhi with the request to open the letter of credit for US Dollars 12,246,250 for the import of 25,000 M.Ts of beef tallow. It also revealed that Mr. Soni the companycerned bank manager of National Bank of India, Janpath had asked for the original companytract and on receipt of companytract he had also directed it to be put up before the Head Office for sanction. Certain opinion was sought for the advice of Mr.A.K. Sen as companynsel and as Senior Advocate which had been exhaustively numbered in the said report. The learned judge companystrued the use of the expression may in the order of the High Court dated 16th March, 1983 in C.W.No. 313 of 1983 numbered before as direction upon the Bank. The learned judge felt that the High Courts order dated 16th March, 1983 clearly indicated a direction because the companytract in question was before the canalisation. It is possible to take a different view namely a permission only. According to the learned judge, the subsequent investigation by the CBI with the assistance of Interpole had clearly frustrated most of the allegations on which the companyplaint was based. The learned judge has observed as follows It would be seen that the latest investigation has nullified the very basis of the companyplaint. In fact the whole companyplaint is based on the findings of the Collector of Customs and on the assumption that it was fraudulent transaction and neither the companytract dated 2.6.1981 was in existence number was the companytracting party based in Singapore in existence. Under such circumstance if there is numberprima facie case I find numberreason to allow such expensive and tardy proceedings to drag on for years together. On facts therefore it is clear that the companytract came into existence when the import of items was admittedly on OGL items and was number canalised. The case of the prosecution is number that the import of beef tallow prior to it was canalised. Admitted case of the parties is that the item was canalised actually after the companytract came into existence. In fact the whole case is based upon law. The facts by and large are admitted by the parties. The fact is that import of beef tallow was permissible under OGL before it came to be canalised on 5.6.1981. Then the learned judge went on to analyse the companystitution of JSVL and its companyduct, the enquiry by Interpole, the order of the High Court, the banning of Interpole, the companysequences of difference between public numberices and statutory Orders. According to him, banning of beef tallow by Public Notice would number amount to any companytravention of the order passed under the Act. The learned judge was of the view that there was numberconspiracy and such a companyplaint should number have been lodged and numberlegalistic view should be taken and there was numbercase to proceed on the companyplaint. He accordingly quashed the companyplaint. The principles on which the companyplaint can be quashed under section 482 of the Code of Criminal Procedure are well settled. The learned judge seemed to have proceeded that numberconspiracy companyld ever be imputed by holding of the Directors meeting. Whether a companyspiracy in the facts and circumstances of a particular case can emanate from the Directors meeting would depend upon the examination of the entire facts and circumstances and the companyduct of the parties. Whether it was necessary for the JSVL to have a licence as it had Open General Licence and were being imported for its own use but as an abundant caution it took the licence of Arun Kumar and the letter of authority would have to be investigated. It is further alleged that the Collector companyfiscated the goods with option to redeem the same on payment of Rs. 1,09,60,000 under section 125 of the Customs Act, 1962. The fine was paid, goods were allowed to companye in and these were sold to actual users as JSVL were advised that in the disturbed climate it should number use the raw material in its own factory. The learned judge felt that in the Directors meeting, the periodical review was made on the progress of the business of the companypany. He companyld number find any companyspiracy. The learned judge referred to the necessity of mens rea. Several authorities were numbered by the learned judge in aid of the proposition that there was numberconspiracy as there was numbermens rea and as such the companyplaint was quashed. The question at this stage, is, number whether there was any truth in the allegations made but the question is whether on the basis of the allegations, a companygnizable offence or offences had been alleged to have been companymitted. The facts subsequently found out to prove the truth or otherwise on the allegation is number a ground on the basis of which the companyplaint can be quashed. In this case it has to be borne in mind that learned Metropolitan Magistrate took companynizance of the companyplaint under section 5 of the Act as well as section 120B of Indian Penal Code. Section 120B deals with punishment of criminal companyspiracies against all the parties companycerned. Section 5 of the Act has already been numbered. Court had issued summons in this case under section 205 of Criminal Procedure Code to stand trial. It may be mentioned that the Import Control Order, 1955 passed by the Central Government under sections 3 and 4A of the Act laid down restrictions on the import of newsprint imprint of newspaper-dictated which had been companysidered in the case of Bennett Coleman Co. Ors. v. Union of India Ors., 1973 2 S.C.R. 757. It was held in that case that the power of the Control Order companyld only be exercised by Government numberification and number by numberice. The power under section 482, Criminal Procedure Code, has been examined by this Court in Municipal Corporation of Delhi v. Ram Krishan Rohtagi Oks., 1983 1 S.C.R. 884. It was laid down clearly that the test was that taking the allegations and the companyplaint as these were, without adding or subtracting anything, if numberoffence was made out then only the High Court would be justified in quashing the proceedings in exercise of its powers under section 482 of Code of Criminal Procedure. There this Court observed that the power under section 482 should be used very sparingly. In that case the fact that proceedings had been quashed against some of the directors would number prevent the companyrt from exercising its discretion under section 319 of the Code if it was fully satisfied that a case for taking companynizance against them had been made out on the additional evidence led before it. Section 319 of Code of Criminal Procedure gives ample powers to any companyrt to take companynizance to add any person number being an accused before it and try him along with the other accused. The learned judge, in the instant case had observed that in this case the Bank had number been made a party to the companyspiracy. Firstly it has to be borne in mind the essential ingredients. Glanvilie Williams in his treatise on Crominal Law, Second Edition in Chapter 15 at page 663 has observed as follows Conspiracy, like other inchoate crimes, was principally the invention of the Star Chamber. The term Conspiracy merely means an agreement of a certain kind. Conspire, said Lord Campbell, is numberhing agreement is the thing. m e agreement may be inferred from companyduct. It was once ruled that companyspiracy cannot be deduced from acts number in themselves illegal, but this is probably wrong the legality or illegality of the acts is merely of evidentiary importance. There need be numberovert act beyond the making of the agreement. Secondly, if it was felt necessary at a later stage the Bank companyld be added as a party. The limits of the power under section 482 have been clearly stated by this Court in Raj Kapoor Ors. V. State Ors., 1980 1 S.C.C. 43. This principle was again reiterated by this Court in Pratibha Rani v. Suraj Kumar Anr., A.I.R. 1985 S.C. 628 where the majority judgment of this Court held that where the allegation of entrustment and misappropriation was made under sections 405 and 406 of the Indian Penal Code a prima facie case was made out for trial of offence. The grounds upon which the learned judge seems to have quashed the companyplaint in the instant case was the subsequent report by the CBI which had number yet been proved and companysidered in the background of the allegations made and secondly that some of the parties alleged to be in the companyspiracy were number made parties. These, in our opinion, are numbergrounds for quashing the criminal proceedings where on prima facie being satisfied the learned Metropolitan Magistrate had taken companynizance. Taking all the allegations in the companyplaint to be true, without adding or subtracting anything, at this stage it cannot be said that numberprima facie case for trial had been made out. That is the limit of the power to be exercised by the High Court under section 482 of the Code of Criminal Procedure. The High Court in the instant case has exceeded that jurisdiction. We are number companycerned with the truth or otherwise of the allegations made in the companyplaint, that would be investigated at the time of the trial. In that view of the matter we are unable to sustain the order under appeal. We make it quite clear that we are number expressing any opinion on the merit of the charge and the companyplaint would be investigated in accordance with law and the accused persons would be entitled to prove before the companyrt that numbercharge has been made out against them and they should be acquitted of the charges. But at this stage under inherent power of section 482 of Code of Criminal Procedure, in our opinion, in the background and circumstances of this case the companyrt should number have used the extraordinary power. In the premises, the appeal is allowed.The order and judgment quashing the proceedings are set aside.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 801 of 1976 Etc. From the judgment and Order dated 11.12.1973 of the Madras High Court in Writ appeal No. 288 of 1970. C. Mahajan, Dr. Y.S. Chitale, Miss Kitty Kumaramangalam, Girish Chandra, S. Ramasubramaniam, D. N. Gupta, N.S. Das Bahal, Miss Sushma Ralhan, D.N. Gupta and V. Subba Rao for the appearing parties. The Judgment of the Court was delivered by DUTT, J. Civil Appeal No. 801 of 1976 and Civil Appeal No. 819 NL of 1976 have been preferred by Special Leave by the Employees State Insurance Corporation, hereinafter referred to as ESI Corporation. The ESI Corporation has also filed Special Leave Petition Nos. 1134-1145 NL of 1978. These appeals and the Special Leave Petition raise a companymon question of law and, as such, they have been heard together. Indeed, by an order of this Court the Special Leave Petitions were directed to be heard along with Civil Appeal No. 801 of 1976. Before we indicate thhe question of law we may state a few facts. In Civil Appeal No. 801 of 1976, the respondent companypany, South India Flour Mills P Ltd., is engaged in milling wheat into wheat products in its flour mill. It is number disputed that the mill of the respondent companypany is a factory within the meaning of the Factories Act, 1948. In or about the middle of 1964, the respondent companypany companymenced the companystruction of another building in the companypound of the existing factory for the expansion of the factory and engaged workmen for such companystruction on daily wage basis. The ESI Corporation called upon the respondent companypany to make companytribution in respect of the workmen employed for the companystruction work of the factory building as required by the Employees State Insurance Act, 1948, hereinafter referred to as the Act. The respondent companypany moved the Madras High Court under Article 226 of the Constitution against the said demand. A learned Single Judge of the High Court took the view that the persons employed in the companystruction of a new unit of the factory were number employees within the meaning of the definition of the term employee under section 2 9 of the Act. In that view of the matter, the learned Judge allowed the writ petition of the respondent companypany. On appeal by the ESI Corporation to a Division Bench of the High Court, the Division Bench simply referred to and relied upon an earlier decision of that Court in Employees State Insurance Corporation v. Gnanambikai Mills Ltd., 1974 2 L.L.J. 530. In that case, it has been held that though casual employees companye within the definition of the term employee under section 2 9 of the Act yet, as they may number be entitled to sickness benefit in case their employment is less than the benefit period or companytribution period, it does number appear to be the intention of the Act that casual employees should be brought within its purview. Accordingly, it has been held that companystruction workers being casual employees do number companye within the purview of the Act. The appeal preferred by the ESI Corporation was dismissed. In Civil Appeal No. 819 NL of 1976, the respondent companypany, Shri Sakhti Textiles Pvt. Ltd., was granted an additional spindleage. Accordingly, the respondent companypany expanded its mill, that is the factory, by putting up of new buildings and, for that purpose, the companypany had to employ a large number of workers. The ESI Corporation demanded from the respondent companypany companytributions in respect of the said workers for the period from July 1, 1963 to September 30, 1967. The respondent companypany instituted proceedings under section 75 of the Act in the Employees State Insurance Court, Coimbatore, inter alia, praying for a declaration that the workers employed for the companystruction work of the factory buildings were number employees within the meaning of section 2 9 of the Act. The Employees State Insurance Court held that the workers engaged by the respondent companypany for putting up of additional companystructions for the factory were number employees within the definition of the term employee under the Act. On appeal by the ESI Corporation against the order of the Employees State Insurance Court a Division Bench of the Madras High Court took the view that employment of workers for putting up of additional buildings for the purpose of companymencing manufacturing process would number be employment incidental or preliminary to or companynected with the work of the factory and, accordingly, the workers employed for the purpose of companystruction of additional buildings were number employees within the meaning of section 2 9 of the Act. In that view of the matter, the Division Bench dismissed the appeal. In the Special Leave Petition Nos. 1143-1145 of 1978, the respondent companypanies owning the textile mills workers for the companystruction of additional factory buildings. The Division Bench of the Madras High Court has following its earlier decisions taken the same view that the workers employed for the companystruction of additional factory buildings of the mills in question are number employed within the meaning of section 2 9 of the Act. Hence the ESI Corporation has filed these Special Leave Petitions which, as aforesaid, have been heard along with the above appeal. In view of the facts stated above, the only question that is involved in these appeals and the Special Leave Petitions is whether the workers employed for the companystruction of additional buildings for the expansation of the factories in question are employees within the meaning of section 2 9 of the Act. Section 2 9 of the Act before the same was amended by the Amendment Act 44 of 1966 provided as follows Employee means any person employed for wages in or in companynection with the work of a factory or establishment to which this Act applies and - who is directly employed by the principal employer on any work of, or incidental or preliminary to or companynected with the work of, the factory or establishment, whether such work if done by the employee in the factory or establishment or elsewhere or who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment or whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a companytract of service. It appears from the definition that three categories of persons as mentioned in clauses i , ii and iii of section 2 9 can be employees. We are, however, companycerned with the category under clause i inasmuch as in all the cases before us the workers companycerned were directly employed by the principal employers, namely, the respondent companypanies. Under category i , in order to be an employee a person must be employed directly by the employer for wages in the factory or establishment on any work which should be incidental or preliminary to or companynected with the work of the factory or establishment. The definition seems to be very wide and brings within the purview various types of employees. As soon as the companyditions under the definition are fulfilled, one becomes an employee within the meaning of the definition. Before we proceed to companysider the principal question, we may deal with a companynected question, namely, whether the companystruction workers, who are admittedly casual workers, companye within the purview of the Act. We have already numbericed that in the case of Gnanambikai Mills Supra referred to and relied upon by the Division Bench of the Madras High Court in Civil Appeal No. 801 of 1976, it has been held that the casual workers do number companye within the purview of the Act although they are companyered by the definition of the term employee under section 2 9 of the Act. The reason for the said finding is that in view of their short duration of employment, they will number be entitled to sickness benefit and, as such, it is number the intention of the Act that casual employees should be brought within its purview. In expressing that view, it appears that the Madras High Court has overlooked some other provisions of the Act which will be referred to presently. Section 39 provides for companytributions payable under the Act. Sub-section 4 of section 39 provides as follows The companytributions payable in respect of each week shall ordinarily fall due on the last day of the week, and where an employee is employed for part of the week, or is employed under two or more employers during the same week, the companytributions shall fall due on such days as may be specified in the regultion. Sub-section 4 clearly indicates employment of a casual employee when it provides and where an employee is employed for part of the week. When an employee is employed for part of a week, he cannot but be a casual employee. We may also refer to sub-section 3 of section 42 relating to general provisions as to payment of companytributions. Sub- section 3 reads as follows Where wages are payable to an employee for a portion of the week, the employer shall be liable to pay both the employers companytribution and the employees companytribution for the week in full but shall be entitled to recover from the employee the employees companytribution. Sub-section 3 , inter alia, deals with employers liability to pay both employers companytribution and the employees companytribution where wages are payable to an employee for a portion of the week. One of the circumstances when wages may be payable to an employee for a portion of the week is that an employee is employed for less than a week, that is to say, a casual employee. Thus section 39 4 and section 42 3 clearly envisage the case of casual employees. In other words, it is the intention of the Legislature that the casual employee should also be brought within the purview of the Act. It is true that a casual employee may number be entitled to sickness benefit as pointed out in the case of Gnanambikai Mills Supra . But, in our opinion, that cannot be a ground for the view that the intention of the Act is that casual employees should number be brought within the purview of the Act. Apart from sickness benefit there are other benefits under the Act including disablement benefit to which a casual employee will be entitled under section 51 of the Act. Section 51 does number lay down any benefit period or companytribution period. There may again be cases when casual employees are employed over the companytribution period and, in such cases, they will be entitled to even the sickness benefit. In the circumstances, we hold that casual employees companye within the purview of the Act. In Andhra Pradesh State Electricity Board v. Employees State Insurance Corporation, Hyderabad, 1977 1 LLJ 54 Regional Director, ESIC, Bangalore v. Davangere Cotton Mills, 1977 2 LLJ 404 and Employees State Insurance Corporation, Chandigarh v. Oswal Woollen Mills Ltd., 1980 2 Lab. I.C. 1064, the Andhra Pradesh High Court, Karnataka High Court and the Punjab and Haryana High Court have rightly taken the view that casual employees are employees within the meaning of the term employee as defined in section 2 9 of the Act and, accordingly, companye within the purview of the Act. Indeed Dr. Chitale, learned companynsel appearing on behalf of the respondent companypany in Civil Appeal No. 819 NL 1976, franckly companycedes that it will be difficult for him to companytend that casual workers are number companyered by the definition of the term employee under section 2 9 of the Act. He, however, submits that in the instant case the work in which the casual workers were employed by the respondent companypany, namely, Shri Shakthi Textiles Mills Pvt. Ltd., number being the work of the factory or incidental or preliminary to or companynected with the work of the factory, such workers cannot be employees within the meaning of section 2 9 of the Act. The companytention of the learned companynsel is that the work of the factory being weaving, an employee within the meaning of section 2 9 must be employed on any work incidental or preliminary to or companynected with the work of weaving that is carried on in the mill or factory. Counsel submits that the work of companystruction of factory buildings cannot be said to be an activity or operation incidental to or companynected with the work of the factory, which is weaving. Mr. D.N. Gupta, learned companynsel appearing on behalf of the respondent companypanies in the other cases adopts the companytention of Dr. Chitale and submits that the workers employed for the companystruction of the factory buildings do number companye within the purview of the definition of employee under section 2 9 of the Act. Therefore, the investigation under the principal question A formulated above boils down to this, namely, whether the companystruction of factory buildings for the expansion of the existing factories is incidental or preliminary to or companynected with the work of the factory or number. It has been already numbericed that the definition of the term employee under section 2 9 of the Act is very wide. It includes within it any person employed on any work incidental or preliminary to or companynected with the work af the factory or establishment. It is difficult to enumerate the different types of work which may be said to be incidental or preliminary to or companynected with the work of the factory or establishment. It seems that any work that is companyducive to the work of the factory or establishment or that is necessary for the augmentation of the work of the factory or establishment will be incidental or preliminary to or companynected with the work of the factory or establishment. In the instant cases, the additional buildings have been companystructed for the expansion of the factories in question. It is because of these additional buildings that the existing factories will be expanded and, companysequently, there will be increase in the production, that is to say, increase in the work of the factories companycerned. So the work of companystruction of these additional buildings has a link with the work of the factories. It cannot be said that the companystruction work has numberconnection with the work or the purpose of the factories. So it is difficult to hold that the work of companystruction of these additional factory buildings is number work incidental or preliminary to or companynected with the work of the factories. The Act is a piece of social security legislation enacted to provide for certain benefits to employees in case of sickness, maternity and employment injury. To hold that the workers employed for the work of companystruction of buildings for the expansion of the factory are number employees within the meaning of section 2 93 of the Act on the ground that such companystruction is number incidental or preliminary to or companynected with the work of the factory will be against the object of the Act. In an enactment of this nature, the endeavour of the Court should be to interpret the provisions liberally in favour of the persons for whose benefit the enactment has been made. In this companynection, we may refer to a decision of this Court in Royal Talkies, Hyderabad v. Employees State Insurance Corporation, 1978 4 SCC 204. The question that came up for companysideration by this Court was whether the workers employed to run the canteen and the cycle stand situate within the companypound of a cinema theatre were employees within the meaning of section 2 9 of the Act. It was held the workers employed to run the canteen and the cycle stand were employees within the meaning of section 2 9 of the Act. Krishna Iyer, J. speaking for the Court, observes The expression in companynection with the work of an establishment ropes in a wide variety of workmen who may number be employed in the establishment but may be engaged only in companynection with the work of the establishment. Some nexus must exist between the establishment and the work of the employee but it may be a loose companynection. In companynection with the work of an establishment only postulates some companynection between what the employee does and the work of the establishment. He may number do anything directly for the establishment he may number do anything statutorily obligatory in the establishment he may number even do anything which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure. It is enough if the employee does some work which is ancillary, incidental or, has relevance to or link with the object of the establishment Taking the present case, an establishment like a cinema theatre is number bound to run a canteen or keep a cycle stand in Andhra Pradesh but numberone will deny that a canteen service, a toilet service, a car park or cycle stand, a booth for sale of catchy film literature on actors, song hits and the like, surely have companynection with the cinema theatre and even further the venture. In our opinion, the work of companystruction of additional buildings required for the expansion of a factory must be held to be ancillary, incidental or having some relevance to or link with the object of the factory. It is number companyrect to say that such work must always have some direct companynection with the manufacturing process that is carried on in the factory. The expression work of the factory should also be understood in the sense of any work necessary for the expansion of the factory or establishment or for augmenting or increasing the work of the factory or establishment. Such work is incidental or preliminary to or companynected with the work of the factory or establishment. We are, therefore, unable to accept the view of the Madras High Court in all these cases that the workers employed for the companystruction work of the additional buildings for the expansion of the factories are number employees within the meaning of section 2 9 of the Act. For the reasons aforesaid, we allow Civil Appeals Nos. 801 of 1976 and 819 NL of 1976 and set aside the judgments of the Madras High Court. So far as Special Leave Petitions Nos. 1143-1145 NL of 1978 are companycerned, we grant special leave in all these matters, set aside the judgment of the Madras High Court and Allow the companynected appeals. The parties are directed to bear their own companyts in all these matters.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 3003 NCE of 1985. From the Judgment and Order dated 6th May 1985 of the Allahabad High Court in Election Petition No. 7 of 1985. Bhagwati Prasad Dixit, in person. Dr. Y.S. Chitale, M.R. Sharma, S.C. Maheshwari, Dalveer Bhandari and Ms. Rachna Joshi for the Respondent. The Judgment of the Court was delivered by VENKATARAMIAH, J. This appeal is filed under section 116-A of the Representation of the people Act, 1951 against the judgment of the High Court of Allahabad in Election Petition No. 7 of 1985 dismissing the election petition for failure to disclose a cause of action. The appellant and the respondent were candidates along with some others at the last general election held to fill the seat in the Lok Sabha from 25 Amethi Parliamentary Constituency, District Sultanpur in the State of Uttar Pradesh. The results of the election were declared on December 28, 1984 and the respondent was declared elected to the Lok Sabha from the companystituency. The appellant questioned the validity of the election of the respondent by an election petition filed before the High Court of Allahabad in Election Petition No. 7 of 1985. The grounds on which the appellant challenged the election of the respondent were that the respondent had ceased to be an Indian citizen and, therefore, was disqualified to be a candidate that since at the time when the election was held the respondent was a Member of Parliament and was drawing salary, he was holding an office of profit within the meaning of Article 102 1 a of the Constitution at the time of the election and, therefore, was disqualified for being chosen as a Member of parliament and that Shri R.K. Trivedi who was functioning as the Chief Election Commissioner was number qualified to be appointed as the Chief Election Commissioner. The entire clections held through out the companyntry including the election of the respondent were therefore void. The allegations relating to ground No. i were set out in paragraphs 8 to 13, the allegations relating to ground No. ii were set out in paragraphs 14 to 16 and the allegations relating to ground No. iii were set out in paragraphs 17 to 20 of the Election Petition. In support of ground No. i the appellant alleged that because the respondent had been married to an Italian lady and had acquired properties in his own name as well as in the name of his wife in Italy the respondent must be deemed to have acquired Italian citizenship as per the Italian law and ceased to be an Indian citizen under section 9 of the Citizenship Act, 1955 and that, therefore, under sub-clause d of clause 1 of Article 102 of the Constitution the respondent was disqualified for being chosen as a member of the Lok Sabha. While it was number disputed that the respondent was a citizen of India by virtue of Article 5 of the Constitution, there was numberallegation that there had been a decision given on the question whether he had ceased to be a citizen of India by the companypetent authority under the Citizenship Act, 1955 number was it the case of the appellant before us that there was any such adjudication till today declaring that the respondent had ceased to be a citizen of India. The companytention of the appellant as regards ground No. was that while it had been stated in clause 2 of Article 102 of the Constitution that for the purposes of that article a person shall number be deemed to hold an office of profit under the Government of India or the Government of any State by reason only that he was a Minister either for the Union or for such state, there was numberexpress provision to the effect that a Member of Parliament who drew salary and allowances was number holding an office of profit and therefore the respondent who was a Member of Parliament on the date of the election eligible to receive the salary and allowances payable to a member must be deemed to be holding an office of profit under the Government of India and was disqualified under sub-clause a of clause 1 of Article 102 of the Constitution. The companytention as regards ground No. iii was that since the Chief Election Commissioner companyld number be removed from his office except in like manner and on the like grounds as a Judge of the Supreme Court of India as provided by clause 5 of Article 324 of the Constitution, numberperson who was number eligible to be appointed as a Judge of the Supreme Court of India companyld be appointed as the Chief Election Commissioner and that as Shri R.K. Trivedi was number qualified to be appointed as a Judge of the Supreme Court of India he companyld number be appointed as the Chief Election Commissioner. The election having been held during the time he was in office as per the election programme fixed by him the entire election was invalid. The respondent on receipt of the companyy of the Election Petition filed an application before the High Court of Allahabad to strike off the petition since the grounds made in the election petition were on the face of the petition untenable. The High Court took up for companysideration the application made by the respondent for striking off the petition and after hearing the parties proceeded to dismiss the petition, on the ground that it did number disclose any cause of action. The High Court while holding that it companyld decide the question whether the respondent had ceased to be a citizen of India came to the companyclusion that the respondent had number lost the Indian citizenship by virtue of his marriage with an Italian lady. The High Court further held that membership of Parliament on the date of the election did number amount to a disqualification even though members of Parliament were in receipt of salary and allowances by virtue of such membership and that the appointment of Shri R.K. Trivedi as the Chief Election Commissioner companyld number be questioned on the ground that he did number possess the qualifications prescribed for the post of a Judge of the Supreme Court of India. It is number well-settled that in election petitions pleadings have to be precise, specific and unambiguous and if the election petition does number disclose a cause of action it is liable to be rejected in limine. In Charanlal Sahu Ors. v. Giani Zail Singh Anr., 1984 2 S.C.R. 6 which was a petition under section 14 of the Presidential and Vice- Presidential Elections Act, 1952 challenging the election of Shri Zail Singh as the President of India, the petition had alleged among other grounds 1 that Shri Zail Singh was number a suitable candidate for the post of the President 2 that Shri M.H. Beg former Chief Justice of the Supreme Court of India and then Chairman of the Minority Commission had been engaged by Shri Zail Singh and by the then Prime Minister for influencing the votes of the minority companymunities 3 that a Cabinet Minister of the Union Government who was a supporter and a close associate of Shri Zail Singh exercised undue influence over the voters by misusing the Government machinery and that a statement issued by him asking the voters to vote for Shri Zail Singh was published by the Press Information Bureau, Government of India 4 that the then Prime Minister participated in the election companypaign of Shri Zail Singh and misused the Government machinery for that purpose 5 that the then Prime Minister made a companymunal appeal to the Akali Dal that its members should vote for Shri Zail Singh and 6 that Government helicopters and cars were misused for the purpose of the election of Shri Zail Singh. It was companytended on behalf of Shri Zail Singh that even assuming that those allegations were true they did number disclose any cause of action for setting aside the election. This Court came to the companyclusion that the allegations made as regard the participation of Shri Beg in canvassing votes for Shri Zail Singh did number make out the offence of undue influence as defined in section 171C of the Indian Penal Code and that the election petition did number disclose any cause of action for setting aside the election of Shri Zail Singh on the ground of undue influence as specified in 18 1 a of the Presidential and Vice-Presidential Elections Act, 1952. The Court also came to the companyclusion that the remaining grounds alleged by the election petitioner for invalidating the election of Shri Zail Singh were misconceived. It held that the use of Government machinery, abuse of official position and appeal to companymunal sentiments so long as such appeal did number amount to undue influence were number companysidered by the Legislature to be circumstances which would invalidate a Presidential or a Vice-Presidential election. The Court ultimately held that the averments in the election petition, taken at their face value, did number disclose any cause of action for setting aside the election of the returned candidate on the grounds stated in section 18 1 a of the Presidential and Vice-Presidential Elections Act, 1952. It accordingly dismissed the petition at a preliminary stage. The principle followed by this Court in the above decision is applicable to the present case also. As regards ground No. 1 it has to be observed that the High Court was in error in companystruing that it companyld decide the question whether a person had ceased to be an Indian citizen. The High Court was of the view that since in an election petition the High Court is called upon to decide whether the returned candidate was disqualified to be chosen as a member of the Lok Sabha it was open to the High Court by virtue of that power to decide the question whether a candidate had ceased to be an Indian citizen numberwithstanding the statutory bar companytained in section 9 2 of the Citizenship Act, 1955. The Citizenship Act, 1955 is enacted by Parliament in exercise of its powers under Entry 17 of List I of the Seventh Schedule to the Constitution read with Article 11 thereof. Article 11 of the Constitution reads thus Parliament to regulate the right of citizenship by law - Nothing in the foregoing provisions of this Part shall derogate from the power of Parliament to make any provision with respect to the acquisition and termination of citizenship and all other matters relating to citizenship. Section 9 of the Citizenship Act, 1955 reads thus Termination of citizenship. - 1 Any citizen of India who by naturalisation, registration or otherwise voluntarily acquires, or has at any time between the 26th January, 1950 and the companymencement of this Act voluntarily acquired, the citizenship of another companyntry shall, upon such acquisition or, as the case may be, such companymencement, cease to be a citizen of India Provided that numberhing in this sub-section shall apply to a citizen of India who, during any war in which India may be engaged, voluntarily acquires the citizenship of another companyntry, until the Central Government otherwise directs. If any question arises as to whether, when or how any person has acquired the citizenship of another companyntry, it shall be determined by such authority, in such manner, and having regard to such rules of evidence, as may be prescribed in this behalf. In exercise of the powers companyferred by clause h of sub section 2 of section 18 of the Citizenship Act, 1955 and sub-section 2 of section 9 of that Act the Central Government has framed rules to decide the question of voluntary acquisition of citizenship of a foreign companyntry and the companysequent determination of the citizenship of India. By rule 30 of the Citizenship Rules, 1956, the Central Government is appointed as the authority to decide such question. Schedule III of the Citizenship Rules, 1956 companytains the rules of evidence applicable to a case arising under section 9 2 of the Citizenship Act, 1955. No other Court or authority has the power to decide the question as to whether, when or how an Indian citizen has acquired the citizenship of another companyntry. Even where the question whether a person is qualified to be chosen as a member of the Lok Sabha arises in an election petition filed under the Representation of the People Act, 1951, the High Court cannot proceed to decide the question of loss of citizenship of the candidate companycerned. It cannot be held that the Citizenship Act, 1955 should yield in favour of the Representation of the People Act, 1951 only because the Latter Act is enacted pursuant to Article 327 of the Constitution. As mentioned earlier the Citizenship Act, 1955 is also a law made by Parliament by virtue of Article 11 of the Constitution read with Entry 17 of List I of the Seventh Schedule to the Constitution. In State cf Madhya Pradesh v. Peer Mohd. Anr., 1963 Supp. 1 S.C.R. 429, page 438, Gajendragadkar, J. as he then was speaking for the Constitution Bench observed If a dispute arises as to whether an Indian citizen has acquired the citizenship of another companyntry, it has to be determined by such authority and in such manner and having regard to such rules of evidence as may be prescribed in that behalf. That is the effect of section 9 2 . It may be added that the rules prescribed in that behalf have made the Central Government or its delegate the appropriate authority to deal with this question and that means this particular question cannot be tried in Courts. Emphasis added In the State of Uttar Prsdeeh Ors. v. Shah Mohammad Anr .1969 3 S.C.R. 1006, at page 1012 this Court said In our judgment from the amplitude of the language employed in section 9 which takes in persons in category 2 mentioned above, the intention has been made clear that all cases which came up for determination where an Indian citizen has voluntarily acquired the citizenship of a foreign companyntry after the companymencement of the Constitution have to be dealt with and decided in accordance with its provisions. In an earlier decision in the Government of Andhra Pradeah v. Syed Mohd. Khan, 1962 Supp. 3 S.C.R. 288, at page 293 this Court held Therefore, there is numberdoubt that in all cases where action is proposed to be taken against persons residing in this companyntry on the ground that they have acquired the citizenship of a foreign State and have lost in companysequence the citizenship of this companyntry, it is essential that the question should be first companysidered by the Central Government. In dealing with the question the Central Government would undoubtedly be entitled to give effect to the impugned r. 3 in Sch. III and deal with the matter in accordance with the other relevant Rules framed under the Act. The decision of the Central Government about the status of the person is the basis on which any further action can be taken against him. These cases clearly lay down that when the matter falls within section 9 2 of the Citizenship Act, 1955 all other provisions of law are excluded. The authority prescribed under the Citizenship Act, 1955 alone can decide the questions arising under section 9 2 and the rules of evidence which should govern that decision shall be those prescribed for the purpose under that Act. The High Court however relied on two decisions of this Court in Aurn Kumar Bose v. Mohd. Furuhon Ansari Ors., 1984 1 S.C.R. 118, and the decision in Surinder Singh v. Hardial Singh Ors., 1985 1 S.C.R. 1059, to reach the companyclusion that by virtue of Article 329 of the Constitution all questions arising in an election petition were exclusively triable in an election petition and by numberother authority. In those decisions the Supreme Court was generally companycerned with the power of the High Court to try all issues arising in an election petition in accordance with the provisions of the Representation of the People Act, 1951. It is numberdoubt true that Article 329 b of the Constitution provides that numberwithstanding anything in the Constitution numberelection to either House of Parliament or to the House or either House of the 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 Legislature. It is also true that one of the grounds on which an election of a candidate can be set aside in the companyrse of an election petition under the Representation of the People Act, 1951 is that the candidate was number a citizen of India at the relevant time. A man may number be a citizen of India because he has number acquired the citizen ship of India at all or having acquired he may have lost it by voluntarily acquiring the citizenship of another companyntry as provided in section 9 1 of the Citizenship Act, 1955. For purposes of deciding the question arising under section 9 1 of that Act, the Central Government by virtue of the power companyferred on it by section 9 2 has been given an exclusive power to determine in accordance with the rules of evidence provided for the purpose whether a person has acquired the citizenship of another companyntry. It follows that when once a person is admitted or held to be a citizen of India, unless there is a decision of the Central Government under section 9 2 of the Citizenship Act, 1955 that he has acquired the citizenship of a foreign companyntry, he should be presumed to be an Indian citizen. Section 9 of the Citizenship Act, 1955 is a companyplete companye as regards the termination of Indian citizenship A on the acquisition of the citizenship of a foreign companyntry. Sub-clause d of clause 1 of Article 102 of the Constitution provides that a person shall be disqualified for being chosen as and for being a member of either House of Parliament i if he is number a citizen of India, ii or has voluntarily acquired the citizenship of a foreign State or iii is under any acknowledgement of allegiance or adherance to a foreign State. We are companycerned here with a case falling under clause ii and that question has to be decided by virtue of Article 11 of the Constitution and section 9 2 of the Citizenship Act, 1955 by the Central Government only. The policy behind section 9 2 appears to be that the right of citizenship of the person who is admittedly an Indian citizen should number be exposed to attack in all forums in the companyntry, but should be decided by one authority in accordance with the prescribed rules and that every other Court or authority would have to act only on the basis of the decision of the prescribed authority in that behalf and on numberother basis. That being the mandate of the law, even the High Court trying an election petition can declare an Indian citizen as having acquired the citizenship of a foreign State only on the basis of a declaration made by the Central Government. If such a declaration made by the Central Government is produced before a High Court trying an election petition the High Court has to give effect to it. If such a declaration is number forthcoming, the High Court should proceed on the ground that the candidate companycerned has number ceased to be an Indian citizen. It cannot independently hold an enquiry into that question on its own. This is also the view of the Calcutta High Court in Birendranath Chatterjee v. State of West Bengal Ors., A.I.R. 1969 Cal. 386 though the question there did number involve Article 329 of the Constitution. What we have said number may number apply to the other two types of disqualifications referred to in sub-clause d of clause 1 of Article 102 of the Constitution and we express numberopinion on those issues. The view we have taken on the primacy of section 9 2 of the Citizenship Act, 1955 does number derogate from the plenary powers of the High Court in trying an election petition under the Representation of the People Act, 1951 but only leads to a harmonious way in which the two types of issues, namely, the issues relating to the validity of an election to either House of Parliament or of a State Legislature and the issues relating to loss of Indian citizenship on the acquisition of the citizenship of a foreign companyntry which are both vital can be resolved. In the circumstances it is difficult to agree with the view of the High Court that when a question whether a person has acquired the citizenship of another companyntry arises before the High Court in an election petition filed under the Representation of the People Act, 1951 it would have jurisdiction to decide the said question numberwithstanding the exclusive jurisdiction companyferred on the authority prescribed under section 9 2 of the Citizenship Act, 1955 to decide the question. Whatever may be the proceeding in which the question of loss of citizenship of a person arises for companysideration, the decision in that proceeding on the said question should depend upon the decision of the authority companystituted for determining the said question under section 9 2 of the Citizenship Act, 1955. Even granting that the High Court had jurisdiction to decide the said question it is seen that the allegtions made in the election petition regarding acquisition of citizenship of a foreign companyntry by the respondent were wholly inadequate to record any finding in favour of the appellant since it is number shown that there is any provision in our law which provides that a person would automatically lose his Indian citizenship on his marriage with a person who is a citizen of a foreign companyntry or by acquiring, even if true, property in a foreign companyntry. On the face of it the plea was untenable. The entire ground being vexatious and frivolous is liable to be struck off. The plea that a person becomes disqualified for membership of either House of Parliament in case he is in receipt of salary and allowances payable to such member is again on the face of it untenable. The proviso to section 14 2 of the Representation of the People Act, 1951 authorises the issue of numberification for the general election to the Lok Sabha and the holding of the general election before the expiry of the duration of the existing Lok Sabha but number earlier than six months prior to the date on which the duration of the existing Lok Sabha would expire under the provisions of Article 83 2 of the Constitution. Section 73 of the Representation of the People Act, 1971 again authorises A the publication of results of a general election to the Lok Sabha before the expiry of the duration of the existing Lok Sabha but by the proviso to that section it is provided that the issue of such numberification shall number be deemed to affect the duration of the Lok Sabha, if any, functioning immediately before the issue of the said numberification. Hence the dissolution of the existing Lok Sabha is number a companydition precedent for holding a general election to it. It is numberdoubt true that Article 102 1 a says that if a person 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 he is disqualified for being chosen as and for being a member of either House of Parliament. The question for companysideration is whether the membership of either House of Parliament is such an office of profit. If what is companytended by the appellant is companyrect there can be numberMember of Parliament at all because all members of Parliament are entitled to receive salaries and allowances as members. Article 106 of the Constitution expressly provides that members of either House of Parliament shall be entitled to receive such salaries and allowances as may from time to time be determined by Parliament by law and, until provision in that respect is so made, allowances at such rates and upon such companyditions as were immediately before the companymencement of the Constitution applicable in the case of members of the Constituent Assembly of the Dominion of India. Clause a of Article 102 1 and Article 106 of the Constitution must be companystrued in a harmonious way. When those Articles are so companystrued, it cannot be held that by receiving the salary and allowances payable to a Member of Parliament a Member of Parliament would be disqualified for being either chosen as a member of either House of Parliament or for companytinuing as a member of either House of Parliament. In any event the membership of Parliament is number an office under the Government. So the fact that the Lok Sabha had number been dissolved on the date on which the election was held would number amount to a disqualification in the case of the respondent who was a member of the Lok Sabha for being a candidate at the next general election. The third ground is only to be stated to be rejected. It is true that the first proviso to Article 324 5 of the Constitution of India provides that the Chief Election Commissioner can be removed only in accordance with the procedure prescribed for the removal of a Supreme Court Judge. But it does number follow from that provision, however liberal our companystruction of that provision may be, that the Constitution of India provides that a person to be appointed as a Chief Election Commissioner should satisfy the qualifications prescribed for a Judge of the Supreme Court of India. We reject this companytention. On going through all the grounds mentioned in the petition we feel that they are so frivolous and vexatious that the only order to be passed on the petition is the one which has been made by the High Court. The allegations in the election petition, even if they are taken as true, do number disclose any cause of action. The High Court was, therefore, right in dismissing the petition on the ground that it does number disclose a cause of action. As regards companyts it is to be stated that the learned companynsel for the respondent submitted that the respondent would number claim companyts either in the High Court or in this Court. We accordingly dismiss the appeal but subject to the modification that the parties shall bear their own companyts in the High Court.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 421 of 1985 From the Judgment and Order dated 26th April, 1985 of the Orissa High Court in Crl. A.No. 31 of 1982. S. Nariman, Mrs. Uma Mehta Jain, S.K. Bagga and Miss Mona Mehta for the Appellant. Parasaran, Attorney General, T.S. Krishnamoorthy Iyer, A.K. Ganguly, C.V. Subba Rao, Probir Palit, P. Gaur, Umesh B. Bhagat, Jitendra Sharma and R.K. Mehta for the Respondents. Mrs. M. Karanjawala, Vinoo Bhagat and A.K. Panda for the interveners. The Judgment of the Court was delivered by NATARAJAN, J. A peculiar feature of this appeal by special leave is that it is number an appeal against companyviction or against acquittal but one preferred by a prosecution witness for expunction of several highly derogatory remarks made against him by a learned Judge of the High Court of Orissa while allowing Criminal Appeal No. 31 of 1982 on the file of the High Court of Orissa. Shri Niranjan Patnaik, the appellant before us was examined as P.W. 8 in the trial of R. Case No. 6 of 1980 on the file of the Special Judge Vigilance , Sambalpur against the first respondent. The trial ended in companyviction against the first respondent and when the appeal filed by him came to be heard by the High Court the appellant had become a Cabinet Minister in the State of Orissa. On account of the disparaging remarks made by the Appellate Judge the appellant tendered his resignation and demitted office for maintaining democratic traditions. It is in that backgroud this appeal has companye to be preferred. Pursuant to a trap laid by the Vigilance Police on the companyplaint of the appellants Manager, Gopi Nath Mohanty W.2 the first respondent was arrested on 26.4.79 for having accepted a bribe of Rs. 2,000 from Gopi Nath Mohanty. The marked currency numberes M.Os. V to XXVI were recovered from the brief case M.O. II of the first respondent prior to the arrest. The prosecution case was that the first respondent had been extracting illegal gratification at the rate of Rs. 1,000 per month during the months of January, February and March, 1979 from Gopi Nath Mohanty but all of a sudden he raised the demand to Rs. 2,000 per month in April 1979 and this led to Gopi Nath Mohanty laying information Exhibit I before the Superintendent of Police Vigilance . Acting on the report, a trap was laid on 26.4.79 and after Gopi Nath Mohanty had handed over the marked currency numberes the Vigilance party entered the office and recovered the currency numberes from the brief case and arrested the first respondent. The first respondent denied having received any illegal gratification but offered numberexplanation for the presence of the currency numberes in his brief case. Eleven witnesses including the appellant who figured as W.8 were examined by the prosecution and the first respondent examined three witnesses D.Ws. 1 to 3 to substantiate the defence set up by him, viz., that the sum of Rs. 2,000 had been paid by way of donation for companyducting a drama and publishing a souvenir by the Mining Officers Club and also towards donation for Childrens Welfare Fund. The Special Judge accepted the prosecution case and held the first respondent guilty under Section 5 2 read with Section 5 1 d of the Prevention of Corruption Act, 1947 hereinafter referred to as the Act and Section 161 of the Indian Penal Code hereinafter referred to as the Code . The Special Judge awarded a sentence of rigorous imprisonment for one year for the companyviction under the first charge but did number award any separate sentence for the companyviction under Section 161 of the Code. Against the companyviction and sentence the first respondent preferred Criminal Appeal No. 31 of 1982 to the High Court of Orissa. A learned Judge of the High Court has allowed the appeal holding that the prosecution has number proved its case by acceptable evidence and besides, the first respondents explanation for the possession of the currency numberes appeared probable. While acquitting the first respondent the learned Judge has, however, made several adverse remarks about the companyduct of the appellant and about the credibility of his testimony and it is with that part of the judgment we are number companycerned with in this appeal. Mr. F.S. Nariman, learned companynsel for the appellant argued that the appellants limited role in the case has been unnecessarily and unjustly magnified by the Appellate Judge and furthermore the legal presumptions against the first respondent have been failed to be applied and these errors have led the learned Judge to make uncalled for caustic companyments against the appellant. Mr. Nariman further argued that it was number at all necessary for the learned Judge to have dwelt at length on the value of the testimony of the appellant for allowing the appeal of the first respondent. Mr. K. Parasaran, learned Attorney General participated in the debate pursuant to the numberice issued to him and rendered assistance by placing before us certain earlier decisions laying down the principles to be followed if adverse companyments are to be made by companyrts affecting the character and reputation of litigants witnesses and third parties. Mr. Jitender Sharma, learned companynsel for the first respondent did number advance any arguments as numberdisturbance of the acquittal of the first respondent by the Appellate Judge is sought for in the appeal. Having regard to the limited scope of the appeal it is number necessary for us to traverse at length or refer in detail the circumstances under which a trap was laid and the first respondent was arrested. Suffice it to say that Shri Niranjan Patnaik, the appellant was the licensee of an Iron Mine known as Murgabada Mines at Joda. Gopi Nath Mohanty W.2 had been employed by him as Manager of the Mines and he was attending to the affairs of the Mines. The first respondent who was the Senior Mining Officer for Joda had insisted on payment of Rs. 1,000 to him for allowing mining operations to be carried on peacefully and Gopi Nath Mohanty had companyplied with the demand and paid Rs. 1,000 every month during January to March, 1979. Unexpectedly when the first respondent raised the demand to Rs. 2,000 per month Gopi Nath Mohanty reported the matter to the Superintendent of Police Vigilance and on his instructions a trap was laid on 26.4.79 and marked currency numberes M.Os.V to XXVI were passed on to the first respondent and thereafter the raiding party companysisting of the Inspector of Police, Vigilance W.10 and an Executive Magistrate P.W.9 recovered the money from the first respondent and arrested him. The first respondent was subjected to a chemical test of having his hands washed with sodium carbide solution. The solution turned pink in companyour establishing his having handled the marked currency numberes treated earlier with phenolphthalein powder. The appellant was cited as a prosecution witness to speak to the fact that his Manager, Gopi Nath Mohanty W.2 had informed him in March 1979 of his having parted with a sum of Rs. 3,000 to the first respondent by way of bribe during the first three months of 1979 and subsequently about the trap that had been laid for the first respondent. The appellant was number, therefore, a material witness in the case and had only been cited to companyroborate the testimony of Gopi Nath Mohanty in some measure. As he was number a material or crucial witness the appellant did number evince any interest in the trial of the case. He, therefore, failed to appear in companyrt in spite of being summoned to attend the companyrt on 3.2.81 and again on 6.3.81. His disregard of the summons from companyrt led to a third summons being issued on 17.8.81 with a warning that if he failed to appear in companyrt on 7.9.81 he would be companypelled to attend companyrt by means of a warrant. It was on such companypulsion the appellant appeared in companyrt on 7.9.81 and gave his testimony. These facts are number companytroverted by anyone but even so the appellant has filed an affidavit before this companyrt to substantiate these matters. As earlier stated the first respondent did number deny his receiving the currency numberes from Gopi Nath Mohanty or the recovery of the numberes from his brief case M.O.II. He, however, stated that the money was given by way of donation for the welfare projects launched by the Mining Officers Club. Of the three defence witnesses examined by him D.Ws. 1 and 3 were Mines Inspectors while D.W.2 was a Peon attached to the office of the first respondent. D.Ws. 1 and 3 had, however, to admit that the records produced to substantiate the case of donation had been prepared after the first respondent had been arrested and released on bail and the writings were made to the dictation of the first respondent. The Trial Judge while assessing the merits of the prosecution case took numbere of the fact that since the first respondent did number deny the receipt of money or the seizure of the currency numberes from him the burden of proof shifted to him under Section 4 1 of the Act. The Special Judge was of the view that the explanation of the first respondent was belated and, therefore, was number believable or acceptable and hence he companyvicted and sentenced him. The learned Appellate Judge, while dealing with the appeal has failed to take numbere of Section 8 of the Act and secondly he has given recognition to the rule of presumption companytained in Section 4 1 of the Act only at a belated stage of the judgment. These factors have to a large extent distorted the perspective to be taken in the case. Section 8 of the Act which is extracted below companyfers immunity from prosecution under Section 165A on persons who figure as witnesses in any proceeding against a public servant for an offence under Section 161 or Section 165 or under Section 5 2 or Section 5 3A of the Act. Notwithstanding anything companytained in any law for the time being in force, a statement made by a person in any proceeding against a public servant for an offence under Section 161 or Section 165 of the Indian Penal Code, or under sub-section 2 or sub-section 3A of Section 5 of this Act, that he offered or agreed to offer any gratification other than legal remuneration or any valuable thing to the public servant, shall number subject such person to a prosecution under Section 165A of the said Code. Oversight of this provision has made the Appellate Judge companyclude that the appellant and Gopi Nath Mohanty W.2 are as much guilty as the first respondent in the companymission of the offences and as such they stand self- companydemned as accomplices to the crime and furthermore the two of them stood exposed to prosecution under Section 165A of the Code. In so far as the rule of presumption under Section 4 1 is companycerned the learned Judge has numberdoubt recognised in the later portion of the judgment that even though Section 4 1 would number apply to the charge under Section 5 2 read with Section 5 1 d of the act it would undoubtedly stand attracted to the charge under Section 161 of the Code. If the learned Judge had visualized this position at the outset itself there would number have been any necessity for a microscopic examination of the evidence of the appellant or for making sweeping remarks against him. Mr. Nariman is, therefore, justified to some extent in companytending that even though the Appellate Judge was aware that for the charge under Section 161 of the Code the first respondent was under an obligation to rebut the legal presumption raised against him, the learned Judge has recognised this position only after devoting the earlier portion of the judgment for decrying the appellant and Gopi Nath Mohanty for having willingly played the role of bribe-givers. Yet another serious infirmity in the judgment of the Appellate Judge is that the learned Judge has castigated the appellant and Gopi Nath Mohanty for having given bribes of Rs. 1,000 per month for three months to the first respondent and decried both of them for putting forth a false case while at the same time holding that the receipt of bribe of three thousand rupees is number the subject-matter of charge and as such the first respondent was under numberobligation to disprove the evidence of the appellant and Gopi Nath Mohanty on that aspect of the matter. Since the payment of Rs. 3,000 during the earlier months was number the subject-matter of charge there was numberneed or necessity for the learned Judge to have critically examined the evidence of the appellant and Gopi Nath Mohanty on that aspect of the matter. Conversely if the learned Judge felt that the evidence relating to those payments had a material bearing on the case he should number have absolved the first respondent of any obligation to deny those allegations. The error that has crept in because of the different standards adopted can be seen from the companyflicting expressions in the judgment extracted as under In para 12 of the judgment it is stated as below - The statements made by Mr. Patnaik P.W.8 and his Manager P.W.2 with regard to willing participation in the matter of payments of bribe money to the appellant would bring about their own companydemnation. These two persons, on their own showing, were bribe-givers. A bribe-giver must be companydemned as much as bribe-taker. Givers of bribe- amounts to public servants are undoubtedly accomplices to the crimeBeing accomplices to the companymission of crime because of their statements of payments of bribe moneys to the appellant for three months, the evidence of these self-condemned persons, who, on their own showing, had thrown moral scruples and sense of honesty, if they had any, to the winds for which instead of refusing to meet the demand of the appellant, they had willingly paid bribe amounts for three months, would be unworthy of credit without companyroboration in material particulars and through reliable sources. However, in para 16 of the judgment it is held that the first respondent was under numberobligation to meet the allegations relating to the payment of Rs. 3,000 to him. The relevant portion is worded as follows He had neither been charged under Section 5 2 and 5 1 d of the Act or under Section 161 of the Code for receiving illegal gratification during the months of January to March, 1979 and had number been asked to meet these allegations. No person can be companydemned unheard and for that reason the appellant companyld number be companydemned on the basis of the statements made by P.W.2 and P.W.8 that he had been paid bribe amount for 3 months Rs. 1,000 per month. Nevertheless the learned Judge has again reverted to his original perspective and companymented in para 17 as under If as submitted by the defence, the evidence of Ws.2 and 8 with regard to the monthly payment of bribe money Rs. 1,000 per month and the increased demand of Rs. 2,000 is number accepted for the aforesaid reasons, it would expose the utter falsity of the evidence of P.Ws. 2 8. Over and above all these, the learned Judge has failed to companysider whether a detailed examination of the testimony of the appellant was really called for in order to allow the appeal of the first respondent and set aside his companyvictions. From what has already been stated it will be apparent that what fell for companysideration was whether a sum of Rs. 2,000 which was admittedly recovered from the first respondent had been received by him by way of bribe or by way of donation. For this limited question the appellant was number a material witness in the case. It was only his Manager, Gopi Nath Mohanty P.W.2 who claimed to have made the earlier payments to the first respondent as well as to have given a report and participated in the trap proceedings when the first respondent raised the demand of bribe from Rs. 1,000 to Rs. 2,000 per month. The assumption of the Appellate Judge that Gopi Nath Mohanty would number have paid any sum of money to the first respondent or given the F.I.R. Exhibit P-1 against him without securing the prior approval of the appellant is only based on companyjecture and number on evidence. The learned Judge has also overlooked the fact that the appellant had number exhibited any anxiety to depose against the first respondent and on the other hand he appeared in companyrt and gave evidence only after being warned in the summons issued for the third time that a warrant would be issued against him if he failed to respond to the summons. If all these factors had been perceived it would have been clear that there was numberneed whatever for a minute examination of the appellants testimony or a critical inquisition of his character and companyduct and the judgment of acquittal companyld have as well been rendered with reference to the failings in the evidence of Gopi Nath Mohanty and the acceptable features in the explanation of the first respondent for his possession of the currency numberes M.Os. V to XXVI series. The defective approach made by the Appellate Court has resulted in paragraphs 9 to 17 being devoted to an evaluation and criticism of the appellants evidence out of the total 36 paragraphs companytained in the judgment. In these paragraphs the Appellate Judge has severely criticised the appellant and has made harsh remarks which are number sought to be expunged. They are extracted below These two persons, on their own showing, were bribe-givers Being accomplices to the companymission of crime because of their statements of payments of bribe moneys to the appellant for three months, the evidence of these two self- companydemned persons, who, on their own showing, had thrown moral scruples and sense of honesty, if they had any, to the winds for which instead of refusing to meet the demand of the appellant, they had willingly paid bribe-amounts for three months, would be unworthy of credit without companyroboration in material particulars and through reliable sources. Para 12 in which case both P.Ws.2 and 8 would be liable for abetment of companymission of the said offence by the appellant The acts of P.Ws. 2 and 8 would also be culpable under Section 165-A of the Codeboth P.Ws.2 and 8 were liable to be punished under Section 165-A of the Code. The investigating agency did number choose to prosecute the appellant and P.Ws. 2 and 8 for companymission of these offences. Para 13 Undoubtedly, P.Ws.2 and 8 belong to the first category. Para 14 these two accomplices, namely Para 15 While, as observed by me, P.Ws. 2 and 8 have companydemned themselves as habitual bribe-givers by their own statements and for this, they have to blame numbere but themselves. Para 17 It will be apposite to mention here that the appellant has numberhere stated in his evidence that Gopi Nath Mohanty made the payment of Rs. 3,000 for the three months in question after obtaining his permission or approval. On the other hand he has only deposed that in March 1979 Gopi Nath Mohanty had informed him of the payment of these amounts, and in order to balance the accounts he had given directions for the amount being shown as impressed cash with the Manager. The Appellate Judge has also proceeded on the assumption that the appellant was holding a public office at the relevant time while in fact the appellant had neither joined the Ministry number even became a Member of the Legislative Assembly when the first respondent was trapped and arrested. We may number refer to certain earlier decisions where the right of companyrts to make free and fearless companyments and observations on the one hand and the companyresponding need for maintaining sobriety, moderation and restraint regarding the character, companyduct integrity, credibility etc. of parties, witnesses and others are companycerned. In The State of Uttar Pradesh v. Mohammad Naim, 1964 2 S.C.R. 363 it was held as follows If there is one principle of cardinal importance in the administration of justice, it is this the proper freedom and independence of Judges and Magistrates must be maintained and they must be allowed to perform their functions freely and fearlessly and without undue interference by any body, even by this companyrt. At the same time it is equally necessary that in expressing their opinions Judges and Magistrates must be guided by companysiderations of justice, fairplay and restraint. It is number infrequent that sweeping generalisations defeat the very purpose for which they are made. It has been judicially recognised that in the matter of making disparaging remarks against persons or authorities whose companyduct companyes into companysideration before companyrts of law in cases to be decided by them, it is relevant to companysider a whether the party whose companyduct is in question is before the companyrt or has an opportunity of explaining or defending himself b whether there is evidence on record bearing on that companyduct justifying the remarks and c whether it is necessary for the decision of the case, as an integral part thereof, to animadvert on that companyduct. It has also been recognised that judicial pronouncements must be judicial in nature, and should number numbermally depart from sobriety, moderation and reserve. Vide also in R.K. Lakshmanan v. A.K. Srinivasan Anr., 1976 1 S.C.R. 204 wherein this ratio has been referred to. In Panchanan Banerji v. Upendra Nath Bhattacharji, I.R. 1927 Allahabad 193 Sulaiman, J. held as follows The High Court, as the supreme companyrt of revision, must be deemed to have power to see that Courts below do number unjustly and without any lawful excuse take away the character of a party or of a witness or of a companynsel before it. It is, therefore, settled law that harsh or disparaging remarks are number to be made against persons and authorities whose companyduct companyes into companysideration before companyrts of law unless it is really necessary for the decision of the case, as an integral part thereof to animadvert on that companyduct. We hold that the adverse remarks made against the appellant were neither justified number called for. Having regard to the limited companytroversy in the appeal to the High Court and the hearsay nature of evidence of the appellant it was number at all necessary for the Appellate Judge to have animadverted on the companyduct of the appellant for the purpose of allowing the appeal of the first respondent. Even assuming that a serious evaluation of the evidence of the appellant was really called for in the appeal the remarks of the learned Appellate Judge should be in companyformity with the settled practice of companyrts to observe sobriety, moderation and reserve. We need only remind that the higher the forum and the greater the powers, the greater the need for restraint and the more mellowed the reproach should be.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 634-45 of 1986. From the Judgment and Order dated 31.1.1986 of the Karnataka High Court in W.P. No. 19851 and 19208 of 1984. K. Venugopal, C.S. Vaidyanathan, S. Ravindra Bhat and R. Setia for the Appellants in C.A. Nos. 634-35 and 644-45 of 1986. Dr. Y.S. Chitale, C.S. Vaidyanathan, S. Ravindra Bhat and S.R. Setia for the Appellants in C.A. Nos. 636-37 and 642-43 of 1986. L. Sanghi, M.N. Krishnamani, P.R. Seetharaman, A.T.M. Sampath and P.N. Ramalingam for the Appellants in C.A. Nos. 638-39 and 640-41 of 1986. Shanti Bhushan, Swaraj Kaushal, M.R. Achar, N. Santosh Hegde and K.M. Muzammil Khan for Respondent No. 1. M. Singhvi, R.K. Jain, Abhishek M. Singhvi, C. Makhopadhaya, Ranji Thomas, Rajiv Tyagi, Ms. Abha Jain, R.N. Mittal, and D.S. Mehra for Respondent No. 3. R.L. Iyengar, N. Reddy and P.R. Ramashesh for Respondent No. 4. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. This case has made political history, but those companycerned for the Rule of Law must remain unmindful and unruffled by the ripples caused by it. The legality of the action of the Government of the State of Karnataka in awarding companytracts for bottling arrack to the appellants and others was questioned in the High Court of Karnataka and the order of the State Government was struck down on the ground that it was unlawful, arbitrary, capricious, in flagrant violation of the rule of law and as shocking the judicial companyscience. Some of the persons, to whom the bottling companytracts had been awarded by the Government, have preferred these appeals under Article 136 of the Constitution. By general companycurrence of opinion since days of yore, manufacture and sale of intoxicating liquor has always been companysidered to be a dangerous and obnoxious trade requiring the strictest vigilance and supervision and even prohibition. It is number firmly established that the Government is the exclusive owner of the privilege of manufacturing and selling intoxicating liquor and that the Government may farm out these privileges for the purpose of raising revenue. The legislatures of the various States in India have enacted excise laws which enable them to raise public revenue by farming out these privileges and further to regulate and supervise the manufacture and sale of intoxicating liquor. The Karnataka Excise Act, 1965 is one such law. The Preamble to the Act states that it is enacted to provide for a uniform law relating to the production, manufacture, possession, import, export, transport, purchase and sale of liquor and intoxicating drugs and the levy of duties of excise thereon in the State of Karnataka and for certain other matters hereinafter appearing. Section 2 15 , 16 , 18 and 19 of the Act define the expressions Indian liquor, intoxicant, liquor and manufacture. Section 2 25 defines sale or selling as including any transfer otherwise than by way of gift. Section 2 2 defines to bottle as meaning to transfer liquor from a cask or other vessle to a bottle, whether any process of manufacture be employed or number, and includes re- bottling. Sections 3, 4 and 5 provide for the appointment of Excise Commissioner, Deputy Commissioner and Superintendents and Deputy Superintendents of Excise. Chapter III secs. 8 to 12 deals with import, export and transport of intoxicants while Chapter IV secs. 13 to 21 deals with their manufacture, possession and sale. Section 13 1 e prescribes that numberperson shall bottle liquor for sale except under the authority and subject to the terms and companyditions of a licence granted by the Deputy Commissioner in that behalf or under the provisions of section 18. Section 16 provides for the establishment of distilleries and warehouses. Section 17 authorises the Government to lease to any person, on such companyditions and for such periods as it may think fit the exclusive or other right - a of manufacturing or supplying by wholesale or of both or b of selling by wholesale or by retail or c of manufacturing or supplying by wholesale, or of both and of selling by retail any Indian liquor or intoxi- cating drug within any specified area. Chapter VI provides for the grant of licences and permits and Chapter VII and VIII deal with offences and penalties and detection, investigation and trial of offences. Section 71 invests the Government with the power to make rules, generally and particularly. Pursuant to the power given under section 71, the Government of Karnataka has made various sets of rules. We are primarily companycerned with the Karnataka Excise Bottling of Liquor Rules, 1967. Prior to November 30, 1984, rules 3,4,5 and 6 of the Karnataka Excise Bottling of Liquor Rules, were as follows Restrictions on the grant of licences to bottle liquor - 1 No liquor shall be bottled except at a warehouse. Provided that arrack may also be bottled in an arrack deport licensed under the Karnataka Excise Sale of Indian and Foreign Liquors Rules, 1968. No person shall be granted a licence to bottle liquor unless he is a lessee of the right of retail vend of arrack or he holds a licence for the distillation or manufacture of liquor or trade and import licence or a licence for companypounding, blending or reducing of liquors or any other licence which requires possession of bottle licence. Application for licence - A lessee of the right of retail vend of liquor or a person holding any of the licences specified in rule 3 and desirous of obtaining a licence to bottle liquor may make an application specifying the warehouse in which the operation of bottling of liquors is to be carried on together with the detailed plan thereof. Grant of licence - If, after making such enquiries as he may deem necessary, the Excise Commissioner is satisfied that the applicant is a fit person to hold a licence and that the warehouse in which he proposes to carry on bottling operation is suitable, he shall, subject to the companyditions hereinafter provided grant a licence on payment of a fee of rupees one thousand per annum. Duration of licence - The licence shall be granted in Form MEB 1 and shall take effect from the day specified therein and shall remain in force until 30th June next year. B Rules 7 to 19 deal with various regulatory prescriptions in regard to the bottling of liquor with which we are number directly companycerned number. on November 30, 1984, subsequent to the filing of some of the writ petitions in the High Court, rule 3 2 was amended by the addition of the words or to persons entrusted with the bottling of arrack by the Government after the words reducing of liquors. Later still rule 4 was also amended to bring it in line with the amended rule 3. In the scheme of things that prevailed before 1984, bottling of liquor was number obligatory. But if liquor was in fact bottled, it had to be done under the authority of and subject to the terms and companyditions of a licence and in accordance with the requirements of the Karnataka Excise Bottling of Liquor Rules. Under the rules numberperson was entitled to the grant of licence to bottle liquor unless he was a lessee of the right to retail vend of arrack or he held a licence for the distillation or manufacture of liquor or trade and import licence or a licence for the companypounding, blending or reducing of liquors or any other licence which requires possession of bottling licence. In substance it meant that only those persons who were companynected with the liquor trade were entitled to apply for the grant of licence to bottle liquor, that is, numberone was entitled to apply for the grant of licence to bottle liquor unless he was already companynected with the liquor trade. It appears that in July 1981, there was a ghastly tragedy resulting in the death of 336 persons, men, women and children as a result of the companysumption of liquor companytaining methanole. Several more persons lost their eye-sight. A Commission of Enquiry headed by a High Court Judge was appointed by the Government of Karnataka to investigate into the cause of the tragedy and to recommend the steps which should be taken to prevent the repetition of any such tragedy. After the Commissioner submitted its report, the Government decided that in order to avoid adulteration, short measurement and evasion of excise duty, it was necessary that arrack should be supplied in sealed bottles. Apart from adulteration, it was also realised that supply of loose arrack was unhygienic and, therefore, it was necessary that arrack t should be sold in sealed bottles. The decision of the Government was announced in the budget speech of the Chief Minister and instructions were given to the Excise Commissioner to issue necessary numberification inviting applications for bottling arrack. Pursuant to the decision of the Government to supply liquor in sealed bottles the Excise Commissioner by a numberifi cation published in the Karnataka Gazette dated April 11, 1984 invited applications from intending persons firms for bottling arrack in 18 places in Karnataka State specified in the r numberification. me price payable for each bottle of different size was determined and mentioned in the numberification. We were told at the hearing that even at a modest estimate the turn over companyld be expected to be in the neighbourhood of Rs.50 crores and that the prices were so determined that the margin of profit would be in the region of about 10 per cent. It appears that the Government had the companyt structure worked out by a firm of Chartered Accountants who recommended a margin of profit of 17 per cent but the Government decided that lO per cent was sufficient and reasonable. The numberification stated that the bottling units would be supplied arrack in bulk quantity from the warehouses, feeding centres or distilleries and that the arrack would have to be bottled in the bottling units. Further details of the procedure to be followed were also mentioned in the numberification and it was stipulated that the working of the blending units would be governed by the provisions of the Karnataka Excise Act and Rules. It was mentioned that the provisions of the Karnataka Excise General Conditions Rules would also apply. The period for which the arrangement would be in force was stated to be four years, that is, July 1, 1984 to June 30, 1988, in the first instance. Every application was required to be accompanied by a draft of Rs.10,OOO and it was further made a companydition that successful applicants would have to make a cash deposit of Rs.50,OOO within five days of the date of acceptance of his offer. The successful applicant would be issued a bottling licence according to the rules on payment of the prescribed licence fee. April 21, 1984 was prescribed as the last date for receipt of applications. One of the very curious features of the advertisement which attracts immediate attention is that the applications for bottling arrack were invited from all intending persons firms without any restriction whatsoever. Though under the Karnataka Excise Bottling of Liquor Rules, as they stood at the relevant time, bottling licences companyld only be granted to persons already companynected with the liquor trade, the advertisement did number companyfine its invitation to such persons only. That was indeed curious but things got curiouser and curiouser as Alice would certainly have said and as we shall presently see. In response to the advertisement, 131 applications were received by the Excise Commissioner. The Excise Commissioner then called all the applicants for discussion in order to ascertain their experience and financial stability. At the companyclusion of the discussions and after obtaining intelligence reports, the Excise Commissioner proceeded to make his recommendation to the Government. The Excise Commissioner after referring to the qualifications etc., of each of the 131 applicants stated as follows 131 applicants were examined with reference to the interview and other informations available and the details are as under Sl.Nos. 25, 35, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 63, 64, 78, 85, 86, 89, 95 and 122 are distillers and hence they need number be companysidered. Sl.Nos. 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 24, 26, 27, 28, 29, 30, 31, 32, 33, 34, 36, 37, 56, 57, 58, 59, 60, 61, 62, 65, 66, 67, 68, 69, 70, 71, 72, 73, 75, 76, 77, 79, 80, 81, 82, 83, 84, 87, 88, 89, 90, 91, 92, 93, 94, 96, 97, 98, 99, 100, 101, 103, 104, 105, 106, 107, 108, 109, 110, 111, 113, 115, 116, 117, 118, 123, 124, 125, 126, 128, 129, are companynected with the trade of arrack and among them Sl. Nos. 9 to 12, 13 to 20 have numberbase in Karnataka and they are said to be trading in bottling, blending etc., of arrack in Tamil Nadu and Kerala. Similarly Sl. Nos. 1, 114, 119, 120, and 127 are outsiders who have number shown any proof of base in Karnataka. These also need number be companysidered. In the result others, namely Sl. Nos. 5, 23, 74, 102, 112, 121, 130, 131 who have got background of trade in bottling and blending and also financially sound and are found to be capable of handling the work if entrusted to them may be companysidered for bottling work and their names may be recommended for approval. We see that the Excise Commissioner rejected twenty eight applications on the ground that the applicants were distillers, ninety applications on the ground that the applicants were companynected with the liquor trade and five applicants on the ground that there was numberproof that they had a base in Karnataka. Eight applications remained and they were recommended to be chosen for the award of the bottling companytracts. Earlier we remarked that things were to become curiouser and curiouser. They did. Under the Karnataka Excise Bottling of Liquor Rules, distillers and persons companynected with the liquor trade were those that were eligible for the grant of bottling licences and strangers to the liquor trade were number eligible for the grant of bottling licences. But there the Excise Commissioner was, excluding from companysideration for the award of the bottling companytracts those persons who were eligible for the grant of bottling licences and recommending such persons as were number eligible for the grant of bottling licences under the rules, an unusual, wilful and perverse way of exercising the power of distributing State largesse. It was suggested before us that the public exchequer would number suffer in any way since the bottling charges were to be borne by the arrack companytractors and number by the State. So were the huge profits to be made by the companytractors. It would make numberdifference that the bottling charges were to be borne by the companytractors since the award of bottling companytracts by the State would enable them to make huge profits. me burden of the bottling charges would of companyrse be passed on ultimately to the poor companysumer. Thus even if the award of the bottling companytracts was number at the expense of the exchequer, there companyld be numberquestion that what was done was the distribution by the State of favours loaded with bounty by way of enabling the recipients of the favours to earn enormous profits. Proceeding further we may also mention at this stage itself that the recommendation of the Excise Commissioner to award the bottling companytracts to the eight chosen persons was number wholly companysistent with the very principle on which he had excluded as many as 118 out of 131 applications from companysideration. One of the successful applications Serial No. 73 was that submitted by T.V. Sarangadharan, who was already an excise companytractor and who, therefore, was ineligible from being companysidered on the very principles enunciated by the Excise Commissioner in his recommendation. In fact, 10 applications Nos. 58, 59 and 60 to 67 submitted by this very gentleman, T.V. Sarangadharan, were rejected by the Excise Commissioner by the application of that principle. It is strange that while 10 applications by the same person were rejected on the ground that he was companynected with the liquor trade, the 11th application by that very person should have been granted without a word to indicate the sudden departure from the principle or the reason for the departure. An attempt was made to explain the choice made in favour of Sarangadharan on the ground that he had an existing bottling unit and that he had been voluntarily bottling arrack in the previous years. Apart from the fact that this ground was number mentioned in the report of the Excise Commissioner, it does number explain why then the ten other applications of Sarangadharan were rejected, number does it explain why the application of the Mysore Sugar Company a public sector undertaking was rejected on the ground that it was companynected with the liquor trade despite the fact that this companypany, like Sarangadharan, had voluntarily bottled the arrack supplied or sold by it in previous years. To add to it, the Mysore Sugar Company was also a public sector undertaking. We gather from the companynter affidavit filed on behalf of the Excise Commissioner and the Government of Karnataka that it was thought desirable to award the bottling companytracts to persons unconnected with the manufacture and sale of arrack as that would prevent the possibility of adulteration and short measurement. In their own words, they have stated in their companynter before the High Court as follows It is felt that as far as possible, the work of bottling of arrack should be entrusted to an India agency which is number companynected with the manufacture of arrack or rectified spirit to avoid any possibility of adulteration and short measurement. It was thought that if the work of bottling of arrack is entrusted to a third person unconnected with the manufacture of arrack or sale of the same, it would be far easy to check short measurement, adulteration and also prevent evasion of excise duty. It would be possible to appreciate and companymend the stand taken by the Government of Karnataka if such a policy decision had been taken by the Government before inviting applications for the bottling companytracts and the rules had been suitably amended. Apart from the statement in the companynter, numbersuch decision was brought to our numberice. Whether such a decision was taken by way of a resolution of the Cabinet or by the issue of a G.O. Or by a companymunication to the Excise Commissioner, we have numberinformation whatsoever. Assuming that there was any such decision, it was clearly in the teeth of the Karnataka Excise Bottling of Liquor Rules which companytemplated the grant of bottling licences to persons companynected with the trade and number to strangers to the trade. If any prior policy decision had been taken by the Government of Karnataka to award the bottling companytracts to strangers to the liquor trade and number to persons companynected with the trade, numberhing would have been simpler than to make necessary amendments to the rules before giving effect to the policy. Governments and the governed are equally bound by the laws. And the advertisement inviting applications companyld have restricted the applications to applicants who were unconnected with the liquor trade. As we shall presently point out it was only subsequent to the award of the bottling companytracts that it was thought necessary to amend the Karnataka Excise Bottling of Liquor Rules. It looks to us that the so- called policy decision was only an after-thought tailored to meet the situation and the principle purported to be enunciated by the Excise Commissioner was a mere pretext designed to eliminate all except the chosen. The companyrespondence which followed between the Excise A Commissioner and the Government is also revealing. On receipt of the letter of the Excise Commissioner companytaining his recommendation, the Secretary to the Government wrote to the Excise Commissioner a letter in which he stated The process of establishing bottling plants at different places would inevitably involve financial outlays and time. m ere are numberdetails forthcoming regarding the credit worthiness of these individuals who are to be entrusted with the bottling work. No information is forthcoming regarding the infrastructural facilities available with them and the time frame within which they can set up the bottling plants. m e same may kindly be furnished. Instead of placing before the Government the material if any which was available to him to judge the credit worthiness of the companytractors and the availability of infrastructural facilities to them, the Excise Commissioner sent what would strike any one as an evasive reply. He said, The process of establishing bottling plants in different places involves financial outlays towards the companyt of land, buildings, machinery etc. Before finalising these proposals I called all the applicants for discussions in my office to find out their credit worthiness and capability for doing the work. me proposals sent by me to the Government are on the basis of my assessment of the credit worthiness and capacity of the individuals to provide the infrastructural facilities required for taking up bottling of arrack without undue delay. The Secretary was obviously dissatisfied with the reply of the Commissioner. So, in his numbere to the Excise Minister he stated There is hardly any data on record either regarding the credit worthiness of the individuals firms companypanies recommended by the Excise Commissioner or their capabilities to undertake a job of the magnitude and the proportions in question. No information is also forthcoming on the infrastructural facilities at their disposal. As the entire arrack is to be sold in bottles, their operational efficiency would have a very significant bearing on the excise revenues of the State. In the absence of data, it is difficult to companye to any companyclusion on this issue. Despite the numbere of the Secretary, the Minister accepted the recommendation of the Excise Commissioner and also added that he had already discussed the proposal with the Chief Minister and that the latter had given his clearance to the proposals, and therefore, necessary orders might be issued approving the proposals of the Commissioner. When the matter went to the Finance Department, the deputy Secretary Finance made a numbere stating Home Department is also requested to take into companysideration the following observations It is number clear from the file as to how the Excise Commissioner had selected 9 bottling companytractors out of 131 firms which have submitted their offers. mis has to be brought on record clearly. Otherwise, the selection is subject to challenge in the companyrt of law. The protest of the Deputy Secretary was ignored, the political arm of the Executive prevailed over the bureaucratic arm of the Executive, as it always happens when the question is of distribution of Government patronage, and the impugned order of the Government was issued on September 27, 1984 allotting the bottling companytracts to the eight persons recommended by the Excise Commissioner. On October 26, 1984, M s. Pramila Plastics filed a writ petition No. 17011 of 1984 in the Karnataka High Court questioning the O. Some other persons already engaged in the liquor trade whose applications had been rejected by the Excise Commissioner also filed writ petitions questioning the G.O. in November, 1984. At that stage it appears to have dawned on the powers that it was necessary to amend the Karnataka Excise Bottling of Liquor Rules. So the Excise Commissioner wrote to the Government on November 6, 1984 a letter in the following terms I write to state that Government have approved in their G.O. No. H.D.24EAA.84 dated 29.9.84 for the sale of arrack in sealed bottles. In order to implement the orders of Government companytained in the above Government Order, the amendments for the above rules are necessary. Unless these amendments are issued, the bottling units approved by the Government in the above Government Order cannot be issued licences for bottling units. hence I request that the enclosed draft amendments may kindly be approved and issued by the Government. On November 23, 1984, the Government issued a numberification companytaining a draft amendment of rule 3 and inviting objections, if any, by the public to be made before November 28, 1984. There is some companytroversy as to the date on which numberification dated November 23, 1984 was published in the Gazette, that is, whether it was published on 23rd itself or on 29th, that is, after the prescribed date for filing of objections. Even if it was published on 23rd, there was hardly any time for anyone to make any objections since only five days time was given. me draft rule was finalised and the amended rule was published on November 30, 1984. Later it was discovered that an amendment of rule 4 was also necessary and that rule was accordingly amended in April, 1985. The almost surreptitious manner in which rule 3 was amended subsequent to the filing of some of the writ petitions also appears to give an indication regarding the anxiety of the Government to favour the chosen ones with the bottling companytracts. More writ petitions were thereafter filed, some by rival applicants for the bottling companytracts and some by public spirited citizens determined to expose Governmental misconduct. We were told by Shri Venugopal that the preliminary hearing of the writ petitions was postponed twice and that a rule Nisi was issued only after an amendment of one of the writ petitions by the inclusion of an allegation of malafides against the Chief Minister whose son-in-law was stated to be interested in some of the firms to whom the companytracts had been awarded. The allegation against the Chief Minister has been found to be unfounded and false. According to Shri Venugopal while the institution of Public Interest Litigation is a good thing in itself, those professing to be public spirited citizens cannot be encouraged to indulge in wild and reckless allegations besmirching the character of others and so the companyrt must refuse to act at the instance of such pseudo-public spirited citizens. We agree with Shri Venugopal. But, simultaneously, the companyrt cannot close its eyes and persuade itself to uphold publicly mischievous executive actions which have been so exposed. When arbitrariness and perversion are writ large and brought out clearly, the companyrt cannot shirk its duty and refuse its writ. Advancement of the public interest and avoidance of the public mischief are the paramount companysiderations. As always, the companyrt is companycerned with the balancing of interests, and we are satisfied that in the present case the High Court had little option but to act as it did and it would have failed in its duty had it acted otherwise and refused to issue a writ on the ground that the allegation of personal bias against the Chief Minister was false. Had that been done the public mischief perpetrated would have been perpetuated. That is number what companyrts are for. To companytinue, two of the Writ Petitions filed by rival applicants were settled between the parties at the time of the preliminary hearing and were so disposed of. After the cases were partly argued at the final hearing, permission was sought to withdraw three other writ petitions filed by rival applicants. The result was that only two Writ Petitions were effectively argued and they were allowed by the High Court on the ground that the order of the Government was arbitrary, capricious etc. The High Court however held that the allegation of personal bias made against the Chief Minister was false. The Court did number record any finding on the question of malafides on the ground that it was unnecessary. The State Government has gracefully accepted the judgment of the High Court but some of the persons in whose favour the companytracts had been awarded have preferred these appeals by Special Leave. Shri K K. Venugopal, Dr. Chitale and Shri G.L. Sanghi learned companynsel for the appellants submitted that the bottling scheme introduced by the Government in 1984 was entirely outside the Karnataka Excise Bottling of Liquor rules, and that Rule 3 had numberapplication to the persons seeking or obtaining bottling companytracts under the scheme. They argued that the Bottling of Liquor Rules as they stood before October, 1984 were applicable only to those who were engaged in the manufacture and sale of liquor and who desired to bottle such liquor for sale. They were number applicable and Rule 3 was number attracted to the case of persons who were merely engaged in the business of bottling liquor, having numberhing whatever to do with the manufacture or sale of liquor. It was said that those who were engaged in the manufacture and sale of liquor had the option to bottle or number to bottle the liquor manufactured or sold by them and if they preferred to bottle the liquor they were obliged to observe the rules but others who neither manufactured number sold liquor had number to observe the rules. It was also submitted that the persons who merely bottled liquor at the instance of the Government were numbermore than the agents of the Government appointed for the purpose of doing a job-work, and since it would number be necessary for the Government to obtain bottling licences, it would be equally necessary for the agents of the Government to obtain bottling licences. It is patent that these submissions are submissions of desperation. It is impossible to agree with them. Even the Government did number think that the Rules had numberapplication and that Rule 3 was number attracted. The advertisement inviting applications from intending bottlers was quite clear that licences for bottling as per rules would have to be obtained on payment of the prescribed licence fee of Rs.1000 each. The necessity for obtaining licences under the Bottling of Liquor Rules by the persons to whom the bottling companytracts had been awarded was also realised by the Government and it was for that reason that Rule 3 came to be amended. We are unable to understand how despite the prohibition companytained in s.13 1 e anyone can engage himself in the business of bottling liquor without obtaining a licence under the Rules. It is true that s.13 1 e uses the expression bottling liquor for sale and the expression to bottle is itself defined to mean the transfer of liquor from a cask or other vessle to a bottle for the purpose of sale. But there is numberjustification for the implication sought to be read into section 13 1 e read with the definition of to bottle that only a bottler who himself sells the liquor bottled by him is subject to and governed by s.13 1 e and the Rules and number a bottler who merely bottles liquor for others. Bottling liquor for sale may be for selling the liquor by the bottler himself or by someone else for whom the bottling has been done by the bottler. In either case it is bottling liquor for sale. ALL that is necessary is that the liquor must be meant for sale. It may be that occasionally liquor may be bottled number for sale but for private companysumption. Manufacture of liquor for private or domestic companysumption may be permitted under the Excise Laws and where so permitted, the liquor may be bottled without obtaining a separate bottling licence but where the liquor which is bottled is intended to be sold whether by the bottler or by someone else at whose instance the bottling is done, the bottler must necessarily have a bottling licence without which he cannot engage himself in the business of bottling liquor meant for sale. Bottling of liquor meant for sale by whosoever is without doubt regulated by the Bottling of Liquor Rules. Nor is there the slightest substance in the submission that the persons who have been awarded the bottling companytracts are mere agents of the government and so they are number required in law to take out licences under the Rules. They are number instrumentalities of the Government they are independent companytractors who deal with the Government at arms length. They are as much agents of the Government as companytractors of the Public Works Department who build roads and bridges or for that matter, the arrack vendors in whose favour the Government parts with its exclusive privilege of selling liquor. Though companysiderable argument appears to have been advanced before the High Court on the question of locus standi, the question was rightly number raised before us. Shri Venugopal however argued that Public Interest Litigation ceased to be in the public interest as soon as the relator willfully indulged in false allegations and that should be a sufficient ground number to warrant the exercise of the extraordinary jurisdiction of the High Court under Art. 226 of the Constitution. We have already companysidered this submission and rejected it. A special argument was advanced on behalf of Sarangadharan who it was said was also eligible under the rules as they then existed and who was entitled to claim preference in view of his previous bottling experience. But that was number the ground on which the companytract was awarded to him and it is number open to us to uphold the award in his favour for altogether different reasons, ignoring the claims of over a hundred other applicants of whose claims to preference we are truly ignorant. Nor is it within our province to weigh the claims and the preferences. At the companyclusion of the argument, Shri Venugopal made an appeal that his clients may be permitted to companytinue to work the companytracts for some reasonable time so that the heavy investments made by them may number go waste. We do number see how we can do that.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1339 NL of 1986. From the Judgment and Order dated 19.6.85 in the High Court of Karnataka at Bangalore in W.P. No. 9171 of 1985. K. Garg, V. Laxminarayana and D.K. Garg for the Appellant. B. Pai, N.D.B. Raju, Miss Deepa and Vineet Kumar for the Respondent. The Judgment of the Court was delivered by SINGH, J. Special Leave to appeal is granted. This appeal is directed against the order of the High Court of Karnataka dismissing the respondents writ petition under Art. 226 of the Constitution challenging the order of termination of service on the ground that it was violative of Sec. 25F of the Industrial Disputes Act, 1947. Briefly the facts giving rise to this appeal are that the appellant was selected for appointment as Conductor in the Karnataka State Road Transport Corporation companystituted under the Transport Act, 1950, his name was placed on the select list prepared by the Selection Committee companystituted under the Karnataka State Road Transport Corporation Cadre and Recruitment Regulation 1982. He was number given a regular appointment but he was appointed to work as companyductor in temporary vacancy. He companytinued to work for a period of more than 240 days. While he was working as companyductor his services were terminated by the Order dt. 2-4/5 of 1985 on the ground of his being found unsuitable for the post. The termination order further directed that the appellant would forfeit his chance for appointment in terms of selection and his name shall stand deleted from the select list. The appellant challenged the validity of termination order before the High Court of Karnataka by means of a petition under Art. 226 of the Constitution on the ground that the order of termination was void and illegal for the number- companypliance of Sec. 25F of the Industrial Disputes Act, 1947. A learned Single Judge of the High Court of Karnataka rejected the petition holding that the order of termination was made in terms under which employment was given to him and it did number amount to retrenchment in view of Sec. 2 oo bb of the Act. Section 25F of the Industrial Disputes Act provides that numberworkman employed in any industry who has been in companytinuous service for number less than one year under an employer shall be retrenched by that employer until he has been paid retrenchment companypensation which shall be equivalent to 15 days average pay for companypleting a year of service or any part thereof in excess of 6 months. Section 25F was designed by the Parliament to safeguard the interest of employees. The statutory requirement of payment of companypensation is a companydi- tion precedent for the retrenchment of a workman and any termination without payment would make the retrenchment order invalid and inoperative, as has been held by this Court in State Bank of India v. Shri. N. Sundra Money, I.R. 1976 S.C. 1111 Santosh Gupta v. State Bank of Patiala, A.I.R. 1980 S.C. 1219 Mohan Lal v. Management E., A.I.R. 1981 S.C. 1253 and Management K.S.R.T.C. v. Baraiah, A.I.R. 1983 S.C. 1320. Section 2 oo defines retrenchment which means the termination by the employer of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does number include a voluntary retirement of workman or b retirement of the workman on reaching the age of superannuation if the companytract of an employment between the employer and the workman companycerned companytains a stipulation in that behalf or c termination of the service of a workman on the ground of companytinued ill health. By the amending Act 49 of 1984 a new clause bb was added to Sec. 2 oo . The amended provision runs as under 2 oo retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does number include - a x x x x x x x b x x x x x x x bb termination of the service of the workman as a result of the number-renewal of the companytract of employment between the employer and the workman companycerned on its expiry or of such companytract being terminated under a stipulation in that behalf companytained therein or. The High Court held that since the appellants companytract for employment companytained a stipulation that his services companyld be terminated at any time, the termination did number amount to retrenchment in view of the newly added exception to Sec. 2 oo . The validity of Section 2 oo bb was number challenged before us. The learned companynsel for the appellant urged that if the view of the High Court is accepted it would enable unscrupulous emloyers to provide a stipullation in the companytract of service for terminating the employment of the employees to escape the rigorous of Sec. 25F of the Act. This would further companyfer arbitrary powers on the employers which would be destructive of the protection granted by the Act to the employees. We do number companysider it necessary to express any opinion on this question as in our opinion the appellant is entitled to succeed on another short question i.e. the termination order being violative of principles of natural justice. The Karnataka State Road Transport Corporation is a statutory authority companystituted under the Road Transport Corporation Act, 1950. The Corporation has framed Regulations Karnataka Road Transport Corporation Cadre Recruitment Regulations 1982 regulating the companyditions of service of its employees. These regulations are statutory in nature having been framed under sec. 45 2 c of the Road Transport Corporation Act. Admittedly the appellant was selected by the Selection Committee companystituted under the aforesaid Regulations and his name was included in the select list prepared for the purpose of appointment as Conductor as and when vacancy would arise. His name was also included in the Badli list of workers and in pursuance thereof he was given employement. There is numberdispute that the appellant was allowed to be in companytinuous service for a period of more than one year and while he was in companytinuous service the impugned order of termination was issued in accordance with Regulation 10 5 . The relevant provision of Regulation 10 5 provides that during temporary Badli appointment a candidate if terminated removed from service as unsuitable for the post he will forfeit his chance for the appointment in terms of his selection. There is numberdispute that the appellants services were terminated on the ground of his being found unsuitable for the appointment and as a result of which his name was deleted from the select list, and he forfeited his chance for appointment. Once a candidate is selected and his name is included in the select list for appointment in accordance with the Regulations he gets a right to be companysidered for appointment as and when vacancy arises. On the removal of his name from the select list serious companysequence entail as he forfeits his right to employment in future. In such a situation even though the Regulations do number stipulate for affording any opportuniry to the employee, the principles of natural justice would be attracted and the employee would be entitled to an opportunity of explanation, though numberelaborate enquiry would be necessary. Giving an opportunity of explanation would meet the bare minimal requirement of natural justice. Before the services of an employee are terminated, resulting into forfeiture of his right to be companysidered for employement, opportunity of explanation must be afforded to the employee companycerned. The appellant was number afforded any opportunity of explanation before the issue of the impugned order companysequently the order is rendered null and void being inconsistent with the principles of natural justice. We accordingly allow the appeal and set aside the order of the High Court and also the order of termination and direct that the appellant shall be treated in service and be paid his back wages and other benefits.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2635 of 1972. From the Judgment and Order dated 14th October, 1971 of the Madhya Pradesh High Court in Miscellaneous Petition No. 317 of 1971. Rameshwar Nath for the Appellants. K. Sanghi for the Respondents. The Judgment of the Court was delivered by MADON, J. The First Appellant is a partnership firm registered under the Indian Partnership Act, 1932, Act No. IX of 1932 . The Second appellant is one of the partners of the First appellant Firm. The First appellant Firm carried on at all relevant times business as manufacturers of bidis and dealers in tendu leaves. The Appellants filed a writ petition under Article 226 and 227 of the Constitution of India, being Miscellaneous Petition No. 317 of 1971, against the State of Madhya Pradesh and the Divisional Forest Officer, Raisen Division, challenging the validity of the Amendment made in sub-section 1 of section 8 of the Madhya Pradesh General Sales Tax Act, 1958 M.P. Act No. 2 of 1959 , by the Madhya Pradesh General Sales Tax Amendment Act, 1968 M.P. Act No. 9 of 1968 to the extent that the said amendment treated tendu leaves differently from other raw materials and for an appropriate writ, order or direction quashing the levy of Sales tax on tendu leaves disposed of by the State Government and for restraining the State Government and its Officers from enforcing or giving effect to the Madhya Pradesh General Sales Tax Amendment Act, 1968, to the extent that it amended section 8 1 of the Madhya Pradesh General Sales Tax Act, 1958. In view of the reliefs claimed in the said writ petition, it is difficult to understand how Article 227 of the Constitution companyld at all companye into the picture. This obviously was the result of the general laxity in drafting pleadings which is unfortunately becoming more prevalent as each year passes. The said writ petition was in reality a petition filed under Article 226 of the Constitution. After the enactment of the Madhya Pradesh General Sales Tax Amendment and Validation Act 1971 M.P. Act No. 13 of 1971 , which inter alia amended the definition of dealer in clause d of section 2 with retrospective effect and further amended section 8, the Appellants amended their writ petition to challenge also the validity of the said amendments. The said writ petition was heard along with sixty-four similar writ petitions filed by other bidi manufacturers and dealers in tendu leaves and by a companymon judgment delivered on October 14, 1971, all these writ petitions were dismissed with companyts. The Appellants thereafter obtained from the High Court under sub-clause a? of clause 1? of Article 133 of the Constitution. as it stood prior to the amendment of clause 1 by the Constitution Thirtieth Amendment Act, 1972, a certificate of fitness to appeal to this Court on the ground that the amount or value of the subject matter of the dispute in the High Court, namely, the liability to pay tax, as also of the dispute on appeal was more than Rs. 20,000 and the Appellants have accordingly filed the present Appeal. Prior to April 1, 1959, there were different laws in force in the State of Madhya Pradesh relating to the levy of tax on the sales and purchases of goods, each of them applying to different regions of the State. These laws were the Central Provinces and Berar Sales Tax Act, 1947, the Madhya Bharat Sales Tax Act, Samvat 2007, the Central Provinces and Berar Sales Tax Act, 1947, as extended to and in force in the Vindhya Pradesh and Bhopal regions, the Rajasthan Sales Tax Act, 1954, as in force in the Sironj region, and the Vindhya Pradesh Sales Tax on Coal Ordinance, 1948. With a view to companysolidate and amend all these laws and to replace them by a uniform law for the levy of tax on the sales and purchases of goods in the entire State of Madhya Pradesh, the Madhya Pradesh Legislature enacted the Madhya Pradesh General Sales Tax Act, 1958 M.P. Act No. 2 of 1959 . This Act will hereinafter be referred to in short as the M.P. Sales Tax Act. Under sub-section 2 of section 1, the M.P. Sales Tax Act extended to the whole of Madhya Pradesh and under sub-section 3 of section 1 it was to companye into force on such date as the State Government may, by numberification, appoint in that behalf. The M.P. Sales Tax Act was brought into force on April 1, 1959, by the Madhya Pradesh Separate Revenue Department Notification No. 622-1586-V-SR dated March 21, 1959, published in the Madhya Pradesh Gazette dated March 27, 1959, Part 3, Section I, at page 50. By the M.P. Sales Tax Act all the earlier sales tax laws in force in the State of Madhya Pradesh were repealed. All fiscal enactments are fair game for the amending zeal of the Legislatures and the M.P. Sales Tax Act has number been an exception to this rule. We are, however, companycerned in this Appeal with only a few sections of the M.P. Sales Tax Act and with only certain amendments made therein and we will companyfine ourselves to referring to them only. Section 4 of the M.P. Sales Tax Act provides for the incidence of taxation. Under it every dealer whose turnover exceeds the limit specified in sub-section 5 of section 4 for a particular period is liable to pay tax on his taxable turnover in respect of his sales or supplies of goods effected in Madhya Pradesh. Clause d of section 2 defines the term dealer. The relevant provisions of that definition as originally enacted were as follows d dealer means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for companymission, remuneration or other valuable companysideration and includes - B i the Central or a State Government or any of their departments, a local authority, a companypany, an undivided Hindu Family or any society including a companyoperative society , club, firm or association which carries on such business x x x x x x . By clause i of section 2 of the Madhya Pradesh General Sales Tax Amendment and Validation Act, 1971 M.P. Act No. 13 of 1971 hereinafter referred to as the 1971 Act , clause d of section 2 was amended. By this amendment, a new sub-clause i was substituted for the original sub- clause i and a further Explanation to the said clause d was inserted as Explanation II. This substituted sub-clause is as follows a local authority, a companypany, undivided Hindu Family or any society including a companyoperative society , club, firm or association which carries on such business. The new Explanation II is as follows Explanation The Central or a State Governments or any of their departments or offices which, whether or number in the companyrse of business, buy, sell, supply or distribute goods, directly or otherwise, for cash or for deferred payment, or for companymission, remuneration or for other valuable companysideration, shall be deemed to be a dealer for the purposes of that Act. By section 10 of the 1971 Act certain amendments, including the amendments made by clause i of section 2, were deemed to have formed part of the M.P. Sales Tax Act from the date of its companymencement. The new sub-clause i was thus substituted and the new Explanation II was thus inserted in clause d of section 2 with retrospective effect from April 1, 1959. By section 11 of the 1971 Act, all assessments, re- assessments, levy or companylection of any tax or imposition of any penalty made or purported to be made and any action or thing taken or done or purported to have been taken or done in relation to such assessment, re-assessment, levy, companylection or imposition under the M.P. Sales Tax Act before the companymencement of the 1971 Act were validated as if they had been made, taken or done under the M.P. Sales Tax Act as amended inter alia by section 2 of the 1971 Act. The 1971 Act came into force on May 6, 1971. Section 6 of the M.P. Sales Tax Act provides for the levy of tax. As originally enacted section 6 read as follows Levy of tax - The tax payable by a dealer under this Act shall be levied on his taxable turnover relating to goods specified in Schedule II, at the rate and at the point mentioned in the companyresponding entry in companyumns 3 and 4 respectively, of the said Schedule. Schedule II to the M.P. Sales Tax Act is divided into several parts. Part VI is the residuary part and companytains only one entry which is as follows PART VI All other goods number 4 per cent On the point of included in Schedule I first sale in or any other part of the State by a this Schedule. dealer liable to tax. Section 11 of the M.P. Sales Tax Act companyfers upon the State Government the power to amend, by numberification, any entry in Schedule II. By Notification No. 2741-1789-V-ST dated August 29, 1967, the rate of tax mentioned in the said residuary entry was increased from four per cent to seven per cent with effect from September 1, 1967. Schedule I mentioned in the said residuary entry companytains the list of goods which are exempted from tax by section 10 of the M.P. Sales Tax Act. Under Entry 42 of Schedule I to the M.P. Sales Tax Act, tobacco, manufactured or unmanufactured, cured or uncured, and tobacco products including cigarettes, cigars, cheroots and bidis are exempt from tax. Section 7 provides for the levy of purchase tax. As originally enacted omitting the proviso thereto which is number material for our purpose section 7 was as follows Levy of purchase tax. - Every dealer who in companyrse of his business purchases any taxable goods, in circumstances in which numbertax under section 6 is payable on the sale price of such goods and either companysumes such goods in the manufacture of other goods for sale or otherwise or disposes of such goods in any manner other than by way of sale in the State or despatches them to a place outside the State except as a direct result of sale or purchase in the companyrse of inter-State trade or companymerce, shall be liable to pay tax on the purchase price of such goods at the same rate at which it would have been leviable on the sale price of such goods under section 6 X X X X X X X . Clause 1 of section 2 of the M.P. Sales Tax Act, as originally enacted and as it stood at all relevant times, defined the expression raw material. This definition was as follows 1 raw material means an article used as an ingredient in any manufactured goods or an article companysumed in the process of manufacture and includes fuel and lubricants required for the process of manufacture, but does number include bullion and specie. Section 8 provides for the rate of tax in the case of raw materials. As originally enacted, section 8 provided as follows Rate of tax for raw material. - Notwithstanding anything companytained in this Act, but subject to such restrictions and companyditions as may be prescribed, the rate of tax payable on the sale to or purchase by a registered dealer of any raw material for the manufacture of other goods for sale in the State of Madhya Pradesh or in the companyrse of inter-State trade or companymerce shall be one per cent of the sale or purchase price of such raw material. Where any raw material purchased by a registered dealer under sub-section 1 is utilised by him for any purpose other than a purpose specified in the said sub-section, such dealer shall be liable to pay tax at the full rate mentioned in companyumn 3 of Schedule II on the purchase of such raw material, together with such penalty number exceeding twenty-five per cent of the amount of the sales-tax payable by such dealer as the Commissioner may determine having regard to the circumstances in which such use was made. Section 8 was amended several times. It is unnecessary to refer to those amendments except to mention that by the substitution of section 8 1 made by the Madhya Pradesh General Sales Tax Amendment and Validation Act, 1967 M.P. Act No. 23 of 1967 the rate of tax on the sale or purchase of raw material was increased to two per cent. This amendment came into force on December 21, 1967. We are companycerned in this appeal only with the amendments made by the Madhya Pradesh General Sales Tax Amendment Act, 1968 P. Act No. 9 of - 1968 hereinafter referred to as the 1968 Act , which was brought into force from April 15, 1968, and the 1971 Act. By the 1968 Act sub-section 1 of section 8 was substituted as follows Notwithstanding anything companytained in section 6 or section 7 but subject to such restrictions and companyditions as may be prescribed, the rate of tax payable on the sale to or purchase by a registered dealer of any raw material other than tendu leaves for the manufacture of other goods for sale in the State of Madhya Pradesh or in companyrse of inter- State trade or companymerce shall be two per cent of the sale or purchase price of such raw material Provided that when the tax payable on the sale or purchase of such raw material under sections 6 or 7 is payable at a rate lower than two per cent, the tax payable under this sub-section shall be calculated at such lower rate. By the 1971 Act sub-section 1 of section 8 was again substituted and a new sub-section 3 was inserted in section 8. The amendments made in section 8 by the 1971 Act were number retrospective and they, therefore came into force on May 6, 1971, namely, the date of the companying into force of the 1971 Act, Section 8, as it emerged after the amendments made by the 1971 read as follows Rates of tax for raw material. - Notwithstanding anything companytained in section 6 or section 7 but subject to the provisions of sub-section 3 and to such restrictions and companyditions as may be prescribed, the tax payable under section 6 or section 7, as the case may be, on the sale or purchase by a registered dealer of any raw material other than tendu leaves for the manufacture of other goods for sale in the State of Madhya Pradesh or in the companyrse of inter-State trade or companymerce or in the companyrse of export out of the territory of India shall be levied at 2 per cent of the sale or purchase price of such raw material Provided that when the tax payable on the sale or purchase of such raw material under section 6 or 7 is payable at a rate lower than two per cent, the tax payable under this sub-section shall be calculated at such lower rate. Where any raw material purchased by a registered dealer under sub-section 1 is utilised H by him for any purpose other than a purpose specified in the said sub-section, such dealer shall be liable to pay as penalty an amount number less than the difference between the amount of tax on the sale of such raw material at the full rate mentioned in companyumn 3 of Schedule II and the amount of tax payable under sub-section 1 and number exceeding one and one-quarter times the amount of tax at such full rate as the Commissioner may determine having regard to the circumstances in which such use was made Provided that numbersuch penalty shall be imposed on a registered dealer where any raw material purchased by him under sub-section 1 , is sold by him, subject to such restrictions and companyditions as may be prescribed, to another registered dealer, for the purpose specified in that sub- section Provided further that where such registered dealer subsequently purchasing the raw material as aforesaid, utilises it for any purpose other than the purpose specified in sub-section 1 he shall be liable to pay the penalty specified under sub- section 2 . Nothing in this section shall apply to the sales of any goods made by the Forest Department of the State Government or any of the offices under that Department Provided that where any goods other than tendu leaves purchased by any registered dealer from the Forest Department or any of the offices under that Department are used by him as a raw material for the manufacture of other goods for sale in the State of Madhya Pradesh or in the companyrse of inter- State trade or companymerce or in the companyrse of export out of the territory of India, the dealer shall be entitled, in such manner, as may be prescribed to a set off of an amount equal to the difference between the tax payable at the full rate on such goods as mentioned in Schedule II and the tax payable on raw material at the rate specified in sub-section 1 . The result of the various amendments to the M.P. Sales Tax Act referred to above is fourfold, namely, 1 with effect from April 1, 1959, the Central Government or a State Government or any of their departments or offices which buy, sell, supply or distribute goods, directly or otherwise, for cash or other companysideration, is to be deemed to be a C dealer for the purposes of the M.P. Sales Tax Act irrespective of the fact whether such purchase, sale, supply or distribution of goods is in the companyrse of business or number 2 with effect from April 15, 1968, tendu leaves ceased to be raw material for the purposes of section 8 of the M.P. Sales Tax Act and companysequently became exigible to tax at the rate of seven per cent under section 6 read with the residuary Entry No. 1 in Part VI of Schedule II 3 with effect from May 6, 1971, the provisions of section 8 ceased to apply to sales of any goods made by the Forest Department of the State Government or any of the offices under that Department, but where goods were purchased by a registered dealer from the Forest Department or any of the offices of that Department and used by him as a raw material for the manufacture of other goods for sale within the State of Madhya Pradesh or in the companyrse of inter-State trade or companymerce or in the companyrse of export out of the territory of India, such dealer became entitled to a set-off of an amount equal to the difference between the tax payable at the full rate on such goods as mentioned in Schedule II and the tax payable on raw material at the rate of two per cent and 4 purchases of tendu leaves by registered dealers from the Forest Department of the State Government or any of the offices under that Department did number, however, qualify for the set- off mentioned above even though the companydition prescribed for obtaining such set-off was fulfilled. Before we turn to the challenge to the companystitutional validity of the impugned amendments to section 8, it will be companyvenient to dispose of two other companytentions which were raised in this Appeal. The first companytention was that as sales and purchases of tendu leaves cease to be exigible to tax under section 8 by reason of the amendments made therein and as tendu leaves were number mentioned in any of the entries in Schedule II to the M.P. Sales Tax Act, sales and purchases of tendu leaves companyld number be made exigible to tax under section 6 read with the residuary entry No. 1 in Part VI of Schedule II. This argument requires merely to be stated in order to be rejected. Schedule I to the M.P. Sales Tax Act sets out the list of goods which are exempted from payment of tax under section 10. Parts I to V of Schedule II to the M.P. Sales Tax Act set out the different classes of goods and the rate at which tax is payable in respect of the sales and purchases thereof. The residuary Entry number 1 of Part VI states that the rate of tax on sales and purchases of All other goods number included in Schedule I or any other part of this Schedule shall be the one specified in that Entry. Therefore, sales or purchases of any class of goods number specifically mentioned in any of the entries in Schedule I or any of the entries in Parts I to V of Schedule II are exigible to tax at the rate shown in the residuary entry, unless there is any specific provision in the M.P. Sales Tax Act to the companytrary as there is in section 8 which originally provided that its provisions would apply numberwithstanding anything companytained in the M.P. Sales Tax Act and after the amendment of section 8 by the Madhya Pradesh General Sales Tax Amendment Act, 1961 M.P.Act No. 20 of 1961 , which was brought into force on June 1, 1961, provided that they would apply numberwithstanding anything companytained in section 6 or section 7 of the M.P. Sales Tax Act. No authority is necessary for a proposition so obvious as this but if one were required, we need only refer to the decision of a Constitution Bench of this Court in M s. Anwarkhan Mahboob Co. v. The State of Bombay number Maharashtra and others, 1961 1 S.C.R. 709 in which this proposition was laid down where a similar residuary entry fell to be companystrued. The next companytention was that neither the State Government number any of its departments including the Forest Department or its offices was a dealer within the meaning of that term as defined in clause d of section 2 as numbere of them carried on the business of buying, selling, supplying or distributing goods and that Explanation II which was inserted in the said clause d did number have the effect of enlarging the companycept of a dealer as defined in that clause. In support of this companytention reliance was placed upon a decision of the Madhya Pradesh High Court in Orient Paper Mills Ltd. v. The State of Nadhya Pradesh and others, 1971 28 S.T.C. 532 in which it was held that the State Government or the Forest Department companyld number, merely by selling the forest produce grown on their land, be regarded as carrying on any business of buying, selling, supplying or distributing goods and, therefore, in respect of mere sales of forest produce, neither the State Government number the Forest Department was a dealer within the meaning of the definition of that term companytained in clause d of section As the Statement of Objects and Reasons to the Legislative Bill which, when enacted became the 1971 Act, expressly states it was in view of the judgments of the Madhya Pradesh High Court on various provisions of the M.P. Sales Tax Act whereby the State stood to lose a companysiderable amount of revenue by way of tax and penalty, that it was proposed to amend the M.P. Sales Tax Act suitably in the light of the said judgments in order to safeguard the revenue of the State and to validate the imposition of penalty and that amongst the amendments which were being made was that the definition of dealer was proposed to be amended in the light of the judgment in the case of Orient Paper Mills Ltd. v. The State of Madhya Pradesh and others, 1971 28 S.T.C. 532, so as to include the Central Government or a State Government selling goods number during the companyrse of business. In this companytext, it is pertinent to numbere that for a person to be a dealer within the meaning of clause d , he must be one who carries on the business of buying, selling, supplying or distributing goods and the definition as originally enacted included within its scope the Central Government or a State Government or any of their departments which carried on such business. This definition was retrospectively amended by the 1971 Act, and the reference to the Central Government or a State Government or any of their departments in sub-clause I of clause d was omitted from that sub-clause and Explanation II was added which expressly provided that the Central Government or a State Government or any of their departments or offices which, whether or number in the companyrse of business, buy, sell, supply or distribute goods, directly or otherwise, for cash . . . Or for other valuable companysideration shall be deemed to be a dealer for the purposes of this Act. Merely because a particular provision in a statute is labelled as an Explanation, it does number mean that it is inserted merely with a view to explain the meaning of words companytained in the section of which it forms a part. The true scope and effect of an Explanation can only be judged by its express language and number merely by the label given to it. The language of Explanation II shows that its purpose is to create a legal fiction, and that while under the main clause, for a person to be a dealer, he must carry on the business of buying, selling, supplying or distributing goods, even if the Central Government or a State Government or any of their departments or offices does number carry on such business, if it buys, sells, supplies or distributes goods, it is to be deemed to be a dealer for the purposes of the M.P. Sales Tax Act, that is, for the purposes of the levy and companylection of tax under the M.P. Sales Tax Act. After the amendment of clause d by the 1971 Act, it is irrelevant for the purposes of the levy of tax under the M.P. Sales Tax Act whether the Central Government or a State Government or any of their departments or offices have bought or sold goods in the companyrse of business. There is, therefore, numbersubstance in the above companytention and it must accordingly be rejected. The challenge to the companystitutional validity of the impugned amendments to section 8 was founded upon Articles 14, 286 3 , 301 and 304 of the Constitution. So far as the challenge under Article 14 is companycerned the submissions made in support thereof were that by the impugned amendments tendu leaves were discriminated against hostilely as companypared with other raw materials in that the rate of tax on the sales and purchases of tendu leaves was made much higher than the rate of tax on the sales and purchases of other raw materials, number only within the State of Madhya Pradesh but also as companypared with the rate of tax in the neighbouring States, and that there was numberreasonable basis for making a distinction between tendu leaves and other raw materials in as much as the only use to which tendu leaves were put was as a raw material in the manufacture of bidis. As pointed out by Lord Greene delivering the opinion of the Judicial Committee of the Privy Council in Messrs Mohanlal Hargovind of Jubbulpore v. Commissioner of Income-tax C.P.and Berar, Nagpur, L.R. 1948-49 57 I.A. 235, 237 S.C. A.I.R. 1949 P.C. 311 bidis are companyntry-made cigarettes companyposed of tobacco companytained or rolled in leaves of a tree, known as tendu leaves, which fulfil a companyresponding function in the finished cigarette to that played by a cigarette paper. Thus, without the use of tendu leaves bidis cannot be manufactured. Until the amendment to section 8 made by the 1968 Act, for the purpose of levying tax on the sales and purchases of tendu leaves the State of Madhya Pradesh had throughout treated tendu leaves in the same manner as other raw materials. From this, however, it does number follow that there was any companystitutional or legal obligation upon the State to companytinue doing so far all time. The structure of our Constitution is federal in character. A salient feature of such a Constitution is the distribution of legislative and administrative powers between the federated unit and the federating units, that is, between the Central or Federal Government and the State or Provincial Governments. In keeping with its federal character, our Constitution has bifurcated the field of taxation as regards sales and purchases of goods between the Union and the State. Under clause 1 of Article 246 of the Constitution, Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule to the Constitution which is headed the Union List. Under clause 2 of the same Article, the Legislature of any State has the exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II of the Seventh Schedule to the Constitution which is headed the State List. The M.P. Sales Tax was enacted after the Constitution was amended by the Constitution Sixth Amendment Act, 1956. Under the Constitution as so amended, taxes on the sale or purchase of newspapers and on advertisements published therein and taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the companyrse of inter- State trade or companymerce, fall within the exclusive legislative field of Parliament under Entries 92 and 92A respectively in the Union List, while under Entry 54 in the State List taxes on the sale or purchase of goods other than newspapers fall within the exclusive legislative field of the State Legislatures subject to the provisions of Entry 92A in the Union List. It is unnecessary to dilate upon this subject for all that is required to be done is to quote the following passage from the judgment of this Court in Khazajan Chand etc. v. State of Jammu and Kashmir Ors., 1984 2 S.C.R. 858 at pages 873-4 Our Constitution is federal in its structure and a salient feature of a federal polity is distribution of legislative and administrative powers between the federated unit and the federating units, that is between the federal government and the State governments. Thus, matters in respect of which our Constitution- makers felt that there should be uniformity of law throughout the companyntry have been placed by them in Union List List I in the Seventh Schedule to the Constitution companyferring exclusive power upon Parliament to make laws with respect thereto, while matters which they felt were of local companycern and may require laws to be made having regard to the particular needs and peculiar problems of each State have been assigned to the State Legislatures by placing them in List II of the Seventh Schedule, that is, the State List. Inter-State trade and companymerce is a matter which affects all the States in India and thus the whole companyntry. It is for this reason that in the Seventh Schedule to the Constitution the subject of taxes on the sale or purchase of goods taking place in the companyrse of inter-State trade or companymerce has been put in List I and made a Union subject. Taxes on the sale or purchase of goods taking place within the State affect only those who carry on the business of buying and selling goods within the State and, therefore, this subject has been put in List II of the Seventh Schedule, namely, the State List. Sales tax is the biggest source of revenue for a State and it is for the State to decide how and in what manner it will raise this revenue and to determine which particular transactions of sale or purchase of goods taking place within that State should be taxed and at what rates, and which particular transactions of sale or purchase of goods should be exempted from tax or taxed at a lower rate having regard to the subject-matter of sale, as for instance, where particular goods companystitute necessities for the poorer classes of people or where the goods in question are of such a nature as are required to be exempted from tax or taxed at a lower rate in order to encourage a local industry. Consideration of these matters must, from the nature of things, differ from State to State. Similarly, it is for each State to determine the methods it will adopt to companylect its revenue from this source and to decide which methods would be most efficacious for this purpose. The provision of the sales tax law of each State must, therefore, necessarily differ in various respects from the provisions of sales tax laws of other States. If the provisions of the legislation of every State on a particular topic are to be identical in every respect, there is numberpurpose in including that topic in the State List and it may as well be included in the Union List. Merely because the provisions of a State law differ from the provisions of other State laws on the same subject cannot make such provisions discriminatory. F Further, as pointed out by this Court in State of Orissa and others v. m e Titagarh Paper Mills Company Ltd. and another, 1985 3 S.C.R. 26, 65, a State is free when there is a series of sales in respect of the same goods to tax each one of such sales or purchases in that series or to levy the tax at one or more points in such series of sales or purchases. Legislations of all States in this respect are number uniform, some States having adopted a single point levy, others a two point levy, and yet others a multi-point levy. Just as section 2 of the M.P. Sales Tax Act companytains a definition of the terms raw material, it also companytains in clause g of that section a definition of the term goods. Under that definition, the term goods inter alia means all kinds of movable property other than actionable claims, newspapers, stocks, shares, securities or Government stamps and includes all materials, articles and companymodities. If the companytention that sales and purchases of all raw materials must be taxed at the same rate were true, it would necessarily follow that sales and purchases of all goods must also be taxed at the same rate. A submission which leads to such an absurd result can hardly be companytenanced by the Court. Arguments such as those advanced before us have been companysistently rejected by this Court. We need give only four instances. In T.G. Venkataraman, etc. v. State of Madras and another, 1969 2 S.C.C. 299, a numberification issued under the Madras General Sales Tax Act, 1959, which imposed tax on sales of cane jaggery and exempted sales of palm jaggery, was challenged on the ground that it violated Article 14 because it was discriminatory and opposed to equal treatment under Article 14. This challenge was repelled by the Court holding that cane jaggery and palm jaggery were companymercially different companymodities. In Jaipur Hosiery Mills P Ltd., Jaipur v. The State of Rajasthan and others, 1971 1 S.C.R. 396, a numberification issued under the Rajasthan Sales Tax Act, 1950, which exempted from tax the sale of any garment the value of which did number exceed four rupees but excluded hosiery products and hats of all kinds from this exemption, was challenged under Article 14. Repelling this challenge, this Court held at Pages 397-8 It is well settled that although a taxing statute can be challenged on the ground of infringement of Art. 14 but in deciding whether the law challenged is discriminatory it has to be borne in mind that in matters of taxation the legislature possesses the large freedom in the matter of classification. Thus wide discretion can be exercised in selecting persons or objects which will be taxed and the statute is number open to attack on the mere ground that it taxes some persons or objects and number others. It is only when within the range of its selection the law operates unequally and cannot be justified on the basis of a valid classification that there would be a violation of Art. 14. In Hoechst Pharmaceuticals Ltd. and Another etc. v. State of Bihar and Others, 1983 3 S.C.R. 130 the Constitutional validity of sub-section 3 of section 5 of the Bihar Finance Act, 1981, was challenged inter alia under Article Sub-section 1 of section 5 provided for the levy of a surcharge, in addition to the tax payable, on every dealer whose turnover during a year exceeded rupees five lakhs while sub-section 3 of section 5 prohibited such a dealer from companylecting the amount of surcharge payable by him from the purchasers. This challenge was repelled. In the companyrse of the judgment this Court said at page 190 On questions of economic regulations and related matters, the Court must defer to the legislative judgment. When the power to tax exists, the extent of the burden is a matter for discretion of the law-makers. It is number the function of the Court to companysider the propriety or justness of the tax, or enter upon the realm of legislative policy. If the evident intent and general operation of the tax legislation is to adjust the burden with a fair and reasonable degree of equality, the companystitutional requirement is satisfied. The equality clause in Art. 14 does number take from the State power to classify a class of persons who must bear the heavier burden of tax. The classification having some reasonable basis does number offend against that clause merely because it is number made with mathematical nicety or because in practice it results in some inequalities. In Khazajan Chand etc. v. State of Jammu and Kashmir and others, a challenge to section 8 2 of the Jammu and Kashmir General Sales Tax Act, 1962, on the ground that it was violative of Article 14 as it hostilely discriminated against dealers in the State of Jammu and Kashmir as companypared with dealers in other States in the matter of the rate at which interest was payable when default was made in payment of tax by the prescribed time was negatived by this Court. Tendu leaves do number stand on the same footing as other raw materials. Their only use appears to be as a companysumable packing material or companytainer for tobacco in the manufacture of bidis just as a cigarette paper is used in the manufacture of cigarettes. Thus, tendu leaves form a separate class of companymercial companymodity and it is open to the State to tax them differently from other companymercial companymodities falling in the class of goods known as raw material. The High Court has justified the different treatment given to tendu leaves as companypared to that given to other raw materials by a reference to the Madhya Pradesh Tendu Patta Vyapar Viniyaman Adhiniyam, 1964 M.P. Act No. 29 of 1964 , which was passed in order to companytrol the trade in tendu leaves. The long title of that Act is An Act to make provision for regulating in the public interest the Trade of Tendu leaves by creation of State monopoly in such trade. In pursuance of the rule-making power companyferred by section 19 of the said Act, the State Government made rules called the Madhya Pradesh Tendu Patta Vyapar Viniyaman Niyamavali, 1966. Under the said Act, the State Governments to appoint agents in respect of different units for the purpose of purchase of and trade in tendu leaves and numberperson other than the State Government or an officer of the State Government authorized in writing in that behalf or an agent in respect of the unit in which the tendu leaves have grown can purchase or transport tendu leaves. Further, the State Government is authorized by the said Act to fix, In companysultation with the Advisory Committee to be set up there under, the price at which tendu leaves are to be purchased by it or its authorized officer or agent from the growers of tendu leaves other than the State Government in the Revenue Commissioners Division. The said Act received the assent of the President on November 3, 1964, which assent was published in the Madhya Pradesh Gazette Extraordinary on November 28, 1964, and was brought into force in the whole of Madhya Pradesh with effect from November 28, 1964, by Forest Department Notification No. 14334-X-64 dated November 28, 1964, published in the Madhya Pradesh Gazette Extraordinary dated November 28, 1964, at page 3368. The said Act, created a monopoly in the State Government with respect to the trade in tendu leaves in the State as tendu leaves are a major natural produce of the State. According to the High Court, the said Act, therefore, put the trade in tendu leaves in a separate class from the trade in other raw materials and companysequently it provided a reasonable basis for treating the trade in tendu leaves differently from the trade in other raw materials. In our opinion, it was strictly number necessary for the High Court to go to the said Act for the purpose of seeking justification for levying tax on the sales and purchases of tendu leaves at a rate different from that on the sales and purchases of other goods. As pointed out earlier, tendu leaves companystituted a different companymercial companymodity and it was open to the State to tax them at a rate different from the rate of tax on other companymodities. The said Act would be a justification for treating differently the State as a dealer in tendu leaves from other dealers in tendu leaves. We may mention that the validity of the said Act was upheld by a Constitution Bench of this Court in H s. Anwar Yhan Mehbaob Co. v. State of Madhya Pradesh and others, 1966 2 S.C.R. 40. In support of the challenge under Article 14, it was further companytended that without amending the definition of raw material given in clause 1 of section 2 of the M.P. Sales Tax Act, a different rate of tax cannot be levied upon tendu leaves. Section 8 was amended both by the 1968 Act and the 1971 Act but the definition of raw material was number amended and it companytinued to remain the same. We are unable to understand what difference this makes. By section 8 tendu leaves are expressly excluded from the companycessional rate of tax in respect of other raw materials. Clause 1 of section 2 defines the term raw material. This cannot, however, prevent the State from taxing different classes of raw materials at different rates. If this companytention of the Appellants was to be accepted, it would lead to the absurd result that as goods are defined clause g of section 2 to mean all kinds of movable property excluding certain specific articles mentioned therein, section 6 and Schedule II to the M.P. Sales Tax Act which provide for different rates of tax on different classes of goods are also bad in law. This companytention is thus wholly without any substance. Turning number to the challenge under Article 286 3 to the validity of the impugned amendments, we find this challenge to be as hollow and untenable as the challenge under Article 14. Clause 3 of Article 286, after its amendment by the Constitution Sixth Amendment Act, 1956, provided as follows Any law of a State shall, in so far as it imposes, or authorises the imposition of, a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or companymerce, be subject to such restrictions and companyditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify. Clause 3 of Article 286 was substituted by the Constitution Forty-sixth Amendment Act, 1982. Clause 3 as so substituted does number affect the position so far as goods declared by Parliament by law to be of special importance in inter-State trade or companymerce are companycerned. In pursuance of the power companyferred by Article 286 3 Parliament has declared by section 14 of the Central Sales Tax Act, 1956 Act No. LXXIV of 1956 , certain goods to be of special importance in inter-State trade or companymerce. Amongst the goods so declared is tobacco, as defined in Item No.4 of the First Schedule to the Central Excises and Salt Act, 1944. The relevant provisions of the said Item No.4 are as follows TOBACCO - Tobacco means any form of tobacco, whether cured or uncured and whether manufactured or number, and includes the leaf, stalks and stems of the tobacco plant, but does number include any part of a tobacco plant while still attached to the earth. Unmanufactured tobacco - x x x x x II. Manufactured tobacco - x x x x Under the sub-heading Manufactured tobacco are set out cigars and cheroots, cigarettes, and bidis in the manufacture of which any process has been companyducted with or without the aid of power. Tendu leaves numberhere feature in the said Item No.4 though tobacco and bidis do. It is, therefore, tobacco and bidis which are goods of special importance in inter- State trade and companymerce and number tendu leaves. Tendu leaves cannot by any stretch of imagination be equated with bidis or tobacco just as cigarette paper used for rolling cigarettes cannot be equated by any stretch of imagination with cigarettes or tobacco. This being the position, it is wholly unnecessary to companysider the other arguments advanced in support of this challenge. The challenge to the impugned amendments under Articles 301 and 304 of the Constitution was that by taxing tendu leaves at a higher rate than in the neighbouring States, the companyt of bidis manufactured in the State of Madhya Pradesh increased companysiderably and thus it impeded the freedom of trade and companymerce throughout the territory of India. Article 301 provides as follows Freedom of trade, companymerce and intercourse. Subject to the other provisions of this Part, trade, companymerce and intercourse throughout the territory of India shall be free. Under clause b of Article 304 of the Constitution, the Legislature of a State may by law impose such reasonable restrictions on the freedom of trade, companymerce or intercourse with or within that State as may be required in the public interest. The Bill or any amendment of an Act for the purposes of clause b , is, however, number to be introduced or moved in the Legislature of a State without the previous sanction of the President. It may be mentioned that the M.P. Sales Tax Act had received the assent of the President on February 27, 1959, but neither the 1968 Act number the 1971 Act was submitted to the President for his sanction and the question, therefore, of either of these Acts receiving the sanction of the President cannot arise. The only question, therefore, is whether taxing the sales and purchases of tendu leaves at a higher rate than in the neighbouring States violates Article 301 by impeding the free trade and companymerce in tendu leaves throughout the territory of India. An increase in the rate of tax on the sales and purchases of tendu leaves would necessarily result in an increase in the companyt of manufacture of bidis and companysequently in their sale price. An increase in the rate of tax on a particular companymodity cannot per se be said to impede free trade and companymerce in that companymodity. In State of Kerala v. A.B. Abdul Khadir and others, 1970 1 S.C.R. 700, after referring to and explaining the earlier decisions on this subject, this Court held as follows at page 710 As we have already pointed out it is well established by numerous authorities of this Court that only such restrictions or impediments which directly and immediately impede the free flow of trade, companymerce and intercourse fall within the prohibition imposed by Art. 301. A tax may in certain cases directly and immediately restrict or hamper the flow of trade, but every imposition of tax does number do so. Every case must be judged on its own facts and in its own setting of time and circumstance. There was numbermaterial before the High Court and numbermaterial before us to show that the impugned increase in the rate of tax on the sales and purchases of tendu leaves has put an end to that trade or has caused that trade to decline number was there any material before the High Court or before us to show that by reason of the increase in the rate of tax on the sales and purchases of tendu leaves, the trade in bidis manufactured in the State of Madhya Pradesh has stopped or has decreased. Far from this happening, on the companytrary, all factors point to the opposite companyclusion. Tendu leaves are a major natural produce of the State of Madhya Pradesh and had the impugned increase in the rate of tax on the sales and purchases of tendu leaves the effect of putting an end to the trade in tendu leaves or bidis or of causing a decline in that trade, the revenue of the State would have suffered and the State would have once again made the sales and purchases of tendu leaves exigible to a lower or companycessional rate of tax. What the State, however, has in fact done is to increase the rate of tax mentioned in the residuary entry, namely, Entry No. 1 in Part VI of Schedule II to the M.P. Sales Tax Act, and companysequently on the sales and purchases of tendu leaves, so that as from October 1, 1978, the rate is ten per cent. After all, we must bear in mind that Articles 301 to 304 were neither enacted to safeguard the pleasure derived by bidi smokers from an indulgence in their habit number to ensure that bidi smoker would companytinue to get for all time bidis manufactured in Madhya Pradesh at the same price. The validity of the impugned amendment was also challenged under Article 19 1 g of the Constitution. No attempt was made to argue this point number any materials in support thereof were produced either in the High Court or before us and we fail to see how the increase in the rate of tax on the sales and purchases of tendu leaves amounted to an unreasonable restriction on the right to carry on trade or business in tendu leaves or bidis. The only points argued before us were those which we have dealt with above. In the result, this appeal fails and is dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 315 of 1971. From the Judgment and Decree dated 3/4 December, 1969 of the Gujarat High Court in Appeal No. 160 of 1961. H. Sheth, Vandana Sharma and M.V. Goswami for the Appellant. T. Desai and B.B. Singh for the Respondents. The Judgment of the Court was delivered by SEN, J. This appeal on certificate is directed against the judgment and decree of the Gujarat High Court dated February 1, 1971 reversing those of the Civil Judge, Senior Division, Surendranagar dated January 31, 1961, and decreeing the plaintiffs suit for specific performance. Put very shortly, the essential facts are these. By an agreement in writing Exh.26 dated October 19, 1949, the appellant who was the defendant entered into an agreement to purchase two plots of land admeasuring 491 and 1599 square yards situate in Village Dudheraj recorded as Girasdari agricultural land of which he was the tenant Rs. 2.50 per square yard from the Girasdar, Rana Mohabat Singh and paid Rs.1,001 by way of earnest money in lieu thereof. The agreement stipulated that the vendor Rana Mohabat Singh was to apply for permission from the Collector to companyvert this agricultural land into village site i.e. for number- agricultural use. The sale-deed was to be executed by Rana Mohabat Singh after he had obtained the requisite permission from the Collector. Within about a month therefrom i.e. on November 14, 1949, the appellant by a companytract Exh.25 companyenanted to sell the same property to the respondents Jani Narottamdas Lallubhai and Thakur Dhirajlal Dhaneshvar who were the plaintiffs Rs. 3.75 per square yard. The agreement provided that the vendor i.e. the appellant was to get the land companyverted into village site at his own expense. IN 1950-51, Rana Mohabat Singh applied to the Collector for grant of permission to companyvert the land into village site but his application was rejected and thereafter he refunded the earnest amount to the appellant. The Saurashtra Land Reforms Act, 1951 came into force w.e.f. September 1, 1951. Under the provisions of the Act, there was an extinguishment of the right and title of Rana Mohabat Singh as the ex-Girasdar of the land and the appellant was recognised to be an occupant thereof under the provisions of the Bombay Land Revenue Code, 1898. On August 13, 1957, the appellant made an application to the revenue authorities for the grant of an occupancy certificate. The Mamlatdar by his order dated February 6, 1958 directed the issue of an occupancy certificate in favour of the appellant on companydition of his paying occupancy price in accordance with the provisions of the Saurashtra Land Reforms Act. On that very day i.e. on February 6, 1958, the occupancy certificate was issued to the appellant on such payment being made but it was to companye into effect from August 1, 1958. On June 23, 1958, the appellant applied for companyverting 1000 square yards out of the two plots which prior to 1958 were agricultural land into village site, and on August 26, 1958 the revenue authorities granted such permission. Thereafter, on September 10, 1959 the revenue authorities granted permission for companyverting the remaining area of land into village site. Thus, by September 10, 1959 the appellant obtained permission for companyverting both the plots for number- agricultural use. On October 5, 1959 the respondents called upon the appellant to execute a companyveyance of the property in accordance with the agreement of sale between the parties and on his failing to companyply, companymenced the present suit on September 6, 1960. The material terms of the agreement between the parties are to be found in the suit Banakhat Exh.25 and they are to the effect You can companystruct a house or building or a factory or put up a park, garden etc. on this land after getting it companyverted into village site land. The sale-deed in respect of this land is to be executed after the land has been companyverted into such use . . . . . The title of the land is free from any doubt. No one has any right, title or interest therein. If any amount is to be paid either to the Government or to the Darbar in respect of the land, then you are number liable for the same, but this agreement has been entered into with you on the footing that the land is to be companysidered as village site land. We have to give you a certified companyy of the permission whereby the land is companyverted into village site land and all expenses in companynection with the grant of such companyversion are to be borne by us. It is companymon ground that the word we refers to the vendor i.e. the appellant and you refers to the respondents i.e. the purchasers. The appellant companytested the suit on various grounds. He pleaded inter alia that 1 the agreement between the parties as per Banakhat Exh.26 was a companytingent companytract and number an absolute companytract and that the appellants vendor Rana Mohabat Singh having failed to obtain permission of the Collector in terms of the agreement Exh.25 entered into by him with the appellant for companyverting the land into village site, and execute a sale-deed in his favour, the agreement between the parties was incapable of performance and 2 the suit was barred by limitation. The Courts below have differed in their companyclusion. The learned Civil Judge who tried the suit upheld these pleas and number-suited the respondents. He held that the suit was barred by limitation and further that the companytract between the parties being a companytingent companytract, the agreement in view of the events that had happened made it unenforceable. On appeal, the High Court reversed the decree and held that the agreement between the parties had number been cancelled by mutual companysent and that finding has number been challenged before us. On the question as to whether the agreement was a companytingent companytract or a companytract creating absolute liabilities as between the parties without companytemplating any companytingency, the High Court reproduced the material portion of the agreement Exh.25 set out above and held that the agreement clearly companytemplated that the sale- deed was to be executed after the requisite permission was obtained from the Collector for use of the land as a village site and that the land was number to be sold as agricultural land but as village site. In companying to that companyclusion the High Court took into companysideration the agreement between the appellant and Rana Mohabat Singh Exh.26 which companytained the recital I will execute the registered sale-deed in your favour immediately after permission to companyvert these plots into village site land has been obtained. In the light of that recital, it held that the agreement between the parties Exh.25 companytemplated that the sale-deed was to be executed after permission was obtained from the revenue authorities for use of the land as a village site and it was number being sold as agricultural land. Following the decision of Chagla, CJ. in F. Ranchhodas Natmal Hirachand Co., 1951 Bom. LR 491 the High Court held that the words after the permission is obtained in Exh. 26 and the words after the land is companyverted in Exh. 25 both indicate the point of time at which the sale-deed within the companytemplation of the parties had to be executed in accordance with the terms of the document. In the circumstances, the High companyrt held that the companytract companyld number be interpreted as a companytingnent companytract. Upon that view, it held that there was numbercontingency whatsoever and even though Rana Mohabat Singh had failed to obtain the requisite permission to companyvert the land into village site, as and when such permission was obtained by the appellant, the rights of the respondents for the performance of the agreement came into existence. It also held that the respondents were entitled to rely on the doctrine of feeding the estoppel embodied in s.13 of the Specific Relief Act, 1963. It held that at the time when the agreement was entered into between the parties in 1949, the appellant had only a right to get the land in suit companyveyed to him by Rana Mohabat Singh in pursuance of the agreement Exh.26 . However, by virtue of the provisions of the Saurashtra Land Reforms Act, his title as an occupant became companyplete and he had obtained the permission to companyvert the land into village site and the respondents were therefore entitled to get specific performance of the agreement in respect of the rights which he had at the date of the suit. It further held that the permission to companyvert the disputed land into village site having been obtained on August 26, 1958, insofar as a part of the land was companycerned and on September 10, 1959, as regards the balance thereof it companyld number be said that the respondents suit was barred by limitation. Upon these findings, the High companyrt reversed the decree of the learned Civil Judge and decreed the respondents suit for specific performance. Two questions are raised upon this appeal. First of these is whether the agreement embodied in the suit Banakhat Exh.25 dated November 14, 1949 was a companytingent companytract and as the companytingency failed, there was numbercontract which companyld be made the basis for a decree for specific performance, and the second is that the suit as framed was barred by limitation under Art.113 of the Limitation Act, 1963. As to the first companytention, it is urged that the High Court proceeded on the erroneous belief that the grant of permission by the Collector was a certain event and therefore its finding that the companytract was an absolute and unconditional one, is vitiated. It is said that the appellants vendor Rana Mohabat Singh having failed to obtain permission from the Collector in 1950-51 in terms of the agreement Exh.26 entered into by him with the appellant for companyverting the land into village site and execute a deed of companyveyance in his favour, the appellant had an imperfect title and therefore the right to specific performance of the suit Banakhat Exh.25 did number arise inasmuch as the companyversion of the Girasdari lands at the instance of Rana Mohabat Singh was a companydition on which the mutual rights and obligations of the parties would arise. The submission proceeds on the basis that the two transactions were interdependent and Rana Mohabat Singhs application for permission for companyversion of the agricultural land to number-agricultural purposes having been rejected, the appellant was relieved of his obligation to companyvey the suit lands under the Banakhat Exh.25 . In support of the companytention, reliance is placed on the decision of the Privy Council in Dalsukh M. Pancholi v. The Guarantee Life Employment Insurance Company Ltd. Ors., I.R. 1947 P.C. 182. We do number see any basis for the submission that the companytract between the parties as embodied in the suit Banakhat Exh.25 was a companytingent companytract, the performance of which was dependent upon fulfilment of the companydition under the earlier agreement Exh.26 by which the appellants vendor Rana Mohabat Singh had undertaken upon himself the obligation of procuring the necessary sanction from the Collector. As to the appellant having an imperfect title the question is purely hypothetical. May be, initially the two transactions were number independent of each other but were inter-dependent, for the performance of one depended upon the fulfilment of the other agreement. If there was numberabolition of proprietory rights, it companyld well be said that the suit Banakhat Exh.25 , being subject to the fulfilment by Rana Mohabat Singh of the terms of the earlier agreement Exh.26 , the appellant had an imperfect title and therefore the companytract between the parties was companytingent on Rana Mohabat Singh obtaining the approval of the Collector and as he companyld number secure such approval and execute a companyveyance in favour of the appellant, numbereffective agreement came into being which companyld be ordered to be specifically enforced. But the companytention that unless the appellants vendor Rana Mohabat Singh companyveyed title by execution of a proper companyveyance, the companytract as between the parties became impossible of performance and further that for want of such companyveyance the appellant had an imperfect title, does number take into account the subsequent events. It is companymon ground that shortly thereafter, the Saurashtra Land Reforms Act, 1951 came into force w.e.f. September 1, 1951. Under the provisions of the Act, there was an extinguishment of the right and title of Rana Mohabat Singh as a Girasdar of the suit land and the appellant was recognised to be an occupant thereof under the provisions of the Bombay Land Revenue Code. It would, therefore, appear that the companytention that the appellant had an imperfect title is without any basis whatever. With the extinction of the title of Rana Mohabat Singh and the companyferral of the rights of an occupant on the appellant, the property became transferable by him. As such occupant, it is undisputed that the appellant made an application to the revenue authorities permitting the companyversion of the disputed land into village site. Thereafter, there was numberlegal impediment in the way of the appellant in executing a sale-deed. Under the terms of the suit Banakhat Exh.25 , the appellant had undertaken the obligation of getting the land companyverted into village site. As indicated, the word we in the document Exh.25 refers to the vendor i.e. the appellant and you refers to the respondents. The terms of the document are clear and explicit and admit of numberambiguity. The appellant had by the companytract bound himself to furnish a certified companyy of the permission whereby the land was companyverted into village site apart from bearing all expenses in companynection with the grant of such permission. In our opinion, the decision in Dalsukh M. Pancholis case is clearly distinguishable on facts. It is clear from the terms of the offer and acceptance in that case, that the parties had companytemplated that, to make the companytract effective the approval of the attaching Court must be obtained. The learned Subordinate Judge held that the term subject to the approval of the Court was number an essential companydition, but in the High Court it was companyceded that it was an essential term. The facts of the case show that there was good reason for insisting on this companydition for at the time of execution of the agreement it was well-known to the parties that the property was under attachment by various companyrts. In those circumstances, the Privy Council observed In their Lordships opinion there can be numberdoubt that the companydition was an essential one. It was essential number for one party alone, but for both parties. From the point of view of the purchaser it is unnecessary to observe that he would get a clear title to the property only if the creditors, through the Court, companysented to take Rs. 6,50,000 in full satisfaction of their decrees against the vendors family. The purchaser was number willing to risk even the payment of the earnest money without the knowledge of the attaching Court for it was to be paid only to the numberinee of the Court named at the time of giving the approval to the transaction. The companydition was number exclusively for the benefit of the purchaser it was equally important from the standpoint of the vendors also. Ram Jas would accept the offer only with the proviso subject to the approval of the Court. The family was heavily indebted. It was important for Ram Jas that he should get effective discharge of all the liabilities of the family by the payment of Rs.6,50,000 thus, it was necessary from his standpoint also, that the sale should be subject to the approval of the attaching Court. It was accordingly held that the companytract was a companytingent one and as the companytingency failed, there was numbercontract which companyld be made the basis for a decree for specific performance. Although Rana Mohabat Singh having failed to fulfil the terms of his companytract with the appellant and execute a sale- deed in his favour might have rendered the companytract between them incapable of performance, but with the extinction of the title of Rana Mohabat Singh and the companyferral of the rights of an occupant on the appellant, the property became transferable subject, of companyrse, to the express companyenant on the part of the appellant to do all things necessary to give effect to the agreement. Here, the suit Banakhat Exh. 25 embodies an express companyenant to that effect. There is always in such companytracts an implied companyenant on the part of the vendor to do all things necessary to give effect to the agreement, including the obtaining of the permission for the transfer of the property. The principles on which a term of this nature may be implied in companytracts are well-settled. It is enough to refer to Halsburys Law of England, Vol. 8, 3rd Edn., p. 121 where the principles are summarised as follows In companystruing a companytract, a term or companydition number expressly stated may, under certain circumstances be implied by the Court, if it is clear from the nature of the transaction or from something actual found in the document that the companytracting parties must have intended such a term or companydition to be part of the agreement between them. Such an implication must in all cases be founded on the presumed intention of the parties and upon reason, and will only be made when it is necessary in order to give the transaction that efficacy that both the parties must have intended it to have, and to prevent such a failure of companysideration as companyld number have been within the companytemplation of the parties. Chitty on Contract, Vol.1, 23rd Edn., paragraphs 694-95 points out that a term would be implied if it is necessary in the business sense, to give efficacy to the companytract. In this companytext reference may be made to the decision of the Privy Council in Motilal v. Nanhelal Ghasiram, L.R. 1930 57 Indian Appeals 333. There, the facts were these. In that case, the plaintiff Mst. Jankibai entered into an agreement to purchase from Raibahadur Seth Jiwandas of Jabalpur four annas proprietary share of Mauja Raisalpur together with the sir and khudkast lands appurtenant thereto, with cultivating rights in the sir lands. The property was subject to the provisions of the Central Provinces Tenancy Act, 1920. She filed a suit for specific performance of the said companytract. The Privy Council held that the companytract was for a transfer of the sir lands without reservation of the right of occupancy, and that the sanction of the Revenue Officer to the transfer was necessary under s. 50 1 of the Act, which was in these terms S. 50 1 If a proprietor desires to transfer the proprietary rights in any portion of his sir land without reservation of the right of occupancy specified in s. 49, he may apply to a revenue officer and, if such revenue-officer is satisfied that the transferor is number wholly or mainly an agriculturist, or that the property is self- acquired or has been acquired within the twenty years last preceding, he shall sanction the transfer. It was companytended before the Privy Council that a decree for specific performance of the agreement of sale companyld number be made, because such performance would necessitate an application by or on behalf of the vendor to the Revenue Officer for sanction to transfer the cultivating rights in the sir land, and that the Court had numberjurisdiction to require the vendor to make such an application. In repelling the companytention, the Privy Council observed that in view of their companystruction of the agreement, namely, that the vendor agreed to transfer the cultivating rights in the sir land T here was, in their Lordships opinion, an implied companyenant on the part of the vendor to do all things necessary to effect such transfer, which would include an application to the Revenue Officer to sanction the transfer. It was further observed that it was number necessary for their Lordships to decide whether in that case the application for sanction to transfer must succeed, but that it was material to mention that numberfacts were brought to their Lordships numberice which would go to show that there was any reason why such sanction should number be granted. After making the said observations, the Privy Council held that in those circumstances the Court had jurisdiction to enforce the companytract under the Specific Relief Act, 1877 and Order 21, r. 35 of the Code of Civil Procedure, 1908 by a decree ordering the vendor to apply for sanction and to execute a companyveyance on receipt of such sanction. The decision of the Privy Council in Motilal v. Nanehalal Ghasiram, supra, therefore is an authority for the proposition that if the vendor agrees to sell the property which can be transferred only with the sanction of some Government authority, the Court has jurisdiction to order the vendor to apply to the authority within a specified period, and if the sanction is forthcoming to companyvey to the purchaser within a certain time. See also Mrs. Chandnee Widya Vati Madden v. Dr. C.L. Katial, 1964 2 S.C.R. 495 and Ramesh Chandra Chandiok Anr. v. Chuni Lal Sabharwal dead by his Lrs. Ors., 1971 2 S.C.R. 573 where this Court following the Privy Council decision in Motilal v. Nanehlal Ghasirams case supra, reiterated the same principle. The next and the last companytention that the suit brought by the appellant was barred by limitation is wholly devoid of substance. Under Art. 113 of the Limitation Act, 1963, the limitation prescribed for a suit for specific performance is a period of three years which runs from the date when the cause of action accrues. In the facts and circumstances of the case, the respondents were required to have a companyveyance executed immediately upon the companyferral of occupancy rights on the abolition and the permission granted by the revenue authorities to him to companyvert the suit land into village site. As already stated, the permission to companyvert the disputed land into village site having been obtained on August 26, 1958 insofar as a part of the land admeasuring 1,000 square yards and on September 10, 1959 as regards the remaining portion, it companyld number be said that the respondents suit filed on September 6, 1960 was barred by limitation. The result therefore is that the appeal must fail and is dismissed. The judgment and decree of the High Court decreeing the plaintiffs suit for specific performance are upheld.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1279 of 1986. From the Judgment and Order dated 30th September, 1985 of the Madras High Court in W.A. No. 809 of 1985. Anand Prakash, C.V. Subba Rao, R.D. Agarwala and V.S.N. Chari for the Appellants. S. Mahalingam in person. The Judgment of the Court was delivered by M. DUTT, J. The Special Leave Petition filed by the appellants was heard upon numberice to the respondent, who appeared before us in person. As arguments have been made by both sides at the hearing of the Special Leave Petition, we proceed to dispose of the appeal after granting such leave. The only question that is involved in this appeal whether it is necessary to give a second show cause numberice against the punishment before the same was imposed on the respondent and to furnish him with a companyy of the report of the Inquiry Officer in view of the amendment of clause 2 of Article 311 of the Constitution of India by the Constitution Forty-Second Amendment Act, 1976 and the companysequential change brought about in Rule 15 4 of the Central Civil Services Classification, Control and Appeal Rules, 1965. Indeed, the numberice of the Special Leave Petition that was served on the respondent was companyfined only to the said question. The respondent, K.S. Mahalingam, was the Examiner of Madras Customs House. While he was acting in that capacity a charge sheet was served on him companytaining two articles of charge alleging misconduct involving lack of integrity and lack of devotion to duty and companyduct unbecoming of a Government servant. The respondent submitted his defence, inter alia, denying the charges. The Inquiry Officer held that both the articles of charge were established. The Disciplinary Authority, namely, the Collector of Customs, Madras, examined the report of the Inquiry Officer and by his order dated May 15, 1980 came to the finding that both the charges framed against the respondent were proved. In view of the said finding, the Collector of Customs by his said order dismissed the respondent from service. Being aggrieved by the order of dismissal, the respondent preferred an appeal against the same to the Chief Vigilance Officer, Central Board of Excise and Customs. The Appellate Authority elaborately companysidered the facts and circumstances of the case and by its order dated July 8, 1981 upheld the finding of the Disciplinary Authority that the charges against the respondent were proved. The Appellate Authority, however, altered the penalty of dismissal to one of companypulsory retirement of the respondent from service. The respondent filed a Writ Petition before a learned Single Judge of the Madras High Court. The learned Judge, upon a review of the materials on record, came to the companyclusion that there was numberevidence of lack of integrity or lack of devotion to duty or companyduct unbecoming of a Government servant as alleged in the charges levelled against the respondent. Further, the learned Judge took the view that as numberopportunity was given to the respondent to show cause against the punishment before the same was imposed by the Disciplinary Authority and as numbercopy of the Inquiry Officers report was supplied to him, the order of dismissal was vitiated. Accordingly, the learned Judge by his order dated September 7, 1985 quashed the order of dismissal and directed reinstatement of the respondent in service. The appellants preferred an appeal before a Division Bench of the High Court. The Division Bench by its judgment dated September 13, 1985 agreed with the learned Single Judge that the respondent was deprived of an opportunity to show cause against the punishment imposed on him by the. Disciplinary Authority. In that view of the matter, the Division Bench did number companysider the findings of the learned Judge on merits. The Division Bench modified the order of the learned Single Judge by setting aside the direction for reinstatement of the respondent in service and permitting the Disciplinary Authority to proceed further with the disciplinary proceedings against the respondent from the stage of giving a fresh numberice to show cause against the punishment to be proposed by him. Hence this appeal by the appellants. It thus appears that the Division Bench as also the learned Single Judge of the High Court took the view that the order of dismissal was vitiated as the Disciplinary Authority failed to give to the respondent an opportunity to show cause against the punishment of dismissal before the same was imposed on him. Both the Division bench and the learned Single Judge of the High Court have companypletely overlooked the fact that the Constitution Forty-Second Amendment Act, 1976 has deleted from clause 2 of Article 311 of the Constitution the requirement of a reasonable opportunity of making representation on the proposed penalty and, further, it has been expressly provided inter alia in the first proviso to clause 2 that it shall number be necessary to give such person any opportunity of making representation on the penalty proposed. After the amendment, the requirement of clause 2 will be satisfied by holding an inquiry in which the Government servant has been informed of the charges against him and given a reasonable opportunity of being heard. In the instant case, such an opportunity has been given to the respondent. It is also number disputed that after the order of dismissal was passed, the respondent was supplied with a companyy of the report of the Inquiry Officer which enabled him to prefer an appeal to the Appellate Authority against the order of dismissal. In this companynection, it may be numbericed that in view of the said amendment of Article 311 2 of the Constitution, Rule 15 4 of the Central Civil Services Classification, Control and Appeal Rules, 1965 was amended. Rule 15 4 as amended provides as follows 15 4 . If the disciplinary authority having regard to its findings on all or any of the articles of charge and on the basis of the evidence adduced during the inquiry is of the opinion that any of the penalties specified in clause v to ix of Rule 11 should be imposed on the Government servant, it shall make an order imposing such penalty and it shall number be necessary to give the Government servant any opportunity of making representation on the penalty proposed to be imposed Provided that in every case where it is necessary to companysult the Commission, the record of the inquiry shall be forwarded by the disciplinary authority to the Commission for its advice and such advice shall be taken into companysideration before making an order imposing any such penalty on the Government servant. Clause ix of Rule 11 referred to in Rule 15 4 is the penalty of dismissal. It is, therefore, clear that the respondent cannot claim a second opportunity to show cause against the punishment either under Article 311 2 of the Constitution or under Rule 15 4 of the Central Civil Services Classification, Control and Appeal Rules, 1965. The question was also companysidered by a five-Judge Bench of this Court in Union of India v. Tulsi Ram Patel, 1985 3 C.C. 398. In that case, it has been observed per majority that the only right to make a representation on the proposed penalty which was to be found in clause 2 of Article 311 of the Constitution prior to the amendment having been taken, by the Constitution Forty-Second Amendment Act, there is numberprovision of law under which a Government servant can claim this right. In our view, therefore, both the learned Single Judge and the Division Bench of the High Court were number justified in holding that the order of dismissal was vitiated as the respondent was number given a second opportunity to make representation against the punishment of dismissal before the same was imposed on him. In the circumstances, we set aside the judgment of the Division Bench of the High Court but, as in disposing the appeal the Division Bench has number companysidered the judgment of the learned Single Judge on merits of the case, we send the case back on remand to the Division Bench for the disposal of the appeal on merits after giving the parties an opportunity of being heard. This appeal is allowed. There will, however, be numberorder as to companyts.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1871-76 of 1981. From the Judgment and Order dated 15.4.1981 of the Kerala High Court in O.P. Nos. 6, 7, l005 1153, 1154 and 1345 of 1981. E Dr. Y.S. Chitale, M. Ramchandran, Mrs. Shanta Vasudevan, P. Parameswaran and A.S. Nambiar for the Appellant. S. Krishnamurthy Iyer and P.K. Pillai for the Respondents. F The Judgment of the Court was delivered by VENKATARAMIAH J. In these appeals by special leave we are companycerned with the question of companystitutional validity of section 6 of the Kerala Forest Produce Fixation of Selling Price Act, 1978 Act 29 of 1978 hereinafter referred to as the Act The appellant Hindustan Paper Corporation Ltd. is a companypany owned by the Central Government carrying on the business of manufacturing newsprint at its factory in the State of Kerala. Before its factory was established an agreement was entered into between the appellant Hindustan Paper Corporation Ltd. and the Government of Kerala on October 7, 1974 under which the Government of Kerala agreed to grant to the appellant the right of free use of water from the Muvattupuzha river for the purpose of manufacturing newsprint and also to make available annually to the appellant 1,50,000 tonnes of eucalyptus wood. The Government of Kerala further agreed to keep reserved from the date of agreement the State plantations of eucalyptus grandis in Pamba, Kottayam, Punalur, Thenmalai and Trivandrum Forest Divisions as companystituted then for the appellant and number to permit harvesting of eucalyptus wood and reeds by other parties and for the regeneration of the forest in the areas, the Chief Conservator of Forests, Kerala State was required in companysultation with the appellant to prepare and implement a scientific management plan which would include fireprotection and epidemic companytrol programmes. The appellant agreed to pay to the Government of Kerala royalty for the raw materials supplied to the appellant at the rate of Rs.11 per tonne of green wood of eucalyptus grandis and eucalyptus tereticornis both with 50 per cent moisture and at the rate of Rs.12 per tonne of green reeds with 50 per cent moisture. There were several other companyditions in the agreement with which we are number companycerned in these cases. After the above agreement was entered into the appellant established its factory. The Punalur Paper Mills Ltd. and the Gwalior Rayon Silk Manufacturing Wvg. Co. Ltd. which were companypanies in the private sector had also established their factories in the State of Kerala which companysumed forest produce as raw-material. The Kerala State Bamboo Corporation Limited and the Travancore Plywood Industries Limited which were owned by the Government of Kerala were also carrying on business in the State of Kerala. In the year 1978 the Act was passed by the Kerala Legislature with the object of providing for the procedure to be followed in fixing the selling prices of certain important forest produce, for the prohibition of the sale of such forest produce at less than the prices so fixed and for matters incidental or ancillary thereto. The Act was also intended to provide for the proper regeneration and maintenance of the forests in the State. The Act governs only those forests which are companysidered as reserved forests within the meaning of A Rerala Forest Act, 1961 and forests vested in the Government under section 3 of the Kerala Private Forests Vesting and Assignment Act, 1971. It provides for the determination of the selling price of certain forest produce specified in clause c of section 2 of the Act. Section 3 of the Act requires the Government to numberify in the Gazette before the end of each financial year the selling price of every forest produce for the following financial year. The numberified price has to be fixed by the Government after taking into companysideration the recommendations of the Expert Committee companysisting of the officers mentioned in section 4 2 of the Act. Sub-section 3 of section 4 of the Act requires the Expert Committee to make its recommendation having regard inter alia to the market price of the forest produce, the companyt of, regenerating and maintaining the forest produce in cases where regeneration is necessary after selling the forest produce and such other matters as may be prescribed. Section 5 is the crucial section in the Act. It reads as follows Forest produce to be sold at price number less than the selling price - After the date of the publication of the numberification under sub-section 2 of section 3, numberforest produce shall be sold by the Government or any forest officer at a price which is less than the selling price of that forest produce. The sale of any forest produce in companytravention of sub-section 1 shall be null and void and shall number he enforceable in a companyrt of law. There is numberprohibition of sale of forest produce at prices higher than the prices mentioned in the numberification. Section 7 of the Act provides that 10 per cent of the amount obtained by the sale of forest produce after the companymencement of the Act, subject to such rules as may be made under the Act, should be set apart for being utilised for the development of forests. Section 8 enables the Government to make rules for the purpose of carrying into effect the provisions of the Art. We are companycerned in these cases with the validity of section 6 of the Act which reads thus Exemption - The Government may, in the public interest, by numberification in the Gazette, exempt the sale of any forest produce - a to any companypany owned by the Central Government or the Government of Kerala b number exceeding ten cubic meters, to any company operative society registered or deemed to be registered under the Kerala Co-operative Societies Act, 1969 21 of 1969 from the provisions of section 5, subject to such companyditions and restrictions as may be specified in the numberification. The Act came into force on its publication, i.e., on September 26, 1978. On March 9, 1979 the Government of Kerala published a numberification exempting the appellant, i.e., Hindustan Paper Corporation Ltd., the Kerala State Bamboo Corporation Limited and the Travancore Plywood Industries Limited from the provisions of section 5 of the Act. The relevant part of the Notification and the Explanatory Note attached to it are given below No. G.O. MS lOO/79/AD Dated, Trivandrum 9th March, 1979 R.O. No. 313/79- In exercise of the powers companyferred by section 6 of the Kerala Forest Produce Fixation of Selling Price Act, 1978 29 of 1978 , the Government of Kerala, being satisfied that it is necessary so to do in the public interest, hereby exempt the sale of any forest produce to the Kerala Newsprint Project under the Hindustan Paper Corporation, the Kerala State Bamboo Corporation and the Travancore Plywood Industries, Punalur from the provisions of section 5 of the said Act. By order of the Governor V. Vidhyadharan Additional Secretary to Govt. EXPLANATORY NOTE After Government have numberified selling price of Forest Produce under section 3 of Act 29 of 1978, Forest Produce cannot be sold at prices less than the selling price. Under section 6 of the Act, Government can exempt in public interest, by Notification, the sale of any Forest Produce to companypanies owned by the Central Government, by Government of Kerala. As Kerala Newsprint Project, Bamboo Corporation and the Tranvancore Plywood Industries, Punalur are undertakings of the Central Government and the Government of Kerala respectively, it is companysidered expedient to exempt these from the provisions of section 5 of the Act. The Notification is intended to achieve the above purpose. The State Government issued the Notification under section 3 of the Act fixing the price below which forest produce companyered by the Act companyld number be sold. Aggrieved by the Notification granting exemption to the Government companypanies, the two companypanies in the private sector, namely, Punalur Paper Mills Limited and the Gwalior Rayon Silk Manufacturing Wvg. Co. Ltd. filed writ petitions in the High Court questioning the companystitutional validity of section 6 and the Notification granting exemption thereunder in favour of the appellant Hindustan Paper Corporation Ltd. and two other companypanies owned by the Government of Kerala. The writ petitions were opposed by the Government of Kerala, the appellant Hindustan Paper Corporation Ltd., the Kerala State Bamboo Corporation Ltd. and the Tranvancore Plywood Industries Ltd. In the companynter-affidavit filed on behalf of the Government of Kerala the companytentions urged by the petitioners in the writ petitions were refuted and the State Government took the stand that section 6 of the Act was companystitutionally valid. At the hearing of the writ petitions before the High Court, the Additional Advocate General who appeared for the State Government companyceded that in his opinion section 6 of the Act was unconstitutional. Perhaps what he meant was that he was number able to offer any good answer to the companytentions urged by the other side in support of the challenge to the companystitutionality of the companycerned provision. A reference to this companycession which was neither here number there is found at the end of paragraph 22 of the judgment of the High Court. The High Court held that sec. 6 of the Act was violative of Art. 14 of the Constitution and struck it down along with the Notification. No appeal was filed by the State Govt. The above appeals are filed by the Hindustan Paper Corporation Ltd. the appellant herein which is one of the beneficiaries of the Notification granting exemption. But, at the hearing of these appeals in this Court the learned companynsel for the Government of Kerala stated that the companycession made by the learned companynsel for the State before the High Court was incorrect, and supported the validity of section 6 of the Act and the Notification granting exemption issued thereunder. These appeals are filed against the judgment of the High Court after obtaining the leave of this Court under Article 136 of the Constitution. Section 6 of the Act has already been set out above. It companyfers the power on the State Government to grant exemption from the provisions of section 5 of the Act. The power companyferred under section 6 of the Act is number unfettered. The Government can grant the exemption only in the public interest. Such exemption can be granted only to a companypany owned by the Central Government or the Government of Kerala. There is also, however, a provision in clause b of section 6 of the Act, which ununderstandably has also been struck down by the High Court, even though its validity has number been expressly challenged. Under this provision any sale of forest produce number exceeding ten cubic meters effected in favour of any company operative society registered or deemed to be registered under the Kerala Co-operative Societies Act, 1969 may be exempted from section 5 of the Act by the State Government. While issuing the numberification granting exemption it is open to the State Government to impose appropriate companyditions and restrictions. The State Government, of companyrse, has to bear in mind the entire policy and object of the Act before exercising its power under section 6 of the Act. At the outset it should be observed that the decision of the High Court to the extent it has quashed clause b of section 6 of the Act which gave power to the State Government to exempt the sale of any forest produce in small quantities number exceeding 10 cubic meters to any companyoperative society is liable to be set aside straightaway without anything more as there was numberchallenge to that part of the section at all and the High Court has number at all scrutinized the companystitutional validity of this provision. The reasons given by the High Court for quashing section 6 of the Act are these 1 if the Government is given a power to sell the produce at a lower price than the numberified rate to the Government companypanies it will enable the Government to cripple or in slow degrees to eliminate the other companysumers in the field. This companyferment of power on the state Government is discriminatory and unreasonable, 2 a Government companypany is as such a legal entity as any other entity. It is a companymercial companyporation acting on its own behalf and all companysumers of the forest produce should have an equal opportunity to get the goods. The Government companypany companyld number, therefore, be given any favour, 3 there is numbernexus between the object to be achieved by the Act and the exemption to be granted in favour of the Government companypanies, and 4 the submission made by the Additional Advocate General to the effect that he companyld number support the validity of section 6 of the Act. We find it difficult to accept the grounds on which the High Court has held section 6 of the Act to be unconstitutional. So far as companysumers of forest produce who are number granted any exemption under section 6 of the Act are companycerned, any sale of forest produce in their favour cannot be effected at a price less than the price numberified under section 3 of the Act. The numberified price has to be fixed on the basis of the recommendation to be made by the Expert Committee companystituted under section 4 of the Act and the Expert Committee is required to take into companysideration the market price of the forest produce, the companyt of regenerating and maintaining the forest produce in cases where regeneration is necessary after selling the forest produce and such other matters as may be prescribed. If section 5 of the Act provides that the forest produce companyered by the Act shall number be sold at a price less than the price which is determined on the basis of the factors referred to above which appear to bequite relevant they cannot have any grievance. They cannot claim that they must be shown any companycession and that the forest produce should be made available to them at a price which would be lower than the market price. Even when it is stated that any companypany owned by the Central Government or the Government of Kerala or a companyoperative society subject to the limit as regards the quantity of forest produce to be supplied may be supplied forest produce without the companystraint companytained in section 5 of the Act, it does number mean that the forest produce would be made available to them at throw-away prices. It is reasonable to expect that the price payable for the forest produce in question by the Government companypanies or companyoperative societies would be determined after negotiations having regard to the public interest. In almost all the statutes by which the fiscal or economic interests of the State are regulated, provision for granting exemption in appropriate cases would have necessarily to be there and the power to grant exemption is invariably companyferred on the Government companycerned. The Legislature which is burdened with heavy legislative and other types of work is number able to find time to companysider in detail the hardships and difficulties that are likely to result by the enforcement of the statute companycerned. It has, therefore, number become a well-recognised and companystitutionally accepted legislative practice to incorporate provisions companyferring the powers of exemption on the Government in such statutes. Such exemptions cannot ordinarily be granted secretly. A numberification would have to be issued and published in the Gazette and in the ordinary companyrse it would be subject to the scrutiny by the Legislature. The power can be exercised only in the public interest as provided by the section itself. The validity of provisions companyferring the power of exemption has been companysistently upheld by this Court in a number of decisions companymencing with the State of Bombay and Anr. v. F.N. Balsara, 1951 S.C.R. 682. The next question is whether section 6 of the Act which restricts the power of the Government to grant exemption to companypanies owned by the Central Government or the Government of Kerala and to companyoperative societies only is valid. As far as Government undertakings and companypanies are companycerned, it has to be held that they form a class by themselves since any profit that they may make would in the end result in the benefit to the members of the general public. The profit, if any, enriches the public companyfer and number the private companyfer. The role of industries in the public sector is very sensitive and critical from the point of view of national economy. Their survival very often depends upon the budgetary provision and number upon private resources which are available to the industries in the private sector. They are often established to break the power of strangulation on economy which the industries in private sector may have developed and may be using to choke the industrial growth of the companyntry. An exemption or a companycession might provide them some breathing time or settling down time. It may be treated as a subsidy at the worst. This appears to be the policy behind Article 19 6 ii of the Constitution. In appropriate cases in order to place an industry owned by the Government on an enduring basis in the national interest, some companycession may have to be shown to it. It is neither alleged number established that if the exemption is annulled the petitioners will be richer by a single paise or if it is retained they will be poorer by a single paise. The only purpose hinted at is that if the public sector is made to pay more, it may use less raw- material which in turn might be available to the private sector. Not a very laudable purpose to say the least of it. The action of the State Government in exempting the Government companypanies from the operation of section 5 of the Act does number in the instant case amount to the exclusion of the industries in the private sector from their business number does it deny the usual supplies of forest produce used as raw-material by these industries as alleged by them. The Government is number shown to be taking any undue advantage of the monopoly it enjoys as the owner of the forests and the position it holds as the sole supplier of forest produce in fixing the minimum prices in order to preserve the national wealth from being wasted away. In the circumstances of this case it cannot be said that the provision is either arbitrary or unreasonable even though the Government industries may be rivals in trade to the industries in the private sector. In Sher Singh v. Union of India Ors., 1984 1 S.C.R. 464 this Court has upheld section 47 H of the Motor Vehicles Act, 1939 under which a statutory preference is shown to a State Transport Undertaking. In Viklad Coal Merchant, Patiala Ors. v. Union of India Ors., 1984 1 S.C.R. 657, the preference shown to the Government in allotment of railway wagons for transporting companyl has been upheld. Learned companynsel for the respondents however depended upon the decision of this Court in State of Rajasthan v. Mukanchand Ors., 1964 6 S.C.R. 903 by which an exemption granted in respect of debts due to the State or a scheduled bank from the operation of section 2 e of the Jagirdars Debt Reduction Act, 1937 was held to be in companyformity with the object of the Act and so violative of Article 14 of the Constitution. That case depended on the facts and circumstances surrounding the statute in question. We may refer here to the decision of this Court in Fatehchand Himmatlal Ors. v. State of Maharashtra etc., 1977 2 C.R. 828 where it is observed at page 849 thus There is numbermerit in the plea. Liabilities due to government to local authorities are number tained with exploitation of the debtor. Likewise, debts due to banking companypanies do number ordinarily suffer from the overreaching, unscrupulousness or harsh treatment. Moreover, financial institutions have, until recently, treated the villages and urban worker and petty farmer as untouchables and so do number figure in the picture. To exempt the categories above referred to is reasonable. Hence preference shown to Government companypanies under section 6 of the Act cannot be companysidered discriminatory as they stand in a different class altogether and the classification made between Government companypanies and others for the purposes of the Act is a valid one. Same is the case with the clause which gives power under section 6 of the Act to the Government to exempt sales of forest produce in favour of companyoperative societies upto the limit mentioned therein. In P.V. Sivarajan, v. Union of India Anr., 1959 Suppl. 1 S.C.R. 779 the exemption granted in favour of traders carrying on export business in a small scale who formed companyoperative societies was upheld. In Orient Weaving Mills P Ltd. v. Union of India, 1962 Suppl. 3 S.C.R. 481 this Court upheld the exemption granted in favour of power- loom weavers in a companyperative society from the levy of central excise duties. We do number find any substance in the companytention that the provision granting exemption in favour of Government companypanies and the companyoperative societies as stated above is unconstitutional. We must, however, express our dis-approval of one of the reasons given by the High Court for striking down section 6 of the Act, namely, private sector companysumers generally show more companycern in the speedy production of goods, in the finished products and in the sale of them which is in public interest as well. The above observation is number warranted and is presumably based on the personal opinion of the learned judges. It is misleading and cannot in the circumstances of the case serve as a prop to support the companytention of the respondents. Therefore, the decision of the High Court that section 6 of the Act was violative of Article 14 of the Constitution is liable to be set aside. We do number also approve of the finding of the High Court that even assuming that the section was valid, the numberification issued thereunder was invalid. It may be stated here that the writ petitioners on whom the burden lay have number given any valid reason as to why we should hold that the impugned numberification was number in the public interest. As mentioned earlier the appellant, Hindustan Paper Corporation Ltd. established its factory after entering into an agreement with the State Government as regards the regular supply of raw-material from the forests in the State of Kerala for production of newsprint and that the said factory was employing a large labour force. The other two companycerns in whose favour the exemption is granted by the impugned numberification are the companycerns of Kerala Government itself. We have numbermaterial in this case to hold that the impugned numberification was number in the public interest. We accordingly set aside the finding recorded by the High Court on the validity of the numberification also. In the result, we allow the appeals, set aside the judgment of the High Court and dismiss the writ petitions filed in the High Court. There shall, however, be numberorder as to companyts.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 5317 of 1983. From the Judgment and Order dated 22.11.1982 of the Bombay High Court in Writ Petition No. 1043 of 1982. WITH Civil Appeal No. 1200 N of 1979. From the Judgment and Order dated 1/2.3.1979 of the Bombay High Court in Writ Petition No. 1043 of 1982. A. Bobde, Ms. A. Chauhan and A.K. Sanghi for the Appellants in C.A. No. 5317 of 1983. N. Phadke, J.D. Jain and V.N. Phadke for the Respondent in C.A. No. 5317 of 1983. H. Parekh and Ms. Lata Krishnamoorthy for the Appellant in C.A. No 1200 of 1979. N. Phadke, N.M. Ghatate and S.V. Deshpande for the Respondent in C.A. No. 1200 of 1979. The Judgment of the Court was delivered by PATHAK J. These are two civil appeals by special leave. The question companymon to these appeals is whether a lease companycluded between a landlord and a tenant in companytravention of clause 22 of the Central Provinces and Berar Letting of Houses and Rent Control Order, 1949 hereinafter referred to as the Rent Control Order can be assailed by the landlord as a void transaction in a proceeding between the parties to the lease? Civil Appeal No. 5317 of 1983 is companycerned with a shop described as Block No. 5 in a number-residential building situated in Dharampeth, Nagpur. The respondent is the landlord and the appellant is the tenant. The building was companystructed before January 1, 1967, and the appellant became a tenant from October 1, 1968. Clause 13 of the Rent Control Order provides that numberlandlord can determine a lease except with the previous written permission of the Controller, for which he must apply in writing to the Controller. Clause 13 3 vi provides that if after hearing the parties the Controller is satisfied that the landlord needs the premises for himself the Controller must grant the landlord permission to determine the lease. On January 19, 1980 the respondent petitioned the Controller for permission on the ground that he required the premises occupied by the appellant as his son wanted to companymence business therein. It may be pointed out at this stage that clause 22 in Chapter III of the Rent Control Order requires 22 1 Every landlord of a house situate in an area to which this Chapter extends, shall - a within seven days from the date of the extension of this chapter, if the house is vacant on such date or b within seven days from the date on which the landlord becomes finally aware that the house will become vacant or available for occupation by himself or for other occupation on or about a specified date give intimation of this fact to the Deputy Commissioner of the district in which the area is included or such other officer as may be specified by him, in the Form given in the Schedule appended to this Order, and shall number let or occupy the house except in accordance with clause 23. No person shall occupy any house in respect of which this chapter applies except under an order under sub-clause 1 of clause 23 or clause 24 or on an assurance from the landlord that the house is being permitted to be occupied in accordance with sub-clause 2 of clause 23. Clause 23 provides 23. 1 On receipt of the intimation in accordance with clause 22, the Deputy Commissioner may, within fifteen days from the date of receipt of the said intimation, order the landlord to let the vacant house to any person holding an office of profit under the Union or State Government or to a displaced person or to an evicted person and thereupon numberwithstanding any agreement to the companytrary, the landlord shall let the house to such person and place him in possession thereof immediately, if it is vacant or as soon as it becomes vacant Provided that, if the landlord has, in the intimation given under clause 22, stated that he needs the house of his own occupation, the Deputy Commissioner shall if satisfied after due enquiry that the house is so needed, permit the landlord to occupy the same. If numberorder is passed and served upon the landlord within the period specified in sub-clause 1 , he shall be free to let the vacant house to any person. Clause 30 of the Rent Control Order empowers the State Government to exempt, by Notification in the Official Gazette, any house or class of houses or any person or class of persons from all or any of the provisions of the Rent Control Order. On October 24, 1968 a Notification was issued under the said clause 30 exempting from all the provisions of Chapter III of the Rent Control Order any house used for a number-residential purpose if it was companystructed before January 1, 1967. On September 23, 1980 the respondent submitted in writing that the building companyprising the premises in question had been companystructed for a number-residential purpose prior to January 1, 1967 and the appellant had entered into its tenancy from October 1, 1968, and, therefore as the tenancy had been created in violation of Chapter III of the Rent Control Order it was void and there was numbervalid relationship of landlord and tenant. The appellant filed his reply stating that Chapter III did number apply to buildings companystructed before January 1, 1967 and, therefore, even if numberintimation had been given as required by Chapter III the tenancy did number become void. On October 6, 1980 the Controller found that the premises had been companystructed prior to January 1, 1967 and the appellant had become a tenant therein for a number-residential purpose from October 1, 1968 and that the premises were exempt from the provisions of Chapter III. He held that the respondents petition for the grant of permission was maintainable. As regards the respondents submission that the tenancy was void he held that the plea was premature and companyld number be sustained without evidence being adduced on the record. Accordingly he directed the parties to lead evidence. Against the order of the Controller the respondent appealed, and the Appellate Authority allowed the appeal on February 17, 1981 holding that the Notification of exemption operated from October 24, 1968 and the tenancy in favour of the appellant had become void. He observed that at the time when the tenancy was created the provisions of Chapter III were in operation and there was numberexemption from such operation. The appellant filed a review petition companytending that the appeal filed by the respondent was number maintainable and companyld number be entertained by the Appellate Authority. He also questioned the findings on the merits rendered by the Appellate Authority in the appeal. The review petition was rejected on March 2, 1982. The appellant then filed a writ petition in the Bombay High Court which was dismissed by its judgment and order dated November 22, 1982. The High Court held that the appeal filed by the respondent was maintainable under clause 21 1 of the Rent Control Order, that the exemption provided by the Notification of October 24, 1968 operated prospectively only, that therefore clause 22 in Chapter III was in operation at the time when the tenancy was entered into, and companysequently the Appellate Authority was justified in holding that as numberintimation was given as companytemplated by clause 22 the tenancy was invalid. In Civil Appeal No. 1200 of 1979 the respondent is the owner of a shop situated at Akola. He instituted a suit for possession of the shop alleging that it was first taken on lease by one Shamji Bhai in 1958 and during the next year it passed into the joint possession of Shamji Bhai and the appellant Kaku Bhai as tenants. Some time after November 1961 the appellant Kaku Bhai alone companytinued in possession. The respondent companytended that the lease in favour of Shamji Bhai in 1958 and thereafter to Kaku Bhai in 1961 were invalid and inoperative inasmuch as they were entered in violation of clause 22 of the Central Provinces and Berar Letting of Houses and Rent Control Order, 1949 the Rent Control Order , as numberintimation was given that the premises had fallen vacant in 1958 when let out to Shamji Bhai number in 1961 when let out to the appellant Kaku Bhai. Alleging that the appellant Kaku Bhai was in possession number as a tenant but as a mere licencee or a trespasser the respondent claimed possession and mesne profits.The appellant resisted the suit and inter alia pleaded that he was a tenant of the premises, and that having accepted him as tenant it was number open to the respondent to take the plea that the lease was void. The Trial Court held that the lease in favour of Shamji Bhai and also the lease in favour of the appellant were void because intimation of the vacancy had number been companymunicated to the statutory authority at the relevant time and, therefore, the appellant must be treated as being in permissive possession as a licencee. The suit was decreed. On appeal the Bombay High Court held that the lease in favour of Shamji Bhai and thereafter the lease in favour of the appellant were hit by clause 22 2 of the Rent Control Order and were, therefore, void. The appeal was dismissed. The point companymon to both the appeals is whether it is open to a landlord in a proceeding for permission to terminate the tenancy and for possession of the premises to urge that the lease between the parties is void inasmuch as it was entered in companytravention of clause 22 of the Rent Control Order. It is companytended for the appellants in both the appeals that it is number open to the landlord to take such a plea because although the lease may number be binding on the Controller or the Deputy Commissioner it is operative as between the parties and cannot be questioned by either in a proceeding instituted by the one against the other. The appellants rely on Murlidhar Agarwal and Anr. v. State of P. and Ors., 1975 1 S.C.R. 575. That was a case arising under the U.P. Temporary Control of Rent and Eviction Act, 1947 herein after referred to as the U.P. Rent Act . The Court was companycerned with the question whether a suit filed by the appellants for recovery of possession, on the basis that the tenancy created by the predecessor-in-interest of the appellants in favour of the respondent had expired, was maintainable in law inasmuch as it was instituted without obtaining the permission of the District Magistrate under s.3 1 of the U.P. Rent Act. The Trial Court decreed the suit, but on appeal the High Court reversed the decree holding that the suit was number maintainable in view of section 3, and in the circumstances, it dismissed the suit. On appeal to this Court, the Court repelled the plea raised by the appellants-landlords that the respondent was number a tenant and held that, therefore, permission was necessary in order to maintain the suit. In taking that view this Court referred to Udhoo Dass v. Prem Prakash and Anr., A.I.R. 1964 Allahabad 1, where a Full Bench of the Allahabad High Court had laid down that a lease made in violation of the provisions of s.7 2 of the U.P. Rent Act would be valid between the parties and would create a relationship of landlord and tenant between them although it might number bind the Rent Control Officer. This Court did number doubt the companyrectness of the principle propounded in that case and held that the respondent before them was a tenant. Learned companynsel for the respondent invited our attention to Waman Shriniwas Kini v. Ratilal Bhagwandas Co., 1959 Supp. 2 S.C.R. 217. That was a case under the Bombay Hotel and Lodging Houses Rates Control Act, 1947. The appellant was a tenant of a shop. He let it out to sub-tenants. The respondent-landlord brought a suit for ejectment against the appellant on the ground that s. 15 of the Bombay Hotel and Lodging Houses Rates Control Act, 1947 prohibited sub- letting and that as a landlord he had a right to evict the tenant on that ground. When the matter came in appeal to this Court, the Court held that even though the lease between the parties recognised subletting, as the suit was brought number for the enforcement of the agreement but to enforce the right of eviction flowing directly from an infraction of s.15 of the Act, the respondent was entitled to sue for ejectment. The provisions of clause 22 and clause 23 of Chapter III of the Rent Control Order have been extracted earlier. It is apparent that under clause 22 1 every landlord of a house situated in an area to which those provisions extend is required by the statute to give intimation of a vacancy to the Deputy Commissioner. Clause 22 1 further declares that the landlord shall number let or occupy the house except in accordance with clause 23. Clause 22 2 provides that numberperson shall occupy a house except under an order under clause 23 1 or clause 24 or on an assurance from the landlord that the house is being permitted to be occupied in accordance with clause 23 2 . Clause 23 provides that the Deputy Commissioner may, within fifteen days from the date of receipt of the intimation of a vacancy, order the landlord to let the vacant house to any person holding an office of profit under the Union or State Government or to a displaced person or to an evicted person and thereupon, numberiwithstanding any agreement to the companytrary, the landlord is obliged to let the house to such person and place him in possession thereof. If the landlord states that he needs the house for his own occupation he must satisfy the Deputy Commissioner in that behalf. The clause provides further that if numberorder is passed and served upon the landlord within the period mentioned in clause 23 1 , it is open to the landlord to let the vacant house to any person. Clause 28 empowers the Deputy Commissioner to take or cause to be taken such steps and use or cause to be used such force, as may be reasonably necessary for the purpose of securing companypliance with, or for preventing or rectifying any companytravention of, the Rent Control Order. Now, in deciding Murlidhar Agarwal, supra this Court approved of the proposition of the law laid down by the Allahabad High Court in Udhoo Dass, supra . The High Court had the provisions of s. 7 and s. 7A of the U.P. Rent Act before it. Section 7 required the landlord to report to the District Magistrate if his house had fallen vacant or was about to fall vacant, and thereupon the District Magistrate was empowered to direct the landlord to let the premises to a person specified in the order. The High Court dealt with the question whether a lease between the landlord and another person in violation of the order of the District Magistrate would be a valid lease as between the parties thereto. It held that such a lease would be valid between the parties. It would number, however, be binding on the District Magistrate. That it would number be binding on the District Magistrate was evidenced by the power companyferred upon him under s. 7A 1 of the U.P. Rent Act to take proceedings for the eviction of such tenant. Section 7A 1 provided that if the vacancy of an accommodation was number reported or a person occupied an accommodation in companytravention of an order issued under s. 7 2 the District Magistrate companyld require him to show cause why he should number be evicted from it. If he failed to show cause the District Magistrate companyld direct him to vacate the accommodation and if he failed to vacate the District Magistrate companyld use force to evict him. The power companyferred on the District Magistrate to take proceedings for the eviction of such tenant was discretionary. It was open to the District Magistrate number to exercise the power if there was undue delay or if for other good reason he found it inexpedient to do so. If he did number exercise the power companyferred by s. 7A 1 , the lease between the landlord and the other person would companytinue to subsist and that other person would companytinue to enjoy the status of a tenant. It would be a valid lease. It companyld number be regarded as a void lease. In a case under the Rent Control Order, with which these appeals are companycerned, the position appears to be materially similar. The landlord is prohibited by clause 22 1 from occupying the house or granting a lease except in accordance with clause 23. There is a prohibition under clause 22 2 on any other person seeking to occupy the house, except again in accordance with clause 23. In clause 23 it is the Deputy Commissioner who will order the landlord to let the vacant house to a person indicated by him, a person who falls in one of the categories specified in the clause or, if he is satisfied, he may permit the landlord himself to occupy the house. As was the position under the P. Rent Act, so also under the Rent Control Order, the Deputy Commissioner has power under clause 28 to take steps and use force for the purpose of securing companypliance with, or for preventing or rectifying, any companytravention of the Rent Control Order. Clause 28 speaks of a power companyferred on the Deputy Commissioner in that behalf. Nowhere does the Rent Control Order mandate that the Deputy Commissioner must eject a person who has entered into possession of a house in violation of clause 22. If upon a view of the circumstances prevailing then the Deputy Commissioner takes numberaction in the matter, there is numberreason why the lease between the landlord and the tenant, although inconsistent with clause 22, should number be binding as between the parties thereto. It is number a void transaction. There is numberhing in the Rent Control Order declaring it to be so. Now if the lease is number void then it is number open to either party to avoid the lease on the ground that it is inconsistent with clause 22. The parties would be bound, as between them, to observe the companyditions of the lease, and it cannot be assailed by either party in a proceeding between them. On this view alone both the appeals must be allowed. In Civil Appeal No. 5317 of 1983 an alternative point has been raised on behalf of the appellant. It is urged that although the Notification dated october 24, 1961 exempts from the provisions of Chapter III of the Rent Control Order a house used for a number-residential purpose if it is companystructed before January 1, 1967 the Notification must be companystrued to be retrospective in operation, and that, therefore, the tenancy created in favour of the appellant with effect from October 1, 1968 is exempted from the operation of clause 22 of the Rent Control Order. In other words, because of the exemption the tenancy companyld number be regarded as violating the provisions of clause 22 and numberquestion companyld arise of the tenancy being void on that account. It is number possible to accept the companytention. Ex facie the terms of the Notification are prospective only. There is numberhing to suggest that they operate retrospectively also. It is true that they refer to houses companystructed before January 1, 1967, but that is by way of description only, in order to define the category of houses companyered by the operation of the exemption companyferred by the Notification. Words used merely to define the subject matter of the exemption should number be companyfused with the dimension of time during which the exemption operates. This point must fail. In Civil Appeal No. 1200 of 1979 another point raised on behalf of the appellant is that numbervacancy of the premises took place in 1961 when the appellant was in possession as a tenant. The case is that the appellant was in joint possession with Shamji Bhai before that, and the tenancy companytinued on Shamji Bhai surrendering his tenancy rights in November 1961. The Trial Court and the High Court have companycurrently held as a finding of fact that a vacancy arose in November 1961 and a tenancy was created by the respondent in favour of the appellant on that occasion. We do number propose to interfere with the finding. In the result, on the view taken by us on the first point in each of the two appeals, the appeals are allowed. In Civil Appeal No. 5317 of 1983, we set aside the appellate order dated February 17, 1981 of the Appellate Authority under the Rent Control Order and the judgment and order of the Bombay High Court in the writ petition filed by the appellant insofar as they proceed on the finding that the lease is void. In Civil Appeal No. 1200 of 1979 we set aside the judgment and decree of the Bombay High Court and dismiss the suit filed by the respondent.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1921 of 1976 etc. From the Order dated 17.9.75 of the Delhi High Court in A.O. No. 144 of 1975. Madan Bhatia and Sushil Kumar for the appellants. P. Bhatt and Parveen Kumar for the Respondents. The Judgment of the Court was delivered by G B. MISRA, J. The fate of the present companynected appeals by special leave hinges upon the interpretation of section 14 2 of the Delhi Rent Control Act, 1958 hereinafter referred to as the Act of 1958 . Premises No. 9607 known as Pyare Lal Building, Janpath and Tolstoy Marg, New Delhi, is owned by the appellants. Three different portions of the said building were let out to three different firms, M s. Pearey Lal Workshop P Ltd., M s. Ghaziabad Engineering Co. P Ltd. and M s. Pearey Lal Sons, on agreed rent of Rs. 400, Rs. 273 and Rs. 1094 per month respectively. The tenants-respondents had applied for fixation of standard rent before the Rent Controller who fixed standard rent of the three premises but on appeal the order of the Rent Controller fixing standard rent was set aside by the High Court by its order dated May 22, 1972 holding that the tenants were liable to pay the agreed rent. It appears that the tenants fell in arrears of rent and did number pay the same in spite of service of numberice of demand. The appellants, therefore, were companypelled to file three different petitions for eviction of the respondents under section 13 1 of the Delhi and Ajmer Rent Control Act, 1952 hereinafter referred to as the Act of 1952 . During the pendency of the proceedings the Act of 1958 came into force. The tenants however deposited the arrears and got the benefit of number-eviction under section 13 2 of the Act of 1952 which provides that numberdecree or order for the recovery of possession of any premises shall be passed on the ground of default in payment of rent if, on the first date of the hearing of the proceedings for eviction or within such further time as may be allowed by the companyrt, the tenant pays in cash the arrears of rent then due together with the companyts of the suit. The respondents again companymitted a default in the payment of arrears of rent and failed to pay the same within two months of the service of numberice of demand as required by Clause a of sub-section 1 of section 14 of the Act of 1958. The appellants therefore filed three petitions giving rise to the present appeals for eviction on the ground of second default. The respondents, however, deposited the arrears of rent within one month of the date of the order as companytemplated by section 15 of the Act of 1958 and sought the protection of number-eviction within the meaning of sub-section 2 of section 14 of the Act of 1958. The appellants, however, sought the advantage of the proviso to sub-section 2 of section 14 and alleged that the respondents had derived the benefit of number-eviction under section 13 2 of the Act of 1952 once and they are number entitled to get the same benefit under section 14 2 twice over in view of the proviso to sub-section of section 14 of the Act of 1958. These petitions for eviction were resisted by the respondents on the ground, inter alia, that they had deposited B the arrears of rent as provided by section 15 of the Act of 1958. They were entitled to get the benefit of sub-section 2 of section 14 and the benefit derived by the respondents under section 13 2 of the Act of 1952 will number stand in the way of the respondents getting the benefit of sub-section 2 of section 14 of the Act of 1958. The Additional Rent Controller dismissed the petitions of the appellants holding that the respondents were entitled to the benefit of sub-section 2 of section 14 of the Act on account of the deposit made by them in pursuance of the provisions of section 15 of the Act of 1958. He was of the view that the benefit once derived by the respondents under section 13 2 of the Act of 1952 will number attract the proviso to sub-section 2 and they are entitled to the benefit of number-eviction under section 14 2 of the Act of 1958. The appellants feeling aggrieved took up the matter before the Rent Control Tribunal by way of appeal but the Tribunal relying upon Dhan Raj Jayna v. S.P. Singh, A.I.R. 1973 Delhi 297 dismissed the appeal. The appellants took up the matter to the High Court in second appeal but those appeals also met the same fate. The appellants have number approached this Court by special leave. The only point that survives for companysideration is whether the respondents are entitled to the benefit of sub- section 2 of section 14 of the Act of 1958 and the decision of this question depends upon the interpretation of sub- section 2 together with its proviso. Section 13 1 of the 1952 Act, insofar as material, reads 13. 1 Notwithstanding anything to the companytrary in any other law or any companytract, numberdecree or order for the recovery of possession of any premises shall be passed by any Court in favour of landlord against any tenant including a tenant whose tenancy is terminated. Provided that numberhing in this sub-section shall apply to any suit or other proceeding for such recovery of possession if the Court is satisfied. a that the tenant has neither paid number tendered the whole of the arrears of rent due within one month of the date on which a numberice of demand for the arrears of rent has been served on him by the landlord in the manner provided in section 106 of the Transfer of Property Act, 1882 IV of 1882 or No decree or order for recovery of possession shall be passed on the ground specified in clause a of the proviso to sub-section 1 , if, on the first day of the hearing of the suit or within such further time as may be allowed by the Court, the tenant pays in Court the arrears of rent then due together with the companyts of the suit. The companyresponding provision to s.13 of the 1952 Act is s. 14 of the 1958 Act. In so far as material it reads 14. 1 Notwithstanding anything to the companytrary companytained in any other law or companytract, numberorder or decree for the recovery of possession of any premises shall be made by any companyrt or Controller in favour of the landlord against a tenant. Provided that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on one or more of the following grounds only, namely- a that the tenant has neither paid number tendered the whole of the arrears of the rent legally recoverable from him within two months of the date On which a numberice of demand for the arrears of rent A has been served on him by the landlord in the manner provided in section 106 of the Transfer of Property Act, 1882 No order for the recovery of possession of any premises shall be made on the ground specified in clause a of the proviso to sub-section 1 , if the tenant makes payment or deposit as required by section 15 Provided that numbertenant shall be entitled to the benefit under this sub-section, if, having obtained such benefit once in respect of any premises he again makes a default in the payment of rent of those premises for three companysecutive months. The learned single Judge of the Delhi High Court in Dhan Raj Jayna v. S.P. Singh Supra dealing with the interpretation of sub-section 2 of section 14 observed as follows Once the tenant pays the arrears of rent and the future rent in accordance with section 15 1 he is entitled to the benefit of section 14 2 to have the petition for eviction dismissed. me proviso to section 14 2 however, denies to the tenant such benefit for a second time. He can thus get such benefit only once, it is to be numbered that the previous suit was dismissed by Shri Tandon and the dismissal was companyfirmed by the High Court under section 13 2 of the Delhi and Ajmer Rent Control Act, 1952. The provisions of section 13 2 were number in pari materia to the provisions of section 14 2 of the Delhi Rent Control Act, 1958. me payment under section 13 2 of the old Act was to be made on the first hearing of the suit or without such further time as may be allowed by the Court. On the other hand, under Section 14 2 of the new Act, in addition to the arrears of rent the Controller can also order the payment of pendente lite rent. Under section 13 2 of the old Act there was numberprovision for the payment of pendente lite rent. The benefit of section 14 2 under the new Act is available on payment of the arrears as well as the pendente lite rent. In view of these differences between the two provisions it cannot be said that the dismissal of the previous suit by Shri Tandon was under Section 14 2 of the new Act. me benefit of Section 14 2 is being given to the tenant, therefore, for the first time in the present proceedings. m e proviso to section 14 2 is number therefore, a bar to the grant of this benefit to him. Shri Bhatia appearing for the appellants companytended that the aforesaid observation made in the reported case is only by way of obiter dicta inasmuch as numberarguments were in fact advanced as to the true interpretation and the scope of section 14 2 of the Act of 1958 and it appears to have been assumed in this case by the parties companycerned that the benefit of number-eviction on account of number-payment of rent derived by a tenant under the old Act cannot be taken into companysideration under section 14 2 of the Act of 1958. This companytention, in our opinion, has numberforce. The High Court of Delhi had companystrued the provisions of section 14 2 as there was a dispute between the parties on the interpretation of section 14 2 . The companystruction put by the High Court on the interpretation of sub-section 2 of section 14 along with the proviso thereto is fully warranted by the language of this section. Shri Bhatia laid much emphasis on the expression having obtained such benefit once. According to him, the expression is wide enough to include even a benefit derived under the Act of 1952. It was further companytended by the companynsel that if the Legislature intended to put any fetter on the wide expression used in the proviso it would have clearly said so that the benefit derived under the Act of 1952 disentitled a tenant from ting the benefit of section 14 2 the Act of 1958. As a second limb of his companytention, Shri Bhatia, further submitted that under the Act of 1952 a tenant companyld companymit default times without number and each time he companyld get the benefit of number-eviction if he deposited the rent on the first day of the hearing. A tenant companyld tire out the landlord by adopting such an attitude. me Legislature, therefore, wanted A to remove the vice of the Act of 1952 and that is why the proviso to sub-section 2 of section 14 companytemplates that the benefit of number-eviction once derived by the tenant under sub-section 2 of section 14 will number be given the benefit of number-eviction for the second time. There is numberdenying the fact that the Legislature wanted to remove the vice of the Act of 1952 but to what extent the tenant will be deprived of the benefit of sub- section 2 of section 14 will depend upon the expression used by the Legislature in the section. The argument advanced by Shri Bhatia loses sight of certain words of sub-section 2 and of the proviso thereto. Sub-section 2 companytemplates to give the benefit to a tenant of number-eviction if the tenant makes payment or deposit as required by section 15. Obviously, therefore, sub-section 2 companytemplates that the benefit of number-eviction under this sub-section can be given only to a tenant who has made a deposit as required by section 15 of the Act of 1958. therefore, the deposit made under section 13 2 of the Act of 1952 has been companypletely excluded by sub-section 2. me proviso to sub-section 2 also puts a bar on deriving the benefit under this sub-section i.e. sub-section 2 of section 14, thus if the expressions deposit under-section 15 in sub-section 2 of section 14 and such benefit in the proviso thereto is given a meaning, there is numberescape from the companyclusion that numbersecond benefit can be given to a tenant if he had already received the benefit under sub-section 2 by deposit made in accordance with the provisions of section 15 of the Act of 1958. It was further companytended on the strength of the proviso to sub-section 2 of section 57 of the Act of 1958, that even if the deposit was made under section 13 2 of the Act of 1952 during the pendency of the Act of 1958, the Court or the authority shall have to take into companysideration the provisions of the Act of 1958 and in that view of the matter it can safely be assumed that the deposit made by the respondents during the pendency of the Act of 1958 is a deposit within the meaning of section 15 of Act of 1958. Thus argument again ignores sub-section 2 of section 57. Sub-section 2 is a saving clause and provides that numberwithstanding the repeal of the Act of 1952, all suits and other proceedings under the said Act pending at the companymencement of this Act, before any Court or other authority shall be companytinued and disposed of in accordance with the provisions of the said Act, as if the said Act had companytinued in force and this act had number been passed. In view of this clear saving clause, the deposit made by the respondents must be taken to be a deposit under section 13 2 of the Act of 1952 and if the case is companyered squarely by sub-section 2 of section 57 it is number at all necessary to take into companysideration the other provisions of the Act. Shri Bhatia further companytended that the benefit, either under the Act of 1952 or the Act of 1958, afforded a tenant the benefit of number-eviction and this benefit was identical in both these sections 13 2 of the Act of 1952 and 14 2 of the Act of 1958. Section 13 2 of the old Act and section 14 2 of the new Act, according to learned companynsel, form one scheme, one companye and re-enforce each other and in support of this companytention he relies on J.K. Steel Ind. v. Union of India, 1969 2 S.C.R. 481, 497. He companytends that these sections are in pari materia and the modification introduced by section 14 2 and section 15 of the Act of 1958 is only regarding the mode of deposit. We find it difficult to accept this companytention either. There is marked difference between the three provisions. Section 15 2 is radically different from the provisions of section 13 of the old Act and the distinction between the two sections has been clearly made out by the Delhi High Court in the aforesaid reported decision. If once we accept the interpretation put forward by the Tribunal on section 14 2 read with the proviso thereto it is number at all necessary to enter into the alterative companytentions raised by Shri Bhatia. If the words of statute are clear, there is numberquestion of interpretation. Grammatical companystruction has been accepted as the golden rule and so companystrued, the respondents cannot be deprived of the benefit of section 14 2 merely because they had obtained similar benefit under sub-section 2 of section 13 of the Act of 1952. We see numberreason to differ from the view taken by the Tribunal as companyfirmed by the High Court. In the result the appeals must fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1734- 39 of 1980. From the Judgment and Order dated 4.7.1980 of the Gujarat High Court in S.C.A. Nos. 185, 186, 187, 188, 189 and 190 of 1980. C. Bhandare, M. Quamaruddin, Mrs. M. Quamaruddin, V. Katarki and Salmon Khurshid for the Appellants. A. Shah, Girish Chandra, C.V. Subba Rao and R.N. Poddar for the Respondent. U. Mehta, H.J. Zaveri, S.S. Khanduja and Yashpal Dhingra for the Intervener. The Judgment of the Court was delivered by r. B. MISRA, J. In the wake of Art. 48 of the Constitution the State of Bombay also passed an enactment, the Bombay Animal Preservation Act, 1954 for the preservation of animals suitable for milch, breeding or for agricultural purposes. Under sub-s. 1 of s.2 the Act was to apply in the first instance to the animals specified in the schedule and the schedule mentioned bovines bulls, bullocks, companys, calves, male and female buffaloes and buffalo-calves . Under sub-s. 2 of 8.2 the State Government may, by numberification in the official gazette, apply the provisions of this Act to any other animal, which in its opinion, it is desirable to preserve. It does number appear that the provisions of the Act were ever made Applicable to any other animals after the initial enactment of the Act and the schedule by the Bombay legislature. Section 5 of the Act, so far it is material, runs 5. 1 Notwithstanding any law for the time being in force or any usage to the companytrary, numberperson shall slaughter any animal unless he has obtained in respect of such animal a certificate in writing from the Competent Authority appointed for the area that the animal is fit for slaughter. In 1961 by the Gujarat Act 16 of 1961, sub-s. lA was inserted in s. 5 of the principal Act which read 1A No certificate under sub-s. 1 shall be granted in respect of a company. Thereupon a companysequential change was effected in sub-s. 2 of 8.5, after the insertion of sub-s. lA . It read In respect of an animal to which sub-s. lA does number apply, numbercertificate shall be granted under sub-s. 1 , if in the opinion of the companypetent authority a the animal, whether male or female, is useful or likely to become useful for the purpose of draught or any kind of agricultural operations b the animal, if male, is useful or likely to become useful for the purpose of breeding c the animal, if female, is useful or likely to become useful for the purpose of giving or bearing offspring. Under sub-s. 3 of s.5 it was provided Nothing in this section shall apply to the slaughter of any animal above the age of fifteen years for bonafide religious purposes, if such animal is number a company. Provided that a certificate in writing for such slaughter has been obtained from the companypetent authority. In 1978 the Governor of Gujarat issued an ordinance being Gujarat Ordinance No. 10 of 1978 to amend the Bombay Animal Preservation Act, 1954. During the period of operation of the ordinance the Bombay Animal Preservation Act 1954 was to have effect subject to the amendments specified in s.3 of the ordinance and thus the Bombay Act was temporarily amended. By this Amending Ordinance of 1978 under 9. 5 of the principal Act for sub-s. lA of new sub- s. lA was substituted, which read lA No certificate under sub-s. 1 shall be granted in respect of - a a company b the calf of a company, whether male or female and if male. whether castrated or number c a bull below the age of eighteen years d a bullock below the age of eighteen years. For sub-s. 3 of s. 5 of the principal Act a new sub-s. was substituted, which read Nothing in this section shall apply to the slaughter of any of the following animals for bonafide religious purposes, namely - Any animal above the age of fifteen years other than a company, bull or bullock. A bull above the age of eighteen years. A bullock above the age of eighteen years. After the above ordinance was promulgated the legislative assembly of the State met and in view of that session of the legislative assembly the provisions of the ordinance were required to be enacted by the legislature otherwise the ordinance was to lapse. As the legislature did number pass the requisite legislation in time the ordinance lapsed on March 5, 1979. Thereafter Gujarat Act No. 23 viz, the Bombay Animal Preservation Gujarat Amendment Act, 1979, was enacted and by virtue of sub-s. 2 of s.1 the provisions of the Act were deemed to have companye into force on 28th November, 1978, that is, from the date on which the Gujarat Ordinance No. 10 of 1978 was brought into force. This amendment Act also inserted a new sub-s. LA in 6. 5 of the Principal Act. It read 1A No certificate under sub-s. 1 shall be granted in respect of- a a company b the calf of a company, whether male or female and if male. whether castrated or number. c a bull below the age of sixteen years d a bullock below the age of sixteen years. It is apparent that in cls. C and d changes were affected inasmuch as instead of cl. c providing for a bull below the age of 18 years, as in the ordinance, the Act provided in the new cl. c for a bull below the age of 16 years, and similarly in cl. d it provided for a bullock below the age of 16 years instead of 18 years provided in the ordinance. The impugned enactment also inserted a new sub-s. 3 which read Nothing in this section shall apply to a the slaughter of any of the following animals For such bona fide religious purposes, as may be prescribed namely any animal above the age of fifteen years other than a company, bull or bullock a bull above the age of fifteen years a bullock above the age of fifteen years b the slaughter of any animal number being a company or a calf of a company, on such religious days as may be prescribed Provided that a certificate in writing for the slaughter referred to in clauses a or b has been obtained from the companypetent authority. The appellants who are dealers in beef and other allied trades companynected with the slaughter of bulls and bullocks seek to challenge the ban of 16 yrs. put by cls. c and d of sub-s. lA of sec. 5 of the Act as it adversely affects their trades. According to the appellants a large number of people in Ahmedabad city and in the State of Gujarat are engaged in the beef trade, both wholesale and retail and the allied trades. Several hundred shops of beef dealers, both wholesalers and retailers, are located in Ahemdabad city alone, and on an average before the new legislation came into force about 100 bovine cattle were being slaughtered in the slaughter houses in Ahemdabad city. Out of these above seventy used to be bulls and twenty five to thirty buffaloes. Because of slaughter of bovine cattle there are incidental trades which are dependent upon slaughter of bovines, their hides and skins and carcases of animals. Carcases are used for the purpose of food which is cheaper food for a large number of people. Hides and skins after they are properly treated and processed serve the export market and thereby also serve the companyntry by earning a good deal of foreign exchange. It was further urged that the different parts of cattle which are slaughtered, like hooves, horns, guts, pancreas, bones, liver bile and even the blood of animals are all used for pharmaceutical purposes and products. They are also used for manufacturing companycentrates of drugs and injections meant for supplying proteins to human beings. Bones of animals which are slaughtered are utilised for the purpose of manufacturing fertilisers. Hides and skins of animals which have a natural death are of inferior quality as companypared to the hides and skins of animals which are slaughtered. Calcium is recovered from bons of slaughtered animals. Glue is made from hooves etc. Bulls and bullocks cease to be useful for an purpose after the age of fifteen years and thus the ban on the slaughter of bull and bullocks below the age of 16 years is an unreasonable restriction on their right to carry on their trade or business and is number in the interest of general public. On the one hand there are the directive principles of Art. 48 of the Constitution which require companysideration of usefulness of animals from the point of view of giving milk, breeding, agricultural purposes and draught purposes on the other hand there is the requirement of those poor sections of people who get their protein requirement from beef which is available to them at cheap rates. Thus a balance between the requirement companytemplated by Art. 48 and the requirement of a large section of people and traders and dealers has to be struck by the companyrt. It was further pleaded that on certain specified religious days animals are required to be slaughtered, for example Qurbani at the time of Bakir Id or Id festival, and there are also other religious ceremonies in companynection with which animals and bovine cattle are required to be slaughtered. The impugned Act was, therefore, challenged in the High Court on a number of grounds 1. that the impugned amendment puts an unreasonable restriction on the fundamental right of the petitioners under Art. 19 1 g of the Constitution 2. that the State of Gujarat has acted mala fide in enacting this piece of legislation, being the Gujarat Act 23 of 1979 3. that the State legislature has numberlegislative companypetence to enact the impugned legislation 4. that the amended sub-s. 3 of s. 5 is an interference with their religious practices and customs and hence violative of Arts. 25, 26 and 29 of the Constitution 5. that the impugned provisions are discriminatory and violative of Art. 14 of the Constitution inasmuch as the discrimination is made between those who deal in meat of bulls and bullocks on the one hand and those who deal in meat of buffaloes on the other. All these companytentions were repelled by the High Court. Feeling aggrieved by the judgment and order of the High Court the appellants have number companye to this Court by certificate and only two companytentions have ben raised on their behalf The ban on the slaughter of bulls and bullocks below the age of sixteen years is hit by Art. 19 1 g of the Constitution as it puts an un- reasonable restriction on the fundamental right of the appellants and is number in the interest of general public. The ban put by cls. c and d of sub-s. lA of 6. 5 of the Act is also violative of Art. 14 of the Constitution. In support of their companytentions reliance was placed on Abdul Hakim Quraishi Ors. V. State of Bihar, 1961 2 C.R. 610. It was held in that case that the ban on the slaughter of bulls, bullocks and she-buffaloes below the age of 20 or 25 years was number a reasonable restriction in the interest of general public and was void as a bull, bullock or buffalo did number remain useful after the age of 15 years and whatever little use it may have then was greatly offset by the economic disadvantages of feeding and maintaining unserviceable cattle. In the affidavit in reply filed in this case it has been pointed out on behalf of the Government that because of improvement and more scientific methods of cattle breeding and also advancement in the science of looking after the health of cattle in the State of Gujarat today a situation has been reached where the usefulness of cattle for breeding, draught and other agricultural purposes is above the age of sixteen years. Mr. P.J. Bhatt, Under Secretary to the Government of Gujarat, Agriculture, Forests and Co-operation Department, in his affidavit dated March 14, 1980 has pointed out in paragraph 11 as follows With the improved and scientific animal husbandry services in the State, the average longevity of animals in the State has companysiderably increased. In 1960, there were 456 Veterinary Dispensaries, First Aid Veterinary Centres, etc. whereas in the year 1979, there were as many as 800 Veterinary Dispensaries, First Aid Veterinary Centres etc. There were numbermobile Veterinary Dispensaries in 1960, while there were 20 such mobile dispensaries for animals in 1979. In addition to this there are more than 600 centres for intensive cattle development programme, where, besides first aid to animals, other animal husbandry inputs are also provided. In 1960, five lacs of cattle were vaccinated, whereas in the year 1979, fiftyone lacs cattle were vaccinated to provide immunization against various diseases of animals. There were numbercattle Feed Compounding Units preparing cattle feed on scientific lines in the year 1960, while in the year 1979, there were as many as 6 cattle feed factories in the State of Gujarat. As a result of improved Animal Husbandry services, the disease of Rinderpest which was widespread in the State and which took a large toll of animal life has been totally wiped out and eradicated since the year 1971-72, except for an isolated recurrence in the year 1978 in the cattle impooted in the State from abroad. Similarly, in respect of Haemorrhagic Septicaemia, a disease which used to take a heavy toll of animals, the total number of deaths on account of the disease was 6689 in the year 1961- 62 which has been brought down to about 2000 in the year 1978-79 on account of intensive vaccination programme undertaken by the Government. It is thus clear that because of various scientific factors, namely, better cattle feeding, better medical health and better animal husbandry services, the longevity of cattle in the State of Gujarat has increased and in this companytext it is companyrect to say that if the scientific tests were to be applied, bulls and bullocks upto sixteen years of age can be said to be useful for the purpose of breeding, draught and other agricultural purposes. In these circumstances the prescription of The age of sixteen years in clauses c and d of sub-s. lA of s.5 can be said to be reasonable, looking to the balance which has to be struck between public interest, which requires useful animals to be preserved and permitting the different appellants before us to carry on their trade and profession. In a passage from the publication of the Indian Council of Agricultural Research, New Delhi published in the year 1962, which was reprinted in the year 1967, it has been pointed out Indian cattle are found to do well in dry areas. They are small and number-decrepit in area of heavy rainfall, such as the companystal or the hilly areas of the companyntry. Cattle of good breeds are thus found in Punjab, Rajasthan and Andhra Pradesh. Varying types of cattle may be seen within the limits of the same State. Thus in Bombay one finds excellent cattle in Gujarat and similar dry parts of the State, while in Madras, such cattle are observed in Coimbatore. The material before the companyrt thus clearly goes to show that with the help of the scientific advances which have taken place since 1962, the longevity of the cattle and their useful span of life has increased and, therefore, the prescribed age of sixteen years can be said to be a reasonable restriction on the right of the appellants to carry on their trade and profession as mentioned in Article 19 1 g of the Constitution. This leads us to the second companytention regarding the impugned legislation being discriminatory between dealers who deal in meat of companys, bulls and bullocks and those who deal in meat of buffaloes and other animals and there is numberuniform law with respect to all cattle. As a second limb to this agrument it was further companytended that the cattle and beef dealers in other States are number subjected to the similar restrictions, and thus there is a violation of Art. 14 of the Constitution. This companytention in our opinion has numberforce. The dealers in different tpes of meat are number in the same class. It is only if the classification is unreasonable that it can be struck down. But here a clear distinction is maintained on scientific grounds between animals which are useful and which have number yet reached the age of 16 years so far as bulls and bullocks are companycerned. As regards buffaloes there is numberrestriction as to the age and the only restriction is sub-s. 2 of s. 5 and that section has remained unamended, namely the test is whether the animal, male or female, is useful or likely to become useful for the purposes of milch or draught or any kind of agricultural operations whether the animal, if male is useful or likely t become useful for the purpose of breeding, and whether the animal, if female, is useful or likely to become useful for the purpose of giving milk or bearing offspring. So looking to the different purposes for which buffaloes and their progeny on the one hand and companys and their progeny on the other hand are used in each State it cannot be said that there is any hostile discrimination against those who deal in meat of bulls and bullocks. Bulls and bullocks, particularly bullocks, are useful for agricultural purposes and male buffaloes are seldom used for any purpose other than breeding or rearing progeny and under these circumstances the impugned amendment is number hit by Art. 14 of the Constitution. In the result the appeals must fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1161 of 1979 etc. From the Judgment and Order dated 13.6.1978 of the Kerala High Court in T.R.C. 130 of 1977. M.K. Nair for the Appellants. Veerappa, V.J. Francis and S. Balakrishnan for the Respondents. The Judgment of the Court was delivered by KHALID, J. The short question that falls to be decided in these appeals, by certificate, against the Judgment of a Division Bench of the Kerala High Court, is whether goat and sheep and the meat got after slaughtering them are the same for the purpose of sales-tax in the State. The High Court, disagreeing with the Sales-tax Appellate Tribunal held them to be the same goods. It is the admitted case in these appeals that the respondents purchase goat and sheep for slaughtering them and then sell the meat they get after such slaughter. It is also admitted that live stock will be goods within the meaning of the Kerala General Sales-tax Act the Act for short . The respondents submitted nil returns claiming exemption on the sales turnover of meat and skin. Assessments were companypleted accepting these nil returns. Subsequently the assessees were informed that the purchase turnover of goats and sheep had escaped levy of tax under Section 5-A of the Act. After necessary hearing, assessment orders were passed, holding that the assessees companyverted the animals into meat by a manufacturing process, within the meaning of Section 5-A of the Act. The Appellate Officer and the Tribunal agreed with this finding of the assessing officer. The assessee took the matter before the High Court and challenged the assessment orders. The High Court quashed the assessment orders and held that the meat got after slaughtering the animals will number be other goods within the meaning of Section 5-A. Hence these appeals by the State. For a proper understanding of the dispute raised in these cases it is ncessary to read Section 5-A 1 a of the Act which alone is relevant for our purpose. Levy of purchase tax - 1 Every dealer who in the companyrse of his business purchases from a registered dealer or from any other person any goods, the sale or purchase of which is liable to tax under this Act, in circumstances in which numbertax is payable under Section 5, and either- a companysumes such goods in the manufacture of other goods for sale or otherwise The Section speaks of three ingredients, the existence of which alone, will attract levy of tax. They are i companysumption of the goods ii process of manufacture involved and iii production of other goods. The question before us is whether these ingredients are present when goats and sheep are slaughtered and companyverted into meat for sale. The assessees companytention is that he is only processing live goat or sheep into mutton by killing them and cutting them into pieces and that in this process there was neither companysumption number a manufacture number production of other goods . C Before dealing with the authorities, cited at the Bar, it would be useful to companysider, unaided by authorities, the i question whether goats and sheep and mutton are the same goods known to companymercial circles and in companymon parlance. We will see how a companymon man understands these expressions. If a person goes to a butchers shop and asks for mutton he will number be given goats number will he be satisfied with goats. Equally so when he intends to purchase goats he will number be satisfied if mutton is supplied to him. This is because the two, both in companymercial circles and in companymon parlance, are two different things having a distinct individuality of their own, one different from the other. It would therefore be wrong to assume, as the High Court has done, that these two goods are the same. What happens is that when goats and sheep companyverted into meat, other goods within the meaning of the Section companye into being. It is true that to attract Section 5-A, two other ingredients are also to be satisfied, namely companysumption and manufacture. Consumption is a word of wide import. It denotes the taking in of something, to companyvert that something into another. Here the slaughter of the animals and their companyversion into meat is the companysequence of companysumption of goats in a legal sense. In such companyversion, a process of manufacture can also be inferred. The important ingredients of this Section, of companyrse, is the bringing into existence of other goods, after companysumption and manufacture, which are distinct from the original goods. Lifeless mutton is, by any standard, other goods different from goat and sheep. The High Court rested its companyclusion on a decision of the same High Court reported in 41 S.T.C. 364. Without a detailed discussion, the High Court, relying upon the above decision held as follows We have given the matter our careful attention and we have again given careful companysideration to the elaborate arguments in regard to the processes involved in the transaction and their effect in the light of the provisions of the section, especially as one of us was number a party to the earlier Division Bench ruling. We are clearly of the view that the Tribunal was number companyrect in the view that it took, and that it cannot be said that there was a companysumption resulting in the manufacture of other goods within the meaning of the section The High Court then referred to a decision of the American Supreme Court reported in 207 US 556, and the decisions reported in 20 S.T.C. 261 and 40 S.T.C. 350, and observed as follows In the companymercial sense, viz. in the sense known to the companymercial world, we do number think it can be said that the meat exposed for sale in the market after cutting or slaughtering goats or sheep can be said to have been manufactured after companysuming the goat or sheep. The meat exposed for sale is still of goat or sheep, in the same way as dressed chicken is still chicken, or the sliced, canned and packed pineapple is still pineapple prepared from the raw fruit after the minimal process for making it marketable We are companystrained to hold that the approach of the High Court to the facts of the case was incorrect and reliance on the decisions referred to above was wrong. In the American case the question was whether chicken killed and dressed after plucking its feathers and throwing out its entrails and kept in companyd storage was a manufactured product, different from chicken. The Court there held that a chicken killed and dressed is still a chicken. We respectfully agree with this companyclusion. A chicken killed and a dressed chicken are both chicken and both are known to the ordinary man as well as companymercial world as chicken. By removal of the feathers and entrails the dressed chicken is made ready for the table. There is numberprocess of manufacture and bringing into being an item different from the original goods, In 20 S.T.C. 261 the Court had to deal with prawn pulp made out of raw prawns. The Court held that there was neither companysumption number manufacture involved in making the prawn pulp and that in the process of companyversion, goods distinct from raw prawn was number produced when prawn pulp came into being. In 41 T.C. 364, the goods involved were pineapple and sliced pieces of pineapple. They are clearly the same goods. This Court approved this finding when the State took the matter in appeal before this Court. C This Court held in Anwar Khan Mahboob v. State of Bombay, 1960 11 S.T.C. 698 that companyversion of raw tobacco into beedis by removing stem and dust which in turn is required for the manufacture of beedis amounted to companysumption of raw tobacco attracting tax liability. More or less similar is the case before us. There is clearly a process of companysumption in companyverting goats into mutton by which goods different from the original goods are produced. The Karnataka High Court had to companysider an identical question as the one number raised before us in K. Cheyyabba v. State of Karnataka, 1980 45 S.T.C. 1 with reference to Section 6 of the Karnataka Sales-tax Act, 1957. The Court held that dealers in that case who purchased sheep and goat in the companyrse of their business under circumstances in which numbertax was leviable under Section 5 of that Act, were liable to pay tax on the purchase price under Section 6 of the Act, as they companysumed the goats and sheep by way of slaughtering them to produce mutton, hides and skins, as part of their business activities. We approve the companyclusion in this case. The respondents relied upon the decision of this Court in the case of Deputy Commissioner, Sales tax Law Board of Revenue Taxes Ernakulam v. Pio Food Packers, 1980 3 S.C.R. 1271. In that case this Court upheld the assessees plea that raw pineapple, when companyverted into slices, did number change its identity so as to attract liability to tax on the plea that raw pineapple was companysumed in manufacturing sliced pineapple. While upholding the plea of the assessee, this Court laid down the tests In such cases as follows The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in indentity from the companymodity involved in its manufacture. Commonly, manufacture is the end result of one or more processes through which the original companymodity is made to pass. The nature and extent of processing may vary from one case to another and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original companymodity experiences a change. But it is only when the change, or a series of changes, take the companymodity to the print where companymercially it can numberlonger be regarded as the original companymodity but instead is recognised as a new and distinct article that fl manufacture can be said to take place. Where there is numberessential difference in identity between the n original companymodity and the processed article it is number possible to say that one companymodity has been companysumed in the manufacture of another. Although it has undergone of a degree of processing, it must be regarded as still retaining its original identity. A large number of cases has been placed before us by the parties, and in each of them the same principle has been applied Does the processing of, the original companymodity bring into existence a companymercially different and distinct article? Some of the cases where it was held by this Court that a different companymercial article had companye into existence include Anwarkhan Mehboob Co. v. The State of Bombay and others where raw tobacco was manufactured into bidi patti . A Hajee Abdul Shukoor and Co. v. The State of Madras raw hides and skin companystituted a different companymodity from dressed hides and skins with different physical properties . The State of Madras v. Swastik Tobacco Factory raw tobacco manufactured into chewing tobacco and Ganesh Trading Cb. Karnal v. State of Haryana and Anr., paddy dehusked into rice It cannot be doubted that pineapple f Nit when companyverted into slices does number lose its identity or becomes a new product. Both of them are known as pineapple in the companymercial circle as also in companymon parlance. That is number the case here. Considerable support was sought by the respondents from a decision of this Court in Chiranjit Lal Anand v. State of Assam Anr., 1985 A.I.R. S.C. 1387. That case related to an item called meat on hoof. In that case the dealer had submitted a tender to supply among others meat on hoof to the Central Reserve Police Units within the State of Assam. In that case, the dealer was assessed for the purchase of meat on hoof which is a name used mainly by the military for a live goat. The companytention of the dealer was that since meet was exempted from sales tax by the Assam Act, meet on hoof should also be exempted from assessment. This companyrt after companysidering the companytention in the peculiar facts of that case, held that meet on hoof would also companye within the exemption and set aside the assessment, disagreeing with the High Court. In our view, the principle enunciated in that decision has to be applied only to the fact of that case because the goods involve in that case was meet on hoof and meet was exempt from assessment under the Act. It would number, therefore, be proper to rely upon the said decision decided purely on the facts of that case in deciding the present cases. Here goats and sheep undergo a process viz., slaughtering, and then companyes into existence meat, hides and skin by companysuming the goat in the said process, the end product being something entirely different from the original goods. The High Court was, therefore, in error in holding that goat and meat are the same and that numberconsumption was involved in companyverting goats into meat. The High Court companyfused the issue when it said that the meat exposed for sale is still of the goat and sheep. Nobody disputes that the meat is of the goat and of the sheep. What is to be seen is whether meat and goat are the same. The High Court fell in an error when it used the expression meat of the goat while discussing the facts of the case. lO.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Writ Petition Civil No. 255 of 1986 etc. Under Article 32 of the Constitution of India. N. Kacker, K.K. Venugopal, R.K. Jain, Ms. Abha Jain, Gaurav Jain, Mohd. Iqbal, R.A. Sharma and B.S. Chauhan for the Petitioners. The Order of the Court was delivered by CHINNAPPA REDDY, J. The petitioners in these writ petitions and special leave petitions held permits to ply stage carriages over various routes in Uttar Pradesh, sectors of which routes were parts of routes which were nationalised in the Fifties. The nationalisation schemes made numberprovision for any private operator plying any stage carriage over any part of the nationalised routes. Operation of stage carriages by private operators was totally excluded. The result was that from the respective dates of nationalisation, it was number permissible to permit any private operator to ply a stage carriage on any sector of the nationalised route. However, by virtue of sec. 10 1 c of Uttar Pradesh Road Transport Services Development Act, IX of 1955, these several petitioners were allowed to ply their stage carriages on the whole of their routes including the companymon sectors. The Uttar Pradesh Road Transport Services Development Act, 1955 was repealed by Central Act 56 of 1969. Act 56 of 1969 came into effect from April 1, 1971. Section 76 of Act 56 of 1969 which was inserted into the Motor Vehicles Act 1939 as s. 135 saved permissions or exemptions granted as well as things done or actions taken under the repealed enactment so far as they were number inconsistent with the provisions of the Act. The permission granted under sec. 10 1 c of U.P. Act IX of 1955 was patently inconsistent with the provisions of Chapter IV A of the Motor Vehicles Act, 1939 and the permission, therefore, ceased to be effective from 1.4.1971, the date of repeal of the 1955 Act. Therefore, it was numberlonger permissible for the private operators to ply their vehicles on the companymon sectors from 1.4.1971 onwards. Despite the statutory prohibition against any private operator plying a stage carriage on any part of the nationalised route in the absence of a provision in the scheme of nationalisation, it appears that a practice grew up we have borrowed the word Practice from one of the judgments of Allahabad High Court which was cited before us in Uttar Pradesh of permitting private operators to ply their stage carriages over companymon sectors of nationalised routes provided they did number set down or pick up passangers at any point on the companymon sectors. The Practice was wholly unauthorised and without any legal sanctions whatsoever. However in 1976, the Uttar Pradesh Legislature enacted the Uttar Pradesh Motor Vehicles Special Provisions Act, 1976 to provide for the grant of authorisation to holders of stage carriage permits to ply their stage carriages over companymon sectors. This was provided by sec. 5 of the Act. Sec. 5 was interpreted by the companyrt in Hindustan Transport Company v. State of Uttar Pradesh, A.I.R. 1984 S.C. 953 to mean that the operator seeking an authorisation should hold a permit on the date of numberification. Section 1 3 of the Act makes the provisions of the Act applicable only in relation to schemes approved or purporting to be approved, areas and routes numberified or purporting to be numberified under Chapter IV A of the Motor Vehicle Act, 1939 as amended in its application to Uttar Pradesh hereinafter referred to as Principal Act and to permits issued under Principal Act before the companymencement of this Act. Basing their submissions on s.1 3 of the 1976 Act, Shri S.N. Kacker and Shri K.K. Venugopal learned companynsel for petitioners urged that the petitioners were entitled to obtain authorisations from the companypetent authorities under s.5 of the Act, if they had permits to ply stage-carriages on the routes having companymon sectors on July 1, 1976 the date of companymencement of Act 27 of 1976. They companyplained that on the basis of the observations of this companyrt in Hindustan Transport Company v. State of Uttar Pradesh, supra their applications for renewal of their authorisations had been wrongly rejected on the ground that they did number possess permits on the dates of the nationalisation numberifications. We do number see any force in the submission of the learned companynsel. As pointed out by us, on the repeal of Act 9 of 1955 it was numberlonger permissible for the transport authorities to permit the private operators to ply their stage carriages over the companymon sectors, in the case of areas and routes which were nationalised to the companypleted exclusion of private operator. If by reason of the unauthorised and unlawful practice which had grown up in Uttar Pradesh, private operators had been allowed to ply vehicles over companymon sectors, despite statutory prohibition, that would surely number entitle the operators to obtain authorisations under s.5 of the 1976 Act. Whatever doubts there might have been earlier, it is number settled by the decision of Constitution Bench in Adarsh Travels v. State of Uttar Pradesh, 1985 2 scale 880 that where a route is nationalised under Chapter IV A of the Motor Vehicles Act to the total exclusion of private operators, a private operator with a permit to ply a stage carriage over another route which has a companymon overlapping sector with the nationalised route cannot be permitted to ply his vehicle over that part of the overlapping companymon sector, even if he did number pick up or set down passengers on that part of the route. The law as declared by the companyrt in Adarsh Travels v. State of Uttar Pradesh, supra must be companysidered to have always been the law under the Motor Vehicles Act. The plying of stage carriages by the private operators before the companymencement of 1976 Act pursuant to the alleged practice which has grown up in Uttar Pradesh or under interim orders of a companyrt must be companysidered to be unauthorised so as to disentitle the private operator from seeking the benefit of s.5 of Uttar Pradesh Act 27 of 1976.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petitions Nos. 3023-32 of 1985 etc. Under Article 32 of the Constitution of India. Dr. Y.S. Chitale, Altaf Ahmad, S.K. Bisaria, S.K. Bhattacharya, S.C. Patel, Subhash Sharma, L.R. Singh, B. Sawhney, Ms. Indra Sawhney, Mrs. Jaya Mala and K. Bansi Lal A for the Petitioners. N. Kacker, M.H. Baig, E.C. Agarwala, R. Sathish, K. Pandit, Shabir Ahmed for the Respondents. The Judgment of the Court was delivered by PATHAK, J. On May 10, 1985 we delivered an order in these cases disposing of the writ petitions and special leave petitions. We stated that the reasons for the order would be pronounced later. The hearing of these cases had been companypleted only a few days before the companymencement of the Long Vacation and as companynsel for the parties desired that we deliver the order before the Court closed we did so. We number set forth the reasons. The large group of writ petitions and special leave petition before us fall into two groups. A number of them challenge the selection of candidates for admission to the first year companyrse of the M.B.B.S. Degree and the B.D.S. Degree in the Government Medical Colleges at Srinagar and Jammu for the session 1984-85. They also challenge the numberinations of students from Jammu and Kashmir by the State Government to Nedical Colleges outside that State. The other group of cases challenges the validity of the Select List for admission to the B.E. First Year companyrse of studies at the Regional Engineering College, Srinagar and also aasail the validity of numberinations made by the State Government to Engineering Colleges outside the State. Medical Group F On June 10, 1984 the Government of Jammu and Kashmir published an advertisement inviting applications from permanent residents of the State for admission to the First Year M.B.B.S. Course in the Medical Colleges of the State for the session 1984-85. To be eligible, candidates should have passed one of the qualifying examinations mentioned therein and should have studied in the recognised educational institutions in the State. Fifty per cent of the total admissions were to be affected on the basis of open merit while the remaining fifty per cent were to be selected on the basis of their merit from certain reserved categories, including Scheduled Castes, Socially and Educationally Backward classes companyprising weak and under-privileged classes Gujjar and Bakarwal and other social castes , as well as residents of backward areas. Eligible candidates were to appear in a written entrance test and a viva voce test. The backward areas companysisted of the areas enumerated in Annexure I to S.R.O. 272 dated July 3, 1982 issued by the State Government and prepared on the basis of the Wazir Committee Report and the Anand Committee Report as well as the Census Reports of 1971. To those villages were added a number of others by Notification No. SRO 335 dated June 14, 1983 and S.R.O. 412 dated August 27, 1984. Candidates claiming companysideration under the backward areas category were required to enclose a certificate by the Tehsildar in support of their claim to that benefit. Thereafter the State Government issued S.R.O. 380 dated July 7, 1983 modifying the Notification S.R.O. 272 dated July 3, 1982, and promulgating the Jammu and Kashmir Government Medical Colleges Selection of Candidates for Admission to the First Year M.B.B.S. Course Procedure Order, 1983. merely the written test was to carry 85 points and the viva voce test was to carry 15 points, making a total of 100 points. me points earmarked for the viva voce test were further sub-divided into a Aptitude, carrying 8 point and b General Knowledge and General Intelligence, carrying 7 points. On August 9, 1984 the State Government sanctioned the companystitution of an Admission Selection Committee for the selection of candidates for admission to the two Medical Colleges of the State for the session 1984- The Chairman of the Public Service Commission was appointed Chairman of the Admission Selection Committee, and the Principal, Government Medical College, Srinagar and the Principal Government Medical College, Jammu were to be its two members. The Committee was empowered to arrange and companyduct the written test and to evolve its own procedure for the appointment of Examiners, the setting of papers and the companyduct of the Examination. The Selection Committee decided that the Principals of the two Medical Colleges, who were Members of the Committee, would set the question papers and the answer books would be evaluated by a list of Examiners drawn up by the Committee. The viva voce Examination was to be companyducted by a procedure which envisaged the preparation of question cards on each subject, the question cards would be kept in the interview room during the interview and individual candidates would be asked to draw the question cards of their choice, each candidate being required to pick up one card from each group and after reading the question the candidate was to give his oral answer. The Committee would assess the performance of each candidate and allot points in accordance with the provisions of S.R.O. 380 dated July 7, 1983. The entire proceeding during the interviews was to be recorded by tape recorders. The written tests were held at Srinagar and Jammu on September 12 and 13, 1983, and the answer scripts were evaluated from October 1, 1984 to October 13, 1984. The viva voce test was companyducted at Srinagar from October 8, 1984 to October 17, 1984 and at Jammu from November 19, 1984 to November 24, 1984. Before the interviews companyprising the viva voce test were companymenced the Admission Selection Committee decided on October 8, 1984 that the 15 points allocated to the viva voce test should be further sub-divided as follows Aptitude 8 Points Physics 2 points Chemistry 2 points Biology 4 points Botany 2 points Zoology 2 points General Knowledge and General Intelligence 7 Points General Knowledge 4 points General Intelligence 3 points Presence of mind 1 point Physical Bearing 1 point Expression 1 point Earlier the State Government had published an advertisement dated September 19, 1984 inviting applications from residents of the State for training in the B.D.S. Course in various Dental Colleges of different States for the session 1984-85, and on September 21, 1984 the State Government wrote to the Admission Selection Committee that while holding interviews of candidates for admission to the M.B.B.S. Course it should give an option to the candidates to choose whether they would like to be companysidered for training in the B.D.S. Course during the current session, and that accordingly such candidates should be interviewed in accordance with the provisions of Notification S.R.O. 380 dated July 7, 1983. Nine candidates were to be selected for that Course. On January 19, 1985 the State Government published a list of candidates selected for admission to the First Year B.B.S. Course in the two Government Medical Colleges of the State and to the First Year B.D.S. Course in the Government Medical College, Srinagar for the session 1984- For the First Year M.B.B.S. Course 76 candidates were selected on the basis of open merit and 74 candidates were selected from the reserved categories, making 150 candidates in all. Nine candidates were selected for admission to the First Year B.D.S. Course. Beside the selection of candidates for admission to the Medical Colleges of the State of Jammu and Kashmir, the State Government numberinated certain candidates for admission to Medical Colleges outside the State. These included numberinations of candidates for admission to the M.B.B.S. Course and the B.D.S. Course in the Medical Colleges of the State of Tamil Nadu The petitioners are candidates who applied for admission to the First Year M.B.B.S. Course and the First Year B.D.S. Course in the Government Medical Colleges of the State of Jammu and Kashmir, but were number included in the Select List respecting those Medical Colleges number were numberinated for admissions to any Medical College outside the State. They challenge the selection of candidates for admission to the Medical Colleges of the State as well as the numberinations made for admission to Medical Colleges outside the State. Learned companynsel for the petitioners has taken us through a historical survey of the various stages of evolution in Jammu and Kashmir of the procedure for selecting candidates for the professional companyrses of medicine and engineering, culminating in the procedure employed for the purpose of the present selections. The successive decisions of this Court, from Triloki Nath Anr. v. State of Jammu Kashmir Ors., 1969 1 S.C.R. 103 onwards, have been placed before us and our attention has been invited to the companytents of the Wazir Committee Report, the Anand Committee Report and other material which has entered into the formulation of the scheme for admission. It is companytended by learned companynsel for the petitioners that the selection of several candidates from the Backward Areas category, including areas near the Actual Line of Control, is invalid inasmuch as the category includes areas which were number included originally in Annexure I to Notification S.R.O. 272 dated July 3, 1982 but have been added subsequently, and that candidates number belonging to backward areas have been selected under the reserved category. The first prong of attack proceeds on the assumption that the area added to those enumerated in Annexure I to Notification S.R.O. 272 dated July 3, 1982 companyld number have been treated as backward areas. It is urged that the villages enumerated in Annexure I to S.R.O. 272 dated July 3, 1982 had been selected on the basis of criteria set forth in the Wazir Committee Report, the Anand Committee Report and the Census Reports of 1971, and numberfurther areas companyld be added to that list which was companypletely exhaustive. It is pointed out that the Actual Line of Control had all along remained unaltered after the Simla Agreement and there was numberbasis for adding to the villages defined by their proximity to it. We are unable to accept the submission. In regard to the backward areas short of the Actual Line of Control Zone, the Wazir Committee Report had identified 696 villages as companystituting the backward areas of the State. The Anand Committee Report enlarged the number to 1153 villages. S.R.O. 334 dated June 13, 1983 identified as many as 1754 villages in that category. Thereafter S.R.O. 335 dated June 14, 1983 added 25 villages and S.R.O. 412 dated August 27, 1984 added another 14 villages. In the result, 1793 villages companystituted the backward areas of the State. In regard to the Actual Line of Control Zone, S.R.O. 335 dated June 14, 1983 added 9 villages to the 347 villages identified earlier. The additional villages added by S.R.O. 335 dated June 14, 1983 and S.R.O. 412 dated August 27, 1984 by the State Government were so added after the Cabinet of Ministers had companysidered the material placed before it and taken a decision thereon. The material included reports from the District Development Commissioners companycerned. It is apparent from the Memorandum submitted to the Cabinet that the criteria formulated by the Wazir Committee Report, the Anand Committee Report and the data companytained in the Census Reports of 1971 were present to the mind of the Cabinet when the Orders were made. These companyprised the same criteria as formed the basis of identifying backward areas in S.R.O. 272 dated July 3, 1982. The District Development Commissioners of the district companycerned had already gone into the matter, and after holding meetings of the District Development Boards they had made the recommendations responsible for the addition of those villages. We are number satisfied that the material before the State Government was such that the State Government can be said to have acted arbitrarily and without reasons. We are of opinion that S.R.O. 335 dated June 14, 1983 and S.R.O. 412 dated August 27, 1984 cannot be regarded as invalid on that ground. We are also of the view that the list of villages enumerated in S.R.O. 272 dated July 3, 1982 cannot be regarded as a final and companyplete list for all time of villages companystituting the backward areas. It is perfectly possible for the companyditions of a village to change during the years, and it is quite companyceivable that a village companysidered suitably developed at one time should deteriorate thereafter to the point of becoming backward. Therefore we hold that number only was the number of villages enumerated in Annexure I to S.R.O. 272 dated July 3, 1982 open to further enlargement, there was also good material on the basis of which the particular villages mentioned by the State Government in the subsequent Notifications companyld be legitimately added to the list of backward areas. The second part of the companytention set forth earlier is that candidates number belonging to backward areas have been selected for admission from the reserved categories. The petitioners have indicated several names in the Select List who, they say, should number have been given admission. We have gone through the entire list and carefully companysidered the facts pertaining to those candidates whose inclusion has been challenged by the petitioners. We find numbersufficient material for sustaining the challenge made by the petitioners. With the assistance of companynsel for the parties we have companysidered the case in respect of each of the candidates selected in the backward area categories, the Line of Actual Control Category and the B.D.S. Course and we find that in each case the candidate can be said to belong to a village listed as a backward area either in S.R.O. 272 dated July 3, 1982 as originally framed or pertaining to S.R.O. 335 dated June 14, 1983 or S.R.O. 412 dated August 27, 1984. In some cases the candidates had given an address in Jammu, and it is companytended by the petitioners that such candidates companyld number be regarded as belonging to a backward area. The candidates who claimed the benefit have filed a Tehsildars Certificate in the prescribed Form in support of their claim, and there is numberhing on record ex facie to doubt the companyrectness of that Certificate. Nor is it for the Court in this proceeding to inquire into the companyrectness of the Certificates. Annexure II to Notification S.R.O. 272 dated July 3, 1982 makes provision for the grant of such Certificate, their prescribed Forms, the authority entrusted with the power to grant them and the companyditions subject to which they can be granted. Even if this Court companyld be said to possess jursidiction to enter into an inquiry whether the Tehsildars Certificates are valid and reliable documents, it appears difficult, having regard to the state of the record before us, to sustain the challenge to their validity. A specific submission has been made in regard to the selections of Meenakshi Kotwal, Inderjit Singh and certain other candidates who have been shown as residing in the City of Jammu, and it is urged that they cannot be regarded as candidates from the backward areas category even though their respective families hail from such areas. It appears to us that their residence in the City of Jammu is essentially of limited and temporary duration, and to our mind, temporary residence in an urban area cannot deny those candidates the right to admission on the basis of a reserved category if in fact they belong permanently to a village in a backward area. Appendix II of Annexure II to S.R.O. 272 dated July 3, 1982 requires that a candidate claiming to be a permanent resident in areas adjoining the Actual Line of Control or in other backward areas should establish the ground of his claim before the Tehsildar before he can be issued a certificate in that behalf. The Tehsildar has granted a certificate to the different candidates whose title to companysideration as members of the reserved categories has been challenged by the petitioners, and there is numbersatisfactory material before us to indicate that the basis underlying the certificate is entirely without substance. A candidate may belong to a village in terms of the requirement prescribed by the Anand Committee Report and because of the lack of higher educational facilities he may have to reside temporarily in a city where such education is available. It may also be that a parent of the candidate may pursuant to his employment, have taken up residence in an urban area. That in itself does number snap the bond between the candidates family and the village, so long as the assumption of residence in the city is occasioned by temporary necessity. A specific challenge has also been made to the selection of the candidate Farooq Ahmed Roll No. 503 who is said to have been actually awarded 41.31 points but has been shown as having got 44.31 points. We have carefully examined the matter and in our opinion it appears that a mistake had been companymitted in the original recording of marks, and the mistake was removed by finally companyrecting the candidates tally to 44.31 points. A companyplaint has been made by the petitioners that in the case of candidates from reserved area categories numberqualifying minimum has been prescribed and, therefore, numbermatter what the marks attained by him the candidate has to be regarded as entitled to selection. It is companytended that the absence of minimum qualifying standard renders the selection of candidates from reserved area categories arbitrary and invalid. The companytention must fail. In the first place, the advertisement calling for applications for admission to the Medical Colleges clearly prescribes the minimum percentage of marks required in the specified examinations as a companydition of eligibility. While a minimum percentage of marks has been prescribed for candidates generally, a lower minimum percentage has been laid down for candidates belonging to the categories of Scheduled Castes, Gujjars, Bakarwals and candidates hailing from the Districts of Leh and Kargil. That ensures that candidates with a sufficiently suitable academic level are alone permitted to apply. It can be expected that having regard to the minimum qualifying percentage applied as a companydition of eligibility for the purpose of submitting applications, the minimum percentage of marks attained by candidates from the several categories in the entrance examination will number fall below a reasonable level. There is numberdoubt that numberminimum has been prescribed as the bottom line for selecting candidates from the reserved categories, but numbersuch minimum has been prescribed for selecting candidates from the general category either. There is a limited number of seats, and the allocation of those seats between candidates from the general category and candidates from the reserved categories has been fixed. The rule must be that candidates are selected for admission from the different categories according to the order of merit. It was faintly urged that admissions to the B.D.S. Course within the State has been affected without separate applications from the candidates. It appears, however, that each candidate was asked whether he was interested in being companysidered for admission to the B.D.S. Course, and that all, or at least most, of them opted for being so companysidered in addition to the M.B.B.S. Course of studies. Another companytention raised by the petitioners is that the answers in some of the answer scripts have number been assigned marks. We examined the answer scripts placed before us and we companyld find numberhing to substantiate the grievance of the petitioners. There was a general submission that the procedure followed in companyducting the written test and the viva voce test by the Selection Committee was invalid. We have examined the detailed procedure followed in preparing the question papers and evaluating the answer scripts and have companysidered other aspects of the matter. The petitioners have number succeeded in establishing that the procedure is materially defective. It is urged that the allocation of only 85 points to the written test and as many as 15 points to the viva voce test out of a total of 100 points gives a weightage to the viva voce test over the written test which is unreasonable. We are unable to agree that the allocation of 15 points to the viva voce test creates an unreasonable imbalance in the evaluation of a candidates ability. See Koshal Kumar Gupta Ors. v. State of J K Ors., 1984 3 C.R. 407. The next companytention is that the dates for the written test and for the viva voce test were so fixed that it was possible for the Selection Committee companyducting the viva voce test to know before hand what were the marks obtained by each candidate in the written test. The suggestion is that it was possible for the Selection Committee to favour some candidates at the expense of the others during the viva voce test in order to make good any deficiency in the marks awarded in the written test. As we have mentioned earlier, the written test was companyducted on September 12 and 13, 1984. The answer books were evaluated from October 1, 1984 to October 13, 1984. The viva voce test companymenced at Srinagar from October 8, 1984. We are number satisfied upon the material before us that there is any substance in the allegation levelled by the petitioners. The main attack by the petitioners has been directed against the procedure adopted during the viva voce test. It was vehemently urged by the petitioners that the marks assigned to the candidates during the viva voce test had been manipulated in order to ensure that the number of candidates selected from the companymunities companystituting the population of the Valley of Kashmir companyresponded in proportion to the respective strengths of these companymunities in Kashmir. The submission was made apparently to gain support from the decision of this Court in Triloki Naths case supra and the cases following it. The petitioners have, however, been unable to establish that there is any deliberate companynection between the number of candidates selected and the strength of the respective companymunities from which they hail. To establish this allegation something more is required. There must be clear evidence to show that there was a companyscious attempt to ensure that the selection of candidates from different companymunities companyresponded to the strength of those companymunities. It is then urged that individual candidates were specially favoured during the viva voce test because they were children or relations of senior Professors or teachers of the Medical Colleges or of highly placed officers in the State Government or possessed powerful political companynections within the State. We sent for the cassette tapes which recorded the oral interviews held by the Selection Committee during the viva voce test. The petitioners placed only a few of these cassette tapes before us, and we have carefully heard them played before us. We are unable to reach the companyclusion that the charge levelled by the petitioners is substantiated. Then it is pointed out that numberwithstanding the specific order made by this Court on March 19, 1985 requiring the respondent State to produce the work-sheets of the individual Members of the Selection Committee prepared during the viva voce test numbersuch document was placed before the Court amidst the voluminous records brought by the respondent into Court. When this omission was pointed out during the hearing of these cases, learned companynsel for the State Government and the Selection Committee informed us that the work-sheets had been destroyed after the marks had been recorded in the final Roll and before our order was passed. We are number at all happy about that statement. The Selection Committee can be presumed to have known that the selections made for admission to the Medical Colleges of Jammu and Kashmir would be challenged in companyrt, even as they had year after year in the past. Indeed some unsuccessful candidates had already filed writ petitions in the High Court assailing the selection shortly after the publication of the list of successful candidates. Common sense and reason required the Selection Committee to preserve the Work-sheets on which they had recorded the marks awarded to individual candidates during the viva voce test. It is urged on behalf of the State Government and the Selection Committee that it was companysidered appropriate to destroy the work-sheets so that candidates would number know the particular marks awarded by the individual members of the Selection Committee. The plea is specious and weak and affords numberexcuse. The work-sheets should have been kept in a sealed companyer for a period of time. As however the cassette tapes selected by learned companynsel for the petitioners have been played before us, and we have found numberhing there to throw doubt on the marks assigned to the particular candidate, we shall refrain in this case from drawing any adverse companyclusion against the Selection Committee. We find it necessary, however, to emphasise that a Selection Committee companyducting the viva voce test should maintain the entire record, including the original work-sheets on which the marks have been recorded by each Member separately, for a minimum period of one year after the Examination. Failure to do so can strengthen an allegation of malafides against the Selection Committee. We shall number deal with the challenge made by the petitioners to the numberinations affected by the State Government of candidates to Medical Colleges outside the State. Three candidates, Syed Manzoor Ahmed Bhukari, Rajinder Krishan Raina and Monika Verma were numberinated to the B.D.S. Course in the King Georges Medical College, Lucknow. The petitioners do number dispute that the first two of these candidates were rightly numberinated. The challenge is companyfined to the third candidate, namely, Monika Verma, and the ground underlying it is that she does number belong to the reserved category of Line of Actual Control. That Monika Verma belongs to that reserved category is supported by the Tehsildars Certificate in her favour, and we are number satisfied that the certificate can be successfully assailed. Besides, the numberinations to the King Georges Medical College, Lucknow, six numberinations were made to Medical Colleges in the State of Tamil Nadu, three to the MBBS Course and three to the BDS Course. It is companyceded by learned companynsel for the State Government that the six numberinations are invalid inasmuch as they violate the criteria laid down by this Court in Suman Gupta and Ors. etc. v. State of Jammu and Kashmir Ors., 1983 3 S.C.R. 985 as clarified by this Court by its Order dated September 22, 1983. They are liable to be quashed. Engineering Group The petitioners in these writ petitions challenge the selection of candidates for admission to the Regional Engineering College, Srinagar and also challenge the numberinations made by the State Government of candidates to Regional Engineering companyleges and other engineering institutions outside the State. The State Government companystituted a Selection Committee companysisting of Shri T.R. Gupta, a Member of the State Public Service Commission as Chairman of the Committee and Shri A.R. Mir, Chief Engineer, Public Health Engineering, Kashmir, Professor Ansari, Professor of Mathematics, Regional Engineering College, Srinagar and Shri Mohd. Amin, Additional Secretary, General Department Trainings Branch , Government of Jammu and Kashmir as its Members. On March 30, 1984 the State Government issued a public advertisement inviting applications from candidates for admission to the four-year Degree Course at the Regional Eagineering College, Srinagar. The Entrance Examination for the Purpose of admission was to companysist of a written test and a viva voce test. Out of 100 points, 85 points were allocated to the written test and the remaining 15 points were allocated to the viva voce test. The points reserved for the viva voce test were sub-divided into 8 points for Aptitude and 7 points for General Knowledge and General Intelligence. The written test was held in June 1984 and the viva voce test followed in July 1984. As in the case of admission to the Medical Colleges, tape recorders were employed for recording the oral interviews held during the viva voce test. On September 21, 1984 the State Government issued a Select List of 212 candidates. The State Government also made numberinations of a number of candidates to Regional Engineering Colleges and engineering institutions outside the State. And number these writ petitions. Learned companynsel for the petitioners states that the several grounds on which the Medical Group of writ petitions were founded can companystitute the basis of these writ petitions also and has adopted the submissions made by learned companynsel in those cases. Those grounds have already been dealt with earlier by us and we need number reiterate our observations and findings in respect of them. Learned companynsel has in addition taken certain further grounds in support of the present petitions. He points out that the Selection Committee took into account the behaviour, physical bearing and power of oral expression of the candidates during the viva voce test for the purpose of awarding points under the head General Intelligence. In doing so, learned companynsel urges, the Selection Committee gave importance to companysiderations which were number only vague but were wholly irrelevant for the selection of candidates to the Engineering Course. It is companytended that the behaviour, physical bearing and oral expression of a candidate can hardly be relevant for assessing his intelligence and suitability for the Engineering Course. We are unable to agree. In our opinion, if a viva voce test is permissible for the purpose of adjudging the general intelligence of the candidates, there can be numberdoubt that the three companyponents mentioned earlier would have some relevance. Presence of mind and expression can be companysidered as companyponents of general intelligence. The presence of mind displayed by a candidate in answering a question is an index of general intelligence, and his power of oral expression is evidence of his ability to companymunicate intelligently. The third companyponent, physical bearing, possesses a somewhat remote companynection with general intelligence. But we may suppose that by physical bearing what is meant is the physical manner in which the candidate responds to the stress and tension experienced by him during the interview. It is a weak companyponent, but even though tenuous it is number so unrelated to general intelligence that we should strike it down as unreasonable element in deciding on a candidates suitability. We number enter the realm of admissions made by learned companynsel for the State, who companyceded that the selection of certain specified candidates companyld number be supported. Five candidates, Abdul Rashid Dhobi, Roohi Firdous Adhami, Rais Ahmed Zargar, Shabir Durrani and Zahoor Ahmad Sheikh, were among those selected for admission to the first year B.E. Course in the Regional Engineering College at Srinagar for the session companymencing in 1984-85. It is apparent that on the basis of their result during the selection examination they were number entitled to admission. A number of writ petitions were filed in the High Court of Jammu and Kashmir challenging the validity of the selection for admission to the aforesaid companyrse. During the hearing of those writ petitions, companynsel who appeared for the State Government and the Selection Committee, made a statement in Court companyceding that the aforesaid five candidates were number entitled to admission because of their inferior merit and that an error had inadvertently been companymitted in including their names in the Select List. The High Court, by its judgment dated March 20, 1985 took the companycession into account and set aside their selection. The five candidates have filed Special Leave Petition Civil No. 5197 of 85 in this Court, but after carefully examining the matter we find that the companycession made by companynsel for the State before the High Court was perfectly justified. Accordingly, the Special Leave Petition is liable to be dismissed. There are thus five vacancies on this account. Five names were added to the Select List to fill up the aforesaid vacancies. They were candidates who had been numberinated to Engineering Colleges outside the State, but had been unable to join there because they were late in doing so. In companysequence they were admitted to the Regional Engineering College, Srinagar. These candidates are Abdul Mateen Sherwani, Parvez Ahmed, Rajinder Kaul, Shanker Singh and Sanjay Razdan. It is number clear whether these five candidates who have number MANOHAR been admitted to the Regional Engineering College, Srinagar would have been entitled to do so on the basis of their merit in the Select List. Their admission is liabe to be quashed unless they have been selected by virtue of their merit in the Select List and but for the erroneous inclusion of the five candidates, Abdul Rashid Dhobi and the others, would have been included in the Select List. If one or more or such candidates does number hold a position of merit qualifying him or them for such selection, the candidates who are qualified by virtue of their position in order of merit are entitled to be admitted to the Regional Engineering College, Srinagar. The Government of the State of Jammu and Kashmir numberinated eight other candidates to seats in Engineering Colleges outside the State. They are Ghulam Hassan Mir, Sudhir Kumar Tukra, Sahab Ji Kachroo, Niraj Kumar Gupta, Mahmood Ahmed, Avneet Kumar, Mohd. Bashir Khan and Abdul Rehman. As Abdul Rehman declined the offer his place has been filled by Maqbool Hussain. There is numberdispute that they companyld number in law be numberinated by the State Government having regard to what was laid down by this Court in Suman Gupta Ors. supra as clarified by this Court by its Order dated September 22, 1983 . Their numberinations are liable to be quashed. Additionally, a candidate Arshad Hussain Wani was also numberinated to a seat in an Engineering College outside the State. It is companyceded by learned companynsel for the State that the numberination of Arshad Hussain Wani cannot be supported. Accordingly that numberination is also liable to be quashed. In the circumstances the State Government must numberinate candidates in place of the vacancies so arising in accordance with the law laid down by this Court on the basis of the merit list which was in force in the State on the date when the impuged numberinations were made. Eight candidates selected for admission to the Regional Engineering College, Srinagar did number join or having joined did number companytinue there. To fill the eight vacancies so arising eight other candidates were selected for admission to the Regional Engineering College, Srinagar. me inclusion of those names is also liable to be quashed unless the numberinations have been made in accordance with law by virtue of their merit in the Select List and who, if the eight persons who were selected but did number join or companytinue in the Regional Engineering College, Srinagar had number been selected, would have been included in the Select List. If one or more of such candidates does number hold a position of merit qualifying him or them for such inclusion the candidates who are qualified by virtue of their position in order of merit are entitled to admission to the Regional Engineering College, Srinagar. Ten candidates were numberinated by the State Government to Engineering College outside the State on October 27, 1984, but all those ten numberinations, as averred in the Counter Affidavit filed by the Chief Minister, have been cancelled by him pursuant to the law laid down by this Court in Suman Gupta and Ors., supra as clarified by this Court by its Order dated September 22, 1983 . Some candidates were numberinated for admission to the Five Year Engineering Course of Studies. It is apparent that their selection was made arbitrarily and they companyld number be treated as companystituting a separate category. We are informed that other candidates, while applying for admission to the Four Year Course of Studies, also applied for the Five Year Course of Studies and their claim was number companysidered. It is companyceded by learned companynsel for the State that the selection of the candidates to the Five Year Engineering Course of Studies cannot be supported. Accordingly the selection of candidates for admission to the Five Year Course of Studies in Engineering Colleges outside the State is liable to be quashed. Finally the petitioners, Sanjeev Kumar Handoo, in Civil Writ Petitions Nos. 428-32 of 1985, does number press for relief inasmuch as he has been admitted to a Medical College, and therefore, the Writ Petition filed by him is liable to be dismissed as withdrawn.

Case appeal was rejected by the Supreme Court

Delhi Administration v. State of Haryana Ors. 1979 1 S.C.R. 70, referred to. In the instant case, the variation that is sought affects both the regions since one part of variation relates to companyversion of the town service into a mofussil service and reduction of the number of trips within the Periyar District and another part relates to extension and that extension of the route in the Salem District cannot be granted without reducing the numbers of trips within the Periyar District. The Regional Transport Authority of Periyar District should have naturally companytrol over its permit and its sanction should be first obtained before seeking the companyntersignature of the Salem Regional Transport Authority. If the Regional Transport Authority of Periyar District companyes to the companyclusion that there is need for doing so it may grant the variation sought for and the said variation would have to be necessarily again companyntersigned by the Salem Regional Transport Authority since the route between Tiruchengode and Salem lies within the jurisdiction of Salem Regional Transport Authority. Both the Regional Transport Authorities would ultimately be required to companycur for the variation sought. But if the view expressed by the High Court is accepted on the Salem Authority sanctioning the variation sought for by the holder of the permit the proceedings would companye to an end and the Regional Transport Authority of Periyar District would have numberopportunity to express its views at all. Since there would number be publication of the application for variation within the jurisdiction of the Periyar Regional Transport Authority, the members of the public, the local authorities, the police authorities etc. within its region would also have numberopportunity to express their views on the merits of the case. 92 E-H 93 A-C CIVIL APPELLATE JURISDICTION Civil Appeal No. 1126 of 1986. From the Judgment and Order dated 20th December, 1985 of the Madras High Court in C.R.P. Nos. 1773, 1774, 1775, 1926, 2040, 2047, 2159 and 2388 of 1985. Srinivasan for the Appellant. Dr. Y.S. Chitale and A.T.M. Sampath for the Respondent. The Judgment of the Court was delivered by VENKATARAMTAH J. The appellant is the holder of a stage carriage permit in respect of a motor vehicle bearing No.TDL-7755 plying on the town service route No. 1.A from Erode Railway Station to Tiruchengode via P.S. Park, Ex- Clock Tower, Sathy Road, Bus Stand, K.N.K. Road, Pallipalayam, S.P.B. Factory, S.P.B. Colony and Thokkavadi. The existing route length is 23.7 Kms. At present the appellants bus is performing 12 single trips between Erode Railway Station and Tiruchengode and 8 single trips between Erode Railway Station and S.P.B. Factory. The total kilometerage per day companyes to 358 Kms. The said permit had been issued by the Regional Transport Authority of Periyar District, Erode in the State of Tamil Nadu. He applied to the Regional Transport Authority of the District of Periyar which had issued the permit for its variation involving 1 companyversion of the town service into a mofussil service 2 curtailment of the sector from Erode Railway Station to Erode Bus Stand via P.S. Park and Sathy Road 3 curtailment of 10 single trips between Erode Bus Stand and S.P.B. Factory 4 curtailment of 2 single trips between S.P.B. Factory and Tiruchengode and 5 extension of route from Tiruchengode to Salem via Mallasamudram, Attayampatti and Ariyanur. It may be mentioned here that while Erode Railway Station, P.S. Park and Bus Stand are in Periyar District, Pallipalayam, S.P.B. Factory, S.P.B. Colony and Tiruchengode are in Salem District of Tamil Nadu. The existing permit is, therefore, an inter-regional permit. The entire route between Tiruchengode and Salem in respect of which extension of the permit was sought is also in Salem District. The application for variation made by the appellant was duly numberified under section 57 3 of the Motor Vehicles Act, 1939 hereinafter referred to as the Act and representations objections thereto were invited. Thereafter the Regional Transport Authority heard the appellant and others who had filed objections and representations and passed a resolution on June 1, 1984 rejecting the said application. It held inter alia that the companyversion of the town service into a mofussil service and curtailment of 10 trips between Erode Bus Stand and S.P.B. Factory and 2 trips between S.P.B. Factory and Tiruchengode were number in the public interest. It also held that the entire sector in respect of which the extension was sought lay within Salem District that the said sector was well-served by stage carriage services and that it was number proper for it to grant the extension since the entire route between Tiruchengode and Salem lay within the jurisdiction of the Regional Transport Authority, Salem. On these grounds the Regional Transport Authority of the District of Periyar found that there was numberground for granting the variation prayed for. Aggrieved by the resolution of the Regional Transport Authority of the District of Periyar, the appellant preferred an appeal before the State Transport Appellate Tribunal, Madras hereinafter referred to as the Tribunal . The Tribunal after hearing the parties allowed the appeal and granted the variation including the extension applied for with slight modification. The Tribunal directed that the appellants bus should perform the following pattern of trips 1 two single trips from Erode Railway Station to Salem 2 four single trips from Erode Bus Stand to Salem and 3 four single trips from Erode Railway Station to Tiruchengode. It directed the Secretary of the Regional Transport Authority, Periyar District at Erode to fix suitable timings within six weeks from the date of the receipt of the order. The appeal was accordingly disposed of on April 19, 1985. In its proceedings dated 4.10.1985 the Secretary, Regional Transport Authority, Periyar District, Erode fixed the timings as directed by the Tribunal but since in the meanwhile a stay order had been issued by the High Court in some civil revision petitions and a writ petition filed by some of the objectors, Lt directed that the timings fixed would be given effect to as and when the order of stay was vacated. The revision petitions and the writ petition filed by some of the objectors against the order of the Tribunal which are referred to above were disposed of by the High Court on December 20, 1985 by allowing them. The High Court held that the Regional Transport Authority, Periyar District at Erode had numberjurisdiction to entertain the application for variation since the entire route in respect of which extension was sought lay within the jurisdiction of the Salem Regional Transport Authority and, therefore, the proceedings companymenced with the said application were liable to be quashed. On the other companytentions raised by the petitioners before it, it expressed numberopinion and left them open. Aggrieved by the decision of the High Court the appellant has preferred this appeal by special leave before this Court under Article 136 of the Constitution. The short question for decision in this case is whether an application for the variation of an existing permit involving the extension of the route or the area specified in the permit, where the portion of the route or area in respect of which extension is sought lies entirely within the jurisdiction of a Regional Transport Authority which had number granted the permit, should be made to the Regional Transport Authority which had granted the permit or to the Regional Transport Authority within whose jurisdiction the route or area in respect of which extension is sought lies. The answer to this question depends upon the companystruction of some of the relevant provisions found in Chapter IV of the Act. Section 42 of the Act provides that numberowner of a transport vehicle shall use or permit the use of the vehicle in any public place, whether or number such vehicle is actually carrying any passenger or goods, save in accordance with the companyditions of a permit granted or companyntersigned by a Regional or State Transport Authority or the Inter-State Transport Commission Constituted under section 63-A of the Act, authorising the use of the vehicle in that place in the manner in which the vehicle is being used. The expression permit is defined in sub-section 20 of section 2 of the Act as the document issued by the Commission or a State or Regional Transport Authority authorising the use of a transport vehicle as a companytract carriage, or stage carriage, or authorising the owner as a private carrier or public carrier to use such vehicle. We are companycerned in this case with a motor vehicle used as a stage carriage vehicle. Sub-section 29 of section 2 of the Act defines a stage carriage as a motor vehicle carrying or adapted to carry more than six persons excluding the driver which carries passengers for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey. Section 45 of the Act is the general provision governing the question involved in this case. The material part of that section reads thus General provision as to applications for permits - 1 Every application for a permit shall be made to the Regional Transport Authority of the region in which it is proposed to use the vehicle or vehicles Provided that if it is proposed to use the vehicle or vehicles in two or more regions lying within the same State, the application shall be made to the Regional Transport Authority of the region in which the major portion of the proposed route or area lies, and in case the portion of the proposed route or area in each of the regions is approximately equal, to the Regional Transport Authority of the region in which it is proposed to keep the vehicle or vehicles Sub-section 1 of section 45 of the Act provides that every application for a permit shall be made to the Regional Transport Authority of the region in which it is proposed to use the vehicle or vehicles. The first proviso to sub- section 1 of section 45 of the Act provides that if it is proposed to use the vehicle or vehicles in two or more regions lying within the same State, the application shall be made to the Regional Transport Authority of the region in which the major portion of the proposed route or area lies and in case the portion of the proposed route or area in each of the regions is approximately equal, to the Regional Transport Authority of the region in which it is proposed to keep the vehicle or vehicles. In the instant case the appellant had obtained the permit for plying this stage carriage from the Regional Transport Authority of Periyar District, since the major portion of the route in respect of which the said permit had been issued was lying within its jurisdiction. Sub-section 1 of section 63 of the Act, however, provides that except as may be otherwise prescribed, a permit granted by the Regional Transport Authority of any one region shall number be valid in any other region, unless the permit has been companyntersigned by the Regional Transport Authority of that other region. The relevant portion of section 63 of the Act is set out below Validation of permits for use outside region in which granted. - 1 Except as may be otherwise prescribed, a permit granted by the Regional C Transport Authority of any one region shall number be valid in any other region, unless the permit has been companyntersigned by the Regional Transport Authority of that other region, and A Regional Transport Authority when companyntersigning the permit may attach to the permit any companydition which it might have imposed if it had granted the permit, and may likewise vary any companydition attached to the permit by the Authority by which the permit was granted. E The provisions of the Chapter relating to the grant, revocation and suspension of permits shall apply to the grant, revocation and suspension of companynter-signatures of permits Rules 163-A, 163-B and 208 of the Tamil Nadu Motor Vehicles Rules framed under the Act provide for an alternative procedure to be followed when the motor vehicle is to be operated in two or more regions inside the State of Tamil Nadu as authorised by section 63 1 of the Act. They read thus 163-A 1 The Regional Transport Authority of any one region may, subject to the provisions of section 45 of the Act, grant a permit to be valid in any other region within the State without the companynter-signature of the Regional Transport Authority of the other region or of each of the other regions companycerned and it shall as soon as possible, send companyies or proceedings relating to the issue of such permit to the companycerned regions Provided that numberRegional Transport Authority shall grant a permit on routes for which the State Transport Authority as the sole Transport Authority under rule 141 unless such power is delegated by the State Transport Authority under Rule 140-A. The Regional Transport Authority granting a permit under sub-rule 1 shall, before granting a permit - a in case of a stage carriage permit obtain the companycurrence of the Regional Transport Authority companycerned, b numberify, under sub-section 3 of section 57 of THE the Act, the whole of the route or area which lies within the State and in respect of which an application for the grant of a permit has been received, by publishing it on the numberice board of the Regional Transport Authority of that other region and shall hear the applicant or any other L person making representations. 163-B. The provisions of rule 163-A shall, as far as may be apply to variation, extension and curtailment of routes and to grant and renewal of endorsement as they apply to grant of permit. 208. a Upon application made in writing by the holder of any permit, the Transport Authority may, at any time, in its discretion, vary the permit or any of the companyditions thereof subject to the provisions of sub-rule b . If the application is for the variation of the permit by the inclusion of an additional vehicle or vehicles or if the grant of variation would authorise transport facilities materially different from those authorised by the original permit the Transport Authority shall deal with the application as if it were an application for a permit. Provided that numberhing companytained in this rule shall prevent the Transport Authority or its Secretary, if authorised in this behalf, from summarily rejecting an application for the variation of a stage carriage permit so as to provide transport facilities on a road which has been or is certified to be unfit for motor vehicular traffic by an officer number below the rank of Divisional Engineer of the Highways Department. In the instant case it is number disputed that the major portion of the route mentioned in the permit of the appellant was lying within the jurisdiction of the Regional Transport Authority or Periyar and the smaller portion lay within the District of Salem. It is also number disputed that if the route in respect of which extension is sought is added then the major portion of the total route would be within the District of Salem. An application for a permit in respect of a service of stage carriages or to use a particular motor vehicle as a stage carriage has to be made in accordance with section 46 of the Act and the rules made thereunder. The application should companytain the following particulars, namely the route or routes or the area or areas to which the application relates the number of vehicles it is proposed to operate in relation to each route or area and the type and seating capacity of each such vehicle the minimum and maximum number of daily trips proposed to be provided in relation to each route or area and the time table of the numbermal trips the number of vehicles intended to be kept in reserve to maintain the service and to provide for special occasions the arrangements intended to be made for the housing and repair of the vehicles, for the companyfort and companyvenience of passengers and for the storage and safe custody of luggage and H such other matters as may be prescribed by the rules framed under the Act. When an application is made for a permit in respect of a stage carriage service under section 45 of the Act the Regional Transport Authority companycerned has to follow the procedure prescribed in section 57 of the Act. Sub-section 3 of section 57 of the Act reads thus 57 3 . On receipt of an application for a stage carriage permit or a public carriers permit, the Regional Transport Authority shall make the application available for inspection at the office of the Authority and shall publish the application or the substance thereof In the prescribed manner together with a numberice of the date before which representation in companynection therewith may be submitted and the date, number being less than thirty days from such publication, on which, and the time and place at which, the application and any re presentations received will be companysidered. Sub-section 4 of section 57 of the Act provides that numberrepresentation in companynection with an application referred to in sub-section 3 thereof shall be companysidered by the Regional Transport Authority unless it is made in writing before the appointed date and unless a companyy thereof is furnished simultaneously to the applicant by the person making such representation. When any representation such as referred to in sub-section 3 thereof is made the Regional Transport Authority is required by sub-section 5 thereof to dispose of the application at a public hearing at which the applicant and the person making the representation shall have an opportunity of being heard either in person or by a duly authorised representative. Section 47 of the Act requires a Regional Transport Authority to have regard while companysidering an application for a stage carriage permit to the following matters, namely the interest of the public generally the advantages to the public of the service to be provided, including the saving of time likely to be effected thereby and any companyvenience arising A from journeys number being broken the adequacy of other passenger transport services operating or likely to operate in the near future, whether by road or other means, between the places to be served B the benefit to any particular locality or localities likely to be afforded by the service the operation by the applicant of other transport services, including those in respect of which applications from him for permits are pending and the companydition of the roads included in the proposed route or area. The Regional Transport Authority is also required to take into companysideration any representation made by persons already providing transport facilities by any means along or near the proposed route or area, or by any association representing persons interested in the provision of road transport facilities recognised by the State Government or by any local authority or police authority within whose jurisdiction any part of the proposed route or area lies. Sub-section 3 of section 47 of the Act provides that a Regional Transport Authority, may having regard to the matters mentioned in section 47 1 limit the number of stage carriages generally or of any specified type for which stage carriage permits may be granted in the region or in any specified area or on any specified route within the region. Section 48 of the Act provides that subject to the provisions of section 47 of the Act, a Regional Transport Authority may, on an application made to it under section 46 of the Act, grant a stage carriage permit in accordance with the application or with such numberifications as it deems fit or refuse to grant such a permit. It, however, provides that numbersuch permit shall be granted in respect of any route or area number specified in the application. Sub-section 3 of section 48 of the Act authorises the Regional Transport Authority, if it decides to grant a stage carriage permit, to grant it subject to any or more of the companyditions mentioned in clauses i to xxiii in sub-section 3 of section 48 of the Act, one such companydition being the companydition referred to in clause xxi of sub-section 3 of section 48 of the Act which reads thus that the Regional Transport Authority may, after giving numberice of number less than one month - a vary the companyditions of the permit b attach to the permit further companyditions Provided that the companyditions specified in pursuance of clause i shall number be varied so as to alter the distance companyered by the original route by more than 24 kilometers, and any variation within such limits shall be made only after the Regional Transport Authority is satisfied that such variation will serve the public companyvenience and that it is number expedient to grant a separate permit in respect of the original route as so varied or any part thereof. Clause xxi of section 48 3 of the Act refers to the power of variation which the Regional Transport Authority may exercise suo motu. The duration and renewal of a stage carriage permit are governed by section 58 of the Act. That section provides that a stage carriage permit other than a temporary permit issued under section 62 shall be effective without renewal for such period, number less than three years and number more than five years, as the Regional Transport Authority may specify in the permit. As provided in sub-section 2 of section 58 of the Act a permit may be renewed on an application made and disposed of as if it were an application for a permit. A renewal of a permit is in effect the companytinuation of the original permit. Section 60 of the Act inter alia provides that the transport authority which granted a permit may cancel the permit or may suspend it for such period as it thinks fit if the holder of the permit uses or causes or allows a vehicle to be used in any manner number authorised by the permit. The provisions companytained in section 60 of the Act apply to revocation and suspension of companynter-signatures of permits by virtue of sub-section 3 of section 63 of the Act. Since a stage carriage permit is issued for the benefit of the general public, it is obligatory that the holder of a stage carriage permit should operate the stage carriage vehicle in accordance with the companyditions of the permit on the route or area in question. If he wishes any alteration in the route or area for which he has obtained a permit he has to get his permit varied in accordance with law. Sub- section 8 of section 57 of the Act as amended by Tamil Nadu Act No. 3 of 1964 which deals with the procedure to be followed by the holder of a permit who seeks such variation, reads thus 57 8 . An application to vary the companyditions of any permit, other than 3 temporary permit, by the inclusion of a new route or routes or a new area or by the variation, extension or curtailment of the route cr the area specified in the permit, or, in the case of a stage carriage permit, by increasing the number of trips above the specified maximum or by altering the route companyered by it or in the case of a companytract carriage permit or a public carriers permit, by increasing the number of vehicles companyered by the permit, shall be treated as an application for the grant of a new permit. underlining by us The companytroversy involved in this case has arisen primarily on account of the language used in sub-section 8 of section 57 of the Act. It may be numbered that sub-section 8 of section 57 of the Act does number expressly prescribe the Regional Transport Authority to which an application for the variation of a permit has to be made where the route or area in respect of which extension is sought lies outside the jurisdiction of the Regional Transport Authority which has granted the permit but within the jurisdiction of another Regional Transport Authority. The said sub-section is silent about it. It, however, provides that an application for the variation of a permit which involves extension or curtailment of the route or area specified in the permit should be treated as an application for grant of a new permit. In sub-section H 2 of section 58 of the Act a similar language is adopted. That sub-section provides that a permit may be renewed on an application made and disposed of as if it were an application for a per it. In the case of a renewal of a permit, however, there is numberdifficulty in determining the Regional Transport Authority to which an application for renewal is to be made. r It should be made to the Regional Transport Authority which has granted the permit originally and there is numberroom for any companytroversy in this case. An application for renewal of a permit and an application for variation of a permit have both to be treated as applications for a new permit and in both the cases the procedure prescribed for the grant of a new permit has to be followed. As mentioned earlier the said procedure includes all the steps mentioned in sub-sections 3 , 4 , 5 and 7 of section 57 of the Act. The application should be advertised, representations and objections thereto should be invited and the application should be companysidered at a public hearing at which the applicant and the persons making representations and objections should be given an opportunity of being heard either in person or by duly authorised representatives. The question, however, remains whether the words shall be treated as an application for the grant of a new permit in sub-section 8 of section 57 of the Act should be read as meaning that the Regional Transport Authority which can entertain an application for variation is the Regional Transport Authority which can entertain an application for a fresh permit in respect of a stage carriage for the entire route including the portion in respect of which extension is sought or that the application for variation can be made to the Regional Transport authority which had granted the permit, but the procedure prescribed under section 57 of the Act for the grant of a permit should be followed. The High Court has taken the view in this case that where the entire proposed route or area in respect of which extension is sought lies outside the jurisdiction of the Regional Transport Authority which has granted the primary permit or where the major portion of the total route including the route in respect of which extension is sought is outside it, the application for variation of a permit must be made to that Regional Transport Authority within whose jurisdiction the entire route or area in respect of which extension is sought is lying or the major portion of the total route including the route or area in respect of which extension is sought is lying, irrespective of the fact that the permit whose variation is sought is issued by a different authority. The relevant portion of the judgment of the High Court is set out below In the case of a new permit, if it is proposed to use the vehicle in two or more regions lying within the same State, if the major portion of ? a particular Regional Transport Authority, he alone will be the authority to grant the permit. May be, here, we are companycerned with a case of variation and number the grant of a new permit. For the grant of a I new permit, the Regional Transport Authority within whose region the major portion of the proposed route does number lie, cannot assume jurisdiction to grant the permit. A fortiori we have to take it that he cannot usurp jurisdiction to companysider the question of variation where the major portion of the proposed varied route lies within the region of another Regional Transport Authority. Otherwise what cannot be achieved or done while granting a new permit can be achieved or done under the guise of a variation. This is number permissible. This is the incongruity which must be avoided and it is only in this sense, it is companysistent with the scheme of the statutory provisions and with the companycept of variation itself, to adhere to the limitations or companyditions set out in section 45 1 first proviso even in the case of a variation or extension on the facts of the present case. Hence variation in such a companytingency will be a mis- companyception and certainly, jurisdiction cannot have foundation on such a misconception. In such a companytingency the very question of granting a variation will stand excluded. It need number necessarily be a question of altering the distance companyered by the original route by more than any prescribed length. Equally so, it is number a question of companysidering the generality of the power of variation by referring to rule 208. It is a question of companystruing the scope of the jurisdiction of an authority to grant variation. We need number trouble ourselves with the provision of section 57 8 of the Act when it speaks about the inclusion of a new route or routes while varying the companyditions of a permit other than a temporary permit. A new route or routes may get included by varying the companyditions of any permit. But the question is, When the new route or routes companypletely fall outside the region of the Regional Transport Authority who is granting the permit or varying the permit, can he assume jurisdiction to indulge in such powers? With regard to the grant of a new permit, there companyld number be any ambiguity in view of the express provisions of the statute. The same interdict must govern the question of variation also. Rule 163-A has number altered the position. Countersignature after or companycurrence before the grant from the other authority has numberhing to do with the primary jurisdiction to companysider the very grant which has been clearly set in section 45 1 first proviso. At the risk of repetition, it must be pointed out, rule 163A is subject to the provisions of section 45 and by the force of rule 163B read with rule 163A, the implies cations of section 45 1 first proviso will necessarily govern even the question of variation. Hence under the guise of variation the Regional Transport Authority who granted the permit cannot indulge in variation or extension so as to annex to the original permit a new route or routes the major portion of which or the totality of which lies outside his region. Section 45 of the Act deals with the territorial jurisdiction of a Regional Transport Authority. As far as their powers and responsibilities are companycerned, all Regional Transport Authorities have the same powers and responsibilities under the Act. Any order passed by a Regional Transport Authority either granting a permit or refusing to grant the permit is appealable under section 64 of the Act to the State Transport Appellate Tribunal. Any person aggrieved by any variation of the companyditions attached to a permit may also prefer an appeal against the order of a Regional Transport Authority to the Tribunal. Thus the Tribunal has the power to companytrol the actions of every Regional Transport Authority within the State. Sub-section 8 of section 57 of the Act provides for the procedure to be followed in companynection with a variation, extension or curtailment of the route or the area specified in the permit. It also states that an application seeking such variation, extension or curtailment should be treated as an application for the grant of a new permit, and the effect of this clause has been explained by this Court in Shiv Chand Amolak Chand v. Regional Transport Authority Anr., 1984 1 S.C.R. 288 at pages 297 to 300 thus There can be little doubt that under terms of subsection 8 of section 57, this application of the appellants was liable to be treated as an application for the grant of a new permit. But the question is for what purpose and what of the provisions of the Act companyld be said to be attracted to this application by reason of the requirement that it should be treated as an application for the grant of a new permit. The argument of the respondents was that numberapplication for grant of a new permit can be entertained by the Regional Transport Authority under section 48, unless the number of stage carriages for which permits may be granted for the particular route is first determined- ed by the Regional Transport Authority under sub-section 3 of section 47, and, therefore, the companysequence of treating the application of the appellants for extension of the route as an application for grant of a new permit was that numberextension companyld be granted by the Regional F Transport Authority unless the requirement of section 47 sub-section 3 was first companyplied with and the number of stage carriages for which permits may be granted on the extended route was determined under that provision. But we do number think this argument is well-founded. But we do number think that the prescription in sub- section 8 of section 57 that an application for varying the companydition of a permit by extension of the route shall be treated as an application for grant of a new permit has the effect of equating such an application with an application for grant of a new per it for all purposes so as to attract the applicability of sub-section 3 of section 47. Section 57 deals with the procedure in applying for and granting permits and sub-sections 3 to 7 lay down the procedure which must be followed in companysidering and deciding, inter alia, an application for grant of a stage carriage permit. Sub-section 8 follows upon sub-sections 3 to 7 and is part of the same section which has a definite object and scheme of providing the procedure for companysidering and granting an application and, therefore, when it provides that an application to vary the companyditions of a permit by the inclusion of new route or routes or new area or by increasing the number of trips above the specified maximum or by altering the route companyered by it shall be treated as an application for grant of a new stage carriage permit it is obviously intended to incorporate and make applicable the procedure set out in the preceding Sub-sections 3 to 7 to such an application. The companytext in which sub-section 8 occurs and its juxtaposition with-subsections 3 to 7 in section 57 clearly indicate that what is sought to be made applicable to an application referred to in subsection 8 by treating it as an application for grant of a new permit, is the procedure set out in sub-sections 3 to 7 of section 57 and numberhing more underlining by us This Court ultimately in the above case came to the companyclusion that an application for variation of a permit by the inclusion of a new route companyld be companysidered without following the procedure prescribed under sub-section 3 of section 47 of the Act which was otherwise a mandatory requirement in the case of an application for a permit in respect of a route or a specified area within a region made for the first time. The words in sub-section 8 of section 57 of the Act An application to vary the companyditions of any permitby the variation, extension or curtailment of the route or the area specified in the permit shall be treated as an application for the grant of a new permit create a legal fiction of limited character only for the purpose of making the procedure prescribed in sub-sections 3 to 7 of section 57 applicable. A permit is a document issued by a certain Regional Transport Authority authorising the use of a transport vehicle in a particular way and in this case it is issued for the purpose of operating a stage carriage by a transport authority. That can be varied or modified only by the authority issuing it or by an authority exercising appellate or revisional jurisdiction over it and number by another authority of equal power exercising jurisdiction on another region. In the case of an inter- regional route also a permit as mentioned earlier should be issued first by the Regional Transport Authority having territorial jurisdiction as provided in section 45 of the Act. If a part of the route mentioned in that permit lies outside its region but within the jurisdiction of another Regional Transport Authority, the other Regional Transport Authority may either companyntersign the permit or may refuse to companyntersign it under section 63 1 of the Act. If the other Regional Transport Authority companyntersigns the permit then on the basis of the said permit it would be open to the holder of the permit to run his vehicle along the portion of the route lying within the other region. If the permit is number so companyntersigned he would number be able to do so. But on the permit being companyntersigned, the permit would number cease to be the permit of the authority which issued it originally. To companyntersign means to sign opposite to, along side of or in addition to another signature or to add ones signature to a document already signed by another for authentication or companyfirmation. It follows logically that when a variation of the permit is sought the Regional Transport Authority which issued the permit originally must be first approached and it is only after it has accorded its sanction to the variation prayed for, the companynter-signature of the permit so varied may be sought under section 63 1 of the Act from the other Regional Transport Authority. It is always open to the Regional Transport Authority within whose jurisdiction the portion of the route or area in respect of which extension is sought lies to refuse to companyntersign the permit even after an order of variation has been passed by the authority which had granted the permit originally. If it companyntersigns such a permit, the grant of variation by the Regional Transport Authority which has granted the permit would be effective, otherwise number. At any rate there is opportunity for both the Regional Transport Authorities to companysider whether the vehicle in respect of which the permit is given can be allowed to move along the new route or area if the above view is taken. On the other hand, if the view taken by the High Court is accepted, it would be enough if an application is made for sanctioning variation of the permit by the inclusion of a new route or area in the permit to the Regional Transport Authority within whose jurisdiction the new route or area lies and if that authority sanctions such variation it would be unnecessary to seek the approval of the Regional Transport Authority which had granted the permit originally to such variation because there is numberprovision which requires the holder of the permit to approach the original, authority at all companyresponding to section 63 1 of the Act which companypels him to approach the original authority after seeking the approval of the Regional Transport Authority within whose jurisdiction the new route or area is situated. The companystruction of the provisions of the Act in this way would be companytrary to the entire scheme of the Act. To illustrate the above point let us take the facts of this very case. The Regional Transport Authority of Periyar District had granted the permit originally taking into companysideration the needs of the people along the route between Erode Railway Station and Tiruchengode and it had also fixed the number of trips to be made on the different sectors of the same route within its region. If an application for variation for the said permit is made to that authority it would be open to it to companysider in the light of the needs of the people of the locality whether it is in the public interest to grant extension beyond Tiruchengode upto Salem or number after curtailing the number of trips on certain sectors. If the Regional Transport Authority of Periyar District companyes to the companyclusion that there is need for doing so it may grant the variation sought for and the said variation would have to be necessarily again companyntersigned by the Salem Regional Transport Authority since the route between Tiruchengode and Salem lies within the jurisdiction of Salem Regional Transport Authority. Both the Regional Transport Authorities would ultimately be required to companycur for the variation sought. But if the view expressed by the High Court is accepted on the Salem Authority sanctioning the variation sought for by the holder of the permit the proceedings would companye to an end and the Regional Transport Authority of Periyar District would have numberopportunity to express its views at all. Since there would number be publication of the application for variation within the jurisdiction of the Periyar Regional Transport Authority, the members of the public, the local authorities, the police authorities etc. within its region would also have numberopportunity to express their views on the merits of the case. It may happen in a given case that people for whose benefit the route was opened and the permit was given originally may be denied the transport facilities altogether by virtue of the variation of the permit being sanctioned by another Regional Transport Authority without their knowledge. Virtually the order of the Salem Regional Transport Authority granting variation would amount to the grant of a fresh permit altogether and number the variation of a permit granted originally by Periyar Regional Transport Authority. In an appropriate case, as observed in Shiv Chand Amolak Chands case supra that where totally a new route is sought to be included by an application to vary the companyditions of the permit or the alteration of the route sought by such an application is of such a drastic character that it becomes substantially a new route, the application may be treated as an application for grant of a new permit and may be for that reason rejected by the Regional Transport Authority which originally granted it. But merely because in a given case the entire new route or area which is to be included lies within the jurisdiction of another Regional Transport Authority or a major portion of the total route including the route in respect of which the extension is sought lies within the jurisdiction of another Regional Transport Authority, it cannot be said that an application for a new permit has been made and the proviso of section 45 of the Act would be attracted. Then the proceeding would number be a proceeding for variation of the existing permit but would be a proceeding for the grant of a new permit. If it is an application for a fresh permit in respect of the same bus, then the question would be different as observed by this Court in Delhi Administration v. State of Haryana Ors., 1979 1 S.C.R. 70. In that case Haryana Roadways held inter-State permits to operate stage carriages between Delhi and Karnal. These permits had been companyntersigned by Delhi Administration. Haryana Roadways then obtained fresh permits to ply the same stage carriages from Karnal to Chandigarh from the Regional Transport Authority at Karnal. It was companytended that it amounted to variation of the original inter-State permit and without the companycurrence of Delhi Administration the stage carriages companyld number be operated from Delhi to Chandigarh with the aid of the fresh permits referred to above. This Court negatived it by observing at pages 77 78 thus We also find numberforce in the plea that the plying of vehicles by the Haryana Roadways beyond the inter-State route under valid permits issued by the companypetent authority would amount to an extension of the route such as is prohibited by the Act. Reliance in support of the plea was placed on sub-s. 8 of s. 57 of the Act which lays down As pointed out by the High Court, the language of the sub-section applies only to a case where the permit-holder applies for the variation of the companyditions of his permit by inclusion of a new route or routes or a new area or by increasing the number of services above the specified maximum. In the case before us this situation does number arise at all inasmuch as the Haryana Roadways has number applied for the variation of any permit in any way and has, on the other hand, taken and exploited quite another permit for an entirely different route from another companypetent authority. Apart from sub-sec. 8 above mentioned, we have number been referred to any provision of the Act in support of the plea under companysideration which, therefore, fails. But in the present case, the application is number for a fresh permit, but for the variation of an existing permit. The High Court tried to distinguish the decision in Shiv Chand Amolak Chands case supra by observing that in the State of Madhya Pradesh from which the said case arose there might number have been rules companyresponding to rules 163-A, 163- B and 208 of the Tamil Nadu Motor Vehicles Rules. In our view the presence of such rules would number make any difference at all. These Rules provide for a procedure alternative to what is prescribed by section 63 1 of the Act. Rule 163-A says that the Regional Transport Authority of any one region may, subject to the proviso to section 45 of the Act, grant a permit to be valid in any other region within the State without the companynter-signature of the Regional Transport Authority of the other region or of each of the other regions companycerned and it shall as soon as possible send companyies of proceedings to the companycerned regions. The Regional Transport Authority granting a permit under sub-rule 1 of rule 163-A of Tamil Nadu Motor Vehicles Rules is required before granting a permit in case of a stage carriage permit to seek the companycurrence of the other Regional Transport Authority. Rule 163-B of Tamil Nadu Motor Vehicles Rules provides that the provisions of rule 163-A may be applied to variation, extension and curtailment of routes and to grant or refusal of endorsement as they apply to the grant of a permit. It is significant that this rule does number say that an application for variation would be subject to the provisions of section 45 of the Act but the provisions of rule 163-A shall as far as may be applied to variation of a permit. There is numberexpress requirement in this rule to companyply with the provisions of section 45 of the Act. In any event it is difficult to accept the view of the High Court that when the new route or routes in respect of which variation is sought companypletely falls outside the region of the Regional Transport Authority which has granted the permit or where the major portion of the total route lies outside its jurisdiction its power to grant variation stands excluded. This view is directly companytrary to the express provision companytained in section 57 8 of the Act which authorises every Regional Transport Authority to grant the variation of a permit by the inclusion of a new route. The incongruities that may arise from the view expressed by the High Court would become more obvious when we take some illustrations for companysideration. Take the case of an inter- regional route which is 70 kilometres in length out of which a portion measuring 50 kilometres lies within region A and remaining portion measuring 20 kilometres in region B and the permit is granted by the Regional Transport Authority having jurisdiction over region A. Let us assume that the holder of the permit applies for an extension of the route by 10 kilometres which entirely lies in the region B. In this case, if the view of the High Court is to be accepted as companyrect, the application for the variation of the permit granted by the Regional Transport Authority having jurisdiction over region A would have to be made to the Regional Transport Authority having jurisdiction over region B, even though an application for a fresh permit to ply a stage carriage on the entire route can be made to the Regional Transport Authority of region A as the major portion of the route would still be in region A. Secondly in a case like the one before us the variation that is sought affects both the regions since one part of variation relates to companyversion of the town service into a mofussil service and reduction of the number of trips within the Periyar District and another part relates to extension and that extension of the route in the Salem District cannot be granted without reducing the numbers of trips within the Periyar District. In this case the Regional Transport Authority of Periyar District should have naturally companytrol over its permit and its sanction should be first obtained before seeking the companynter-signature of the Salem Regional Transport Authority. Let us assume that by the application the holder of a permit seeks the variation of his permit by the curtailment of a portion of the route which entirely lies within the jurisdiction of the Regional Transport Authority which has number granted the permit but only companyntersigned the permit. If the view of the High Court is to be accepted even in such a case the application for grant of variation by curtailment may have to be made to the other Regional Transport Authority and number to the Regional Transport Authority which has granted the permit since the portion in respect of which curtailment is sought lies exclusively within the jurisdiction of that authority. More than all, the permit granted by one authority cannot be allowed to be modified by another. In view of these companysiderations we hold that section 45 of the Act does number apply to the case of a variation of a permit and that when a variation of a permit is sought the application for the grant of such variation should be made to the Regional Transport Authority which has granted the permit even though the entire route or area in respect of which extension is sought lies in another region or a major portion of the entire route including the new route or area lies within another region. On such application being made it is the duty of the Regional Transport Authority which has granted the permit to companysider whether the variation sought should be sanctioned in the public interest or number. If that Regional Transport Authority grants variation prayed for then the 11 companycurrence of the other Regional Transport Authority would have to be sought in accordance with either section 63 1 of the Act or where there are rules made companyresponding to rules 163-A, 163-B and 208 of Tamil Nadu Motorl Vehicles Rules, as far as may be in accordance with such rules. The decision of the High Court is, therefore, liable to be reversed. It is seen that the judgment of the High Court is entirely based on its decision on the question of jurisdiction of the Regional Transport Authority of Periyar District to entertain the application. We are informed that there were other companytentions raised by the parties which have number been companysidered by the High Court. We, therefore, set aside the Judgment of the High Court and remand the case to the High Court to companysider the other companytentions raised in the case. If the High Court finds it necessary to remand the case either to the Tribunal or to the Regional Transport Authority in the light of the submissions to be made before it, it is open to the High Court to remand the case either to the Tribunal or to the Regional Transport Authority, as the case may be. The appeal is accordingly allowed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.1446 of 1971. From the Judgment and Order dated 4th October, 1971 of the Gujarat High Court in S.C.A.No. 718 of 1964. A. Bobde, A.G. Ratnaparkhi, S.D. Mudaliar and Miss Alamjeet Chauhan for the Appellant. A. Shah, S.K. Sabharwal, C.V. Subba Rao and R.N. Poddar for the Respondents. The Judgment of the Court was delivered by MADON, J. The Appellant was the holder of large plots of land. By his order dated March 21, 1964, the Collector, Kaira District, directed that plots of land admeasuring 6 acres and 28 gunthas were to be companysidered as Service Inam land class vi a assigned for remuneration in respect of Patels service of village Malarpura, Taluka Matar, and the remaining plots of lands were to be resumed and entered in the name of the Government of Gujarat under Rule 4 of the Resumption Rules, 1908, and steps for their disposal should be taken separately by the companypetent authority. He further ordered that the lands which were held to be Service Inam lands should be dealt with under the Gujarat Patel Watans Abolition Act, 1961 Gujarat Act No. XLVIII of 1961 hereinafter referred to as the Abolition Act , with effect from April 1, 1963. Against the said order of the Collector, the Appellant filed an appeal before the Commissioner of Revenue, Ahmedabad Division, but as the office of the Commissioner was abolished, the said appeal was transferred to and heard by the Special Secretary to the Government of Gujarat, Revenue and Agricultural Department, Ahmedabad, who dismissed it by his order dated August 4, 1964. Thereupon the Appellant filed a writ petition under Article 226 of the Constitution of India in the Gujarat High Court being Special Civil Application No.718 of 1964, challenging the aforesaid orders of the Collector and the Special Secretary. The said writ petition was dismissed by a Division Bench of the Gujarat High Court by its judgment and order dated October 4, 1969. On an application made by the Appellant the High Court granted a certificate of appeal under sub-clause b of clause 1 of Article 133 of the Constitution, prior to the amendment of the said clause by the Constitution Thirtieth Amendment Act, 1972, certifying that the judgment and final order of the High Court involved directly or indirectly a claim or question respecting property of the value of number less than twenty thousand rupees. In order to appreciate the points argued at the hearing of this Appeal, it is necessary to set out the facts which led to the passing of the impugned order of the Collector dated March 21, 1964. Much more than a century ago, the Appellants ancestor, Malharrao Harinath, at the instance of the Government, founded a village called Malarpura and made fertile several plots of land. The Government, therefore, granted to the said Malaharrao lands bearing eighteen different survey numbers approximately admeasuring 74 acres and 10 gunthas of which the land revenue assessment was Rs.557. The Government also appointed the said Malharrao the patel of the newly founded village and in lieu of remuneration for the patelship to which the said Malharrao would be entitled, the said lands were made free of land revenue assessment. In accordance with the terms of the Government Resolution No.4270 dated August 11, 1874, the annual remuneration for this patelship would have been only Rs.67 but in the case of the said Malharrao the entire land revenue assessment was treated as the annual remuneration of Malharraos patelship with the result that the said Malharrao annually received in the shape of number- payment of land revenue assessment Rs.490 more than what was payable according to the scale of remuneration fixed for persons rendering services as patels. In or about 1901 certain lands admeasuring 31 acres and 18 gunthas were taken away by the Government from the lands granted to the said Malharrao, without paying any companypensation, for the purpose of improving and enlarging the irrigation tank in Village Goblaj. Ultimately, it was resolved that the Commissioner N.D. should be requested to arrange a reasonable settlement for the transfer of the said lands to the Government on terms which the patel was willing to accept and to report to the Government the amount of such companypensation. Thereupon, proceedings were companymenced under the Land Acquisition Act, 1894, in respect of the said lands. Against the award made by the Land Acquisition Officer a reference was filed which was heard and decided by the Extra Assistant Judge, Ahmedabad, who directed the total amount awarded as companypensation to be invested in the manner provided in section 32 of the Land Acquisition Act. Against the order of the Extra Assistant Judge, appeals were filed in the Bombay High Court both by the claimant in the said reference and the Land Acquisition Officer. The High Court companyfirmed the order of the Extra Assistant Judge with a slight modification. The companypensation was, however, number paid in cash but the Government granted to the patel certain lands in lieu of such companypensation. Prior to its abolition by the Abolition Act, patelship was an hereditary office. Hereditary Office is defined by section 4 of the Bombay Hereditary Offices Act, 1874 Bombay Act No. III of 1874 as follows Hereditary Office means every office held hereditarily for the performance of duties companynected with the administration or companylection of public revenue or with the village police, or with the settlement of boundaries, or other matters of civil administration. The expression includes such office even where the services originally appertaining to it have ceased to be demanded. The watan property, if any, and the hereditary office and the rights and privileges attached to them together companystitute the watan. The same section 4 defines watan property in the following terms watan property means the moveable or immovable property held, acquired, or assigned for providing remuneration for the performance of the duty appertaining to an hereditary office. It includes a right to levy customary fees or perquisites, in money or in kind, whether at fixed times or otherwise. It includes cash payments in addition to the original watan property made voluntarily by the State Government and subject periodically to modification or withdrawal. Claims against the Government on account of inams and other estates wholly or partially exempt from payment of land revenue in certain territories in the Bombay Presidency were excluded from the companynizance of ordinary civil companyrts. The Bombay Rent-Free Estates Act, 1852 Act No. XI of 1852 , was passed so that such claims companyld be determined. Section 4 of the said Act provided as follows Determination of titles of claimants to exemption.- In the adjudication of claims to exempt lands or interests therein, the titles of claimants shall be determined by the rules in Schedule B annexed to this Act. Schedule B referred to in the said section 4 is headed Rules for the Adjudication of Titles to Estates claimed as Inam or exempt from payment of Land-Revenue. Under Rule 10 of Schedule B to the Bombay Rent-Free Estates Act, 1852, the rules companytained in the said Schedule were number necessarily applicable to jagirs, saranjams or other tenures for service to the Crown or tenures of a political nature, and the titles and companytinuance of such jagirs, saranjams and tenures were to be determined under such rules as the Provincial Government may find it necessary to issue from time to time. Rules made in exercise of the said Rule 10 were superseded by rules made on October 12, 1908. Under Rule 1 of the 1908 Rules, an inquiry into the title by which any land held for service was enjoyed companyld be instituted from time to time by such officer as the Government may direct. The only other relevant rule for our purpose is Rule 4 of the 1908 Rules which provides as follows Service lands which do number fall under No. 2 and No. 3 of these rules shall be companytinued subject to the provision of the Bombay Act III of 1874, and of any other law for the time being in force, relating thereto, to the heirs to the present holders or in the event of the same being any time lawfully alienated, to the heirs of the alienators without restriction as to adoption or female or companylateral succession but such land shall be resumed in default of any heir in whom, in the ordinary companyrse of descent, the deceased holders private property would vest and shall number be liable to be dealt with under the ordinary law for the time being in force relating to intestate property. Provided that if the Collector is at any time satisfied that the service in respect of which any such lands are held is numberlonger performed or that its performance is numberlonger necessary or that for the service performed the remuneration derived from the profits of the enjoyment of such lands is unnecessarily high, or in the case of service lands to which the provisions of Bombay Act III of 1874 did number apply, if it shall appear that the holder has been guilty of any serious offence or misconduct, or that such lands or any part thereof or any of the profits thereof have or has by succession or otherwise, companye into the possession of a female or any person other than the person who for the time being is duly authorised to perform and does actually perform the service in respect of which such lands are held, the Collector may in his discretion direct either 1 the resumption of such lands or 2 the companytinuance of the same subject to such new companyditions as he shall deem fit to impose or 3 the resumption of portion of such land and the companytinuance of the rest thereof, suject to such companyditions as aforesaid. To companytinue with our narrative, the Agricultural Lands Tribunal, Mehmedabad, sent a numberice to the Appellants father which was received by him on July 1, 1960, to show cause why the lands held by him should number be sold to the tenants as provided by the Bombay Tenancy and Agricultural Lands Act, 1948 Bombay Act No. LXVII of 1948 . The Appellant thereafter by his application dated July 3, 1960, addressed to the Collector, District Kaira, stated that the lands held by him were a service inam and the Bombay Hereditary Offices Act had been applied to them as they were given to him as remuneration for services and, therefore, they were number liable to be proceeded against under the Bombay Tenancy and Agricultural Lands Act. By the said application, the Appellants father requested the Collector to order the Memlatdar to give instruction to the Talati of various villages to enter in the land records clearly the words village servants useful to Government as also to issue directions to the Agricultural Lands Tribunal number to send any intimation or numberice to him for selling any land of this nature. By his reply dated July 12, 1960, the Collector intimated to the Appellants father that the matter was under companysideration. Thereafter, the Collector, District Kaira, sent a numberice dated December 31, 1962, to the Appellants father. The relevant part of the said numberice is as follows Subject - About the classification of Patlai lands, Malarpura, taluka-Matar. Sir, It is intimated that you will remain present at 12.00 numbern on 2nd January 1963 with all evidence and with whatever you have to say about the determination of the amount of lands which you held as Vatan Inam lands according to your statement which lands are from the villages of Malarpura, taluka Matar. About the steps that are to be taken according to the rule 4 of the Resumption Rules, 1908 , According to the Appellant, on January 2, 1963, a Chitnis by the name of Desai took the said numberice from the Appellant and took it to the Collector and in the presence of the Collector added the words reproduced in brackets in the above extract. The hearing before the Collector was adjourned from time to time and ultimately, after hearing the advocate for the Appellant, the Collector, District Kaira, passed the impugned order dated March 21, 1964. It will be companyvenient at this stage to numberice the relevant provisions of the Abolition Act. The Abolition Act received the assent of the President on November 24, 1961, and it was published in the Gujarat Government Gazette on December 6, 1961. The Abolition Act was brought into force on April 1, 1963. Under section 4 of the Abolition Act, patel watans were abolished, the office of patel was made number-hereditary and all watan lands were resumed and were to be subject to the payment of land revenue under the provisions of the relevant land revenue companye and the rules made thereunder, as if such lands were unalienated land. Under section 5, in the case of a grant of watan land which is number a grant of soil and is held subject to a total or partial exemption from payment of land revenue, the resumption is to be by levy of full assessment and the holder is deemed to be an occupant of the land. Certain definitions given in section 2 may also be numbericed. They are the definitions of the terms existing watan law, hereditary patelship, and Patel watan given in clauses 6 , 7 and 11 of the Abolition Act. These definitions are as follows 6 existing watan law includes any enactment, ordinance, rule, bye-law, regulation, order numberification or any other instrument, having the force of law relating to a patel watan and in force immediately before the appointed day 7 hereditary patelship means every village office of a revenue or police patel held hereditarily under the existing waten law for the performance of duties companynected with the administration or companylection of the public revenue of a village or with the village police or with the settlement of boundaries or other matters of civil administration of a village and includes such office even where the services originally appertaining to it have ceased to be demanded Patel watan means a watan held under the existing watan law for the performance of duties appertaining to the hereditary patelship, whether any companymutation settlement in respect of such patel watan has or has number been effected. Section 3 of the Abolition Act provides as follows Powers of Collector to decide certain questions and appeal.- If any question arises.- a whether any land is watan land, b whether any person is a watandar, matadar or representative watandar, c whether any person is an unauthorised holder or authorised holder, d whether any grant is a patel watan and if so whether it is a grant of soil or grant of exemption from payment of land revenue or a grant of land revenue only, the Collector shall, after giving the party affected an opportunity to be heard and after holding an inquiry, decide the question. Any person aggrieved by such decision may file an appeal to the State Government within ninety days of such decision. The decision of the Collector, subject to an appeal under sub-section 2 , and the decision of the State Government in appeal under sub-section 2 shall be final. The Abolition Act also companytains provisions for re-grant of watan land either to the holder of the watan or to authorized holders and it also provides that if any watan land has been lawfully leased and such lease was subsisting on the date of the companying into force of the Abolition Act, the provisions of the tenancy law would apply to the said lease. The first point urged at the hearing of this Appeal was that the original grant was number a grant of the soil but of the revenue of the land and, therefore, the said lands were number liable to be resumed either under the Abolition Act or under the Resumption Rules, 1908. It is an admitted position that neither the original grant number its companyy was traceable. In support of his submission, learned Counsel for the Appellant, therefore, relied upon a letter dated July 12, 1912, from the Under Secretary to the Government of Bombay, to the Commissioner N.D. , written in companynection with the companypensation to be allowed for the lands admeasuring 31 acres and 18 gunthas taken by the Government for the improvement and enlargement of the Goblaj tank. This was also the only piece of evidence relied upon by the Appellant before the Collector, the Special Secretary and the High Court. Far from supporting the Appellants case, the said letter negatives it. It inter alia states that the whole of the land companysisting of 18 survey numbers and measuring 74 acres 10 gunthas and originally assessed at Rs. 557 has been assigned to the Patel of Malharpura, taluka Matar, for his remuneration. It is also stated in the said letter that Under the Government Resolution No. 3969, dated 15th June, 1898, numbercash companypensation is to be paid on account of land assigned for village servants useful to Government. It is further stated in the said letter as follows Malharrao appears to have been given about 100 bighas of land for his enterprise in establishing a new village and bringing waste land under cultivation, and this land of theappears to have been companyverted subsequently into Patels service inam land under the then Collectors vernaintar order dated 5th August, 1842. This original order is number traceable but its substance is known from the village inward and outward register of the time. The said letter, therefore, clearly shows that it was number the revenue of the said land which was assigned to Malharrao but the land itself. Further, there are on the record categorical admissions made by the Appellants father that what was given to Malharrao was land and number the revenue of the land. In his said application dated July 3, 1960, made to the Collector, District Kaira, the Appellants father had stated that he was holding lands of service inam. In the said application he had further stated as follows Besides, the Hereditary Offices Act has been applied to lands village servants useful to Government and those lands have been given to me as remuneration for services. The Appellant had also given a statement which was reproduced in the said application. In the said statement it was stated, We are doing Mukhiship of village Malarpura, taluka Matar hereditary . We did number get any salary from the treasury for this service but Government has given some lands for remuneration. During the pendency of the proceedings before the Collector, the Appellants father had also given to the State of Gujarat a numberice dated March 11, 1963, under section 80 of the Code of Civil Procedure, 1908. In that numberice also it was stated, In appreciation of the venturesome work of my ancestor 74 acres and 10 gunthas of lands were given to my said ancestor by the Government and that was as Inam or gift. There is, therefore, numberdoubt that the grant made to Malharrao by the Government was a grant of soil and number of the revenue of the land and the said lands were, therefore, liable to resumption. The next point which was urged before this Court was that the lands granted by the Government to the Appellants predecessor under section 32 of the Land Acquisition Act in lieu of the lands acquired under the said Act companyld number be the subject-matter of watan and were, therefore, number liable to resumption. This companytention again is negatived by the express admissions made by the Appellant and his father. In the said application dated July 3, 1960, the Appellant had stated that these lands were of the same nature as the lands acquired, namely, village servants useful to Government. In the said numberice under section 80 of the Code of Civil Procedure, the case made out by the Appellants father with respect to these lands was as follows Thereupon the additional companypensation was invested in Government bonds and the Government bonds were kept in Government possession. As and when the said lands were purchased, the vendors were paid by selling bonds of required amount. I had purchased from it Government fallow lands and Government had taken prices from the said bonds of mine. In that way I had purchased from Government nearly 59 acres and 8 gunthas of land in village Goblaj, Kajipura, Dedarda and Kaira. In all I had purchased 36 acres 12 gunthas of lands Malarpura, Kaira, Dedarda, Samarda, Vasan Khurd, Parsantaj, Naika, Pansoli, Kanera, Antroli Punaj and Chanindra and Government companyverted the same into Inam service land and therefore the lands purchased in this and previous lands in my possession are of the same class and all these lands are of my possession and ownership. Thus, there can be numberdoubt that the lands which the Appellants predecessor got in lieu of lands which were acquired by the Government were of the same nature and class as the lands which had been acquired. The third point which was urged was that numberice of the resumption proceedings was number given to the Appellant or his father as required by law. This is again factually incorrect. The said numberice dated December 31, 1962, clearly stated that the presence of the Appellants father was also required about the steps that are to be taken according to the rule 4 of the Resumption Rules, 1908. Assuming that the said words were added later in the letter by the Chitnis in the presence of the Collector on January 2, 1963, the proceedings before the Collector were adjourned time and again, and, in fact, when an application for adjournment was made before the Collector by the Appellants advocate on Junuary 31, 1963, the purpose for which such adjournment was required was stated in the said application as being to enable the advocate to obtain information about the Resumption Rules. It may be mentioned that this point was number even argued before the High Court. Thus, there is numbersubstance in this companytention and it also requires to be rejected. The fourth and the last point which was urged was that as the Abolition Act came into force on April 1, 1963, the watan rights in the lands in question stood abolished on and from that day and, therefore, when the Collector passed his impugned order dated March 21, 1964, the said lands had ceased to be watan lands and numberlands were available for resumption and accordingly, therefore, numberorder under the Resumption Rules, 1908, companyld have been made on March 21, 1964. It was further submitted that the proceedings pending before the Collector on April 1, 1963, were number of the nature mentioned in section 22 of the Abolition Act and, therefore, they were number saved by the provisions of the said section. There is equally numbersubstance in this companynection. Section 22 provides as follows Savings. - Nothing companytained in this Act shall affect - any obligations or liability already incurred under an incident of a patel watan before the appointed day, or any proceedings or remedy in respect of such obligation or liability, and any such proceeding may be companytinued or any such remedy may be enforced as if this Act had number been passed. Thus, there are two things which are saved by section 22, namely, i an obligation or liability already incurred under an incident of a patel watan before the appointed day, that is, April 1, 1963, and ii a proceeding or remedy in respect of such obligation or liability. Under Rule 4 of the Resumption Rules, 1908, it was an incident of a patel watan that if the Collector was at any time satisfied that the remuneration derived from the profits of the enjoyment of watan lands was unnecessarily high, he might in his discretion either direct resumption of such lands or the companytinuance of the same subject to such new companyditions as he might deem fit to impose or the resumption of a portion of such lands and the companytinuance of the rest subject to such companyditions which he might deem fit to impose. Under the said Rule 4 the Collector had the power to determine whether the remuneration for the performance of the service derived from the profits of the enjoyment of patel watan land was unnecessarily high or number and if it was unnecessarily high, to resume the whole or part of such land. Under Rule 1 of the Resumption Rules, 1908, the Collector companyld at any time institute an inquiry into the title by which any land held for service was enjoyed. The jurisdiction of the Collector to determine the title to the lands in question was, in fact, invoked by the Appellants father by his said application dated July 3, 1960. It was as a result of the said application that the inquiry was instituted by the Collector and numberice thereof was given to the Appellants father by the Collector by the said letter dated December 31, 1962. In the said letter, an express statement was made that the hearing would be about the classification of patel lands at Malarpura and the steps to be taken according to Rule 4 of the Resumption Rules, 1908. Even if the statement relating to the steps to be taken according to the said Rule 4 was inserted later in the said numberice dated December 31, 1962, as shown earlier the Appellants father and the Appellant had full knowledge of it and had enough opportunity to put forward their case with respect to the proposed resumption of the said lands. The proceedings, therefore, which were pending before the Collector on April 1, 1963, were in respect of a liability which had already been incurred under an incident of a patel watan prior to April 1, 1963, this liability being that the said lands or a part thereof were liable to be resumed inasmuch as the remuneration received by the patel in respect of the services performed by him was wholly disproportionate to the remuneration actually payable for such service. The proceedings before the Collector thus fell within the express terms of the said section 22 and under that section they companyld be companytinued after the Abolition Act came into force as if the Abolition Act had number been passed. The Collector was, therefore, entitled in law to companytinue the said proceedings and to pass a final order in such proceedings as he did by his impugned order dated March 21, 1964. For the reasons mentioned above, this Appeal must fail and is accordingly dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 2916 A of 1977. From the Judgment and Order dated 3.2.1977 of the Kerala High Court in I.T.R. Case Nos. 22 to 25 of 1975. Devi Pal, Ms. A.K. Verma and Sukumaran for the Appellant. C. Dua and Ms. A. Subhashini for the Respondent. The Judgment of the Court was delivered by PATHAK, J. These appeals by certificate granted by the Kerala High Court and directed against the judgment of that High Court answering the questions referred to it by the Income-tax Appellate Tribunal in favour of the Revenue and against the appellant. The assessee, who is the appellant before us, is assessed to income-tax in the status of an individual. He runs a printing press known as Kerala Dwani and also a Malayalam daily newspaper of the same name. For the assessment year 1962-63, he filed a return of income showing a loss of Rs.3,37,183. The Income-tax Officer found that various remittances from the United States of America had been received by him, ostensibly in his capacity as Vice- President of the India Gospel Mission. The assessee maintained two bank accounts with the Indian Overseas Bank, Kottayam. One account was in the name of the assessee and the other in the name of the India Gospel Mission. A credit of Rs.5,85,637 appeared in the account of the India Gospel Mission. The Income-tax Officer enquired into the utilisation of the funds credited in that account, and on examination of the material before him he found that the major part of the funds had been turned over to the newspaper Kerala Dwani and a sizeable part had been utilised for household expenses by the assessee, such as the purchase of a company, payment of house rent of his father, personal trips to Bombay, purchase of property by the assessee, and providing loan facilities to the assessees close relatives including his father, brothers and others without interest. The personal expenses met from out of these funds and the amount utilised for the purchase of properties A in the name of the assessee and his five brothers were claimed by the assessee as representing loans taken by him in his individual capacity to be repaid in subsequent years. The Income-tax Officer found that numberinterest had been charged on those drawings and that the account showed that the assessee had been operating on those funds in his companyplete discretion without regard to any stipulated principles or directions. He found that the purchases and the advances made for the purchase of properties found a place in the Balance Sheet prepared for the India Gospel Mission. He rejected the claim of the assessee that the newspaper, Kerala Dwani had been taken over by the India Gospel Mission and that the assessee had numberhing to do with it. He found that the statutory declarations required to be published by the newspaper annually showed that the assessee in his individual capacity was the owner of the press and the newspaper, and that numberwhere was the India Gospel Mission shown as having any companynection with them as such or through him as Vice-President of the India Gospel Mission. The Income-tax Officer came to the companyclusion that on the examination of the entire material it was clear that the funds had been received mostly for assisting the assessee in running the newspaper, and that funds of the India Gospel Mission and the newspaper Kerala Dwani had all been mixed up and treated together as one unit and the assessee had been operating upon all these funds as the individual owner of both the newspaper and the funds. The Income-tax Officer observed that the remittances had been made to the assessee entirely because of his business activities and had been utilised by him for his business and personal activities. He held that the entire receipts of cash from the United States of America were relatable to the business activities of the assessee and were assessable to tax as the assessees income. He rejected the explanation of the assessee that the drawings companystituted loans taken from himself in his personal capacity and paid to himself as Vice-President of the India Gospel Mission. Following the decision in P. Krishna G Menon v. Commissioner of Income-tax, 1959 35 T.R. 48 he brought the amount of Rs.5 India Gospel Missi n t ta as the in On appeal by the assessee, the Appellate Assistant Commissioner observed that the amounts withdrawn from the funds were merely loans repayable by the assessee to the India Gospel Mission but numberdefinite finding was given on that question number did he render any finding on the question whether the receipt of Rs. 5,85,637 in the name of the India Gospel Mission companystituted the income of the assessee. The Appellate Assistant Commissioner relied essentially on an earlier order made by the Income Tax Appellate Tribunal in the appeals arising out of the assessments made for the assessment years 1960-61 and 1961-62, in which years similar remittances to the assessee had been held by the Appellate Tribunal to be number taxable. The Income-tax Officer appealed to the Income-tax Appellate Tribunal, and the Appellate Tribunal dismissed the appeal because it preferred to follow its earlier order relating to the assessment years 1960-61 and 1961-62 wherein it had held that the receipts from abroad did number companystitute the income of the assessee, and that even if they were assumed to companystitute his income they were receipts of a casual and number-recurring nature number arising from business or the exercise of a profession or occupation and, therefore, number taxable. At the instance of the Revenue the Appellate Tribunal referred the following two questions to the High Court of Kerala for its opinion Whether, on the facts and circumstances of the case, the Tribunal was right in finding that the amount of Rs. 5,85,637 assessed by the Income- tax Officer was number assessable as the income for the assessment year 1962-63? Whether, on the facts and circumstances of the case, the Tribunal was right in finding that the amount of Rs. 5,85,637 are receipts of a casual and number-recurring nature number arising from business or the exercise of a profession or occupation within the meaning of section 10 3 of the Income- tax Act, 1961? This reference was numbered as Reference No. 22 of 1975 in the High Court. By its judgment dated February 3, 1977, the High Court held that the amount of Rs. 5,85,637 was assessable as the income of the assessee for the assessment year 1962-63 and that the receipts were number of a casual and number-recurring nature. A reference made to the High Court against the order of the Appellate Tribunal for the assessment years 1960-61 and 1961-62, of which mention has been made earlier, had already been answered by the High Court in favour of the Revenue and against the assessee. That judgment has been reported as Commissioner of Income-tax v. Dr. K. George Thomas, 1974 97 I.T.R. 111. We may point out that that judgment of the High Court was brought in appeal to this Court and was upheld by a Division Bench of this Court, of which one of us Sabyasachi Mukharji, J was a member, and the judgment of this Court has since been reported in Dr. K. George Thomas v. Commissioner of Income Tax, Kerala, 1985 156 I.T.R. 412. Upon that it is clear that the basis on which the Appellate Tribunal proceeded to decide the case in favour of the assessee stands displaced. Learned companynsel for the assessee companytends, however, that there is a material difference between the case for the assessment years 1960-61 and 1961-62 and the case for the assessment year 1962-63 inasmuch as in the former case the remittances were entered in the personal name of the assessee while in the present case the remittances have been shown in a separate account standing in the name of the India Gospel Mission. To our mind the distinction sought to be drawn is wholly without substance, having regard to the overwhelming material on the record showing that the assessee had treated both the accounts as his personal accounts from which heavy drawings were made from time to time entirely for his personal objectives. The case that the drawings from the account in the name of the India Gospel Mission companystituted loans is number supported by the evidence on the record, and it is clear that the entire fund was treated as an intimate part of the assessees personal funds. That being so, the High Court is plainly right in holding that the amount of Rs. 5,85,637 is assessable as the income of the assessee for the assessment year 1962-63. It is also apparent that the receipts cannot be regarded as of casual and number-recurring nature number arising from the assessees business or the exercise of his profession or occupation within the meaning of s. 10 3 of the Income-tax Act. The decision of this Court in P. Krishna Menon supra supports that companyclusion. Indeed both the questions arising before us for the assessment year 1962-63 were, as we have mentioned earlier, examined by this Court on companyresponding facts relating to the assessment years 1960-61 and 1961-62, and we cannot do better than adopt the reasons set forth in that judgment in this case. This appeal, therefore, fails. The other appeals before us arising out of Reference No. 23 of 1975 raise the question of the legality and companyrectness of the levy of penalty on the assessee for number having submitted a return for the assessment year 1962-63, and Reference No. 24 of 1975 and Reference No. 25 of 1975 which raise similar questions for the assessment year 1963- 64 and 1964-65 respectively as in the Reference we have dealt with above. No separate submissions have been made by learned companynsel for the assessee on these appeals and they must also fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 10610 of 1983 etc. From the Judgment and Order dated 27.10.1983 of the Karnataka High Court in Writ Petition No. 1892 of 1983. Dalveer Bhandari for the Appellants. S. Javali and B.P. Singh for the Respondents. The Judgment of the Court was delivered by BHAGWATI, CJ. These appeals by special leave are directed against an Order passed by the Division Bench of the Karnataka High Court summarily rejecting writ appeals preferred by several students against a companymon judgment delivered by Justice Rama Jois dismissing the writ petitions filed by them challenging the cancellation of their admission by the Karnataka University. The facts giving rise to these appeals are few and may be briefly stated as follows. P. Mathur, the appellant in Civil Appeal No. 10610 of 1983 passed Higher Secondary Examination companyducted by the Board of Secondary Education, Rajasthan and applied for admission to the first year of the Engineering Degree companyrse in Shri Dharamsthala Manjunatheswara College of Engineering and Technology for the academic year 1981-82. Shri Dharmasthala Manjunatheswara College of Engineering and Technology is a private Engineering College affiliated to the Karnataka University and admission to the first year of the Engineering Degree Course in this College was, therefore, governed by the Rules for Admission made by the Karnataka University. On 11th August, 1980, the Vice-Chancellor in exercise of the emergency powers companyferred upon him by section 12 5 of the Karnataka Universities Act issued an Order prescribing, inter alia, companydition of eligibility for admission to the first year of the Engineering Degree Course. This Order made by the Vice-Chancellor was approved by the Academic Council and the Syndicate and it governed admissions to be made to the first year of the Engineering Degree companyrse in the academic year 1981-82 and subsequent years. The companydition of eligibility provided by this Order was as follows Candidates shall have passed the two year pre- university examination of the pre-university education board, Bangalore or an examination held by any other Board or University recognised as equivalent to it with English as one of the languages and Physics, Chemistry and mathematics as optional subjects with the necessary percentage of marks laid down by the University at the time of admission. A student who has passed B.Sc. Examination with Physics, Chemistry and Mathematics and secured number less than 50 of the aggregate of Physics, Chemistry and Mathematics, is also eligible for admission. However, he cannot claim exemption of any sort. Now, the Higher Secondary Examination in the State of Rajasthan required only 11 years schooling. The State of Rajasthan did numberfollow the pattern of 102 where SSLC Examination is held after 10 years schooling followed by study for a period of two years, whether in school or in companylege, which is termed as Intermediate companyrse at some places and Pre-University companyrse at others. However, so far as the State of Karnataka is companycerned, it followed the pattern of 102 and after 10 years schooling followed by SSLC Examination, it provided for a two-year Pre-University companyrse culminating in an examination held by the Pre- University Education Board. Obviously, therefore, the Higher Secondary School Examination after 11 years schooling in the State of Rajasthan companyld number be regarded as equivalent to the examination held by the Pre- University Education Board after 102 in the State of Karnataka and this number-equivalence was number seriously disputed on behalf of the appellant. R.P. Mathur, was clearly, in the circumstances number eligible for admission to the Engineering Degree Course. Even so, he was admitted by the Dharmasthala Manjunatheswara College of Engineering and Technology for the academic year 1981-82. He companypleted the first year and appeared in the examination held in July 1982 but he failed in four subjects and he had, therefore, to take a supplementary examination in January 1983 when he cleared two more subjects and the remaining two subjects were cleared by him in the examination held in June 1983. He also simultaneously appeared in the second year examination in June 1983 but again he failed to clear four subjects and he had to appear in the supplementary examination in December 1983 when he passed in the 2nd class. Whilst he was studying for the second year, his admission was disapproved by the Karnataka University in a letter dated 7th April 1983 addressed by the Registrar to the Principal of the Dharmasthala Manjunatheswara College of Engineering and Technology. This letter was in the following terms The matter has been examined carefully. The two candidates that is, R.P. Mathur and one Abhay Kumar Jain have passed the H.S.C. Examination of the H.E.F. Board and H.S.M. Board, Rajasthan which is equivalent to 11 years schooling. As per our eligibility requirements, a candidate must have passed two year pre-university examination of the pre-University Examination Board, Bangalore or an examination held by any other Board or university recognised as equivalent to it. As per our eligibility requirement, H.S.C. examination of 11 years duration is number companysidered as equivalent to our two years pre-university examination as the pattern of education in our State is 10 years plus two years, while it is 11 years schooling in Rajasthan State. Therefore, the two candidates 1 Sri R.P. Mathur and 2 Sri Abhay Kumar Jain are number eligible for admission to the first year P.E. Course during the year 1981-82 as per our eligibility rules. Candidates may be informed accordingly. This decision of the Karnataka University was companymunicated to A R.P. Mathur by the Principal of the College. He, thereupon filed Writ Petition No. 7744 of 1983 in the High Court of Karnataka challenging the cancellation of his admission by the Karnataka University. It appears that when the writ petition was admitted by a learned Single Judge of the High Court, an interim Order was made allowing R.P. Mathur to companytinue his studies in Shri Dharmasthala Manjunatheswara College of Engineering and Technology and it was as a result of this interim Order that P. Mathur companyld appear in the supplementary examination for the first year held in June 1983 and the regular examination for the second year held in June 1983. The writ petition was directed to be heard at an early date and it came up for hearing before Justice Rama Jois sitting as a Single Judge. There were also six other students, namely 1 Vijay Kumar Sharma 2 Nilesh Kumar Malasia 3 Rakesh Jain 4 Rajesh Kumar Mehta 5 Vinod Kumar Jain, and 6 T.M. Mathur appellants in Civil Appeals Nos. 10812 and 10815 to 10819 of 1983 who were admitted to the Engineering Degree Course for the academic year 1982-83 and whose admissions were cancelled by the Karnataka University. Vijay Kumar Sharma, Nilesh Kumar Malasia, Rakesh Jain, Rajesh Kumar Mehta and Vinod Kumar Jain passed the Higher Secondary Examination companyducted by the Board of Secondary Education, Rajasthan and thereafter Vijay Kumar Sharma cleared the first year examination of the three-year Degree companyrse in B.Sc. Of the University of Rajasthan with Physics, Chemistry and Mathematics as optional subjects and the other four, viz., Nilesh Kumar Malasia, Rakesh Jain, Rajesh Kumar Mehta and Vinod Kumar Jain, passed the first year examination of the three year B.Sc. Degree companyrse of Udaipur University with the same three subjects, viz., Physics, Chemistry and Mathematics, as optional subjects. These five students were admitted to the Engineering Degree companyrse in the S.T.C. Institute of Technology, Ranibennur for the academic year 1982-83. The Karnataka University took the view that since they had number passed the two y ear Pre-University examination of the Pre-University Education Board, Bangalore and neither the Higher Secondary Examination of the Board of Secondary Education, Rajasthan number the first year B.Sc. examination of the Rajasthan and Udaipur Universities passed by them was equivalent to the Pre-University examination of the Pre- University Education Board, Bangalore, they were number eligible for admission and accordingly the Karnataka University by its letter dated 5th March, 1983 disapproved of their admission leading to the cancellation of the admission. The companyrse of events followed the same pattern so far as T.Y. Mathur was companycerned. He also passed the Higher Secondary Examination companyducted by the Board of Secondary Education, Rajasthan and thereafter cleared the first year examination of the three year B.Sc. Degree companyrse of the University of Udaipur and on the basis of these qualifications, he was admitted to the Engineering Degree companyrse by Anjuman Engineering College, Bhatkal for the academic year 1982-83. In his case too, the Karnataka University disapproved of his admission on the ground that he was number eligible for admission to the Engineering Degree companyrse and in companysequence, his admission was cancelled. Vijay Kumar Sharma, Nilesh Kumar Malasia, Rakesh Jain, Rajesh Kumar Mehta, Vinod Kumar Jain and T.M. Mathur aggrieved by the cancellation OE their admission, filed writ petitions Nos. 7999/83 to 8003/83 and 9533/83 in the High Court of Karnataka. It appears that in the case of these students also, an interim order was made by the High Court while admitting the writ petitions, allowing them to companytinue their studies and companyplete their Engineering companyrse. The record shows that from out OE these students, only two, namely, Nilesh Kumar Malasia and T.M. Mathur passed the first year examination of the Engineering Degree companyrse while the rest failed. It is number known-at least it does number appear from the record-as to whether those who failed appeared again in the first year examination and cleared it. The writ petition filed by these students were placed for hearing along with Writ Petition No. 7744 of 1983 filed by R.P. Mathur. We shall for the sake of companyvenience refer to the petitioners in all these writ petitions as the appellants. Three companytentions in the main were urged on behalf of the appellants before the learned single Judge. The first companytention was that the companydition of eligibility for admission to the Engineering Degree Course had number been validly laid down by the Karnataka University and hence the admission of the appellants companyld number be cancelled on the ground that they did number satisfy the companydition of eligibility and were accordingly number entitled to be admitted to the Engineering Degree Course. This companytention was negatived by the learned Judge who pointed out that the Vice-Chancellor had laid down the companydition of eligibility in exercise of his emergency powers under Section 12 5 of the Karnataka Universities Act and his action was approved and companyfirmed by the Academic Council and the Syndicate of the University. The second companytention urged on behalf of the appellants was that at least so far as those appellants were companycerned who had passed the B.Sc. first year examination of the University of Rajasthan or Udaipur and were admitted to the Engineering Degree Course on the strength of this qualification, they were eligible for admission even according to the companydition of eligibility prescribed by the Karnataka University since the B.Sc. first year examination of the Universities of Rajasthan and Udaipur was equivalent to the Pre-University Examination of the Pre-University Education Board, Bangalore. But in answer to this companytention it was pointed out on behalf of the respondents that the Academic Council of Karnataka University had accepted the following recommendation of the Committee set up by it for determining equivalence Resolved to recommend to the Academic Council that numberpart examinations of other Universities outside the State of Karnataka be recognised as equivalent to the companyresponding companyrse of this University except the Syndicate Resolution No. 39 of 26.5.79. The Academic Council had thus declined to recognise any part examination of another University outside the State of Karnataka as equivalent to the companyresponding examination of the Karnataka University and the B.Sc. Part-I Examination of the Universities of Rajasthan and Udaipur companyld number, therefore, be regarded as equivalent to the B.Sc. first year examination of the Karnataka University and a fortiori it companyld number be companysidered as equivalent to the Pre-University Examination of the Pre-University Education Board, Bangalore and in any event it was number recognised as such by the Karnataka University. The appellants when faced with this argument were companystrained to adopt an extreme position that the companydition of eligibility prescribed by the Karnataka University was arbitrary and hence liable to be struck down as invalid. This companytention was also rejected by the learned Judge who pointed out that each University has got the power to prescribe companyditions of eligibility for admission to various companyrses in the companyleges within its jurisdiction and the companydition of eligibility prescribed by the Karnataka University was perfectly valid and since the Karnataka University had number recognised the first year B.Sc. examination of any other University outside the State of Karnataka as equivalent to the Pre-University Examination held by the Pre-University Education Board, Bangalore, the appellants did number satisfy the companydition of eligibility and were accordingly number eligible for admission. The appellants also relied on the plea of equitable estoppel against the Karnataka University but that plea was also negatived by the learned Judge since admittedly numberrepresentation was made by the Karnataka University on the basis of which the appellants companyld be said to have altered their position. The learned Judge pointed out that the Karnataka University did number make any representation or hold out at any stage that passing of the Higher Secondary Examination of the State of Rajasthan or of the first year B.Sc. examination of the University of Rajasthan or Udaipur would make the appellants eligible for admission to the Engineering Degree Course of the Karnataka University. The appellants lastly submitted that even if they were ineligible for admission, the admission granted to them should number be cancelled because they had been pursuing the companyrse of study in the Engineering Degree Course for over a year and their admission should number be disturbed as otherwise it would work great hardship on them. This submission of the appellants was also rejected by the learned Judge who took the view that since the appellants were ineligible for admission to the Engineering Degree Course of the Karnataka University, any delay in the cancellation of their admission companyld number companyvert ineligibility into eligibility and this was number a case of irregular admission where less meritorious candidates were selected in preference to more meritorious candidates but it was a case where candidates who were number eligible at all for admission were admitted. The learned Judge accordingly upheld the cancellation of the admission of the appellants and dismissed the writ petitions. The appellants thereupon filed appeals against the decision of the learned Judge before a Division Bench of the High Court but that Division Bench agreeing with the view taken by the learned Judge dismissed the appeals in limine. The appellants being aggrieved by the order of the Division Bench dismissing their appeals preferred the present appeals with special leave obtained from this Court. The appellants did number companytend before us that the companydition of eligibility laid down by the Karnataka University was number valid and binding. Indeed they companyld number possibly raised this companytention because the companydition of eligibility was laid down by the Vice-Chancellor in exercise of his emergency powers under Section 12 5 of the Karnataka Universities Act and his action had been companyfirmed both by the Academic Council and the Syndicate. The appellants also did number rely on the plea of equitable estoppel since it was obvious that the Karnataka University had number made any representation to the appellants that passing of Higher Secondary Examination in the State of Rajasthan or of Ist year B.Sc. examination of the University of Rajasthan or Udaipur would be sufficient to make them eligible for admission to the Engineering Degree Course of the Karnataka University and it was number possible to say that the appellants had altered that position relying on any such representation. The only companytention urged on behalf of the appellants was that the Higher Secondary Examination of the Board of Secondary Education, Rajasthan or in any event first year B.Sc. examination of a University of Rajasthan or Udaipur should be regarded as equivalent to the Per- University Examination of Pre-University Education Board, Bangalore and the appellants who had passed the Higher Secondary Examination of the Secondary Education Board, Rajasthan and in any event such of the appellants who had passed the first year B.Sc. examination of the Universities of Rajasthan and Udaipur satisfied the companydition of eligibility prescribed by the Karnataka University and were therefore eligible for admission to the Engineering Degree Course of the Karnataka University. This companytention is in our opinion wholly unsustainable and cannot be accepted. In the first place it may be numbered that what the companydition of eligibility laid down by the Karnataka University requires is that the students seeking admission should have passed the two year Pre-University Examination of the Pre- University Education Board, Bangalore or an examination held by any other Board or University recognised as equivalent to it. The examination held by any other Board or University which has been passed by the candidate must be recognised by the Karnataka University as equivalent to the two year Pre-University Examination of the Pre-University Education Board, Bangalore. The equivalence has to be decided by the Karnataka University and it is number a matter of objective assessment or evaluation by the Court. It is for each University to decide the question of equivalence of an examination held by any other Board or University with the examination which primarily companystitutes the basis of eligibility. Here in the present case the Karnataka University did number recognise the Higher Secondary Examination held by the Secondary Education Board, Rajasthan as equivalent to the Pre-University Examination of the Pre- University Education Board, Bangalore. And rightly so because the Higher Secondary Examination of the Secondary Education Board, Rajasthan followed only 11 years schooling while the Pre-University Examination of the Pre-University Education Board, Bangalore came at the end of 102 Course that is 12 years study. The Karnataka University also did number recognise the first year B.Sc. examination of the Universities of Rajasthan and Udaipur as equivalent to the Pre-University Examination of the Pre-University Education Board, Bangalore. In fact the academic Council took the view that first year B.Sc. examination of any University outside the State of Karnataka companyld number be recognised as equivalent to the first year B.Sc. examination of the Karnataka University and it would therefore seem to follow a fortiori that the first year B.Sc. examination of the Rajasthan or Udaipur University was number regarded by the Karnataka University as equivalent to the Pre-University Examination of the Pre-University Education Board, Bangalore. It is also evident from the second part of the companydition of eligibility prescribed by the Karnataka University that if a student did number fall in the first part he companyld be eligible under the second part only if he had passed B.Sc. examination with Physics, Chemistry and Mathematics and that mere passing of first year B.Sc. examination would number be enough. There can therefore be numberdoubt that the appellants were number eligible for admission to the Engineering Degree Course of the Karnataka University and their admission was companytrary to the Ordinance prescribing the companydition of eligibility. But it was then companytended on behalf of the appellants as a last alternative that the action of the Karnataka University in number recognising the Higher Secondary Examination held by the Secondary Education Board, Rajasthan and in any event the first year B.Sc. examination of the Rajsthan and Udaipur Universities as equivalent to the Pre-University Examination of the Pre-University Education Board, Bangalore was abritrary and unreasonable. We cannot accede to this companytention. It is difficult to appreciate how the Higher Secondary Examination held by the Secondary Education Board, Rajasthan after only 11 years schooling companyld be regarded as equivalent to the Pre-University Examination of the Pre- University Education Board, Bangalore which came as the culmination of a full 12 years companyrse of study. So also it is difficult to understand how the decision of the Karnataka University number to recognise the first year B.Sc. examination of the Rajasthan and Udaipur Universities as eqivalent to the Pre-University Examination of the Pre-University Education Board, Bangalore companyld be regarded as arbitrary or fanciful. It is for each University to decide the question of equivalence and it would number be right for the Court to sit in judgment over the decision of the University because it is number a matter on which the Court possesses any expertise. The University is best fitted to decide whether any examination held by a University outside the State is equivalent to an examination held within the State having regard to the companyrses, the syllabus, the quality of teaching or instruction and the standard of examination. It is an academic question in which the Court should number disturb the decision taken by the University. Here we find that numbermaterial has been placed before the Court on the basis of which the Court companyld say that the decision of the Karnataka University number to recognise the Higher Secondary Examination of the State of Rajasthan or the first year B.Sc. examination of the Universities of Rajasthan and Udaipur as equivalent to the Pre-University Examination of the Pre- University Education Board, Bangalore was arbitrary or number based on reasons. We must therefore reject this companytention urged on behalf of the appellants. We accordingly endorse the view taken by the learned Judge and affirmed by the Division Bench of the High Court. But the question still remains whether we should allow the appellants to companytinue their studies in the respective Engineering Colleges in which they were admitted. It was strenuously pressed upon us on behalf of the appellants that under the orders initially of the learned Judge and thereafter of this Court they have been pursuing their companyrse of study in the respective Engineering Colleges and their admissions should number number be disturbed because if they are number thrown out after a period of almost four years since their admission their whole future will be blighted. Now it is true that the appellants were number eligible for admission to the Engineering Degree Course and they had numberlegitimate claim to such admission. But it must be numbered that the blame for their wrongfuladmission must lie more upon the Engineering Colleges which granted admission then upon the appellants. It is quite possible that the appellants did number know that neither the Higher Secondary Education of the Secondary Education Board, Rajasthan number the first year Sc. Examination of the Rajasthan and Udaipur Universities was recognised as equivalent to the Pre-University Examination of the Pre-University Education Board, Bangalore. The appellants being young students from Rajasthan might have presumed that since they had passed the first year B.Sc. Examination of the Rajasthan or Udaipur University or in any event the Higher Secondary Examination of the Secondary Education Board, Rajasthan they were eligible for admission. The fault lies with the Engineering Colleges which admitted the appellants because the Principals of these Engineering Colleges must have known that the appellants were number eligible for admission and yet for the sake of capitation fee in some of the cases they granted admission to the appellants. We do number see why the appellants should suffer for the sins of the managements of these Engineering Colleges. We would therefore, numberwithstanding the view taken by us in this Judgment allow the appellants to companytinue their studies in the respective Engineering Colleges in which they were granted admission. But we do feel that against the erring Engineering Colleges the Karnataka University should take appropriate action because the managements of these Engineering Colleges have number only admitted students in eligible for admission but thereby deprived an equal number of eligible students from getting admission to the Engineering Degree Course. We also endorse the directions given by the learned Judge in the penultimate paragraph of his Judgment with a view to preventing admission of ineligible students.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 1954- 55 NT of 1974 etc. 1078 From the Judgment and Order dated 10th August, 1971 of the Bombay High Court in Income Tax Reference No. 124 of 1963. Gauri Shankar and Ms. A. Subhashini for the Appellant. T. Desai, H. Salve, Ravinder and Ms. A.K. Verma for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These appeals by certificate arise from the judgment and decision of the High Court of Bombay dated 10th August, 1971 in Income Tax Reference No. 124 of 1963. The question involved in these appeals is familiar in direct tax laws. The points in companytroversy are short. But the adjudication is pending for long. Assessment years involved are 1957-58 and 1958-59. The High Court disposed of these references on 10th August, 1971 and in 1986 i.e. nearly after 28 years of the years of assessment we are posed with the question whether in respect of certain transactions in those years the assessee was a dealer or an investor and companysequentially whether the income arising from the sale of shares by the assessee is to be taxed on revenue account of capital account. The question that the High Court had to answer was as follows Whether, on the facts and in the circumstances of the case, the assessee was a dealer in shares in the accounting periods relevant to the assessment years 1959-60 and 1960-61? The said question was referred by the Tribunal to the High Court at the instance of the asseessee. The assessee, H. Holck Larsen, was a partner in the firm of M s Larsen Toubro hereinafter referred to as the said companypany unto 1946. On 8th February, 1946/7th February, 1946, that partnership was companyverted into a private limited companypany 1079 of the same name. In companysiderations of his interest in the firm, the assessee was allotted shares of the companypany. Against payment of cash, the assessee got 1875 equity shares and against his interest in the partnership firm, he got 53, 486 equity shares. During the next few accounting years upto the financial year 1953-54, the assessee acquired 2,994 shares of the said companypany and sold 1,550 shares. According to the statement of the case, the purchases and sales of shares of the said companypany were few and far between upto the financial year 1953-54, but these became larger in number and at close intervals in the next few succeeding years. The chart would indicate the position in this respect 1 2 3 4 5 Financial No of Value No. Of Sale year shares Rs. Shares Price ending acquired sold Rs. 31-3-1955 ----- ----- 4,60O 51,173 31-3-1956 6,111 61,110 13,955 1,88,433 31-3-1957 6,1026 1,020 7,661 1,24,406 31-3-1958 1,256 12,560 5,050 63,721 31-3-1959 5,500 55,000 5,200 87,810 31-3-1960 11,000 1,11,000 10,400 2,45,732 During the years mentioned in the chart, the assessee had acquired 29,969 shares of the said companypany and sold 37,366 shares thereby making a profit of Rs. 1,65,581. Besides purchasing and selling equity shares of the said companypany, the assessee had also dealt in preference shares of the said companypany. The assessee had sold shares of Andhra Cement Co. in the financial year 1954-55, made purchases of shares of S.C.C. and I.C.C. in the years 1955-56, 1956-57 and 1958-59 and also of shares of India Cement Co. and National Carbon in 1955-56 and also sold shares of Guest Keen Williams and Indian Cement in 1958-59. During all these years the purchases and sales is equity shares of the said companypany were more marked than the purchase and sale of other shares. Besides the sale OF equity shares of the said companypany and shares of other companypanies stated above, the assessee had also sold some of his original shares of the said companypany held by him. 1080 On these facts the assessee companytended before the Income Tax Officer that the assessee was only an investor and number a dealer in shares but this companytention was rejected by the Income Tax Officer and the Appellate Assistant Commissioner. Aggrieved by the said decision of the Appellate Assistant Commissioner, the assessee filed second appeal before the Tribunal. Before the Tribunal it was companytended on behalf of the assessee 1 that the assessee never purchased equity shares of the said companypany from any outsider or any stranger except in a few cases from close friends or from members of the staff just to accommodate them 2 that the shares that were acquired by the assessee were only right shares issued by the companypany to its existing shareholders 3 that the assessee had to meet huge personal expenses and tax liability in the relevant accounting periods 4 that the assessee had an overdraft account and he wanted to keep the said overdraft account within reasonable limit 5 that the assessee wanted to nurse his investments in the companypany and 6 that the assessee had to and was forced and companypelled by circumstances to sell some of the shares acquired by him. In the premises, the assessees companytention was that the sales of the said shares were neither effected voluntarily number with a view to make any profit number under a profit making scheme, but were effected under companypelling circumstances and as numberassessee companyld be a trader by companypulsion, the assessee was number a trader in respect OF these shares. The Tribunal rejected the said companytentions. The Tribunal held 1 The assessee was a Chairman of the Board of Directors of the said companypany. 2 The said companypany had ever since its inception expanding its business and making good profits. 3 Its capital had increased and, therefore, right shares were offered to the existing shareholders. 4 The assessee had a substantial holding of equity shares in the companypany. S It was number obligatory on the assessee to acquire right shares. 6 In fact, the assessee was indebted to the bank and was having an over- draft account on which he was paying interest. 7 Not only right shares were sold by the assessee, but he had also sold some of the original equity shares held by him. The Tribunal was of the view that as the Chairman of the Board of Directors of the said companypany, the assessee knew the financial position of the companypany and also knew that the 1081 companypanys business was expanding and flourishing, and yet he sold away the shares of such a companypany held by him. The sale, according to the Tribunal, must have been to earn profits. The frequency of the acquisition of right shares and the sales in large numbers in quick succession, according to the Tribunal, established the motive to make profit and that all the dealings in shares were part and parcel of a profit making scheme. The Tribunal numbered that the Appellate Assistant Commissioner had found that in some years, the income of the assessee was much more than the expenses he had to meet and numberwithstanding that fact, the assessee had sold some shares. The Tribunal further numbered that the companyrectness of this finding was neither challenged before the Tribunal number anything established to the companytrary. According to the Tribunal, therefore, if the assessee was under numberobligation to acquire right shares, there was numbernecessity for him to apply for and obtain right shares except to make profits on their sales. According to the Tribunal, it is far from the companyduct of a prudent and reasonable man like the assessee to expect him to sell away his capital assets to meet the recurring personal expenditure. The frequent acquisition of right shares at par companypled with the fact that even some of the original holdings were sold, were against the assessees intention of nursing his investments according to the Tribunal. The Tribunal numbered that according to the Appellate Assistant Commissioner, such an activity was self- destructive purpose by self-cancelling activity. The Tribunal was in agreement with the view of the Appellate Assistant Commissioner and came to the companyclusion that it was the idea of huge profits that the assessee was making by sale of shares of the said companypany that companypelled him to acquire right shares frequently and in large numbers numberwithstanding the fact that he was indebted to the bank and he was having an overdraft account with it. The facts that the assessee did number sell all the right shares or that the founder of the companypany was interested in acquiring right shares or that he did number take all the right shares offered to him because of his financial liability, according to the Tribunal, would number affect the issue. The Tribunal, therefore, came to the companyclusion that 1082 the assessee was doing business in the assessment years under companysideration. Two members namely Judicial Member as well as Accountant Member gave separate but companycurrent opinions for companying to the companyclusion that the assessee was a dealer in shares. In his separate order, the Accountant Member had observed that in the assessment years 1956-57 to 1960-61, both inclusive, the acquisition of the shares was large and so also the sale of shares and in the first three accounting years, the shares sold were much more than the shares acquired by right. The right shares acquired in those three years were 6,111, 6102 and 1,256 whereas the assessee had sold from time to time right shares which were 13,955, 7661 and 5,050 respectively. The maximum number of shares held by the assessee was little over 56,600 and this number went down progressively from the assessment year 1953-54 to assessment year 1958-59 by about 15,000. The Accountant Member, therefore, was of the view that it was number possible to accept the submission of the assessee that the shares were sold only to reduce the overdraft taken from the bank. It may be mentioned, while on this aspect, that during the first few years apart from the years in question i.e. 1959-60 and 1960-61, i.e. from the assessment years 1955-56, 1956-57, 1957-58 and 1958-59, the assessee had been treated by the revenue as an investor in shares and was number taxed on the dealings of these shares. This is an aspect which requires to be taken into companysideration in companyjunction with other factors in answering the question. The second point on this aspect is that for subsequent years for which Special Leave Nos. 8292-8293 of 1979 are pending are for the assessment years 1968-69 and 1969-70 and in those two years the Tribunal had accepted the position that the assessee was an investor and number a dealer in shares. This position, however, according the revenue, had to be accepted in view of the judgment of the Bombay High Court in the instant case which is under appeal before this Court. Therefore, it was number, according to the companynsel for the revenue, on any divergence of finding or any different inference being drawn from the said findings but because of decision of the Bombay High Court and out of deference to it, the assessee had to be treated as an investor. The findings of the Tribunal for those two years are 1083 also the subject matter of Special Leave Petition 8292 and 8293. These will have to be disposed of along with these appeals. The High Court in the impugned judgment answered the question in favour of the assessee and held that the assessee was number a dealer in shares. In this case the facts have been enumerated and tabulated in the statement of the case. The Tribunal on those facts came to the companyclusion that the assessee was for the relevant two years a dealer in shares. The High Court, however, in answer to the question held to the companytrary and held that the assessee was an investor in shares. In the background of these facts, two questions arise, where companyrts have to deal with these types of transactions. The first question is, whether the findings of the Tribunal or the fact finding body is based on evidence from which the companyclusions arrived at by the said fact finding body can be said to be either reasonable or possible. Therefore, in the companytext of the companytroversy in the instant case, it is necessary to examine that what were the facts found by the Tribunal and whether all the facts have been fully companysidered by the tribunal for the companyclusions drawn. If the companyclusions drawn by the Tribunal are pure inferences of facts, then numberquestion of law arises and numberoccasion is caused for interference. If, however, the companyclusion arrived at by the fact finding body is such that numberreasonable man companyld possibly have arrived at, then companyclusion arrived at by the Tribunal would be without evidence and perverse in law. If there is material to support the companyclusion, the fact that another body or the companyrt might have arrived at a different companyclusion is number relevant. The second question is what are the legal principles applicable to the facts of these types of cases to determine whether the companyduct was that of a dealer in shares or an investor in the shares. The two questions have been dealt together in many decisions which may be numbered, though numbercase can provide guidance for all situations. 1084 How in case of sale of share the object or the purpose of selling the shares, in order to determine whether one was a dealer in shares or an investor in shares, should be viewed may be looked at from the angle of Lord Reid in J.P. Harisson Watford , Ltd. v. Griffiths H.M. Inspector of Taxes 40 Tax cases 281 at 295-296 when he observed The question has been asked in a number of cases If this was number trading, what was it? With all deference to those who have used that argument, I do number think that it is very useful in most cases. Human affairs - and business affairs - are of infinite variety. They do number fit neatly into categories or classes. Innominate companytracts and transactions are of frequent occurrence, and I would number expect to find appropriate names to denote new kinds of operations devised for the sole purpose of gaining tax advantages. In the present case the question is number what the transaction of buying and selling the shares lacks to be trading, but whether the later stages of the whole operation show that the first step - the purchase of the shares - was number taken as, or in the companyrse of, a trading transaction. The real question as Lord Reid said was number whether the transaction of buying and selling the shares lacks the element of trading, but whether the later stages of the whole operation show that the first step - the purchase of the shares - was number taken as or in the companyrse of, a trading transaction. It was, further, reiterated in that decision that where a question of inference from certain facts found by the Tribunal arises, unless the companyrt companyes to the companyclusion that the inference drawn by the Tribunal companyld number be reasonably drawn at all, then it is number proper to interfere with that finding of facts. How a question of this nature should be viewed has been indicated by this Court as early as 1958 in G. Venkataswami Naidu Co. v. Commissioner of Income-tax, 35 I.T.R. 594 C The question there was whether sale of a land to a companypany companyld be treated in the facts and circumstances of the case as an adventure in the nature of trade. There, on the facts this 1085 Court upheld the findings of the Appellate Tribunal in affirming that the assessee knew that it would be able to sell the lands to the managed companypany whenever it thought it profitable to do so that the assessee had purchased the four plots of land with the sole intention of selling them to the mills at a profit which intention raised a strong presumption in favour of the view taken by the Tribunal. This Court reiterated that the jurisdiction companyferred on the High Court under section 66 1 of the Act of 1922 hereinafter called the old Act i.e. section 256 of the Act of 1961, hereinafter called the new Act was limited to entertaining references involving questions of law. It was emphasised that if the point raised on reference related 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 might have due regard for the view taken by the Appellate Tribunal, its decision would number be fettered by the Tribunals view. It was free to adopt such companystruction of the document or the statute as appeared to it reasonable. Where the point sought to be raised on a reference was a pure question of fact, the finding of fact recorded by the Tribunal must be regarded as companyclusive in proceedings under reference. If, however, such a finding of fact was based on an inference drawn from primary evidentiary facts proved in the case, its companyrectness and validity were open to challenge in reference proceedings, within, however, narrow limits. The assessee or the revenue companyld companytend that the inference had been drawn on companysidering inadmissible evidence or after excluding admissible and relevant evidence and if the High Court was satisfied that the inference was 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 was number supported by any legal evidence or that the impugned companyclusion drawn from the relevant facts was number rationally possible and if such a plea was established, the companyrt might companysider whether the companyclusion was number preverse and should number, therefore, be set aside. It was to be remembered, however, that it was within those narrow limits that the companyclusions of fact recorded by the Tribunal companyld be challenged in a reference to the High Court. Such companyclusions companyld never be challenged on the ground that these were based 1086 on misappreciation of evidence. A companyclusion reached by the Tribunal on the ground that it is a companyclusion on a question of mixed law and fact, 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. In dealing with findings on questions of mixed law and fact the High Court however, has to accept the findings of the Tribunal on the primary questions of facts 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 companytext of the jurisdiction of the High Court in dealing with such points was the same as in dealing with pure points of law, and number beyond that. Before companysidering other cases it may be appropriate to refer to the report of Royal Commission on Taxation of Profits and Income of England, which was presented to the Parliament of United Kingdom in June 1955. There, the Royal Commission companysidered whether a simple test companyld be evolved that would separate taxable cases from number-taxable one. The Royal Commission numbered that one was that profit arising from any realisation of property should be declared by law to be taxable income if the property had been acquired with a view to profit-seeking. This seems to have been the kind of test envisaged by the 1920 Commission where they spoke of any profit made on a transaction reccognisable as a business transaction, i.e., a transaction in which the subject matter was acquired with a view to profit-seeking. The difficulty, the Royal Commission felt, about applying that test was that, in any numbermal sense of the words, a view of profit- seeking might accompany many transactions that would number be called business transaction. Since few investors it was numbered companyld expect that their investments would remain exactly stable in value in their hands, they are bound to companytemplate the probabilities of rise or fall and it is hardly to be expected that they will number choose one for which they hope or expect a rise. The Royal Commission numbered that Lord Buckmaster in Leeming v. Jones, 1930 15 T.C. 333 at 357 had observed that an accretion to capital did number become income merely because the original capital was invested in the hope and expectation that it would rise in value. 1087 The Royal Commission at page 39 of the report observed that there should be numbersingle fixed rule i.e. each case must be decided according to its own circumstances. The general line of enquiry that had been favoured by appeal Commissioners and encouraged by the Courts, according to the Royal Commission, was to see whether a transaction that is said to have given rise to a taxable profit bears any of the badges of trade. The Royal Commission was of the view that seemed to them the right line, and it had the advantage that it based itself on objective tests of what was a trading adventure instead of companycerning itself directly with the unravelling of motive. At the same time, the Royal Commission was of the view that there was some lack of uniformity in the treatment of different cases according to the tribunals before which these had been brought. The Royal Commission sought to identify these badges of trade as follows The subject matter of the realisation. While almost any form of property can be acquired to be dealt in, those forms of property such as companymodities or manufactured articles, which are numbermally the subject of trading are only very exceptionally the subject of investment. Again property which does number yield to its owner an income or personal enjoyment merely by virtue of its ownership is more likely to have been acquired with the object of a deal than property that does. The length of the period of ownership. Generally speaking, property meant to be dealt in is realised within a short time after acquisition. But there are many exceptions from this as a universal rule. The frequency or number of similar transactions by the same person. If realisation of the same sort of property occur in succession over a period of years or there are several such realisations at about the same date a presumption arises that there has been dealing in respect of each. Supplementary work on or in companynection with the property realised. If the property is worked up in 1088 any way during the ownership so as to bring it into a more marketable companydition or if any special exemptions are made to find or attract purchasers, such as the opening of an office or large-scale advertising, there is some evidence of dealing. For when there is an organised effort to obtain profit there is a source of taxable income. But if numberhing at all is done, the suggestion tends the other way. The circumstances that were responsible for the realisation. There may be some explanation, such as a sudden emergency or oportunity calling for ready money, that negatives the idea that any plan of dealing prompted the original purchase. Motive. There are cases in which the purpose of the transaction of purchase and sale is clearly discernible. Motive is never irrelevant in any of these cases. What is desirable is that it should be realised clearly that it can be inferred from surrounding circumstances in the absence of direct evidence of the sellers intentions and even, if necessary, in the face of his own evidence. In Oriental Investment Co., Ltd. v. Commissioner of Income-tax, Bombay, 32 I.T.R. 664 S.C. this Court had occasion to deal with the question of how far the finding in respect of dealing in shares was a question of fact or a question of law or a mixed question of fact and law. This Court observed that what were the characteristics of the business of dealing in shares or that of an investor was 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 companyld be termed a dealer in shares or an investor was itself a question of law. The mere fact that a companypany had within its objects the dealing in investment in shares, did number give to the companypany the characteristics of a dealer in shares, but if other circumstances were proved it might be relevant for the purpose of determining the nature of the activities of the Company. This Court observed that inference from facts would be a question of fact or a question of law according as the point for determination is one of pure fact or a mixed question of law and fact. A finding of fact without evidence 1089 to support it or based on relevant and irrelevant matters is number unassailable. This Court observed at page 669 of the report that it was difficult to draw a line and draw a distinction as to what was a question of law and what was a question of fact. After referring to several authorities, this Court came to the companyclusion that though English decisions began with a broad definition of what were questions of law, ultimately the House of Lords decided that a matter of degree was a question of fact and it had 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 were both questions of law. This Court observed as to what are the characteristics of the business of dealing in shares or that of an investor was 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 companyld be termed a dealer in shares or an investor was a question of law. As was observed by Venkatarama Ayyar, J. in Sree Meenakshi Mills Limited v. Commissioner of Income-Tax, Madras, 31 I.T.R. 28 S.C. that in between the domains occupied respectively by question of fact and law, there is a large area, in which both these questions run into each other, forming, so to say companyclaves within each other. These are mixed question of law and fact. The instant case is one. In the case of Stanley Surveyor of Taxes v. The Gramophone and Typewriter, Limited, 5 Tax Cases 358 the Court of Appeal in England had dealt with that question. The Court of Appeal in England observed at 374 of the report as follows It is undoubtedly true that, if the Commissioners find a fact, it is number open to this Court 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 Court to say whether the evidence justified what the Commissioners held. In Calfornian Copper Syndicate Limited and Reduced v. Harris Surveyor of Taxes , 5 Tax Cases 159 at 166 Lord 1090 Justice Clerk observed that the test was whether the sum of gain that has been made was a mere enhancement of value by realising a security, or was it a gain made in an operation of business in carrying out a scheme for profit-making. In Commissioners of Inland Revenue v. Lysaght, 1928 C. 234 13 Tax Cases 511 at page 247 of Appeal Cases Lord Buckmaster observed that the distinction between questions of fact and questions of law is difficult to define, but if the circumstances found by the Commissioners in the special case were incapable of reaching the companyclusion reached by them, then the companyclusion companyld number be protected by saying that it was a companyclusion of fact since there were numbermaterials upon which that companyclusion companyld depend. But if the incidents relating to certain factors which lead to the companyclusion were varying that certainly produce the result then the matter must be a matter of degree, and the determination of whether or number the degree extended so far as to make a man in that case resident or ordinarily resident in England was for the Commissioners and it was number for the Courts to say whether they would have reached the same companyclusion. The question was again companysidered in Edwards Inspector of Taxes v. Baristow and Another, 3 W.L.R. 410 28 I.T.R. There the House of Lords held that the facts found led inevitably to the companyclusion that the transaction was an adventure in the nature of trade and that the Commissioners inference to the companytrary should be set aside. Viscount Simonds observed that whether the transaction was number an adventure in the nature of trade was an inference of fact but companyld be set aside because it appeared that the Commissioner had acted without any evidence or on a view of the facts which companyld number reasonably be entertained. In making that inference the Commissioners were to be assumed to have been rightly directed in law as to the characteristics which distinguish such an adventure, and, so far as the Scottish companyrts had diverged from this approach to such problems, the other approach adopted by the English companyrts was to be preferred. Lord Radcliffe observed that without any misconception of law appearing on the face of the case stated, the facts found may be such that numberperson acting judicially and properly as to the relevant law companyld have companye to the determination reached. 1091 We have numbered Lord Reid in J.P. Harisson Watford , Ltd. v. Griffiths H.M. Inspector of Taxes supra saying that intention at the time of the purchase was a relevant and often a companyclusive factor whether the resale was in the nature of an adventure in trade or number. But in Saroj Kumar Mazumdar v. Commissioner of Income-Tax, West Bengal 37 T.R. 242. SC , this Court referred to the observations of Lord Dunedin in the case of Jones v. Leeing supra where the House of Lords observed that the fact that a man did number intend to hold an investment might be an item of evidence tending to show whether he was carrying on a trade or companycern in the nature of trade in respect of his investments, but per se it led to numberconclusion whatever. In the case of Rannarain Sons Pvt. Ltd. v. Commissioner of Income Tax, Bombay 41 I.T.R. 534 S.C. this Court observed that in companysidering whether a transaction was or was number an adventure in the nature of trade, the problem must be approached in the light of the intention of the assessee having regard to the legal requirements which were associated with the companycept of trade or business. The inference on this question raised by the Tribunal on the facts found was of mixed law and fact and was open to challenge before the High Court on a reference. The question whether the assessees transactions amounted to dealing in shares and properties or to investment, was a mixed question of law and fact, and the legal effect of the facts found by the Tribunal on which the assessee companyld be treated as a dealer or an investor, was a question of law. In the case of Janki Ram Bhadur Ram v. Commissioner of Income Tax, Calcutta 57 I.T.R. 21 S.C. this Court observed that the profit motive in entering a transaction was number decisive, for an accretion to capital did number become taxable income merely because an asset was acquired in the expectation that it might be sold at a profit. This Court further observed that if a transaction was related to the business which was numbermally carried on by the assessee, though number directly part of it, an intention to launch upon an adventure in the nature of trade might readily be inferred. This Court had occasion to companysider the question of new shares offered to the holder of old shares in a companypany with right to renounce in the case of Miss Dhun Dadabhoy Kapadia v. 1092 Commissioner of Income-Tax, Bombay, 63 ITR 651 S.C. There, the appellant, who was number a dealer in shares, held by way of investment 710 ordinary shares in the Tata Iron and Steel Co. Ltd. The companypany made an offer to her by which she was entitled to apply for 710 new ordinary shares at a premium with an option of either taking the shares or renouncing there, wholly or partly, in favour of others. The appellant renounced her right to all the 710 shares on 12th June, 1956, and realised Rs. 45,262.50. When this amount was sought to be wholly taxed as a capital gain, the appellant claimed that on the issue of the new shares, the value of her old shares depreciated, since the market quotation of the old shares which was Rs. 253 per share on 1st June, 1956 fell to Rs. 198.75 on 4th June, 1956 and that a result of this depreciation she suffered a capital loss in the old shares to the extent of Rs. 37,630 which she was entitled to set off against the capital gains of Rs. 45,262.50. In the alternative she claimed that the right to receive the new shares was a right which was embedded in her old shares and, companysequently when she realised the sum of Rs. 45,262.50 by selling her right, the capital gain should be companyputed after deducting from that amount the value of the embedded right which became liquidated. It was held that the appellant was entitled to deduct from the sum of Rs. 45,262.50 the loss suffered by way of depreciation in the old shares. The question was again companysidered by this Court in Dalhousie Investment Trust Co. Ltd. v. Commissioner of Income-Tax Central , Calcutta, 68 ITR 486 S.C. There this Court on the facts came to the companyclusion that the assessee dealt with the shares of Moleod and Co. and the allied companypanies as stock-in-trade, and that these were in fact purchased even initially number as investments but for the purpose of sale at a profit and therefore the transactions amounted to an adventure in the nature of trade, and the profit derived by the appellant from the sale of share was therefore revenue receipt and as much liable to income-tax. It was held that the decision of department in the earlier years that the transactions were in the nature of change of investments was number binding in the proceedings for assessment during the subsequent years. In P.M. Mohammed Meerakhan v. Commissioner of Income- tax, Kerala, 73 ITR 735 S.C. this Court reiterated that it was number 1093 possible to evolve any single legal test or formula which companyld be applied in determining whether a transaction was an adventure in the nature of trade or number. The answer to the question must necessarily depend in each case on the total impression and effect of all the relevant factors and circumstances proved therein and which determine the character of the transaction. In Raja Bahadur Kamakhya Narain Singh v. Commissioner of Income-Tax, Bihar Orissa, 77 ITR 253 S.C. the question of adventure in the nature of trade was again companysidered by this Court and it was reiterated that since the expression adventure in the nature of trade implied the existence of certain element in the transactions which in law would invest these with the character of trade or business and the question on that account became a mixed question of law and fact, the companyrt companyld review the Tribunals findings if it had misdirected itself in law. It was fairly clear that where a person in selling his investment realised an enhanced price, the excess over his purchase price was number profit assessable to tax as income, but it would be so, if what was done was number a mere realisation of the investment but an act done for making profit. The distinction between the two types of transactions is number always easy to make. Whether the transaction is of one kind or the other depends on the question whether the excess is an enhancement of the value by realising a security or a gain in an operation of profit-making. The assessee might invest his capital in shares with the intention to resell these if in future their sale bring in a higher price. Such an investment, though motivated by a possibility of enhanced value, did number necessarily render the investment a transaction in the nature of trade. In the premises the totality of all the facts will have to be borne in mind and the companyrect legal principles applied to these. If all the relevant factors have been taken into companysideration and there has been numbermisapplication of the principles of law then the companyclusion arrived at by the Tribunal cannot be interfered with because the inference is a question of law, if such an inference was a possible one, subject, however, that all the relevant factors have been duly weighed and companysidered by the Tribunal, the inference reached by the Tribunal should number be interfered with. 1094 In order to determine the question involved in the instant appeals, certain features will have to be borne in mind. All the right shares were acquired directly as right shares at par from the companypany. It was further urged that as Chairman assessee was duty-bound to support the issue of new shares by the companypany. Sales were made to reduce his overdraft, according to the assessee. The sales were also made to purchase a house in Denmark and for which permission had been obtained from Reserve Bank of India to remit Rs. 1 lakh. This would appear from the assessment order for 1959- 60. It was further emphasised that the market price was lower on the date of sale and there was numberprofit motive. The Income-tax Officer, however, held that profit was the intention of the assessee for acquisition of the shares. The shares acquired after 1st April, 1954 were held as trading stock. This date was chosen by the Income-tax Officer because from this date, the assessee started selling as well as buying shares on a large scale. Therefore, according to the revenue, this indicated dealings in shares. It may be numbered that as such there was basis for choosing that. The Tribunal, however, after companysideration of all these facts came to the companyclusion that the assessee was a dealer in shares. The judgment of the High Court under appeal which incidentally is reported in 85 I.T.R. at page 285 held that the decision in the earlier years that the assessee was an investor was number binding for subsequent years, that the assessee was always an investor. The High Court further observed that the frequency of transactions was number decisive. According to the High Court, it was necessary to appreciate the implications of the issuance of right shares and purchase thereof by the assessee. Right shares were issued by virtue of the provisions of section 81 of the Companies Act. It is number necessary to set out the provisions dealing with the issue of right shares. The issuance of the right shares depreciates the value of the original shares initially. In the impugned judgment, it was held that whether the transactions of sale and purchase of shares were trading transactions or in the nature of investment was a question of 1095 law and must be viewed in the light of the intention of the assessee. On the question of how the right shares affect the original shares, our attention was drawn to Investments - An Introduction to Analysis and Management Fifth Edition, wherein it was emphasised at page 35 of the book that the world economies offered a wide variety of securities or assets to satisfy the investors desire for return and risk. Most investors are risk-averse, and attempt to maximize their wealth. As a principle, investors maximize wealth by maximizing return and minimizing risk. Investment may be defined as the purchase by an individual or institution it was observed of an asset that produces a return proportional to risk over some future period. The investments, it was further observed, available for purchase were typically financial assets, but real or tangible assets might be included among the alternative investments. Another principle guiding investment, it was emphasised at page 604 of the book, was the main reason for diversification - reduction of a risk of loss of capital and income. Investors face an unknown and uncertain future and try to diversify the investments. As a general rule it was emphasised at page 603 of the book, growth of capital was a desirable objective of portfolio management. This did number mean that every investor must invest in growth stocks this would be Inconsistent with many investors needs. A fund can be built up from reinvested income as well as through the purchase of growth shares. A large fund does provide more income for the investor than a small fund. Many investors have increased the capital value of their funds through reinvested dividends and interest income. Some wanted income, some capital gains, and some a companybination of both. In spite of these variations, several objectives should be companysidered as basic to a well-executed investment programme. The guiding principles establish the indifference curve of risk versus return for the investor. To various other authorities our attention was drawn to highlight this aspect. In Business Finance - F W Paish and R J Briston, Sixth 1096 Edition at page 115, it was observed how issue of right shares depreciates the value of the original shares. It was thus observed Since the price to be paid for the new shares is substantially below the current market price of the existing ones, the price per share of the enlarged issue will numbermally be below the price of the old shares before the issue, and the price of the old share will therefore tend to fall but shareholders will recover this loss either by taking up the new shares themselves or by selling their rights. If they neglect to do either they will suffer a loss of value on their existing shares without companypensation, unless the companypany, as is number numbermally the case, sells their rights on their behalf and pays over the proceeds to them. Whatever happens, either the shareholders will take up the shares themselves or they or the companypany will sell their rights to someone else who will do so. The success of the issue can therefore be assured, provided that it is number too large in relation to the capital already issued. As numbered above, section 81 of the Companies Act, 1956 so far as relevant for the present purpose provides that if a companypany proposes to increase its subscribed capital by allotment of further shares, such shares should be offered to the existing share-holders of Equity Shares and the offer should be deemed to include a right to renounce the shares. The right to receive the new shares is embedded in the old shares. Therefore the moment, it was emphasised by the High Court, the issue of right shares are announced, the original share was bound to depreciate because a larger number of people participate in the existing capital. The High Court emphasised that in this case the assessee had acquired the right shares and sold them and he also renounced some of those rights. The question which the High Court was companyfronted with was whether by indulging in those transactions, the assessee was trading in shares or whether he entered into those transactions in the old capacity of an investor. The High Court was of the view that the companyrse of 1097 dealings in the instant case showed that the dominant motive of the assessee in acquiring and selling the new shares and in renouncing some of the right shares was to prevent the inevitable erosion of his capital. If the assessee, according to the High Court, had number acted in the manner he did, his original investments would have depreciated in value, and therefore, in a sense he entered into these transactions to nurse his investments. It was important to bear in mind, and that companyld be appreciated if one had regard to what has been numbered before that the Right shares, according to the High Court, were number acquired by the assessee as a matter of free choice. The assessee acquired, according to the High Court, those shares because if the assessee did number do so, his capital would erode. But as is apparent from the facts numbered before, he had to find so much more money in order to acquire the shares and it was number always prudent to permit the overdraft account to swell. Having regard to all the facts as numbered by the High Court and referring to the relevant decision, the High Court was of the view that true object in this case was to prevent depreciation in the value of his investment. The assessee also in this case, as we have numbered before, renounced some of his rights to get the right shares. The High Court was of the view that the true intention of nursing the investment has number been appreciated by the Tribunal. Therefore, in the light of the facts, the Tribunals inference was number a justified one in the facts and circumstances of this case. At the outset it must be stated that the Tribunal in its order has numbered that according to the assessee, the companytention of the assessee was that with a view to keep the bankdraft within reasonable limit and with the price object of nursing his investments in the companypany, the assessee had to and was forced and companypelled by circumstances to sell some of the shares and the Tribunal has also numbered that the assessee would number be a trader by companypulsion. The Tribunal had companysidered these arguments. The Tribunal also numbered that the assessee was the Chairman of the Board of Directors. The Tribunal also numbered that ever since its inception, the companypany was expanding its business and making good profits. Its capital had increased and, therefore, right shares were offered to the existing shareholders. The assessee had a substantial holding 1098 of Equity Shares in the companypany. It was therefore, according to the Tribunal, number obligatory on the assessee to acquire right shares. The Tribunal companysidered the acquisition of right shares in the background of the indebtedness of the assessee to the bank and he was having an overdraft account on which he was paying interest. The Tribunal numbered the frequency of the acquisition of the right shares and the sales in large numbers in quick succession, and according to the Tribunal, the motive was to make profit and that all the dealings in shares were part and parcel of a profit making scheme. The Tribunal further numbered that the Appellate Assistant Commissioner, in fact, had found that in some years the income of the assessee was much more than the expenses he had to meet and numberwithstanding that fact, the assessee had sold some shares. According to the Tribunal, the companyrectness of this finding had neither been challenged before the Tribunal number anything established to the companytrary. The Tribunal was of the view that the assessee was under numberobligation to acquire right shares. There was numbernecessity for him to apply for right shares except to make profits. It was far from the companyduct of a prudent and reasonable man like the assessee to expect him to sell away his capital assets to meet the recurring personal expenditure, according to the Tribunal. The frequent acquisition of right shares at par companypled with the fact that even some of the original holdings were sold, was against the submission that the sale was to nurse the investment. According to the Tribunal if the fact of the overdraft by the assessee was borne in mind and if the fact of overdraft is kept in view then it companyld number be said that the assessee had purchased the right shares with a view to what can be ascribed as nursing the investments. Therefore bearing the principles of the different cases which we have set out hereinbefore and companysidering the motive in the light of the transactions and the intention with which the shares were acquired, nature of the shares, the question has to be judged whether there has been trading in shares or in the words of Lord President Clyde, whether there was plunge in the waters of trade, in buying shares or acquisition of shares, see The Balgownie Land Trust Ltd. v. The Commissioner of Inland Renenue, 14 Tax Cases 684 at 691 . 1099 The High Court, in our opinion, made a mistake in observing whether transactions of sale and purchase of shares were trading transactions or whether these were in the nature of investment was a question of law. This is a mixed question of law and fact. The entirety of the said facts have been dealt with both by the Tribunal as well as the High Court. The High Court observed that there was numberhing on record to show as to what extent and what measure, the overdraft account was utilised for acquiring right shares number indeed was anything to show the gain which was likely to result which in fact resulted to the assessee by paying interest on the borrowed fund. But the relevant facts must be companysidered in its proper perspective. It appears that the facts, that the assessee was the Chairman of the Company - effect of the issue of right shares vis-a- vis original shares had number been fully kept in proper perspective by the Tribunal in its evaluation. It further appears that the fact that the assessee was the Chairman of the companypany and in fact that if he did number participate in buying right shares, that would have adverse effect on the value of the shares of the companypany, was also number kept in view by the Tribunal. Consideration of all relevant facts involves appreciation of all the facts in their proper perspective. If that is number done it cannot be said that there has been companysideration of all relevant factors. Tribunal, it appears, fell into error in number taking into companysideration properly and fully- though it numbered, the fact that if the right shares were number subscribed by the assessee, his original shares would depreciate in value, but the assessee was also in need of money - he had an overdraft with Bank and he had to remit money to Denmark for the purchase of a house - and further when right shares were issued had he number subscribed to these, there might have been adverse effect on the market so far as the shares of the companypany were companycerned. In the background of the companyrelation of these factors the action of the assessee was like a prudent investor and number of a plunger in the waters of trade. The dealings in the right shares by the assessee keeping in the background these were right shares and effect of number-subscription the value of the original shares were number fully appreciated by the Tribunal. And as such the attitude of a person entitled to right shares for judging whether he was a dealer and investor was number viewed in proper dimension but merely numbered by the Tribunal resulting in the number companysideration of a vital factor leading to an erroneous 1100 inference. The Tribunal in this case has undoubtely numbered the assessees companytention of nursing the investment. The Tribunal, however, has number companysidered in its order the actual position as to how the nursing of the investment was necessary. Tribunal thus erred. In that view of the matter the High Court was justified in interfering with the companyclusion reached by the Tribunal. There is numberreason to interfere with the order of High Court. In the premises these appeals must fail and are dismissed with companyts. In the view we have taken the Special Leave Petition Nos.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 1793- 1798 NT of 1974. From the Judgment and order dated 5th April 1974 of the Orissa High Court in S.J.C. Nos. 211 to 216 of 1971. C. Manchanda, Ms. A. Subhashini, K.C. Dua and K.P. Bhatnagar for the Appellant. Devi Pal, J.B. Dadachanji, K.K. Patnaik, Sukummaran, M. Seal, A.K. Verma, J. Peres and D.N. Mishra for the Respondent. N. Gupta and P.N. Mishra for official Liquidator. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Whether, question of law referable to the High Court, arises out of the order of the Appellate Income-tax Tribunal in this case, is, the question that arises in these appeals by special leave from the decision of the Orissa High Court. Several questions of law were sought for from the Tribunal to be referred out of the decision of the Tribunal under section 256 1 of Income-tax Act, 1961 hereinafter called the Act . The Tribunal re- fused to refer these questions. An application was made under section 256 2 of the Act asking for reference on those questions from the High Court. The High Court rejected the applications and refused to call for a statement of case on those questions. This appeal by special leave is from the said decision of the High Court. It is number necessary to refer to all the questions that were pressed before the High Court because all these questions were number pressed before this Court. The following questions were, however, canvassed before this Court Whether, the findings of the Appellate Tribunal, are vitiated in law by reason of it having ignored relevant and admissible evidence and having relied on incorrect facts and mis- statement of facts? Whether, on the facts and in the circumstances of the case, the companyclusion of the Tribunal that the Kalinga Foundation Trust came into existence in 1947 and that it was distinct from the Trust created by the assessee in 1949 logically followed from the materials on record or it was perverse in the sense that numberreasonable man companyld companye to it on the said materials? Whether, on the facts and in the circumstances of the case, in arriving at the finding that the Kalinga Foundation Trust had acquired property from donations from the public, the Tribunal erred in law in number giving due companysideration to the several matters relevant for determination of the points which had been companysidered by the Income-tax officer in the assessment order? Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income from dividend shown in the name of the Kalinga Foundation Trust, the interest on the loans advanced in the name of the Kalinga Foundation Trust and all investments, remittance, receipts and actual payments in the name of Kalinga Foundation Trust did number belong to the assessee and should therefore be deleted from the assessment of the assessee? Whether, on the facts and in the circumstances of the case, there was any evidence in support of the Tribunals findings that the assessee had companylected donation from the public for the Kalinga Foundation Trust? If the answer to question 5 rearranged by us be in the negative, then whether the Tribunal was right in holding that the amounts donated by the assessee to the said Trust were satisfactorily explained and accordingly they were number to be included in the assessment of the assessee? Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the revenue authorities were bound to accept the decision of the Supreme Court in S.P. Jain v. Kalinga Tubes Ltd. as to the ownership of 39,000 shares of Kalinga Tubes, Ltd. in spite of the materials companylected by the Income-tax Officer subsequent to the delivery of the judgment in the said case? If the answer to question 7 rearranged by us be in the negative then whether the finding of the Tribunal that the persons in whose names the said shares stood were number the benamidar of the assessee was perverse and was arrived at without due companysideration of the material companysidered by the Income-tax Officer in detail on the point? The companytroversy in these appeals related to the various additions made by the revenue to the total income of the assessee relating to the assessment years 1962-63, 1963-64 and 1964-65. The assessee claimed in his assessment, deduction in respect of payments of interest on loans taken from Kalinga Foundation Trust and others and certain dividend transactions relating to the shares of Kalinga Tubes Ltd. While examining the evidence in support of these claims, the Income-tax Officer issued a detailed letter dated 17th October 1965 to the assessee informing him about the evidence available with the revenue against him and requesting him, inter alia, to produce evidence and prove that the cash credits appearing in his account in the name of Kalinga Foundation Trust were genuine and ii that 39,000 shares of Kalinga Tubes Ltd. standing in the names of K. Mall, Sm. Swaran Oberoi, Shri K.C. Dalai, Shri G.C. Patnaik, etc. were number really his own investment. After examining the assessees evidence and on the basis of documentary evidence and government records and on the basis of local enquiries made, the Income-tax Officer had companye to the companyclusion that numbertrust in the name of Kalinga Foundation Trust really existed and even if it existed, it had numberfunds of its own and that the name Kalinga Foundations Trust was used by the assessee as a camouflage to put through his unaccounted money. Accordingly, all cash credits appearing in the books of accounts of the assessee himself or in the books of other companycerns or persons or remittances of actual payments in the name of trust were treated by the Income-tax Officer as moneys companying out of the undisclosed sources of the assessee and accordingly assessed the same as his income from undiscolsed sources. All interest and dividend received in the name of the trust were included by the Income-tax Officer in the assessment of the assessee as his own income. The Income-tax Officer was also of the opinion that the moneys advanced in the name of the trust to several persons in companynection with the acquisition of 39,000 shares of Kalinga Tubes Ltd. which were issued in 1958, actually belonged to the assessee. Accordingly, the dividend of the said shares was treated as the income of the assessee and the expenses incurred in that companynection were allowed as deduction. The persons in whose names the 39,000 shares of Kalinga Tubes Ltd. stood, were treated by the Income-tax Officer as benamindars of the assessee. Thus, in respect of the assessment years under companysideration several items were included as income in the hands of the assessee on this score. It is number necessary to set out the items. Against the orders of assessment, appeals were filed by the assessee before the Appellate Assistant Commissioner. As grievance was made before the Appellate Assistant Commisioner that there was violation of due opportunity being given to the assessee, the Appellate Assistant Commissioner disposed of the appeals by setting aside the assessments for the years under companysideration and remanded the matters back, to Income-tax Officer to frame issues and give due opportunity to the assessee to cross-examine the witnesses in the light of the observations made in the order. Against the order of the Appellate Assistant Commissioner, the appeals were filed. A prayer was made that the appeals should be remanded back to the Appellate Assistant Commissioner. The Tribunal, however, disposed of the appeals on the relevant materials on record. It was companytended on behalf of the revenue before the Tribunal that the Kalinga Foundation Trust had companye into existence as alleged in 1947 at a public meeting held at Killa Maidan, Cuttack and it was registered long thereafter on 28 November 1959. It was stated that the trust was genuine and it had sufficient funds obtained by donations and companysequently was in a position to lend the amounts found credited in the assessees books and in the books of other companycerns. The accounting year followed by the said trust was the calendar year whereas the accounting year followed by the assessee was the financial year ending on 31st March 1962, 31st March 1963 and 31st March 1964, respectively for the three years in question. One of the points urged on behalf of the assessee was that if it was intended to use the trust as a camouflage, the accounting year of the Trust would have been the same as that of the assessee. It was further companytended that the Minute Book and books of accounts were maintained by the Trust and that the Trust had its own written companystitution by way of Memorandum and Articles of Association and Rules. The funds of the Trust were lying in trust with the Maharaja of Sonepur as he was the honorary Treasurer of the Trust. It was further pointed out on behalf of the assessee that the eminent persons were members of the Trust. On behalf of the revenue, it was, however, companytended before the Tribunal that on the basis of the facts emerging on an examination of assessees evidence and facts found on the basis of documentary evidence, the Appellate Assistant Commissioner should have companyfirmed the assessments. It was further stated by the revenue that local inquiries and oral testimony had been used by the Income-tax Officer to support the companyclusions already arrived at on an examination of assessees own evidence and companyroborated by documentary evidence and therefore the Appellate Assistant Commissioner should number have set aside the assessment on the ground that the persons who were examined by the Income-tax Officer should have been allowed to be cross-examined by the assessee. It was submitted that the gist of the enquiries had been companymunicated to the assessee to enable him to meet the case against him and it was for the assessee to produce before the Income-tax Officer the persons who had companylected the funds for the Kalinga Foundation Trust as the Income-tax Officer was number bound by the technical rules of evidence. So far as the acquisition of 39,000 shares of Kalinga Tubes Ltd. was companycerned, it was submitted by the revenue that it had companylected evidence to prove that these shares were purchased by the assessee benami in the names of Shri K. Mall, Shri G.C. Patnaik, etc. It was pointed out by the revenue that the assessee had created a private registered Trust in 1949 out of his own properties having the same name as Kalinga Foundation Trust and that a reference to Kalinga Foundation Trust in some of the documents produced by the assessee was to this private trust and number to any public trust of the same name alleged to have been created at a public function. After companysidering the materials, the Tribunal held that the Kalinga Foundation Trust came into existence in 1947 and companytinued after its registration in 1959 under the same name and style and the fund of the Trust was built up by companylection of donation from the public at large. It may be pointed out and we are of the opinion that this is the companye of the companytroversy in this case, i.e., whether there was numberevi- dence substantial or reliable produced to indicate who were the persons who had companytributed to the Trust, how much they had companytributed to the Trust, the identity and the credit- worthiness of the doners to the said trust. It was companytended on behalf of the assessee that the said trust which came into existence was a separate and distinct entity and the assessee was only holding an executive post in that trust. It was held by the Tribunal that seven persons who were designed by the Income-tax Officer as benamidars of the assessee for the purchase of the shares of M s Kalinga Tubes Ltd. were number benamidars and the money required for the purchase of these shares had been raised by themselves. The Tribunal held that the investments made by the Trust in the assessees group of industries or with the assessee were from its own resources and funds and such investments were guided by business expediency and prudence. The finding of the Tribunal is that the Trust was companyprised of persons of public repute and the companytrol and management of the trust styled as Kalinga Foundation Trust were under the effective companytrol of the Board of Trustees companyprised of persons of public reputation. The Tribunal accordingly held that the income from interest, dividend, or any other usufruct arising out of the investments made by the trust in the various companycerns and the investments of the Trust which were included in the assessments of the assessee in the years under reference should be excluded as appertaining to a separate and distinct entity and therefore directed the Income-tax Officer to exclude these amounts from the assessments of the assessee in all these three years. The revenue did number accept the findings of the Tribunal as companyrect as mentioned hereinbefore and sought reference to the High Court on several questions. Before the questions involved in these appeals are companysidered, it is necessary to bear in mind the scope of the jurisdiction of the High Court in directing reference on question of law where the decision rests primarily on appreciation of facts. This question has from time to time troubled the companyrts-both the High Courts and this Court and several decisions have laid down the principles guiding such a situation. Though number exhaustive, these may be referred to as illustrations. In Sree Meenakshi Mills Limited v. Commissioner of Income-Tax Madras, 31 I.T.R. 28, Venkatarama Ayyar, J. speaking for this Court said that findings on question of pure facts arrived at by the tribunal were number to be disturbed by the High Court on a reference unless it appeared that there was numberevidence before the Tribunal upon which they, as reasonable men, companyld companye to the companyclusion to which they had companye and this was so, even though the High Court would on the evidence have companye to a companyclusion entirely different from that of the Tribunal. The Court laid down the following propositions a such a finding can be reviewed only on the ground that there was numberevidence to support it or that it was perverse. b When a companyclusion had been reached on an appreciation of a number of facts established by the evidence, whether that was sound or number must be determined, number by companysidering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting as a whole. c Where an ultimate finding on an issue was an inference to be drawn from the facts, on the application of any principles of law, that would be a mixed question of law and fact, and the inference from the facts found would in such a case, be a question of law. But where the final determination of the issue equally with the finding or ascertainment of the basic facts does number involve the application of any principle of law, an inference from the facts cannot be regarded as one of law. The proposition that an inference from facts was one of law was therefore companyrect in its application to mixed questions of law and fact, but numberto pure question of fact. In the case of pure questions of fact an inference from the facts is as much a question of fact as the appreciation of the facts. Ayyar, J. numbered that the observations companytained in some judgments of the English Courts that what inference was to be drawn from the proved facts was question of law referred to this distinction. The position that emerges from the decided cases was that When the point for determination was a pure question of law, such as companystruction of a statute or document of title, the decision of the Tribunal was open to reference to the Court. When the point for determination was a mixed question of law and fact, while the finding of the Tribunal on the facts found was final, its decision as to the legal effect of those findings was a question of law which companyld be reviewed by the Court. A finding on a question of fact was open to attack under reference under the relevant Act as erroneous in law when there was numberevidence to support it or if it was perverse. When the finding was one of fact, the fact that it is itself an inference from other basic facts will number alter its character as one of fect. In Gouri Prasad Bagaria and Others v. Commissioner of Income-Tax, West Bengal, 42 I.T.R. 112, this Court held that when the assessees statement was believed in a particular case and the finding of the Tribunal was based on that, then there was obviously material on which the finding of the Tribunal companyld be based and to seek for other material was tantamount to saying that a statement made by an assessee was number material on which a finding companyld be given. The Tribunal having believed the assessees statement, that was an end of the matter in so far as that fact was companycerned, and if the finding was based upon a statement which was good material on which it companyld be based, numberquestion of law really arose. In I.C.I. India Private Ltd. v. Commissioner of Income-tax, West Bengal III, 83 I.T.R. 710, this Court observed that the jurisdiction in the matter of reference companyld be exercised i when the point for determination was a pure question of law such as companystruction of a statute of document of title ii when the point for determination was a mixed question of law and fact. While, however, the finding on facts was final, its decision as to the legal effect of those findings was a question of law. A finding on a question of fact was open to attack as erroneous in law when there was numberevidence to support it or if it was perverse. When, however, the finding was one of fact, the fact that it was an inference from other basic facts would number alter its character as one of fact. In Commissioner of Income-tax Central , Calcutta v. Daulat Ram Rawatmull, 87 I.T.R. 349, this Court held that the onus of proving that the apparent was number the real was on the party who claimed it to be so. It is number necessary to discuss other details of the facts involved in that case. It is sufficient to numbere, however, as was observed by this Court that there should be some direct nexus between the companyclusion of facts arrived at by the authority companycerned and the primary facts upon which that companyclusion was based. The use of extraneous and irelevant material in arriving at that companyclusion would vitiate the companyclusion of fact because it is difficult to predicate as to what extent the extraneous and irrelevant material had influenced the authority in arriving at the companyclusion of fact. Findings on questions of pure fact arrived at by the Tribunal were number to be disturbed by the High Court on a reference unless it appears that there was numberevidence before the Tribunal upon which they, as reasonable men, companyld companye to the companyclusion to which they have companye and this was so even though the High Court would on the evidence have companye to a companyclusion entirely different from that of the Tribunal. In other words, such a finding companyld be reviewed only on the ground that there was numberevidence to support it or that it was perverse. Further, when a companyclusion had been reached on an appreciation of a number of facts, whether that was sound or number must be determined, number by companysidering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting as a whole. When a companyrt of fact acted on a material partly relevant and partly irrelevant, it was impossible, this Court observed, to say to what extent the mind of the companyrt was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arose. Likewise, if the companyrt of fact based its decision partly on companyjecture, surmises and suspicions and partly on evidence, in such a situation an issue of law arose. In Commissioner of Income-tax, Bihar and Orissa v. S.P. Jain, 87 I.T.R. 370, this Court numbered that the questions referred to the High Court did number challenge the validity of the findings in that case given by the Tribunal, as the Tribunal had failed to take into account the relevant material on record in arriving at its finding and had further acted on inadmissible evidence and misread the evidence and based its companyclusion on companyjectures and surmises, the companyrt companyld ignore the findings of the Tribunal and re-examine the issues arising for decision on the basis of the material on record. This Court further reiterated that the High Court and this Court had always the jurisdiction to interfere with the findings of the Appellate Tribunal if it appeared that either the Tribunal had mis- understood the statutory language, because the proper companystruction of the statutory language was a matter of law, or it had arrived at a finding based on numberevidence, or where the finding was inconsistent with the evidence or companytradictory of it, or it had acted on material partly relevant and partly irrelevant or where the Tribunal drew upon its own imagination and imported facts and circumstances number apparent from the record or based its companyclusions on mere companyjectures or surmises or where numberperson judicially acting and properly instructed as to the relevant law companyld have companye to the determination reached. In all such cases the findings arrived at were vitiated. This Court further observed that Any crystallization of the view of this Court and its reluctance to interfere with the findings of the fact should number make the Tribunals or the Income-tax authorities smug in the belief that as the companyrts do number interfere with the findings which form the bed-rock upon which the law will be based they can act on that assumption in findings facts or by their mere ipse dixit that they are findings of fact wish it to be so assumed irrespective of whether they are sustainable in law or on the materials on record. Now in the instant case, as mentioned hereinbefore, the first three questions challenge the genuineness of the donations alleged to have been companytributed by the Kalinga Foundation Trust alleged to have companye into existence as separate organisation at a public meeting in 1947 and the donations companylected therefrom and the next question, i.e., question No. 4 challenges the finding that the dividend shown in the name of Kalinga Foundation Trust and the interest and loans in the name of Kalinga Foundation Trust did number belong to the assessee. The basic question is a next question-whether the assessee had companylected donations from the public. If the answer to that question is that it was from the public, the second aspect is whether the revenue is bound to accept the decision of this Court in S.P. Jain as to ownership of 39,000 shares, in view of the materials companylected by the Income-tax Officer subsequent to the delivery of the judgment in this case. Apparently the identity of the doners to the Trust has number been established and a large amount of materials have been companylected subsequent to the decisions of this case in P. Jains case which had been adverted to be the Income- Tax Officer and to which our attention was drawn. These did number appear to have received companysideration by the Tribunal. We were taken through the evidence on record exhaustively about the foundation of the Trust. We were taken through the evidence as to who were present at the time of the inauguration of the Trust and whose evidence were there, there was a public meeting and whether this Trust was separate from the other Trust or number, whether particular persons were present or number they are all set out in the orders of the Tribunal as well as the Income-tax Officer. It is number necessary at this stage for the purpose of disposing of these appeals to exhaustively discuss this. The revenue has pointed out to the Tribunal as appears in para 22 at page 159 of the Tribunals order that there was omission of adjustment of entries. The Tribunal has held that the Income-tax Officer and companypletely ignored the fact that the assessee has number made this companytribution plus Rs.1,29,331 which was one point at issue, out of his own funds but had deposited only the amount which he had companylected from various persons and hence the question of showing this amount in the books of the assessee did number arise. This is however begging the question was there any material that the companylectors had companylected these amounts from various persons, if so, who were those persons and if so, whether they were capable of making these companytributions? This, in our opinion, is the companye question. The significant fact has to be borne in mind that the Trust kept the money with the Maharaja of Sonepur without earning any interest. Apart from any question whether there was any scope of any application of section 20 of the Trust Act or number, such a companyduct was highly improbable according to the revenue. The explanation of the assessee about the nature and source of various cash credits was that these were loans from Kalinga Foundation Trust. It was claimed that there was a society of the name of Kalinga Foundation Trust. This society, it was maintained, had received large amounts as donations but for over a decade, these donations were lying in cash and were number invested anywhere. These were number even deposited in any bank. It was explained that it was only from 1958 that the society had started investing its funds with Shri Patnaik and the companycerns with which he was associated. This, it was urged by the revenue, was prima facie unacceptable for inter alia, the following reasons Funds exceeding a crore of rupees were claimed invariably to have been received in cash. These were also claimed to have remained uninvested and the cash was said to have been lying idle all these years. There was numbertangible evidence of the existence of any part of these funds prior to 1958. Although the Society is claimed to have been in existence from 1947, it did number apply for exemption under the Income-tax Act. Although the funds were said to have been companylected all over Orissa yet there was numberevidence of the money being brought from different places from Orissa to Cuttack. There was numberevidence of any receipt issued to the alleged donors. No lists of donors were maintained or supplied. These important factors were pointed out to the assessee and numberexplanation was offered by the assessee. The assessee had sought to give an appearance of truth to the explanation offered and relied on certain letters. But there appears to be numberevidence as to who were the persons from whom the money was companylected, how was the money received and how was the money invested? This is companyjunction with other factors, in our opinion, raises a question whether the Tribunal had acted without material evidence. It is number necessary number it is proper at this stage for this Court to express any opinion whether on these facts what companyclusion should properly be drawn but the basic question, in our opinion, on the first aspect of the matter as to whether the donations alleged were given by the assessee were the moneys raised by the Trust as donations from various people or number remains. That question, in our opinion, should be companysidered in its proper perspective but does number seem to have been done. This is the most material portion and in number appreciating the material portion and discussing the evidence in respect of the same, in our opinion, there was number-consideration of a relevant factor on a factual aspect and on this the question is whether the Tribunals decision was perverse in the sense that numberman instructed properly at law companyld have acted as the Tribunal did, and secondly whether there was ignoring of all the materials and relevant facts in companysidering this aspect, do arise. So far as the first aspect of the question is companycerned, it is true that names of some companylectors of money were given and some particulars were given but the persons from whom donations were companylected, their particulars were number supplied number examined number were they produced to prove the genuineness of their donations, their capacity to make the donations. So the question remains whose money was donated by whom? There was evidence on record as to who has companylected it to a certain extent, but numberevidence on the other aspect. In our opinion, ignoring of that fact is a vital fact which influences the decision and a companyclusion and must be judged in its proper perspective. Therefore, the questions which arise on this aspect are questions of law, on the principles enunciated by this Court in the decisions numbered hereinbefore. The second aspect is about 39,000 shares of Kalinga Tubes Ltd.-whether these belong to the assessee. The Revenues companytention was that Kalinga Tubes Ltd. was companytrolled by Shri B. Patnaik and Shri Loganathan and in 1954, the companypany was in need of capital and those two persons came to be introduced to Shri P. Jain. Early in 1956, the three groups companysidered the desirability of extending the business. This was companyverted into a public limited companypany. In 1956 when the companypany was still a private limited companypany, a request was made to the Controller of Capital Issues for raising the capital of the companypany and at a meeting held on 29th March 1958, resolution was moved and the move of Jain group was defeated. To appreciate this companytention, the assessee asserted that Messrs. Kalinga Tubes Ltd. needed funds for capital expansion. The companypany was companyverted into a public limited companypany and Articles of Association were suitably amended. The companypany also made an application to the Controller of Capital Issues for the sanction of issue of further shares to the extent of Rs.39,00,000 at the General Meeting of the shareholders. The companypany decided to issue the new shares to the members of the public. Regarding the ownership of 39,000 shares in Kalinga Tubes Ltd.issued in 1958, this involved determination of two issues a whether the ostensible holders of these 39,000 shares were real owners or benamidars and if they were benamidars, who were the real holders? The companypany was incorporated as a private limited companypany in 1950. From 1950 to 1954, it was companytrolled by Shri Biju Patnaik and Shri Loganathan. In 1954, the companypany was in need of capital and these two persons came to be introduced to Shri S.P. Jain. There was some agreement between Shri Jain and the existing shareholders. The Memorandum of Agreement was drawn up in July, 1954. According to this agreement, Patnaik, Loganathan and Jain group were to be equal shareholders of the companypany. Early in 1956, the three groups companysidered the desirability of extending the business and obtaining loan from Industrial Finance Corporation. The Industrial Finance Corporation did number give loan to private limited companypanies and, therefore, the companypany was companyverted into a public limited companypany in January 1957. In September 1956, when the companypany was still a private companypany, a request was made to the Controller of Capital Issues for raising the capital of the companypany. It is further stated that at a meeting held on 29th March 1958, Shrimati Gyan Patnaik, wife of Shri B. Patnaik moved a resolution providing that 39,000 shares should number be offered or allotted to the existing shareholders or to the public. Shri S.L. Aggarwal of the Jain group, however, moved a resolution which provided that the 39,000 shares be offered to the existing shareholders of the companypany in proportion to their shareholdings. The resolution further provided that if the offer was number accepted by the existing shareholders within 15 days, the offer would be deemed to have been declined. It appears that on 18th April 1958, Shri S.P. Jain filed a suit. The suit was decided against the Jain group. But Shri S.P. Jain filed a companyplaint under sections 397, 398, 402 and 403 of the Indian Companies Act. An appeal was preferred from single judges judgment to the division bench. There was appeal to this Court. There is an observation in the judgment of Burman, J. of the Orissa High Court to the following effect In the present case, it is clear that the allotments, of the said 39,000 shares to the seven persons were number in interest of the Company, because records, including the balance sheets, show that even by 1960 share moneys Rs.39 lakhs were number realised from the said allottees. Although, it was given out, by those in the management of the Company, that the Company was in urgent need of funds, the said allotments of 39,000 new shares did number however bring immediate funds to the companypany. The Income-tax Officer was of the view that the facts suggested that the seven persons were benamidars of Shri Patnaik, whether they are so or number and what is the effect of the decision of this Court on this point is another question. But these facts were number properly companysidered by the Tribunal to companye to the companyclusion as to whether 39,000 shares of Kalinga Tubes Ltd. belong to the assessee and number to the shareholders named. The details of this are in Annexure B to the Income - tax Officers order. The Income-tax officer has categorically found that Shri Mall was number assessed to Income-tax as an individual. He was assessed as a member of the joint family on an income of Rs.15,000 to Rs.17,000. The total wealth of the family was about half a lakh. It was number possible to purchase shares of the face value of Rs.9 lakhs on his own. The shares from 1959 to 1964 had gradually appreciated in value. In other words even after deducting the loan incurred by acquiring these shares, the net worth of these shares during 1959 to 1967 was Rs.21/2 lakhs to Rs.71/2 lakhs. Shri Mall never filed his wealth-tax return which clearly showed that numberhere shares were treated as his own. These and other factors taken in companyjunction led the Income-tax Officer to the companyclusion that 39,000 shares belonged to Shri B. Patnaik. In that view of the matter the materials gathered by revenue subsequent to the decision in S.P. Jains case on the aforesaid lines should have been appreciated and companysidered by the Tribunal. In our opinion therefore on the principles enunciated by this Court in several decisions mentioned hereinbefore, these questions as questions of law mentioned above do arise. In our opinion the High Court, in the facts and circumstances of the case, was in error in number directing a reference on the abovenamed questions to the High Court under section 256 2 of the Act. The judgment and order of the High Court are, therefore, set aside. We direct the Tribunal to send a statement of case for the three years involved within six months of the date of receipt of this order on the questions mentioned hereinbefore to the High Court at Cuttack. Let the records be sent to the Tribunal immediately through the High Court. As the matter is very old, the reference when made should be disposed of as quickly as possible.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 278 of 1986. From the Judgment and Order dated 31st December, 1985 of the Andhra Pradesh High Court in Crl. Misc. Petition No. 4049 of 1985. Madhusudan Rao and A. Subba Rao for the Appellants. Ram Reddy, T.V.S.N. Chari and Ms. Vrinda Grover for the Respondent. The Judgment of the Court was delivered by 1134 NATARAJAN, J. This appeal by special leave against an order of a learned Single Judge of the Andhra Pradesh High Court in a petition filed under Section 439 2 of the Code of Criminal Procedure hereinafter referred to as the Code calls for a critical examination of the scope and effect of proviso a to Section 167 2 of the Code. Several High Courts have rendered decisions companystruing differently the terms of the proviso but a need for the examination of the terms of the proviso by this Court had number arisen till number. The circumstances which form the prefactory for this appeal can be summarised as under. The hamlet of Madigawada in Village Karamchedu in Andhra Pradesh was the scene of a horrendous riot on the morning of July 17, 1985. The riot culminated in a toll of human lives and huge destruction of property. Five persons were left dead, twenty others were victims of injuries of varying degrees, properties were looted and hutments were damaged or destroyed. In companynection with the macabre events the police authorities arrested 94 persons including the appellants herein and had them remanded to custody. The appellants were arrested in the forenoon of July 19, 1985 and were produced before the IIIrd Additional Munsif Magistrate, Chirala on the next day, i.e. July 20, 1985. They were initially remanded to judicial custody for a period of 15 days and thereafter the remand was extended from time to time till October 18, 1985. The investigating officer filed a charge-sheet in the case at 10.30 A.M. on October 17, 1985, that being the 90th day of remand. Even so, the appellants filed a petition before the Magistrate and sought enlargement on bail in terms of proviso a to Section 167 2 . The learned Magistrate, overruling the objection of the State, granted bail to the appellants on the ground that the period of 90 days stipulated in the proviso had to be reckoned from the date of arrest and number from the date of remand and so companyputed the charge-sheet had number been filed on the 90th day but on the 91st day and hence the accused were entitled to bail. The State challenged the order of bail before the High Court by means of a petition under Section 439 2 of the Code. A learned Single Judge of the High Court allowed the petition holding that the period of 1135 90 days envisaged by the proviso to Section 167 2 has to be companyputed only from the date of remand and, therefore, cancelled the bail and directed the Magistrate to issue warrants of arrest for the appellants. It is the companyrectness of the order of the learned Judge which is challenged in this appeal. Mr. Madhusudan Rao, learned companynsel for the appellants, strenuously companytended that the liberty of the citizen is the paramount factor for companysideration while companystruing the terms of proviso a of Section 167 2 and as such the period of 90 days, in the case of grave offences, and the period of 60 days, in the case of other offences set out as outer limits for detention of accused persons should be companyputed from the very day the accused was arrested and taken into custody by a police officer and number from the day he was produced before the Magistrate and remanded to custody. In fact Mr. Rao went so far as to say, placing reliance on a decision rendered in Fakira Naik v. State of Orissa, 1983 Crl. L.J. 1336 that even the detention during the fraction of a day should also be companynted as detention for a day since a calendar day as a unit of time is the interval between one midnight and another. In support of his companytention Mr. Rao placed reliance on some decisions where the time limits set out in the proviso have been held to run from the date of arrest itself. Mr. Ram Reddy, learned companynsel for the State of Andhra Pradesh, advanced arguments to the companytrary and submitted that the period of detention companytemplated under the proviso is exclusively referable to the detentions ordered by a Magistrate and there is numberscope for tagging on to this period any anterior period of custody by a police officer, who is permitted under Section 57 of the Code to detain in custody a person arrested without warrant for a maximum period of 24 hours. Alternately, it was companytended that a significant change in the terms of the proviso has been made by the Legislature under Amendment Act 45 of 1978 and by reason of that change the periods of 90 days/60 days prescribed under the proviso are to be companyputed solely within the framework of the proviso and number with reference to any other provision in the Code. Besides these submissions the learned companynsel also placed reliance on another set of decisions wherein the calculation 1136 of the total number of days of custody under remand has been made with reference to the date of remand. Before making a scrutiny of the terms of the proviso in question it will be of use to have a glimpse of the historical background of this legislative provision. Originally, the Code provided only a period of 15 days for remand. As the period was too short for investigation in cases of serious nature the police were forced to resort to filing before the Magistrates a preliminary or incomplete report and seek extension of remand under Section 344 of the Old Code. This device was resorted to as an inevitable necessity, even though Section 344 of the Old Code companyld be invoked only after a Magistrate had taken companynizance of an offence which in turn companyld be only after a report under Section 173 had been received and number while the investigation was in progress. The companyrse followed for obtaining orders of remand beyond 15 days very often led to lethargy in the investigation of cases resulting in scores of accused persons languishing in custody for long periods. To remedy the situation the Legislature deemed it fit to put a time limit on the powers of the police to obtain remand while the investigation was in progress after taking care to provide a longer period of remand so that investigations are number affected. Consequently, a time limit of 60 days with a provision for its extension under certain circumstances was fixed by adding proviso a to sub-section 2 of Section 167 of the Code of 1973. In the working of the provision it came to be realised that a ceiling limit of 60 days for companypletion of investigation in all cases including serious cases involving sentence of death, imprisonment for life etc. was hampering full and effective investigation in serious cases and affected the interests of the State. Consequently, certain amendments were effected to the proviso to section 167 2 by means of Act 45 of 1978. By reason of the amendment the ceiling limit for remand period for cases, where the investigation relates to an offence punishable with death, imprisonment for life or imprisonment for a term of number lessthan 10 years was raised to 90 days, while in other cases the earlier limit of 60 days was retained. Apart from this, another significant change made was that instead of the words under this section occurring in the old proviso, the words under this paragraph, were substituted. A third change was the addition of Explanation 1 to the proviso to highlight the 1137 position that the statutory right of bail under clause a of the proviso will stand restricted only to those accused persons who are in a position to furnish bail. Another important change made by the Amendment Act is the provision of Section 2A whereby Executive Magistrates, on whom the powers of a Judicial Magistrate have been companyferred, have also been empowered to order remand for a term number exceeding 7 days in the aggregate, wherever Judicial Magistrates are number available. Our reference to the historical background of the proviso is for two reasons. The first reason is for presenting a perspective of the proviso in its entire companyspectus the second reason is to focus attention on the fact that the proviso has been enacted to number only safeguard the liberty of the citizens but also to safeguard the interests of the State or in other words the public. We feel it necessary to advert to this feature because some of the decisions cited before us have proceeded on the basis that the only factor underlying the legislative provision is the anxiety of the Legislature to safeguard the liberty of the citizen by providing for the restoration of his liberty at the earliest possible moment after the maximum period of custody is over. Besides a reference to the historical background of the proviso and the objective underlying it we must also refer to another numberable feature falling within the field of relevance. The right of bail granted to remand prisoners at the end of 90 days or 60 days as the case may be does number have the effect of rendering the subsequent period of detention ipso facto illegal or unlawful. This is evident from the fact that the right to bail companyferred under the proviso is subject to the companydition that the accused in custody should furnish bail. For clearance of doubts in the matter, Explanation 1 has been expressly provided and the Explanation obligates the accused being detained in custody in spite of the expiry of the prescribed period of 90 days or 60 days as the case may be so long as he does number furnish bail. It will thus be seen that the anxiety of the Legislature to secure to the remand prisoners their release from custody is circumscribed by its companycern in equal measure to safeguard the interests of the State as well. 1138 It is in the light of the companytours set out above we have to examine Section 167 and proviso a to sub-section 2 . The marginal numbere for Section 167 is as under Procedure when investigation cannot be companypleted in twenty-four hours. On a reading of the sub-sections 1 and 2 it may be seen that sub-section 1 is a mandatory provision governing what a police officer should do when a person is arrested and detained in custody and it appears that the investigation cannot be companypleted within the period of 24 hours fixed by Section 57. Sub-section 2 on the other hand pertains to the powers of remand available to a Magistrate and the manner in which such powers should be exercised. The terms of sub-section 1 of Section 167 have to be read in companyjunction with Section 57. Section 57 interdicts a police officer from keeping in custody a person without warrant for a longer period than 24 hours without production before a Magistrate, subject to the exception that the time taken for performing the journey from the place of arrest to the Magistrates Court can be excluded from the prescribed period of 24 hours. Since sub-section 1 provides that if that investigation cannot be companypleted within the period of 24 hours fixed by Section 57 the accused has to be forwarded to the Magistrate along with the entries in the Diary, it follows that a police officer is entitled to keep an arrested person in custody for a maximum period of 24 hours for purposes of investigation. The resultant position is that the initial period of custody of an arrested person till he is produced before a Magistrate is neither referable to number in pursuance of an order of remand passed by a Magistrate. In fact the powers of remand given to a Magistrate become execisable only after an accused is produced before him in terms of sub-section 1 of Section 167. Keeping proviso a out of mind for some time let us look at the wording of sub-section 2 of Section 167. This sub-section empowers the Magistrate before whom an accused is produced for purpose of remand, whether he has jurisdiction or number to try the case, to order the detention of the accused, either in police custody or in judicial custody, for a term number exceeding 15 days in the whole. It was argued by Mr. Rao 1139 that the words in the whole would govern the words for a term number exceeding 15 days and, therefore, the only interpretation that can be made is that the detention period would companymence from the date of arrest itself and number from the date of production of the accused before the Magistrate. Attractive as the companytention may be, we find that it cannot stand the test of scrutiny. In the first place, if the initial order of remand is to be made with reference to the date of arrest then the order will have retrospective companyerage for the period of custody prior to the production of the accused before the Magistrate, i.e. the period of 24 hours custody which a police officer is entitled to have under section 57 besides the time taken for the journey. Such a companystruction will number only be in discord with the terms of Section 57 but will also be at variance with the terms of sub-section 2 itself. The operative words in sub- section 2 viz. authorise the detention of the accused for a term number exceeding 15 days in the whole will have to be read differently in so far as the first order of remand is companycerned so as to read as for a term number exceeding 15 days in the whole from the date of arrest. This would necessitate the adding of more words to the section than what the Legislature has provided. Another anomaly that would occur is that while sub-section 2 empowers the Magistrate to order the detention of an accused in such custody as such Magistrate thinks fit, for a term number exceeding 15 days in the whole the Magistrate will be disentitled to placing an accused in police custody for a full period of 15 days or in judicial custody for a full period of 15 days if the period of custody is to be reckoned from the date of arrest because the period of custody prior to the production of the accused will have to be excluded from the total period of 15 days. Apart from these anomalous features, if an accused were to companytend that he was taken into custody more than 24 hours before his production before the Magistrate and the police officer refutes the statement, the Magistrate will have to indulge in a fact finding inquiry to determine when exactly the accused was arrested and from what point of time the remand period of 15 days is to be reckoned. Such an exercise by a Magistrate ordering remand is number companytemplated or provided for in the Code. It would, therefore, be proper to give the plain meaning of the words occurring in sub-section 1140 2 and holding that a Magistrate is empowered to authorise the detention of an accused produced before him for a full period of 15 days from the date of production of the accused. We may also refer to another provision in the Code, viz.the first proviso to sub-section 2 of section 309 for companystruing the period of 15 days referred to in sub-section 2 of Section 167. Section 309, while prescribing expeditious companyduct of enquiries and trials also provides for adjournments of cases for valid reasons and for remanding the accused if he is in custody. The first proviso restricts the period of remand to 15 days and is worded as under - Provided that numberMagistrate shall remand an accused person to custody under this section for a term exceeding 15 days at a time. As sub-section 2 of Section 167 as well as proviso 1 of sub-section 2 of Section 309 relate to the powers of remand of a Magistrate, though under different situations, the two provisions call for a harmonious reading in so far as the periods of remand are companycerned. It would, therefore, follow that the words 15 days in the whole occurring in sub-section 2 of Section 167 would be tantamount to a period of 15 days at a time but subject to the companydition that if the accused is to be remanded to police custody the remand should be for such period as is companymensurate with the requirements of a case with provision for further extensions for restricted periods, if need be, but in numbercase should the total period of remand to police custody exceed 15 days. Where an accused is placed in police custody for the maximum period of 15 days allowed under law either pursuant to a single order of remand or to more than one order, when the remand is restricted on each occasion to a lesser number of days, further detention of the accused, if warranted, has to be necessarily to judicial custody and number otherwise. The Legislature having provided for an accused being placed under police custody under orders of remand for effective investigation of cases has at the same time taken care to see that the interests of the accused are number jeopardised by his being placed under police custody beyond a total period of 15 days, under any circumstances, irrespective of the gravity of the offence or the serious nature of the case. 1141 Thus in the light of our discussion and companyclusions reached we do number find merit or force in the companytention of the appellants companynsel that the words for a term number exceeding 15 days in the whole occurring in sub-section 2 of Section 167 should be so companystrued as to include also the period of custody of the accused from the time of arrest till the time of production before the Magistrate. A Magistrate can, therefore, authorise the detention of the accused for a maximum period of 15 days from the date of remand and place the accused either in police custody or in judicial custody during the period of 15 days remand. It has, however, to be borne in mind that if an accused is remanded to police custody the maximum period during which he can be placed in police custody is only 15 days. Beyond that period numberMagistrate can authorise the detention of the accused in police custody. Further remands, to fecilitate the investigation, can only be for the detention of the accused in judicial custody. The restriction of the Magistrates powers in this behalf is to be found in the words otherwise than in the custody of the police beyond the period of 15 days in proviso a . Now companying to proviso a itself, the proviso authorises a Magistrate to order further detention of an accused person, otherwise than in police custody which as already stated means that the maximum period under which a Magistrate can place an accused in police custody is only 15 days. A limitation to the powers of further remand is, however, placed by interdicting the Magistrate from authorising the detention of an accused person in custody beyond a total period of 90 days where the offence is punishable with death, imprisonment for life or for a term of number less than 10 years and beyond a total period of 60 days in other cases. The interdiction will, however, operate only in those cases where the accused persons are in a position to furnish bail. The words used in proviso a are numberMagistrate shall authorise the detention of the accused person in custody, under this paragraph, for a total period exceeding i.e. 90 days/60 days. Detention can be authorised by the Magistrate only from the time the order of remand is passed. The earlier period when the accused is in the custody of a police officer in exercise of his powers under Section 57 cannot companystitute 1142 detention pursuant to an authorisation issued by the Magistrate. It, therefore, stands to reason that the total period of 90 days or 60 days can begin to run only from the date of order of remand. Approaching the matter from another angle also we find it necessary to companystrue the proviso in the manner set out above. We have earlier referred to sub-section 2A newly introduced by Act 45 of 1978 to Section 167. This sub- section has been introduced for pragmatic reasons. In order that the production of an accused, arrested under Section 57, before a Magistrate is number delayed on account of the number-availability of a Judicial Magistrate, the Legislature has deemed it necessary to companyfer powers of remand on such of those Executive Magistrates on whom the powers of a Judicial Magistrate have been companyferred. The sub-section states that if an arrested person is produced before an Executive Magistrate for remand the said Magistrate may authorise the detention of the accused for a term number exceeding 7 days in the aggregate. It is further provided that the period of remand ordered by an Executive Magistrate should also be taken into account for companyputing the period specified in paragraph a of the proviso to sub-section 2 . Let us assume a case where a person arrested under Section 57 on the previous day is produced before an Executive Magistrate on the next day, but within the expiry of 24 hours and the remand order is obtained for a period of 7 days. How is the Judicial Magistrate, who is companypetent to make further orders of detention to calculate the period of detention so as to companyform to the requirements of proviso a ? As per sub-section 2A he is obliged to take into companysideration only the period of detention actually undergone by the accused pursuant to the orders of remand passed by the Executive Magistrrate. The earlier period of custody till the producton of the accused before the Executive Magistrate is number directed to be taken into companysideration by sub-section 2A . Such being the case, there cannot be different modes of companyputation of the period of remand depending upon whether the accused person is forwarded to a Judicial Magistrate or an Executive Magistrate for purposes of remand. The intention of the Legislature can also be gathered by companyparing proviso a of sub-section 5 of Section 167. Sub-section 5 of Section 167 is in the following terms 1143 If in any case triable by a Magistrate as a summons case, the investigation is number companycluded within a period of six months from the date on which the accused was arrested, the Magistrate shall make an order stopping further investigation into the offence unless the officer making the investigation beyond the period of six months is necessary. Exphasis supplied The Legislature has companysciously referred to the date of arrest in Section 167 5 but has made numbersuch reference in Section 167 2 or proviso a thereto. If it was the intention of the Legislature that the period of remand of 15 days in the whole envisaged in sub-section 2 or the total period of 90 days/60 days prescribed in proviso a should be calculated from the date of arrest then the Legislature would have expressly said so as it had done under Section 167 5 . Turning number to the alternate argument of Mr. Ram Reddy, the companytention is that even if there is scope for companytending that the total period of detention should be reckoned from the date of arrest there is numberroom at all for any such companytention being raised after the amendment of the proviso by Act 45 of 1978. We have already referred to the fact that the amending Act has substituted the words under this paragraph for the words under this section in proviso a . We have also adverted to Explanation 1 and sub-section 2A which also refer to the period specified in paragraph a . The change of wording in the proviso has to be given its due significance because the Legislature would number have effected the change without any purpose or objective. We must bear in mind that significant changes have been made in Section 167 as well as to the proviso by Act 45 of 1978 such as increasing the period for investigation in grave cases from 60 to 90 days, companyferring of powers of remand on Executive Magistrates in certain situations etc. Therefore, it can be legitimately companytended that the words occurring in proviso a should be companystrued within the frame work of the proviso itself without any reference to Section 167 2 . If such a companystruction is made, it may be seen that the proviso forbids the extension of remands only beyond a total period of 90 days under clause i 1144 and beyond a total period of 60 days under clause ii . Thus if proviso a is treated as a separate paragraph it necessarily follows that the period of 90 days or 60 days as the case may be, will companymence running only from the date of remand and number from any anterior date in spite of the fact that the accused may have been taken into custody earlier by a police officer and deprived of his liberty. Thus in any view of the matter i.e. companystruing proviso a either in companyjunction with sub-section 2 of Section 167 or as an independent paragraph, we find that the total period of 90 days under clause i and the total period of 60 days under clause ii has to be calculated only from the date of remand and number from the date of arrest. We may number companysider the decisions cited before us by the learned companynsel for the appellants and the respondent. The judgments relied upon by Mr. Rao in support of his companytentions are the following Mohd. Shafi Anr. v. The State, 1975 Crl. L.J. 1309, State of Rajasthan v. Bhanwaru Khan Ors., 1975 Crl. L.J. 1981, Khinvdan v. The State of Rajasthan, 1975 Crl. L.J. 1984, Prem Raj Anr. State of Rajasthan, 1976 Crl. L.J. 455, Gyanu Madhu Jamkhandi Ors. v. The State of Karnataka, 1977 Crl. L.J. 632, State of Haryana v. Mehal Singh Anr., FB 1978 Crl. L.J. 1810, Fakira Naik Ors. v. State of Orissa, 1983 Crl. L.J. 1336. Though in all these decisions there are expressions to the effect that for companyputing the total period of detention prescribed in proviso a to Section 167 2 the period will start running from the date of arrest itself, we find that excepting in Fakira Naiks case supra the question as to how the total period of detention should be companyputed had number directly arisen for companysideration. In fact except in the last mentioned case there is numberdiscussion about this question. The companytroversies in all those cases pertained to other matters. In Shaifs case No.2 the matter for companysideration was whether when an application for bail was made under proviso 1145 a to Section 167 2 the Court can reject the application on the ground it was number a fit case for grant of bail under Section 439 of the Code. In Bhanwaru Khans Case No.3 the matter for decision was whether proviso a to Section 167 2 companytained a mandatory provision or number. In Khinvdans case No.4 the issue for companysideration was whether an accused person entitled to bail under proviso a can be validly kept in detention by an order of remand made under Section 309 2 of the Code. In Gyanus Case No.6 what fell for companysideration was whether after charge-sheet had been filed on 6.9.76 the accused can be kept in custody pursuant to an earlier order of remand which expired on 10.9.76. In Mehal Singhs case No.7 the Full Bench was called upon to decide whether a police report in terms of Section 173 2 of the Code will companystitute a valid report only if it is accompanied by such documents and statements as are referred to in Section 173 5 . It was only in Fakira Naiks case No.8 a debate similar to the one before us was raised for companysideration. A Division Bench of the Orissa High Court has taken the view that the intention of the Legislature in enacting the proviso was to prevent accused persons suffering the deprivation of liberty on account of dilatory investigation and hence the period of detention would start running from the date of arrest itself. In reaching such a companyclusion the Court has taken the view that the decision of this Court in Hussainara Khatoon Ors. v. Home Secretary, State of Bihar, 1979 Crl. L.J. 1052, Patna companytains an obiter that on the expiry of 90 days or 60 days as the case may be from the date of arrest the accused is entitled to be released on bail under proviso a of Section 167 2 . We will be presently showing that this Court has number made such a pronouncement by way of an obiter. Apart from that we find that there has been numbercritical analysis in the judgment of the several relevant provisions which have been examined by us in this case. We, therefore, find that the decisions relied on by Mr. Rao cannot advance the case of the appellants in any manner. In view of the findings rendered by us the decisions of the various High Courts will stand disapproved. We will number deal with the other set of cases cited by Mr. Ram Reddy to fortify his arguments. These decisions are to be found in 1146 Rajoo alias Raj Kishore Singh Anr. v. State of Bihar Anr., 1976 55 I.L.R. Patna 1021, Raj Kumar v. The State of Punjab, A.I.R. 1979 Punjab Haryana 80, Batna Ram v. State of Himachal Pradesh, 1980 Crl. L.J. 748, Jagdish Ors. v. State of Madhya Pradesh, 1984 Crl. L.J. 79, N. Sureya Reddy Anr. v. State of Orissa, 1985 Crl. L.J. 939. In these decisions, even though a companytrary view has been taken we find the companyclusions are number based on the reasoning taken by us. In Rajoo alias Raj Kishore Singhs case No. 10 it has been held that the words used in the proviso are a total period number exceeding 60 days and number within 60 days and hence the Legislature has intended to provide a clear 60 days for purposes of investigation. In Raj Kumars case No.11 it has been held that the day of arrest is number to be included for calculating the total period but there is numberdiscussion. In Batna Rams case No.12 it has been laid down that Section 57 should be given full effect to and as such a Magistrate is entitled to grant police custody for a total period of 15 days without taking into companysideration the period of custody from the time of arrest till the time of production before a Magistrate. In Jagdishs case No. 13 it has been held that the date of arrest is to be excluded in companyputing the total period of detention by application of Section 9 of the General Clauses Act and by bearing in mind Section 12 of the limitation Act. In Sureya Reddys case No 14 the view taken is that Section 10 of the General Clauses Act would be attracted for interpreting the proviso if the last day happens to be a Sunday or holiday and even otherwise the principle enunciated therein should be invoked on companysiderations of justice and expediency. In that case the 90th day from the date of arrest happened to be a Sunday and hence the Court was of the view that Section 10 of the General Clauses Act would be attracted. Some of the decisions cited on either side have been rendered prior to the amendment of proviso a by Act 45 of 1978 and some have been rendered after the amendment. Mr. Ram Reddy sought to make a distinction of the earlier decisions by companytending that they ceased to have relevance because of the amendment to proviso a making it an independent paragraph 1147 all by itself. Since we have held that in whichever way proviso a is companystrued i.e. with reference to Section 167 2 or without reference to it the periods of 90 days and 60 days prescribed by the Legislature can be reckoned only from the date of remand the distinction sought to be made between the decisions rendered prior to Amendment Act 45 of 1978 and subsequent to it does number have much of significance. As the terms of proviso a with reference to the total periods of detention can be interpreted on the plain language of the proviso itself we do number think it is necessary to invoke the provisions of the General Clauses Act or seek guidance from the Limitation Act to companystrue the terms of the proviso. We are lastly left with three decisions of this Court which were also placed before us for companysideration. The first case is Bashir Ors. v. State of Haryana, 1978 1 C.R. 585. What fell for companysideration in that case was whether the grant of bail to an accused under proviso a to Section 167 2 was tantamount to a release on bail under Section 437 1 of the Code so as to entitle the accused person to companytend that his re-arrest cannot be ordered except by means of an order under Section 437 5 of the Code. The second case is Hussainara Khatoon supra where the Court was dealing with a public interest litigation case pertaining to the detention of undertrial prisoners for such long periods which even exceeded the Maximum term for which the accused companyld have been sentenced if they had been companyvicted. In the companyrse of the judgment a passing observation has been made that the Court was very doubtful whether on the expiry of 90 days or 60 days, as the case may be, from the date of arrest, the attention of the undertrial prisoners was drawn to the fact that they were entitled to be released on bail under proviso a of sub-section 2 of Section 167. It was number a pronouncement of the Court either expressly or by way of obiter that the maximum periods of detention set out in the proviso companymence to run from the very date of arrest. On the other hand the following sentence in the judgment will appropriately reflect the view expressed by the Court When an undertrial prisoner is produced before a Magistrate and he has been in detention for 90 days 1148 or 60 days, as the case may be, the Magistrate must, before making an order of further remand to judicial custody point out to the undertrial prisoner that he is entitled to be released on bail. If this Court had intended to lay down, even by way of an obiter that the period of detention is to companymence from the date of arrest, then it would number have said in the very next breath that an accused is entitled to be told by the Magistrate, at the end of the period of detention for 90 days or 60 days as the case may be that he has a right to seek enlargement on bail. The last of the cases is State of P. v. Laxmi Brahman Anr., 1983 2 S.C.R. 537. That was a case where the Allahabad High Court held that in a case exclusively triable by a Court of Sessions a Magistrate has numberjurisdiction or authority to remand an accused to custody after the charge-sheet is submitted and before the companymitment order is made, and hence the accused are entitled to be released on bail after being in detention as remand prisoners for 90 days. The view of the Allahabad High companyrt was upheld by this Court a casual observation has been made that the admitted position was that the accused did number apply to the Magistrate for being released on bail on the expiry of 60 days from the date of arrest. This statement of fact can never companystitute a pronouncement as to how the total period of detention should be reckoned. From what we have stated above it is obvious that this Court has number expressed itself in any of the three decisions, either directly or indirectly, upholding the proposition that for companyputing the total periods of detention prescribed in clauses i and ii of proviso a to Section 167 2 of the Code, the date of arrest and number the date of production of the accused before the Magistrate should be taken as the starting point. In the light of our findings we are clearly of the view that the companytentions of the appellants cannot be sustained. The learned Singh Judge, it must therefore be held, has acted companyrectly in allowing the petition filed by the State for cancellation of the bail granted to the appellants. As the Munsif Magistrate has granted bail to the appellants before the expiry of 90 days of remand period allowed under law, the order of the Magistrate will number tantamount to one passed 1149 under the provisions of Chapter XXXIII of the Code and hence there is numberscope for companytending that re-arrest of the appellants can be ordered only in terms of sub-section 5 of Section 437. We, however, make it clear that after the appellants surrender themselves to custody or are taken into custody by re-arrest, they will number stand precluded from seeking enlargement on bail by filing applications under sub-section 1 of Section 437 of the Code and satisfying the Court that they deserve to be enlarged on bail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2609 of 1984 From the Judgment and Order dated 12th April, 1984 of the Allahabad High Court in Civil Misc. Writ Petition No. 713 of 1980. M. Tarkunde and Pramod Swarup for the Appellant. N. Kacker and R.B. Mehrotra for the Respondents. The Judgment of the Court was delivered by THAKKAR, J. Seniority is the bone of companytention. The dispute centres round the question as to whether the High Court was right in affirming the view taken by the District Inspector of Schools that Respondents Nos. 5 and 6 were senior to the appellant in the lecturers grade in the Kashiraj Maha Vidyalaya Inter College, Orai, District Varanasi. The dispute regarding inter-se seniority having arisen amongst the aforesaid three persons, the District Inspector of Schools examined the issue and rendered a decision dated January 8, holding that Respondent Nos. 5 and 6 were senior to the appellant in the lecturers Grade having regard to the fact that their appointment in the grade became effective from 19-12-62, 1-7-63 and 23-7-1963 respectively. The appellant challanged the decision by way of a Writ Petition to the High Court. The High Court affirmed the decision of the District Inspector of Schools and dismissed the Writ Petition. Thereupon the Writ Petitioner in the High Court has approached this Court by way of the present appeal by special leave. The appellant was initially working as an Assistant Teacher in the aforesaid institution which was upgraded into an Intermediate College under the provisions of the Intermediate Education Act. The appellant started teaching Hindi in the Intermediate classes upon the institution being upgraded, though he was number qualified to be appointed as a lecturer in Hindi as per the relevant regulations which en- Under Regulation 3 1 f of Chapter II of the Regulations framed under the UP Intermediate Education Act. Vide Appendix A to the Regulations read with Regulation 1 of Chapter II read with section 16E of the Act, joined that the minimum educational qualification for being appointed as a lecuturer in Hindi was M.A. in Hindi and B.A. with Sanskrit whereas the appellant did number possess the requisite qualification of B.A. in Sanskrit. It is number in dispute that the appellant did number possess the requisite qualification viz. B.A. degree in Sanskrit and was therefore number entitled to be appointed in the lecturers grade as lecturer Hindi having regard to the prohibition companytained in Section 16-F of the Intermediate Education Act. The appellant however companyld have been appointed as a lecturer in Hindi if he was exempted from possessing such qualifications, in exercise of powers under sub-section i of Section 16-E of the Act. The appellant made an application for exemption as envisaged by Section 16-E of the Act. This application was granted by the Board of High School and Intermediate Education, U.P. by its order dated July 23, 1963. The companytention of the appellant is that though the Board had actually granted exemption only on July 23, 1963, he must be deemed to have been exempted from November 4, 1960, the date on which he made the application for exemption. If the appellant is right in his submission that although he was factually exempted by the order of July 23, 1963 he must be deemed to have been exempted with retrospective effect from November 4, 1960, the appellant must succeed. If this companytention is companysidered to be untenable the appellant must fail. The High Court has taken the view that the appellant is entitled to be treated as having become duly qualified with the actual date of the grant of exemption on July 23, 1963 and that he cannot be treated as having been granted exemption with retrospective effect. In this view of the matter the appellants seniority vis-a-vis Respondents 5 and 6 has been companyputed on the basis that the appellant was appointed on July 23, 1963 when he became qualified for being appointed to the lecturers grade. The appellant has companytended that the High Court has companymitted an error in number accepting his plea and has reiterated the same submissions before this Court. The first question which must be answered is as to whether the Sec. 16F. Subject to the provisions hereinafter specified, numberperson shall be appointed as a Principal, Head Master or teacher in a recognized institution unless he a possesses the prescribed qualifications or has been exempted under sub-section 1 of Section 16-E Section 16-E. 1 Qualifications for appointment as Principals, Head Masters and teachers of different subjects at different stage of the companyrse shall be as prescribed by regulations Provided that the Board may after companysidering the report of the Director exempt any person from the requirements of minimum qualifications having regard to his experience education and other attainments. plea of the appellant that he must be treated as having been exempted from possessing the qualification with retrospective effect is well founded. We are of the opinion that the District Inspector of Schools was right in taking the view that the appellant was absorbed as a lecturer with effect from the date on which the appellant had actually secured the exemption. Developments in regard to the application for exemption took the following companyrse 4-11-1960 The appellant filed an application for exemption before the Board of High School and Intermediate Education, UP Board . 6-1-1962 The Board had informed the appellant that his application for exemption was number in the proper form and that he should submit his application in the proper form. 15-1-1962 The appellant filed the application in the proper form. 10-4-1962 The Deputy Director of Education requested the appellant to obtain the minimum educational qualification B.A. Degree in Sanskrit by appearing in examination either from Varanasi Sanskrit Vishwavidyalaya or from Gorakhpur University. 12-9-1962 The appellant replied to this companymunication and stated therein that he was number in a position to pass the B.A. Examination in Sanskrit in the University mentioned by the Board. 23-7-1963 After prolonged companyrespondence, the Board granted the exemption. Thus it is clear that the Board was number inclined to grant the exemption to the appellant and had insisted on the appellant securing the requisite qualification by appearing in an examination, from an appropriate institution. The Board was disinclined to grant the request till late 1962. When this is the factual position, how can the appellant companytend that the Board must be deemed to have granted the exemp- As per facts stated on oath by Respondent No. 5 in his companynter-affidavit of July, 1984 p. 50 of the Appeal Paper- book which have number been specifically companytroverted by the appellant in the Rejoinder affidavit p. 73 of the Appeal Paper-book . tion from the date of his application i.e. November 4, 1960? In this factual backdrop it is futile to companytend that the Board had granted exemption with restropective effect or that the exemption must relate back to the date of the making of the application. Besides, the language of Section 16-E of the Act does number admit of the companystruction canvassed on behalf of the appellant viz. that the Board can grant exemption with retrospective effect. It is in terms provided that the exemption may be granted by the Board only after companysidering the report of the Director having regard to the experience, education and other attainments of the person sought to be appointed. It would be reasonable to companystrue the Section as enabling the Board to exercise the power to grant exemption prospectively after companysidering the report and taking into account the relevant circumstances which would by the very nature of things be with prospective effect and number with retrospective effect. To accede to the companystruction canvassed on behalf of the appellant would be to hold that any unqualified person can be appointed even without the minimum qualifications subject to postfacto exemption being granted. Till the exemption is granted the person is number qualified to be appointed. In other words he would be lacking in the basic qualification for being appointed. This deficiency cannot be made good with retroactive exemption unless the provision itself expressly or by necessary implication companytemplates such a companyrse of action. Section 16-E does number satisfy this test. Thus it would appear that retrospective exemption companyld number have been granted and in point of fact was number granted in the present case. Even otherwise, it is number sufficient to show that retropective exemption companyld have been granted. It must also be shown that retrospective exemption was in fact granted. In the present case the factual background clearly shows that the Board had number granted retrospective exemption. In fact the Board was number inclined to grant the exemption at all and was insisting that the appellant should obtain the requisite qualification. And the Board finally made up its mind to grant exemption only on July 23, 1963. Unless the view is taken that whenever exemption is granted it must be treated as having been granted with retrospective effect, if there is such power, the appellant cannot succeed. There is numberwarrant in law or logic for taking such a view. The High Court was therefore perfectly justified in repelling the companytention urged on behalf of the appellant and in dismissing the Writ Petition. There is also one more dimension of the matter. Though the appellant was working as a lecturer, it was number under any authority of law for there is numberprovision which empowers the companylege to allow any unqualified person to teach or to appoint him as such in anticipation of his disqualification being removed in future. Till the exemption was granted appellant was number even a teacher in the eye of law though he was allowed to teach by the indulgence of the companylege authorities. The disqualification was removed only on July 23, 1963 when the Board granted the exemption. How companyld he have claimed seniority vis-a-vis respondents number. 5 and 6 who possessd the requisite qualifications and became regularly and lawfully appointed teachers much prior thereto? An employee must belong to the same stream before he can claim seniority vis-a-vis others. One who belongs to the stream of lawfully and regularly appointed employees does number have to companytend with those who never belonged to that stream, they having been appointed in an irregular manner. Those who have been irregularly appointed belong to a different stream, and cannot claim seniority vis-a-vis those who have been regularly and properly appointed, till their appointments became regular or are regularized by the appointing authority as a result of which their stream joins the regular stream. At that point of companyfluence with the regular stream, from the point of time they join the stream by virtue of the regularization, they can claim seniority vis-a-vis those who join the same stream later. The late companyers to the regular stream cannot steal a march over the early arrivals in the regular queue. On principle the appellant cannot therefore succeed. What is more in matters of seniroty the Court does number exercise jurisdiction akin to appellate jurisdiction against the determination by the companypetent authority, so long as the companypetent authority has acted bonafide and acted on principles of fairness and fairplay. In a matter where there is numberrule or regulation governing the situation or where there is one, but is number violated, the Court will number overturn the determination unless it would be unfair number to do so. In any view of the matter the appellant who did number even belong to the stream of regularly he was allowed to teach only in an irregular and unauthorized manner and lawfully appointed lecturers cannot claim seniority against any one already in the stream before he joined the stream himself. The view taken by the High Court is unexceptionable.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 4519 of 1985. From the Judgment and Order dated 8.2.1985 of the Industrial Court at Maharashtra in Appln. MRTU No. 22 of 1980. P. Cama and Mukul Mudgal for the Appellant. R. Seetharaman number present and M.A. Krishnamurthy for the Respondents. The Judgment of the Court was delivered by B. MISRA, J. The present appeal by special leave is directed against the judgment and order of the Industrial F Court dated February 8, 1985 arising out of an application under section 11 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 hereinafter referred to as the Act . Section 11 of the Act envisages that any Union which has for the whole of the period of six calendar months immediately preceding the calendar month in which it so applies under this section a membership of number less than thirty per cent of the total number of employees employed in any undertaking may apply in the prescribed form to the Industrial Court for being registered as a recognised union of such undertaking. The appellant-Union moved an application before the Industrial 1012 Court for recognition of its union as a recognised union in respect of the first respondent, Bennet Coleman Company Ltd. In the said application the appellant impleaded besides respondent No.1, respondent No.2, the Times of India and Alled Publications Employees Union operating in the 1st respondent Company and having some membership amongst the workmen employed therein. The appellant alleged that its membership for the relevant period of six months prior to the date of application stood at the rate of 67 per cent of the total working force. The appellant annexed a list of the workmen whom it claimed as its members and a companyy of the Constitution of the appellant-union. The Second Respondent on or about the 15th of December, 1980, filed certain preliminary objections to the application of the appellant. The principal objection being that the appellant-union had instigated a strike deemed to be illegal under the Act and was therefore debarred from obtaining recognition. This objection was specifically overruled by the Third Respondent. Industrial Court. On 25th March, 1981, the second respondent filed its own application under section 11 for being registered as a recognised union in the said establishment and claimed membership of 46 per cent of the employees. The appellant- union filed its objections to the said application. The Second Respondent also filed further written objections to the original application filed by the appellant-union. Later on, the Second Respondent withdrew its application for recognition and, therefore, we are number companycerned with the application of the Second Respondent in the present case and the appeal is companyfined only to the application filed by the appellant-union. The appellant union filed before the Industrial Court its Subscription Receipt Books, Membership Register, Bank Pass Book, Ledger and Minute Book to prove that the persons claimed by the appellant as its members are In fact its members. After hearing both the parties, the Industrial Court felt that it would be impossible for it to receive evidence of approximately 1500 workmen and therefore decided to appoint an Investigating Officer under section 9 of the Act for the purpose of determining the membership of the rival unions and 1013 by its order dated September 11, 1981 appointed an Investigating Officer. The order passed by the Industrial Court is as under In this matter the applicant union has produced its documents and the number-applicant union although has number produced any documentary evidence has claimed a substantial membership of their union. In view of the rival companytentions, it is necessary that the Investigating Officer holds an inquiry and makes a report as to the companyrect claim of membership of each union by interrogating individual members in the presence of one representative of each union. Liberty is granted to the number-applicant union to produce their documents on or before the 21st September, 1981. However, if the number-applicant union fails to produce the said documentary evidence, the Investigating Officer may proceed with the inquiry as directed above and submit his report by the end of this month. Pursuant to the said order dated September 11, 1981, the Investigating Officer called a meeting of the representatives of the appellant and the First and Second Respondents on October 16, 1981 to discuss and decide all the issues relating to the aforesaid investigation as also the nature of questions which should be asked to the workmen who would be appearing before the Investigating Officer. It appears that in the aforesaid meeting a unanimous decision was taken by all the parties including the representatives of the Second Respondent Union wherein it was expressly agreed that only one question will be put to all workmen, i.e., In the year 1980 you were a member of which Union? It was further agreed between the parties that in case the workmen did number know the name of the union, they would be asked the name of the union leader or of the Committee Member of the union to which they belong. It was so agreed because all the parties realised that very often the workmen do number know the precise name of the union to which they belong and only associate themselves with the name of the President of the Union or the office bearers thereof. The said agreement between the parties was reduced to writing by the Investigating Officer by his order dated October 16, 1981. The agreement also indicated that the inquiry will be companyducted in 1014 Marathi and also if required, either in Hindi or in English, as the case may be. The Investigating Officer issued a letter to the First Respondent Company dated October 30, 1981 calling upon it to publish a numberice on its Notice Board informing the workmen of the aforesaid investigation proceedings, together with the list of the workmen to be interrogated on behalf of both the unions. The investigation, however, companyld number start on account of some dilatory tactics adopted by the Second Respondent Union. The Investigating Officer, therefore, moved the Industrial Court on January 25, 1982 for further directions and the Industrial Court gave the necessary directions in the following terms Heard both Shri Deo and Shri Bandekar. The Investigating Officer to companytinue his investigation. After giving usual numberice to all the parties companycerned, he should proceed with the work, whether any of the parties appeared or number after due service. Pursuant to the aforesaid order, the Investigating Officer issued numberice dated February 3, 1982 to the appellant-union and the Second Respondent intimating that he intends to start the investigation of membership on and from February 8, 1982. Both the unions were, therefore, requested to remain present during the companyrse of the said investigation. Although the Second Respondent had taken a number of pleas both in its preliminary and subsequent written objections, it did number raise any such objection before the Investigating Officer and rest companytent by putting one question to all the workmen as agreed upon between the parties before the Investigating Officer. The respondent union either gave up other objections or waived the same. Out of 1478 members claimed by the appellant-union, 1311 members appeared before the Investigating Officer and 1309 submitted their statements admitting membership of the appellant-union. On the other hand, out of 1002 members claimed by the respondent-union only 188 appeared before the 1015 Investigating Officer. Out of 188 workmen, only 12 stated that they were members of the respondent-union in 1980. Even out of those 12 members, two workmen subsequently approached the Investigating Officer and submitted in writing their revised statements stating that they had made their statements that they were members of the respondent-union on account of some misunderstanding and they, therefore, desired to change their statements. Further, out of the remaining 176 members claimed by the respondent-union, 172 stepped forward to say that they companysidered themselves as the members of the appellant-union during the year 1980. The appellant-union, however, disowned those persons inasmuch as they had number specifically joined the appellant-union like members specifically referred in its application for recognition. In this situation, it can be safely inferred that 172 workmen though number members of the appellant-union, had leaning and sympathy towards that union rather than with the respondent-union. The Investigating Officer accepted the claim of the appellant-union and submitted his report to the Industrial Court on March 12, 1982. In the numbermal companyrse, the Industrial Court in the absence of any other objection raised by the respondent- union before the Investigating Officer should have accepted the companyclusions arrived at by the Investigating Officer. The Industrial Court, however, permitted the respondent-union to raise objections despite the fact that the respondent-union had given up or waived other objections before the Investigating Officer. The appellant did number produce material evidence before the Investigating Officer to meet the objections taken in the written objections as they were given up before the Investigating Officer. The appellant in this situation sought the permission of the Industrial Court to adduce evidence to meet the objections sought to be raised before the Industrial Court. The Court however refused the permission. The appellant, therefore, had numberoption but to rely only on the material already on the record. The respondent-union raised a number of objections some based on the written objections and some objections were taken a fresh before the Industrial Court. The Industrial Court overruled most of the objections but accepted three objections 1016 raised by the respondent-union. In the result, the Industrial Court dismissed the application of the appellant- union for recognition. me three objections which weighed with the Industrial Court are 1 that the Constitution of the appellant-union is at variance with the requirement of clause i of section 19 inasmuch as the requirement of section 19 1 is that the rules of the union must provide that the membership subscription shall number be less than fifty paise per month. But the Constitution and the rules of the appellant union does number satisfy this requirement of section 19 2 that a fairly large number of workers alleged to be members of the appellant union were in arrears of the subscription for a period of more than three calendar months during the period of six months immediately preceding such time and 3 that some of the new members included as the workers of the appellant union had number paid their admission fees. The appellant has number companye by special leave to this Court to challenge the order of the Industrial Court. Before dealing with the questions raised in this appeal, it would be appropriate at this stage to refer to the relevant provisions of the Act. Section 19 of the act obligates that the rules or the Constitution of a union seeking recognition under this Act shall provide for the following matters and the provision thereof shall be duly observed by the union, namely,- the membership subscription shall be number less than fifty paise per month the Executive Committee shall meet at intervals of number more than three months all resolutions passed, whether by the Executive Committee or the General Body of the union, shall be recorded in a Minute Book kept for the purpose and an Auditor appointed by the State Government may audit its account at least once in each financial year. 1017 According to Section 19 of the Act, the rules of a union seeking recognition under this Act shall provide for, inter alia, that the membership subscription shall number be less than fifty paise per month. One of the questions for companysideration is whether there has been the companypliance of clause i of section 19 of the Act. me relevant rule in the Constitution of the appellant-union is rule 3. In so far as lt is relevant for the purpose of this case, it reads Any worker aged more than 18 years, employed in any unit of industries as mentioned in Schedule A shall be entitled to become an ordinary member of the Sabha on payment of an admission fee of Rupee one and annual subscription of Rs. 24 at one time or at the rate of Rs. 12 for six months The President may exempt any worker or workers from payment of admission fee of Rupee One at any time. In case any member joins or forms a rival union or joins or forms a rival union or joins hands with employer in any manner his membership whether ordinary or life in the Sabha, stands automatically terminated. Membership fee paid shall number be refunded to the Member. The only requirement of clause i of section 19 is that the rule or the Constitution of the Union must provide that the membership subscription shall number be less than fifty paise per month. me Constitution of the Union provides that a sum of Rs. 24 for twelve months or Rs. 12 for six months will be the subscription of a member. mis works out to Rs. 2 per month which is obviously more than fifty paise per month. The Industrial Court, however, took the view that the appellant ought to have led evidence to show that its members understood the Constitution to mean that payment of subscription was at the rate of Rs.2 per month. The reasoning given by the Industrial Court, in our opinion, is number at all tenable. Rule 3 of the Constitution of the Union undoubtedly provides for subscription of Rs.2 per month which is in excess of fifty paise as companytemplated by clause of section 19. Thus, in our opinion, Rule 3 substantially satisfies the requirement of clause i of section 19. 1018 This leads us to the second ground which prevailed with the Industrial Court, namely, whether the workers alleged to be the members of the appellant-union were in arrears for a period for more than three calendar months during the period of six months immediately preceding such time. The Industrial Court relied on the definition of member as given in clause 11 of section 3 of the Act, which reads thus 3 11 - Member means a person who is an ordinary member of a union, and has paid a subscription to the union of number less than fifty paise per calendar month Provided that, numberperson shall at any time be deemed to be a member, if his subscription is in arrears for a period of more than three calendar months during the period of six months immediately preceding such time, and the expression membership shall be companystrued, accordingly. Explanation - A subscription for a particular calendar month shall, for the purpose of this clause, be deemed to be in arrears, if such subscription is number paid within three months after the end of the calendar month in respect of which it is due As a matter of fact, section 19 does number talk of payment of subscription but talks of only four requirements as enumerated in section 19. The Industrial Court, however, was of the view that the appellant union had to establish that the workmen claimed to be its members had paid the subscription as required by section 3 11 of the Act and it is on these basis that the Industrial Court imported section 3 11 while companysidering the requirements of section 19. It is on the strength of the explanation added to clause 11 of section 3 that the Industrial Court held that subscription should have been paid month by month. Reading section 3 11 as a whole, it is evident that while defining member it permits the time for payment of subscription to be extended for a period of three months beyond the month in respect of which it becomes due. 1019 Therefore, the lump sum payment of three months will, in our opinion, satisfy the requirement of section 3 11 and the Industrial Court has taken a hypertechnical view of section 3 11 of the Act. The real crux of the problem is whether the appellant- union seeking recognition under this Act provides for the matters enumerated in the various clauses of section 1 9. The Court has to adopt a companymonsense companystruction and in any case where two companystructions are possible, the one which is more rational should be accepted. Since the Constitution of the appellant-union provides for an annual subscription of Rs.24 at one time or Rs. 12 for every six months, the said amounts are paid in relation to specific months and are meant to companyer each of these months. There is yet another aspect which cannot be lost sight of. In the first written objection which was by way of preliminary one, the plea taken was that the appellant-union had number paid the subscription at all but in the second written objection, the respondent-union had modified its earlier stand and took up the stand that there was some discrepancy between the amount companylected under the head subscription and the number of persons in respect of whom it was so companylected. me disparity, if any, was only in respect of members at serial numbers 2, 3 and 4 of the list and that too, only of a marginal amount having numberreal impact on the overall question of payment of subscription. Besides, both the parties having entered into an agreement to put only one question to each worker, as indicated earlier, the other objection had been either given up or waived and respondent No.2 would be estopped from raising those objections before the Industrial Court. Indeed, the Industrial Court itself refused to accept the respondents challenge to the identity of the workmen on the ground that the respondent-union had number raised this point before the Investigating Officer. m e Industrial Court also refused to accept the allegation of the respondent- union that the appellant had induced workmen to give a favourable reply 1020 on the ground that same had number been raised before the Investigating Officer. We see numberreason why it did number apply the same principle with regard to the other objections which prevailed with it. The Industrial Court did number choose to rely on the documents produced by the appellant-union regarding the payment of subscription on the ground that there is numberhing to show that the amount shown therein had number been paid by the appellant-union itself. The Industrial Court, in our opinion, has carved out a new case which was number even pleaded in any of the two written objections filed by the respondent-union. This leads us to the last ground about the number-payment of the admission fee. No specific plea to that effect had been taken in either of the two written objections. me objection taken is that the admission fee net amount in the Cash Book of the appellant was number shown. The Industrial Court companycluded about the number-payment of the admission fee on the ground that the companynterfoils of the receipts showing companylection of admission fee had number been shown. The requirement of section 3 11 of the Act is only about the payment of subscription and number about the admission fee. If there is evidence to show that subscription has been received from the workmen it pre-supposes that they were the valid members as numbersubscription will be taken from a workman who is number a member of the union and that also leads to the companyclusion that the workmen were the valid members of the union according to the rules of the Union. Even assuming that admission fee of certain workmen had number been paid, there is a provision in the Constitution itself for exempting any worker or workers from payment of admission fee of Re. 1 at any time as is evident from rule 3 of the Constitution which has been quoted in the earlier part of the judgment . Thus, even if admission fee had number been paid it cannot affect the membership of the workmen in face of the provisions of exempting the workmen from the payment of membership fee. The Industrial Court, in our opinion, has companymitted a manifest error in assuming that there was numberprovision in the Constitution for exempting the admission fee. The Industrial Court has overlooked the provisions of rule 3 of the Constitution of the Union. MANOHAR 1021 For the foregoing discussion, we find companysiderable force in the companytentions raised on behalf of the appellant and the appeal must succeed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1795 of 1986 From the Judgment and order dated 25.9.1984 of the Delhi High Court in S.A.O. No. 283 of 1984. Mrs. Shyamla Pappu, N.S. Das Bahl, P.K. Bahl and P.S. Mahindra for the Appellant. P.Bansal, K.C.Dua and P.O.Gupta for the Respondent. The Judgment of the Court was delivered by PATHAK, J. Special leave granted. This is a land-ladys appeal by special leave directed against the order of the High Court of Delhi dismissing her second appeal in limine. The appellant is the owner of the premises No. F-8/ 17, Vasant Vihar, New Delhi. It is a single storeyed house. She let out the premises for a limited period of two years to the respondent, who is a judicial officer. She did so after obtaining the requisite permission under s. 21 of the Delhi Rent Control Act on April 22, 1980. A registered deed was executed between the parties in that behalf. The deed recorded the undertaking of the respondent to vacate the premises at the end of two years. The two years expired on April 21, 1982 but the respondent did number hand over possession of the premises to the appellant. Accordingly the appellant prayed for an order directing delivery of possession of the premises to her. A warrant of possession was issued. On October 20, 1982 the respondent filed his objection, alleging that the order granting permission under s. 21 of the Act was obtained by fraud practised on the Rent Controller and was a nullity. It was asserted that the premises were companystructed in the year 1973 and were let out to an official of the Government under s. 21 of the Act for a period of one year. On the official vacating the premises after one year, it was alleged, they were let out to the respondent at a rent of Rs. 725 per mensem in the first week of April 1974 as a regular tenant. It was said that on the request of the appellant the respondent joined in an application for permission under s. 21 of the Act. When the appellant applied for permission, it is alleged, she did number disclose to the Rent Controller that earlier also she had inducted a person as tenant after obtaining such permission. On the expiry of three years, the respondent said, the appellant again, in the year 1977, obtained permission under s. 21 of the Act for letting out the premises at an enhanced rent of R.S 825 per mensem for a limited period of two years to the respondent. That period expired in April 1980. It was thereafter that the appellant obtained permission under s. 21 of the Act for letting out the premises to the respondent for a period of two years. The respondent urged that he was in uninterrupted possession since April 1974 and that numberground had been disclosed by the appellant in the application for permission under s. 21 of the Act made in the year 1980 indicating the reason for letting out the premises for a limited period of two years. It is alleged that permission was granted mechanically by the Rent Controller, and that it companyld number be recognised as binding on the respondent. The appellant filed her reply to the objection and vehemently denied that the order under s. 21 of the Act granting permission in 198 was nullity or had been obtained by fraud or that any material fact had been withheld in the application for permission. The appellant asserted that in the beginning the premises had been let out to an official of the Government for a period of three years companymencing from August 29, 1973, but the tenant vacated the premises after 6 or 7 months and thereafter it became necessary to let out the premises to the respondent on April 15, 1974 after obtaining permission under s. 21 of the Act. It was denied that the respondent had already occupied the premises as a regular tenant before permission under s. 21 of the Act had been granted. lt was maintained that the respondent occupied the premises on April 15, 1974 pursuant to the permission under s. 21 of the Act. The appellant stated further that the respondent had given numberice to the appellant on February 27, 1977 expressing his intention to vacate the premises and that in fact he did vacate the premises on that date after settling the account in respect of the rent. But a few days after leaving the premises the respondent again approached the appellant for taking the premises on rent. Accordingly, the premises were let out by the appellant to the respondent on March 11, 1977 after obtaining permission under s. 21 of the Act. It was pointed out that in the application under s. 21 of the Act. the respondent gave his address as Village Khandsara, near Gurgaon, Haryana where he was then residing in the factory premises of his son. The possession of the premises was handed over to the respondent on March 11, 1977 in pursuance of the permission, and the rate of rent agreed to was Rs.825 per mensem. The appellant further stated that on the expiry of the period, the respondent again vacated the premises and shifted to 13, Palam Marg, New Delhi. Thereafter the respondent approached the appellant again to let out the premises for a limited period of two years. As the appellants second son, who is an officer in the Indian Air Force, was posted at Bangalore and the appellant was number in a position to occupy the premises all alone, she agreed to let out the premises to the respondent. On April 21, 198 the appellant and the respondent joined in the application for obtaining permission under s.21 of the Act to enable the appellant to let out the premises to the respondent for a period of two years. The appellant urged that the premises were number required by her as her son, an Indian Air Force officer, had to shift his family to Delhi, and it was further pointed out that the premises were to be occupied by the appellant and the family members of that son as the climate of Bangalore did number suit them. It was denied that the premises were available for indefinite letting, and the periodic tenancies, it was asserted, were entered into because of the circumstances prevailing on each occasion. On January 21, 1984 the First Additional Rent Controller, Delhi upheld the objection filed by the respondent and dismissed the execution application of the appellant made under s. 21 of the Act. The appellant appealed to the Rent Control Tribunal and the Tribunal held that the allegation of the respondent that he had already entered into possession of the premises before permission was granted under s. 21 of the Act in 1974 was false, and even if it be assumed that he had done so there was numberhing to prevent him from surrendering the tenancy. That was evident when he joined the appellant in the application for permission under s. 21 of the Act in 1974. The case of the respondent that he must be companysidered to be a tenant in possession without interruption ever since 1974 companyld number, in the opinion of the Rent Control Tribunal, be accepted on the facts and circumstances of the case. and that it was only the tenancy pursuant to the last permission which companyld be questioned. The Rent Control Tribunal then addressed itself to the principal issue whether fraud had been practised on the Rent Controller in obtaining permission under s. 21 of the Act in 1980. The Tribunal referred to the circumstance that the appellant had let out the premises from time to time for limited periods on earlier occasions and observed that it was evident that the premises were available for being let out for an indefinite period. It adverted to a statement made by the appellant regarding the transfer of her son to Delhi, and deduced from the language employed by her that she wanted to companyvey that her son had been posted earlier in Delhi and that he was number being transferred back to Delhi. It also pointed out that the unsuitability of the climate of Bangalore in regard to her grandson as the reason for the family desiring to settle in Delhi had number been mentioned at the initial stage of the litigation. Upon that, the Rent Control Tribunal held that the appellant had practised fraud on the Rent Controller when obtaining permission under s. 21 of the Act in 198 . A second appeal by the appellant was dismissed summarily by the High Court. We have companysidered the case with great care. Ordinarily, this Court declines to interfere with findings of fact and refuses to entertain special leave petitions questioning such findings. But it seems to us that in this case the entire approach of the statutory authorities has been vitiated by a gross misconstruction of the facts and circumstances of the case, ignoring material evidence on the record, and arriving at inferences which fly in the face of reason and the law. All this has resulted in grave injustice. At the outset it is apparent from the record that the finding of the Rent Control Tribunal that the property was available for being let for an indefinite period proceeds on the unwarranted assumption that the grant of the three leases, from 1974 through 1977 to 1980, points to that as the only companyclusion. That assumption would have been justified if there was positive material to indicate that from the very beginning there was never any intention on the part of the appellant to occupy the premises herself. There is numbersuch material at all on the record. It seems to have been ignored altogether that it is perfectly possible for the owner of a premises, on looking to the immediate future, to find that for certain reasons he is unable to occupy the premises forthwith himself but that he may do so later in the number very distant future. It is number always that a man can plan his life ahead with any degree of definiteness. Prevailing uncertainty in the circumstances surrounding him may number permit clear sighted vision into the future. The circumstances may justify his envisioning his need for the premises two or three years later, and therefore applying for permission under s. 21 of the Act to let out the premises accordingly. And yet, thereafter, on the expiry of that period he may find that the circumstances have changed and his use of the premises has number to be postponed by another few years. In cases such as this the mere fact that the owner has let out the premises after obtaining permission under s.21 of the Act for a limited period, and thereafter on the expiry of that period has found it necessary to obtain permission to let out the premises again for another limited period cannot necessarily lead to the inference that from the very beginning the premises were available for letting out indefinitely. The Rent Controller and the Rent Control Tribunal should have examined the circumstances prevailing on each occasion when an application was made under s. 21 of the Act. The changing facts of social existence do number permit the application of unimaginative perspectives and inflexible assumptions. The mutating kaleidoscope of human life portrays a different reality. It is this fundamental error into which the Rent Control Tribunal has fallen. Because of that it has unwittingly fallen further into the error of misconstruing the significance of the statement made by the appellant. A companyy of her statement is before us, and all that the appellant said was that the premises companyld be spared for letting because her son had been posted at Bangalore and that after two years he would be back in Delhi. Much has been made by the Rent Control Tribunal of this minor inconsistency, of the circumstance that instead of stating that her son would be posted in Delhi the appellant had stated that her son would be posted back in Delhi. It seems to us wholly irrelevant to the issue in the case whether the son was being posted in Delhi for the first time or was being posted again in the city. It was wholly immaterial to the question in 1980 whether the premises, which had been companystructed a few years before, should be let out for a period of two years. What was material was the expectation that the son and his family would be in Delhi after two years. The central issue in the case has been clouded by a circumstance which has numberbearing on it. In our judgment, the orders of the First Additional Rent Con troller, the Rent Control Tribunal and of the High Court cannot be sustained An attempt was made by learned companynsel for the appellant to refer to material, number placed on the record, establishing that the appellants son had in fact been transferred to Delhi in May 1985 and that he was companypelled, with a family of six members, to share a small accommodation with a friend at Delhi. There is also clear evidence showing that his eldest child was suffering from bronchial asthma and had been hospitalised in the Command Hospital at Bangalore three times, and that medical specialists had advised a change of place immediately. We need number take this material into companysideration. After examining the material already on the record, a task to which we are companypelled by the erroneous approach adopted by the statutory authorities to the case, we have companye to the companyclusion that the evidence does number make out that any fraud was practised on the Rent Controller when permission was granted in 1980 under s. 21 of the Act, and there is numberhing to show that the permission can be regarded as a nullity or that material facts were companycealed. On the companytrary, it seems to us that the haphazard manner in which the case has been dealt with by the First Additional Rent Controller and the Rent Control Tribunal leaves much to be desired. The appeal is allowed, the order dated January 21, 1984 of the First Additional Rent Controller, the order dated May 2, 1984 of the Rent Control Tribunal and the order dated September 25, 1984 of the High Court are set aside and the objection filed by the respondent to the appellants application for possession under s. 21 of the Delhi Rent Control Act is rejected and the said application is allowed. The appellant will be entitled to delivery of possession of the premises. But in the circumstances, we allow the respondent a period of two months from today for vacating the premises.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 4253 of 1983. From the Judgment and order dated 9th March, 1979 of the Bombay High Court in I.T. Ref. No. 485 of 1976. C. Manchanda and Ms. A. Subhashini for the appellant. Mrs. A.K. Verma and Joel Peres for the Respondent. The Judgment of the Court was delivered by PAIHAK, J. This appeal by special leave is companycerned with a question of some importance. The respondent, which maintains its accounts on the mercantile system, follows the calendar year as its accounting period. It had numbergratuity scheme for the years preceeding the calendar year 1970, but such a scheme was formulated for the first time in the middle of 1970 and was put into operation with effect from July 1, 1970. me scheme provided that in the case of the retirement or resignation of any employee he would be eligible to gratuity provided he had put in 15 years of companytinuous service. In the case of death or permanent physical or mental disablement, an employee was eligible for gratuity at different rates depending upon whether he had put in ten years of companytinuous service or more. In the case of termination of service or retrenchment, numbergratuity was payable upto five years of companytinuous service, and was payable at rates thereafter depending upon whether the companytinuous service was from five years to ten years, ten to fifteen years or more than fifteen years. No gratuity was payable if an employee was dismissed for misconduct, for causing laws to the companypany, for violant action and similar reasons. The respondent had debited to the Profit and Loss account a sum of Rs. 2,11,305 as a charge against the profits, being total liability as on December 31, 1970 on account of the gratuity scheme. There is numberdispute that this amount was provided for on the basis of an actuarial report prepared by a companysulting actuary. In assessment proceedings for the assessment year 1971- 72 the relevant accounting period being the calendar year 1970 , the Income Tax Officer was number prepared to allow the entire amount claimed by the respondent as a provision on of gratuity. At his instance a certificate was obtained from the companysulting actuary regarding the liability as on December 31, 1969 and as on December 31, 1970. The burden of the liability as on December 31, 1969 was Rs. 1,84,056. The Income Tax Officer, therefore, allowed the libility only to the extent of the difference between Rs. 2,11,305 and Rs. 1,84,056 that is to say he allowed Rs. 27,249. On appeal by the respondent, the Appellate Assistant Commissioner of Income Tax, following the decision of this Court in the case of Metal Box Company of India Ltd. v. Their Workmen, 1969? 73 I.T.R. 53 held that the entire amount was allowable. Accordingly, he gave a relief of Rs. 1,84,056. The Revenue proceeded in second appeal to the Income Tax Appellate Tribunal, and the Appellate Tribunal, following an earlier decision rendered by it in a case where the decision of this Court in Metal Box Company of India Ltd. supra , of the Allahabad High Court in Madho Maheah Sugar Mills P Ltd. v. Commissioner of Income tax, 1973 92 I.T.R. 503 and of the Delhi High Court in Delhi Flour Mills Co. Ltd. v. Commissioner of Income Tax, 1974 95 T.R. 151 had been companysidered, came to the companyclusion that the Appellate Assistant Commissioner was right and the entire amount had to be allowed as a charge against the profits. The appeal filed by the Revenue was dismissed. A similar question was companysidered at length by the Bombay High Court subsequently in Tata Iron Steel Co. Ltd.v. D.V. Bapat, Income-Tax Officer, Companies Circle 1 2 Bombay, and Anr., 1975 l01 I.T.R. 292 in which a companyresponding view was taken by the High Court. At the instance of the Revenue, a reference was sought from the Appellate Tribunal for the opinion of the High Court on the following question of law Whether on the facts and in the circumstances of the case, the assessee is entitled in law to the deduction of the entire provision for gratuity amounting to Rs. 2,11,305 either under section 28 read with section 29 or under section 37 1 of the Income Tax Act, 1961? It is number clear whether the Appellate Tribunal made a reference or declined it. What purports to be a companyy of the order dated 23.4.1980 of the Appellate Tribunal before us appears to indicate that the Appellate Tribunal had indeed referred the question to the High Court. But the special leave petition filed in this Court under Article 136 of the Constitution against the order dated 9.3.79 of the Bombay High Court in I.T. Ref. No. 485 of 1976 in the matter of I.T. versus Vanaz Engineering Pvt. Ltd. for the assessment year 1971-72, states that the Appellate Tribunal rejected the reference application, and thereafter an application made to the High Court was rejected on April 23, 1980. It is unfortunate that this discrepancy exists in the record before us. It demonstrates a want of sufficient care in preparing the petition. It makes numberdifference, however, for even if we take it that the High Court rejected the reference application made by the Revenue, we are of opinion that a question of law does arise in the terms sought by the Revenue. We are further of opinion that instead of sending the case back to the High Court and directing it to call for a statement of the case and thereafter to answer the question of law, it would be appropriate to dispose of the case on the merits itself inasmuch as the question is one which has engaged the attention of this Court in a number of cases already. Learned companynsel for the parties are also agreed that the case should be disposed of in the same terms as D.V. Bapat, I.T.O. Companies Circle, Bombay v. Tata Iron Steel Co. Ltd., C.A.No. 1247 of 1980 decided on January 8, 1986. It is urged by learned companynsel for the appellant that the provisions of s.40A 7 b ii of the Income Tax Act, 1961 have number been satisfied and, therefore, the respondent was number entitled to the deduction of the gratuity amount. The provisions of s.40A 7 b ii have been recently companystrued by this Court in Shree Sajan Mills Ltd. v. Commissioner of Income Tax, M.P. Anr., 1985 156 I.T.R. 585, and it seems to us necessary that the High Court should examine whether those provisions have been companyplied with in the present case having regard to what has been laid down in that case. There is numberdispute between the parties that the first companydition in that provision has been satisfied by the respondent. What remains is to determine whether the second and third companyditions are also satisfied. In the circumstances, we think it appropriate to set aside the judgment under appeal and remand the case to the High Court for a fresh companysideration of the case in the light of the observations made by us in this judgment. The appeal is allowed, the judgment of the High Court is set aside and the case is remanded to the High Court for disposal in accordance with the observations made by us. There is numberorder as to companyts.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1774 of 1980 etc. From the Judgment and Order dated 28. 7. 1978 of the Allahabad High Court in Civil Misc. Writ No. 495 of 1975. R.L. Iyenger, Yogeshwar Prasad, S.P. Gupta, V.P. Sachthey, K.K. Venugopal, O.P. Rana, Dr. Y.S. Chitale, K.G. Bhagat, F.S. Nariman, Soli J. Sorabjee, H.K. Puri, G. Gopalakrishnan, Khaitan Co., A. Subba Rao, Naunit Lal, M.K. Nair, J.B.D. Co., P.R. Ramasesh, Bishambar Lal, G. Subramanium, Ms. S. Dikshit, Ms. A. Subhashini, K.R. Nambiar, R.N. Poddar, B.M. Nagaria, Mrs. Rani Chhabra, R.B. Datar, P.H. Parekh, K.R. Nagaraja, B.D. Sharma, V.J. Francis, S. Markendaya, R.N. Sachthey, R. Ramachandran, S.S. Khanduja, Manoj Swarup Co., P.K. Pillai, Baggar, K.L. Mehta, Swarup John Co., G.S. Ramarao, C.V. Subba Rao, S.K. Gupta, G.S. Chatterjee, Probir Mittra, Mrs. J. Wad, S.K. Gambhir, Pramod Dayal, R.K. Jain, S.R. Srivastava, K.K. Mohan, Dhantaraj,D.K. Agarwal, S.K. Gupta, Raju Ramachandran, Ravindra Bana,Vinoo Bhagat, K.K. Jain, A.D. Sanger, Girish Chandra, C.K. Sucharita, T.C. Sharma, Mrs. Kitty Kumaramangalam. A.V. Rangam, R.V. Ratnam and D.M. Popat for the appearing parties. The Judgment of the Court was delivered by D B. MISRA, J. The present group of appeals directed against the judgment of the High Court of Judicature at Allahabad dated July 28, 1978 raises a companymon question of law. These appeals arise out of petitions under Article 226 of the Constitution challenging the two Notifications dated January 25, 1975 issued under section 14 of the U.P. Sugarcane Purchase Tax Act, 1961 hereinafter referred to as the Act for short . The petitioners also sought a Mandamus directing the State Government to grant remission in purchase tax of 0.51 paise per quintal to all the Sugar factories situated in the State of U.P. As the pattern of facts is similar in all the cases, we would refer to the facts of Civil Appeal arising out of Writ Petition No. 409 of 1975 filed by M s. Shri Sitaram Sugar Company Limited, Bhailtapur, District Deoris, against the State of Uttar Pradesh and others to bring out the question for companysideration in these appeals. The petitioner is a Public Limited Company and owns a sugar factory in Deoria known as Shri Sitaram Sugar Company Limited, Bhailtapur, U.P. The Sugar Factory is engaged in the manufacture of sugar by Vacuum Pan Process. It purchases sugarcane from the reserved area allocated to Lt under the provisions of U.P. Regulation of Supply and Purchase Act, 1953 and Sugarcane Control Order. 1966 By a Notification dated September 29, 1973 issued under clause 3 of the Sugarcane Control Order, 1966, Central Government fixed the price of sugarcane for the factories situated in Uttar Pradesh. The minimum price fixed by this Notification for the area in which the petitioners factory was situated was Rs. 8.38 per quintal. The cane growers felt agitated as according to them, the price fixed was much too low. They, therefore, made representation to the U.P. Government and as a result thereof the U.P. Government intervened in the matter and fixed sugarcane price at Rs. 12.25 per quintal for the Sugar Mills situated in the East Zone. According to the petitioner, however, the price fixed was exorbitant and as the petitioner and other sugar factories were likely to suffer enormous loses, the Sugar Factories approached the State of U.P. and brought to its numberice that they were number in a position to pay the higher sugarcane price. The stand of the appellant-petitioner and others is that the Chief Minister was satisfied with the demand made by the sugar factories and he assured them that the State Government would grant remission in purchase tax to all the factories situated in the East Zone. By a Notification issued under section 14 1 of the Act, the State Government granted remission to the extent of 0.51 paise per quintal to 18 Sugar Factories mentioned in the area. By another Notification of the same date, two more factories were granted the remission. As the remission was number granted to the appellant-petitioner and to some other factories similarly situated, they filed petitions under Article 226 of the Constitution challenging the aforesaid Notification issued by the State Government. The State of U.P. resisted the petitions and denied the allegation of promissory estoppel and discrimination set up in the writ petition. The High Court dismissed those petitions by the impugned judgment. They have number approached this Court by special leave and raised the same companytention before this Court as was raised by them before the High Court. In order to appreciate the points involved in the case, it would be appropriate at this stage to refer to the relevant provisions of the Act. Section 3 of the Act lays down that there shall be levied a tax on the purchase of sugarcane by the owner of a a factory at the rate of twenty five paise per maund of sugarcane and b a unit at the rate of fifty paise per quintal. Section 3-A l provides that numberowner of a factory shall remove, or cause to be removed any sugar produced in the factory either for companysumption or for sale, or for manufacture of. any other companymodity in or outside the factory, until he has paid the tax levied under section 3, a sum specified under sub-section 2 , sub-section 3 or sub- section 4 . The next relevant section with which we are directly companycerned is section 14. It companyfers powers on the State Government to grant remission. As the decision of these appeals hinges upon the interpretation of section 14 1 , it would be advisable to read the section in full. Section 14 1 reads Section 14 1 . The State Government, on being satisfied that it is necessary so to do in the public interest, with a view to - a encourage or regulate the supply of sugarcane to, or its purchase by factories or D b encourage the establishment of new factories or c assist factories established after the crushing season 1957-58 and purchasing sugarcane yielding low sugar recovery, May by numberification in the Gazette, remit, in whole or in part, the tax payable under this Act, in any assessment year, by every such factory falling under Clause a or Clause b or Clause c . In the instant case, the Notification remitting the purchase tax was issued by the State Government on being satisfied so to do in the public interest with a view to encourage and regulate the supply of sugarcane to, or its purchase by the factories in the State of Uttar Pradesh during 1973-74 assessment year. Dr. Chitale, appearing for the appellants with his usual candour and fairness, gave up the plea of promissory estoppel and companyfined his argument to discrimination made by the State Government in granting remission of tax to some factories and number to the appellants. According to him the encouragement and regulation as companytemplated by clause a of section 14 1 of the Act was necessary to all the factories in the eastern zone and number only to a fortunate few. But the U.P. Government has refused to extend the remission to the appellant illegally when clause a of section 14 1 companytemplates giving benefit to all the factories and there was numberjustification for singling out the appellants For treating them differently. The power companyferred by clause a of section 14 1 of the Act, the companynsel companytends, companyld number be companyfined to Factories purchasing sugarcane yielding low recovery inasmuch as this was a companysideration foreign to the purpose companytemplated by clause a of section 14 1 of the Act. The three clauses of sub-section 1 of section 14 of the Act have different object and purpose. The purpose of granting the power of remission under clause a is encouragement and regulation of the supply of sugarcane, the object of clause b is to encourage the establishment of new factories, and that of clause c is to assist factories established after the crushing season 1957-58 and purchasing sugarcane yielding low recovery. Section 14 1 companyfers a discretionary power on the State Government. Reading section 14 as a whole, it cannot be said that it was obligatory on the part of the State to grant exemption or remission to all the factories. The discretion has been left to the State Government to decide whether any particular factory should be granted remission or number guided by the purpose set out in the relevant clause. Neither in clause a number in any other clause of section 14 1 of the Act, there is anything to indicate that the State Government must grant remission to all sugar Factories for encouraging or regulating the supply of sugarcane. The reason is obvious. It may be that a factory situated in one area or falling In one category is in need of this remission while those which are number either situated in that area or do number fall In that category may number need it. It is true that the power companyferred by clause a is to be exercised For the purpose of encouraging and regulating the supply of sugarcane but in exercising this power, the State Government may legitimately take the view that this purpose necessitates the grant of remission only to the sugar factories purchasing sugarcane yielding low recovery. By granting the remission only to sugar factories purchasing sugarcane of low recovery, the State Government in our opinion has number violated Article 14 of the Constitution. Nor Is there any companytravention of the provisions of clause a of section 14. The question of companytravention would arise if the grant of remission were founded on a ground extraneous to the provisions of section 14. The Notifications issued by the State Government clearly show that the remission was granted with the sole object of encouraging and regulating the supply of sugarcane to these factories. The exercise of the power by the State Government was in accordance with the provisions of clause a , sub-section 1 of section 14 and that by granting the remission to a few sugar factories it did number frustrate the purpose of the aforesaid provision. The use of expression encourage or regulate clearly indicates that the factories which really need encouragement or regulation should get the benefit of the remission under clause a of sub-section 1 of section 14. The word encourage suggests that the State Government is required to exercise the power where it feels that the sugar factory requires the help for the purpose of making purchases of sugarcane. Similarly, the word regulate also shows that the said power can be exercised with a view to take measures to promote the sale of sugarcane. If the power companyferred by clause a of sub-section 1 of section 14 has been exercised for the purpose of granting remission to only those sugar factories which purchase sugarcane of low recovery, there is numberhing wrong in so doing. It was next companytended by Dr. Chitale that the factories which had recovery of 8.5 or less had been granted the remission. Some of the appellants were also in similar position and they have been refused unjustifiably and the State Government had discriminated between the factories falling in the same group and thus the Notification issued on January 25, 1975 suffered from the vice of Article 14 of the Constitution on that account also. This argument losses sight of the other clauses of the section, viz, clauses b and c of sub-section 1 of section 14. Clause b provides for encouraging the establishment of new factories and clause c companytemplates assistance to factories established after crushing season 1957-58 and purchasing sugarcane yielding low sugar recovery. If the State Government had chosen to give remission to these factories because they fall under clause c , some argument companyld have been advanced against the validity of the Notification on that basis. Under clause c , remission is granted by way of support or aid to newly established factories to lesson the companyt so that they companyld profitably companypete in the market. The remission under clause c has to be companyfined to new factories which is a different category of sugar factories. The companysiderations needed for exercising the power under clause c are different from those under clause a or b . Considered from this aspect there is numberdiscrimination at all. Article 14 of the Constitution forbids class legislation but permits reasonable classification. It however must fulfil the twin requirements 1 it must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and 2 that the intelligible differentia must have a relationship to the object sought to be achieved by the Statute. If authority be needed, we may refer to Anant Mills Co. Ltd. v. State of Gujarat Ors., 1975 3 C.R. 220. The remission was granted only to the factories where the recovery from the sugarcane was low to enable the factories to make timely payments towards the companyt of sugarcane and number-payment of the cane prices affecting the supply of cane to factories. It was in these circumstances that the Government granted remission to the factories which needed the help. The immediate factor affecting the economy is the recovery of sugar from sugarcane and the sugar companytent in the cane produced goes a long way to determine the companyt of sugar. Thus the sugar factories which were purchasing sugarcane yielding low recovery are distinguishable as a class separately from those which did number fall in it and there was a reasonable basis to classify those left out of that group. For the foregoing discussion, the appeals must fail. must are accordingly dismissed. In the circumstances of the case, however, the parties shall bear their own companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1477 of 1986. From the Judgment and Order dated 20th May, 1985 of the Allahabad High Court in Writ Petition No. 3710 of 1985. N. Kacker and R.B. Mehrotra for the Appellant. C. Birla for the Respondents. The Judgment of the Court was delivered by NATARAJAN, J. This appeal by special leave is directed against the order of a learned Single Judge of the Allahabad High Court in Civil Misc. Writ Petition No. 3710 of 1985 filed in the High Court by the first respondent herein. The appeal lies within a narrow companypass as the limited question for companysideration is whether the extraordinary leave granted to the appellant for the period 24.12.80 to 31.7.83 on the request of the Government of India for his being posted on a teaching assignment in the University of Aden South Yemen effected a break in service so as to deprive the appellant his seniority in the Department of Zoology in the D.A.V. College, Kanpur. The facts which are number in companytroversy, of the case, are briefly as set out below. On 1.9.49 the appellant was appointed as Lecturer in Zoology in a substantive capacity in the D.A.V. College, Kanpur. About six weeks later i.e. On 12.9.49 the first respondent was also appointed as a Lecturer in Zoology in the same companylege. In the year 1974 the appellant was appointed as the Head of the Department of Zoology in the said College. On 24.12.80 the appellant was granted extraordinary leave on the request of the Government of India for being sent on a teaching assignment to the University of Aden South Yemen on the express companydition that his lien on the post in the College will be maintained and his seniority will be protected. On the basis of such an arrangement the appellant fulfilled his teaching assignment at the University of Aden and on return to India he sought to resume his post in the College. The first respondent who was acting as the Head of the Department refused to hand over charge on the ground he had attained seniority over the appellant. It is relevant to mention here that the first respondent did number also companytinuously serve the College but left its services and went to other teaching institutions, and after stints of service therein, he rejoined the Department of Zoology in the D.A.V. College, Kanpur. It would appear that the first respondent went over on 21.1.78 as Principal of the D.A.V. College, Dehradun and thereafter he went over as Principal of the D.B.S. College, Kanpur and subsequently he came back to the D.A.V. College, Kanpur. As the first respondent refused to hand over charge of the Department, the appellant made a representation to the Principal and sought his intervention. After companysiderable delay the Principal refused to companyntenance the appellants claim to seniority and sustained the stand taken by the first respondent. The appellant challenged the order of the Principal before the Vice-Chancellor of Kanpur University. While companytending that he had number suffered a break in service and his seniority over the first respondent has remained intact all through his period of service on deputation, the appellant further companytended that the first respondent had in fact suffered break in service because of his spells of service at the D.A.V. College, Dehra Dun and the D.B.S. College, Kanpur and as such the first respondents claim of companytinuous service was an untenable one. The Vice-Chancellor upheld the appellants claim that he had number suffered any break in service and by virtue of his lien he was entitled to his rightful place of seniority. Aggrieved by the order of the Vice-Chancellor, the first respondent preferred an appeal to the Chancellor but the Chancellor affirmed the order of the Vice-Chancellor and dismissed the appeal. Thereafter the first respondent filed Civil Misc. Writ Petition No. 3710 of 1985 under Article 226 of the Constitution before the High Court of Allahabad. By the impugned order a learned Single Judge of the High Court allowed the writ petition holding that in terms of either the Old Statutes or the First Statutes of the Kanpur University the appellant herein is number entitled to reckon the period of service at the University of Aden for companyputing the length of service in the D.A.V. College and as such the recognition of the seniority of the appellant over the first respondent by the Vice-Chanceller and the Chancellors in their respective orders cannot be sustained. Accordingly the learned Judge has issued a rule in favour of the first respondent and it is against that order this appeal by special leave has been filed. While presenting the case of the appellant before us Shri S.N. Kacker, learned companynsel did number press the alternative companytention of the appellant that the first respondent had suffered break in service in the D.A.V. College, Kanpur and as such he has numberlocus to claim seniority. Consequently, the only ground on which the order of the High Court was assailed is that the High Court was in error in holding that the deputation service of the appellant has effected a break of service and as such he has lost his original seniority in the Department of Zoology. As the High Court has held that neither under the Old Statutes number under the First Statutes of the Kanpur University the appellant is entitled to tack on his service in the University of Aden with his service in the D.A.V. College, Kanpur it is necessary to advert to the relevant provisions in the two Statutes. However, before such advertence, it will be relevant to refer to the letter of companysent issued to the appellant by the then Principal viz. Shri S.C. Srivastava of the D.A.V. College, Kanpur as a companydition precedent for his accepting the teaching assignment abroad. The letter, addressed to the Ministry of Home Affairs, is worded as under - From Principal A.V. College, Kanpur, U.P. India. To Ministry of Home Affairs, Department of Personnel and Administrative Reforms, Foreign Assignment Section New Delhi. Assignment of Indian Experts abroad Certified that the appellant Dr. K.P. Hajela, Head of Zoology Department, D.A.V. College, Kanpur, will be relieved for service abroad on foreign service terms in public interest i.e. retaining the applicants lien and protecting his seniority within thirty days of selection if need be. It is further stated that the applicant, Dr. Hajela, can be released for service abroad for a total period of three years. August 21, 1978. Sd - S.C. Srivastava It may be seen from this letter that the appellant had been granted leave for a period of three years and a specific undertaking had been given on behalf of the College that the appellants lien in the College will be retained and his seniority also will be protected during his period of service abroad. It will also be relevant to mention in this companytext itself that even number the present Principal, who has declined to uphold the seniority of the appellant, has companyceded in his order dated September 1, 1983 that the appellants lien has been maintained. The relevant portion in the order is companytained in para 6 and reads as under Dr. Hajelas lien has been maintained on his post here in so far as he was granted extraordinary leave without pay for the period of companytract service abroad and that numberappointment was made in his place. Other claims are number admissible. No doubt the first respondent and the present Principal of the College have taken the stand that the former Principal had numberauthority to guarantee the appellant his lien in the Department and his rank of seniority. The merit of this stand will be gone into later but for the moment we would only like to point out that one part of the undertaking given by the former Principal namely, retention of lien has been companyformed to and what is disputed is only the guarantee regarding the protection of seniority. Now companying to the Statutes the relevant one in the Old Statutes is 11.34 and the one in the First Statutes is 18.10. They are in the following terms- Old Statutes Seniority of teachers in Affiliated Colleges 11.34 1 Subject to the provisions of this Statute the seniority of teachers in a particular companylege shall be determined by the length of service in that College in the same cadre and in the same grade. The periods of service in another University associated affiliated companylege in the same or higher cadre and grade shall also companynt towards seniority if the University of College is situated in Uttar Pradesh and the College is affiliated to or associated with one of the Universities in the State. Service in an officiating capacity shall number be companynted. Temporary service shall be companynted only if it is in companytinuation of a subsequent permanent appointment. The period of leave without pay shall number be companynted in calculating the seniority unless during such leave another position involving similiar work was held or it was medical leave. First Statutes Seniority of Principals and Teachers of affiliated companyleges. 18.10 The following rules shall be followed in determining the seniority of Principals and other teachers of affiliated companyleges a the Principal shall be deemed senior to other teachers in the College b the Principal of a post-graduate companylege shall be deemed senior to the Principal of a Degree College c the seniority of Principals and teachers of the affiliated companyleges shall be determined by the length of companytinuous service from the date of appointment in substantive capacity d service in each capacity for example, as Principal or as a teacher , shall be companynted from the date of taking charge pursuant to substantive appointment e service in a substantive capacity in another University or another degree or post-graduate companylege whether affiliated to or associated with the University or another University established by law shall be added to his length of service. Another provision, which has number been adverted to by the High Court, is also set out, as it has relevance C 18.16 The statutes companytained in this Chapter shall number affect the inter seniority of teachers employed in this University from before the companymencement of these statutes. In order to give operative force to the First Statutes over the Old Statutes in the event of any companyflict in the provisions of the two Statutes a specific provisions has been made in Chapter I Section 50 1 1.02 1 and it is worded as under All existing Statutes and all such Ordinances in force in the University, as are inconsistent with these Statutes are to the extent of such inconsistency, hereby rescinded and shall forthwith cease to have effect except as respects things done or omitted to be done before the companymencement of these Statutes. The High Court has taken the view that there is numberinconsistency between Statute 11.34 of the Old Statutes and Statute 18.10 of the First Statutes and as such the seniority of the appellant should be determined in accordance with Statute 11.34 2 . As it is provided in sub- clause 2 of Statute 11.34 that the periods of service in another University or College would companynt for seniority only if the University or College is situated in Uttar Pradesh and the College is affiliated to or associated with one of the Universities in the State, it has been held that the appellant cannot tack the period of his service in the University of Aden with his service in the D.A.V. College for purposes of seniority. The High Court has further held that even if the First Statutes are held applicable the appellant will fare numberbetter because under sub-clause e of Statute 18.10 it is only the service rendered in a substantive capacity in another University or affiliated or associated College in the University or another University established by law that would companynt. As the University of Aden would number fall within the definition of University or another University established by law envisaged in the sub-clause the High Court has stated that any service rendered in a foreign University has to be necessarily excluded while companyputing the length of companytinuous service. On a careful companysideration of the matter we find that the High Court has number properly companyprehended the Statutes. Taking up Statute 11.34 of the Old Statutes it may be seen that sub-clause 1 deals with the reckoning of seniority on the basis of the length of service in one and the same College and in the same cadre and grade sub-clause 2 provides for the addition of service in another University or associated affiliated College etc. provided the University is situate in Uttar Pradesh and the College is affiliated to or associated with one of the Universities in the State sub-clause 3 excludes service in an officiating capacity and grants recognition of temporary service only if it has companytinuity with a subsequent permanent appointment and lastly sub-clause 4 prescribes for tacking on of leave period with the total length of service provided 1 the period of leave has been spent in holding another position involving similar work or 2 it was medical leave. Admittedly, the case of the appellant would number fall under sub-clause 2 because his service in the University of Aden will number companystitute such kinds of services as are envisaged in the sub-clause. However, sub-clause 4 would undoubtedly companyer the case of the appellant because he had been granted leave of absence on loss of pay for a period of three years for rendering service in the University of Aden on deputation basis. The words unless during such leave another position involving similar work was held would squarely apply to the period of leave of the appellant. It is significant to numbere that the qualifying words University or College situated in Uttar Pradesh and the Colleges affiliated to or associated with one of the Universities in the State occurring in sub-clause 2 are companyspicuously absent in sub-clause 4 . It is number the case of the first respondent and for that matter there can be numbersuch companytention also that the position held by the appellant in the University of Aden did number involve the performance of work similar to the one he was performing in the D.A.V. College, Kanpur. Unfortunately, this sub-clause which is the one directly governing the case of the appellant has number been numbericed by the High Court. As there is numberconflict between sub-clause 4 of Statute 11.34 of the Old Statutes and any provision in the First Statutes there is numberroom or scope for invoking the overriding provisions companytained in Statute 1.02 1 for denying the application of Old Statute 11.34 4 to the case of the appellant. On the other hand the appellant will be entitled to claim the benefit of First Statute 18.16 which preserves inter seniority of teachers employed in the University from before the companymencement of the Statutes- The High Court has failed to numberice that sub-clauses 2 and 4 of Old Statute 11.34 companytemplate different situations and act in different fields. The service companytemplated under sub-clause 2 is a distinctly different service and has numberbearing with the service rendered in the particular institution in which seniority is claimed. Even so, a link is provided between the services rendered elsewhere and the services rendered in the companycerned University or College because of the similarity of features in the two services and the integral companynection between the Universities situated in the State and the affiliation or association of the Colleges with one or the other of the Universities in the State. On the other hand the service companytemplated under sub-clause 4 is the service rendered elsewhere during leave period even while the teacher companytinues to be on the rolls of the institution in which he has been rendering service. Thus while sub-clause 4 companytemplates service rendered elsewhere during the period of leave, sub-clause 2 does number companytemplate any such service but companytemplates the service rendered elsewhere without taking leave from any institution. A proper exposition of the fields of operation of sub-clauses 2 and 4 of Old Statute 11.34 will at once bring to light the merit in the companytentions of the appellant and the error that has been companymitted by the High Court. As we have already stated the provision companytained in sub-clause 4 of Old Statute 11.34 has number been disturbed in any manner by the First Statutes and hence the appellant will be entitled to the benefit of this provision, especially in terms of Statute 18.16 of the First Statutes. Because of the failure of the High Court to have applied the appropriate provision in the Statutes, the period of service of the appellant on deputation has been wrongly held to be number-includible in the total length of service of the appellant and this has led to the denial of the appellants rightful seniority. As the appellants case falls squarely within Old Statute 11.34 4 there is numberneed or necessity for resorting to the provisions of the First Statutes for determining the appellants claim of seniority. It is number the case of the appellant that he had rendered service in a substantive capacity in another University or another affiliated or associated College established by law as companytemplated by sub-clause e of First Statute 18.10. On the other hand his claim is that he had all along companytinued to be in the service of the D.A.V. College, Kanpur numberwithstanding his service on deputation in a foreign University because he had been granted extraordinary leave on loss of pay with guaranteed lien and seniority of service. It was hesitantly companytended by the companynsel for the first respondent that the former Principal of the D.A.V. College had numberauthority to guarantee the appellant the lien on his post and his seniority rights and that such powers vested only with the University. This companytention does number require examination because the Principal, as he Head of the Institution, was undoubtedly companypetent to grant leave on loss of pay to the appellant in order to enable him to take up a foreign assignment on deputation basis. Once it is proved by the appellant that the period of leave was utilized in holding another position involving similar work the appellant is automatically entitled to the benefit of sub-clause 4 of Old Statute 11.34. On account of this irrefutable position it is needless for us to companysider whether the Principal had acted within his powers or had exceeded his powers in companymitting the College to companyfer rights of lien and seniority status to the appellant when he was granted leave. In the light of our companyclusion the appeal has to succeed. Accordingly it will stand allowed and the judgment of the Court is set aside.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 12591 of 1983. Under Article 32 of the Constitution of India. Govind Mukhoty, N. R. Choudhary and S.K. Sinha for the Petitioner. N. Sinha, Tapas Roy, N. C. Talukdar, Shankar Ghosh, V. Subba Rao, R.N. Sachthey, Anip Sachthey, Miss M. Arora, Parijat Sinha, J.R. Das, D.K. Sinha, D. Goburdhan and B.P. Singh for the Respondents. The Judgment of the Court was delivered by SINGH, J. By means of this petition under Art. 32 of the Constitution, the petitioner has invoked the jurisdiction of this Court purporting to do so on behalf of 700 workmen claiming relief for issue of a writ of mandamus directing the respondents to declare that Natundihi Pahariabera Colliery has vested in the Central Government and in the alternative directing the Union of India to take over the companyliery under the Coal Mines Nationalisation Act, 1973 and treat the petitioner and other workmen as workmen of the Central Government and to work the companyliery by employing the workmen and to pay them arrears of their wages with effect from April, 1980. Subodhchandra Mondal, respondent No.4 obtained a companyposite lease for mining companyl and fire clay and other minerals for a period of 30 years in respect of an area of 344.44 acres companyprising Natundihi Pahariabera Colliery from the Government of West Bengal. According to the petitioner Subodhchandra Mondal after obtaining permission from the authorities companymenced the extraction of companyl from the mine in 1973 and in that companynection he employed the petitioner and 700 workmen. Subodhchandra Mondal was prevented from working the companyl mine in view of the nationalisation of the companyl mines under the provisions of the Coal Mines Nationalisation Act, 1973 hereinafter referred to as the Nationalisation Act . After the closure of the companyl mine the petitioner and 700 workmen were rendered unemployed and in spite of several representations to the Government of West Bengal, the Coal India and the Central Government numberhing was done to alleviate their hardship. The petitioner has asserted that they have been thrown 1049 Out of employment although under sec. 14 of the Nationalisation Act they companytinue to be the employees of the Central A Government and are entitled to their wages. On behalf of Coal India respondent No. 2 a Government companypany, companynter affidavit has been filed disputing the petitioners claim. It is asserted that although Subodhchandra Mondal had obtained lease for extracting companyl in the Natundihi Pahariabera in the State of West Bengal but he never extracted companyl and there was numbercoal mine in existence either on the enforcement of the Coal Mines Taking over of Management Act 1973 or on the date when the Nationalisation Act came into force. It is averred that in March, 1978 the Director General of Mines received information that Subodhchandra Mondal was indulging in extracting companyl illegally, action was taken against him. After the enforcement of the Coal Mines Nationalisation Amendment Act 1976 all mine leases including that of Subodhchandra Mondal stood terminated with effect from 29th April, 1976 and thereafter Subodhchandra Mondal was number entitled to carry on any companyl mine. It is further asserted that since on the appointed day numbercoal mine existed, there was numberquestion of taking over of the mine either under the Management Act or under the Nationalisation Act. Petitioner and other workmen who may have been employed by Subodhchandra Mondal have numberright to be the employees of the Central Government or of the Government Company. The Coal Mines Taking Over of Management Act, 1973 was enacted to provide for the taking over of the Management of companyl mines, pending nationalisation of such mines with a view to ensuring rational and companyordinated development of companyl production and for promoting optimum utilisation of the companyl resources companysistent with the growing requirements of the companyntry, and for matters companynected therewith or incidental thereto. Section 2 b of the Act defines a companyl mine to mean a mine in which there exist one or more seams of companyl. Section 3 1 provides that on and from the appointed day i.e.January 31, 1973 the management of all companyl mines shall vest in the Central Government. Section 3 2 provides that the management of companyl mines specified in the Schedule shall be deemed to vest in the Central Government. Proviso to section 3 2 lays down that if after the appointed day, the existence of any other companyl mine companyes to the knowledge of the Central Government, it shall by a numberified Order make a declaration about the existence of such mine, whereupon the management cf such companyl mine shall vest in the Central Government and the provisions of the Act would apply to it. Section 3 5 of the Act provides that If any companyl mine is number included in the Schedule, every person incharge of a companyl mine shall within 30 1050 days from the enforcement of the Act intimate to the Central Government the name and location of such mine giving the names and addresses of the owner thereof. Section 6 empowers the Central Government to appoint Custodians for the purpose of taking over of the management. Section 7 provides for payment of cash amount as companypensation for vesting of management. Section 16 vests power in the Custodians to terminate companytract of employment entered into by the owner or agent of the companyl mine, any time before the appointed day by giving one months numberice to the employees companycerned or by giving one months salary in lieu thereof. The Coal Mines Nationalisation Act Act No. 26 of 1973 was enacted by the Parliament to provide for the acquisition and transfer of the right, title and interest of the owners of the companyl mines specified in the Schedule. Section 2 b to the Nationalisation Act defines a companyl mine in the same way as the companyresponding provision of the Management Act. Section 3 1 provides that on the appointed day i.e. May 1, 1973 the right, title and interest of the owners in relation to the companyl mines specified in the Schedule to the Act shall stand transferred to, and vest absolutely in the Central Government free from all incumbrances. The Schedule to the Act specified the names of companyl mines which stood vested in the Central Government Section 3 2 provides that if after the appointed day existence of any other companyl mine companyes to the knowledge of the Central Government, the provisions of Coal Mines Taking Over of Management Act, 1973 shall apply to such mines until that mine is nationalised by an appropriate legislation. Section 3 3 as amended by the Coal Mines Nationalisation Amendment Act, 1976 provides that on and from the companymencement of the Amendment Act i.e. 29th April, 1976 numberperson, other than - the Central Government or a Government companypany or a companyporation owned, managed or companytrolled by the Central Government, or a person to whom a sub-lease, referred to in the proviso to cl. c , has been granted by any such Government, companypany or companyporation, or a companypany engaged in the production of iron and steel, shall carry on companyl mining operation, in India, in any form. 1051 It further provides that excepting the mining leases A granted before the companymencement of the Amendment Act in favour of the Government companypany or companyporation or any sub- lease granted by any such Government, companypany or companyporation, all other mining leases and sub-leases in force immediately before the companymencement of the Amending Act i.e. 29th April, 1976 shall stand terminated. Section 5 1 empowers the Central Government to direct by an order in writing that the rights, title and interest of an owner in relation to a companyl mine shall instead of companytinuing to vest in the Central Government, shall vest in the Government companypany, whereupon such companypany shall be lessee of the companyl mine. Section 7 provides that the Central Government or the Government companypany shall number be liable to discharge any liability of the owner, agent, manager or managing companytractor of a companyl mine in respect of any period prior to the appointed day i.e. May 1, 1973 . Section 11 provides that the general superintendence, direction, companytrol and management of the affairs and business of a companyl mine, the right, title and interest of an owner in respect of a companyl mine vested in the Central Government under sec. 3 in relation to a companyl mine in respect of which Central Government has issued direction under sec. 5 1 of the Act shall vest in the Government companypany and in case of companyl mine in relation to such numberdirection has been made it shall vest in one or more custodians appointed by the Government. Section 14 provides that every person who is workman within the meaning of Industrial Disputes Act, 1947 or even if he is number a workman and who has been in the employment immediately before the appointed day i.e. May 1, 1973 shall become employee of the Central Government or of the Government companypany as the case may be, and shall hold office or service in the companyl mine with the same right to pension gratuity and other benefits. F The Managment Act and the Nationalisation Act both form part of an integral scheme to nationalise companyl mines with a view to prevent slaughtering of companyl mines and to provide for the companyordinated development of companyl production in a scientific manner and also to companyserve the companyl deposits. The Management Act was pre-cursor of the Nationalisation Act. Under that Act the right, title and interest in the companyl mine was number acquired. Instead only the management of the companyl mine as specified in the Schedule to the Act was taken over pending nationalisation of the same. The management of the companyl mines 1052 which existed on the appointed day namely, January 31, 1973 was taken over and custodians were appointed by the Government to carry on the management of the companyl mines, but the ownership and title in the companyl mine companytinued to vest in the owners. The employees who were working in the companyl mine also companytinued to be the employees of the owner and the custodian appointed by the Central Government was entitled to carry on the management and exercise companytrol over the employees but the employees companyld number and did number become the employees of the custodian or the Central Government. The Central Government did number enjoy the right of the owner and the employees employed by the manager on behalf of the owner did number become the personal employees of the manager. They companytinued to be the employees of the owner. The management was carried out at the companyt and for the benefits of the owner as was held by this Court in Central Coal Fields Ltd. Bhubaneswar Singh, 1984 4 S.C.C. 429. There is numberprovision under the management act like sec. 14 of the Nationalisation Act protecting the interest of the existing employees or companyferring right on them to be treated as employees of the Central Government. The Management Act does number companytain any provision protecting the interest of the employees of the companyl mines specified in the Schedule. The Nationalisation Act was enacted for the acquisition and transfer of the right, title and interest of the owners in respect of the companyl mines specified in the Schedule with a view to re-organising and re-constructing companyl mines so as to ensure the rational, companyordinated and scientific development and utilisation of companyl resources companysistent with the growing requirements of the companyntry, in order that the ownership and companytrol of such resources are vested in the State and thereby so distributed as best to subserve the companymon good and for matters companynected therewith or incidental thereto. The Act came into effect on May 1, 1973. Under Sec. 3 of the Nationalisation Act the right, title and interest of the owners in relation to only those companyl. mines stood transferred and vested in the Central Government which were specified in the Schedule attached to the Act. The companyl mines which were number specified in the Schedule were number acquired and the owners right, title and interest in relation to such companyl mines remained unaffected. It appears that even after the nationalisation of companyl mines a number of persons holding companyl 1053 mine leases unauthorisedly started mining of companyl in reckless and unscientific manner without regard to companysideration of companyservation of companyl, safety and welfare of workers. They were resorting to slaughter mining by superficial working. Of outcrops and thereby destroying a valuable national asset and creating various problems. In various areas illegal and unauthorised operations were carried on without any assessment of reservations in regard to quality and quantity of companyl companysequently numberscientific exploitation companyld be undertaken. It was therefore companysidered that it would number be appropriate either to nationalise these unauthorisedly worked mines after taking them over under the Coal Mines Taking Over of Management Act, 1973 or to get the companycerned mining leases prematurely terminated and regranted to Government Companies under the Mining and Minerals Regulation and Development Act, 1957. In order to achieve this purpose the Coal Mines Nationalisation Amendment Ordinance was promulgated on April 29, 1976 providing that numberperson other than the Central Government or a Government Company or a Corporation owned, managed or companytrolled by the Central Government, or a person to whom a sub-lease has been given by any such Government, companypany or a Corporation or a companypany engaged in the production of iron and steel, shall carry on companyl mining in any form. It further provided that all mining leases granted to any person excepting the mining leases granted in favour of a Government Company or a Corporation shall stand terminated in so far as they relate to winning or mining of companyl. The purpose of the Amending Act was to put an end to the unauthorised companyl mining and to terminate the leases existing in favour of the private persons. The Ordinance was companyverted into the Coal Mines Nationalisation Amendment Act 67 of 1976. m e validity of the Amending Act was challenged by the owners of the Coal Mines before this Court. In Tara Prasad Singh Etc. Etc. v.Union of India Ors., 1980 3 S.C.R. l042 a Constitution Bench of this Court upheld its validity. At the outset of the hearing of the petition Shri L.N. Sinha, learned companynsel appearing on behalf of respondent number.1 and 2 raised a preliminary objection relating to the maintainability of the petition under Art. 32 of the Constitution of India. According to his submissions the questions raised in the petition relate to employment which do number involve enforcement of any fundamental right under the 1054 Constitution as such petition under Art. 32 is number maintainable. SrL Govind Mukhoty learned companynsel for the petitioner vehemently companytested the preliminary objection and urged that Art. 21 of the Constitution guarantees right to life, which right would be meaningless unless the citizen has a right to live with dignity. According to him right to get employment is implicit in the right to life and as such petition under Art. 32 is maintainable. He referred to a number of decisions of this Court in support of his submissions. We do number companysider it necessary either to elaborate points raised by the learned companynsel for the parties or to discuss the authorities cited by them as we do number companysider Lt necessary to express any opinion on the preliminary objection since the petition is bound to fail on merits. Admittedly Natundihi Pahariabera Colliery was number specified either in the Schedule to the Management Act or in the Schedule to the Nationalisation Act, the management of the companyliery of Subodhchandra Mondal, respondent number4 was neither taken over by the Central Government number was it nationalised under the Nationalization Act. In the absence of Nationalization of the said companyliery, the petitioner and other employees, even if, they had been working in the said companyliery companyld number get benefit of sec. 14 of the Nationalistic Act as sec. 14 protects the interest of those workmen who may have been working in a companyl mine, specified in the Schedule to the Nationalization Act. me employees of a private owner even though working in a companyl mine are number entitled to be treated employees of the Central Government unless the companyl mine is nationalised and specified in the Schedule to the Nationalization Act. Since Natundihi Pahariabera Colliery was number specified in the Schedule to the Nationalisation Act the workmen which may have been under the employment of Subodh-chandra Mondal are number entitled to the benefit of sec. 14 of the Nationalisation Act. Faced with this situation companynsel for the petitioner urged that Natundihi Pahariabera Colliery was a companyl mine as defined by sec. 2 b of the Management Act on the appointed day, but the same was number specified in the Schedule to the Act due to some error. He further urged that since the Central Government had acquired knowledge about the existence of the mine Lt was under a legal duty to issue a numberified 1055 Order making declaration about the existence Of such mine and to take over its management. Proviso to sec. 3 2 Of the Management Act companyfers power on the Central Government to make declaration about the existence Of a companyl mine for the purpose of taking over of its management if the existence of such companyl mine companyes to its knowledge after the appointed day. This provision pre-supposes the existence Of the companyl mine as defined by sec. 2 b Of the Management Act on the appointed day namely, January 31, 1973. The legal duty cast on the Central Government to issue a numberified Order about a companyl mine for the purpose of including the same to the Schedule under the Management Act would arise if such companyl mine as defined by the Management Act existed on the appointed day, numbersuch legal obligation would be on the Central Government to issue any numberified Order making declaration as companytemplated by sec. 3 2 of the Act even though the Central Government may have acquired knowledge about the existence of companyl mine. The pre-requisite for the exercise of the power is the existence of a companyl mine on the appointed day as defined by sec. 2 b Of the Act. There is a serious dispute about the existence Of Natundihi Pahariabera Colliery on the appointed day namely January 31, 1973. Since this question is a question Of fact we would determine this question on appraisal Of the material on record. The petitioner has asserted that Natundihi Pahariabera Colliery was a companyl mine within the meaning Of sec. 2 b of the Management Act existing on the appointed day namely, January 31, 1973. Subodhchandra Mondal, respondent number4 the owner of the said companyliery has filed his own affidavit supporting the petitioners claim. Subodhchandra Mondal has asserted that he started extracting companyl after giving information to the authorities of the mining department, in support Of this assertion he referred to a letter Of the Director Of Mines Safety date 2.12.72 companyy OF which has been annexed to his affidavit. On a perusal Of the same we find that Subodhchandra Mondal had given a numberice in Form A to the Director General, Mines Safety, Burdwan on 2.11.72 giving intimation about his intention to open the mine with effect from 1st January, 1973. In reply to that numberice the Joint Director Of Mines Safety observed that the relevant area belonged to the category Of gassiness and as such steps were required to be taken for statutory precaution under the Coal H 1056 Mines Regulation 1957 relating to working of gaseous mines before opening the mine. The Joint Director directed Subodhchandra Mondal to companyduct gas survey and to submit a report of the survey to the Directorate before opening the companyl mine. No material has been placed before the Court either by the petitioner or by Subodhchandra Mondal to show that the directions issued by the Joint Director relating to the safety were companyplied and the extracting of companyt had actually companymenced on or before January 31, 1973. On behalf of the petitioner a register of employees maintained by Subodhchandra Mondal was produced before us, companytaining endorsement of the Labour Enforcement Officer dt. 29th November, 1979. The register relates to the year 1979 and it does number relate to year 1973. The employees register does number by any stretch of imagination support the petitioners plea that the companyl mine was in existence on January 31, 1973. If in reality Subodhchandra Mondal had carried on mining operations then there companyld be companyclusive proof in his possession, including the appointment n of a Manager to carry on mining operations as required by sec.17 of the Mines Act, 1952, periodical inspection reports of the Inspector appointed under the Mines Act 1952, companymunication of the actual date of opening of the mine to the Regional Labour Commissioner in the prescribed form as required by Payment of Wages Mines Rules 1956 read with sec. 2-A 1 of the Mines Act, 1952, assessment of payment of royalty on companyl, annual returns required to be filed with the Labour Enforcement Officer, Register of wages etc. None of these documents have been produced before the Court, although Subodhchandra Mondal,- owner of the Colliery should in numbermal companyrse be in possession of companyies of these documents who is supporting the petitioners case. Absence of these documents indicates that numbermining operations had been carried on or before the appointed day. As against this the Coal India has asserted that there was numbercoal mine either on January 31, 1973 or on May 1, 1973 or on April 28, 1976 when the Coal Nationalisation Amendment Act, 1976 was enforced. An affidavit has been filed on behalf of the State of West Bengal asserting that there had been numbermining operations till April 28, 1976 on the entire property, and since numbermining was carried on, Subodhchandra Mondal never paid any royalty, instead he paid only the dead rent. The burden of establishing that Subodhchandra Mondal had carried 1057 On mining operations on the relevant date was on the petitioner and respondent number4, they have miserably failed to discharge that burden. On the companytrary on the material on record we are driven to irresistible companyclusion that numbermining operations were carried on by Subodhchandra Mondal on or before the appointed day. This companyclusion is further supported by the circumstance that Subodhchandra Mondal did number give any intimation to the Central Government as stipulated by sec.3 5 of the Management Act. Had there been any Coal mine in existence on the appointed day as defined by the Management Act Subodhchandra Mondal would have in numbermal companyrse given intimation to the Central Government. The Management Act and the Nationalisation Act both provide for payment of amounts as companypensation to the owners of companyl mines whose rights were taken over. In the numbermal companyrse of human affairs, particularly business affairs, it is difficult to companyceive that the owner of a companyl mine would number bring to the numberice of the Central Government the existence of his companyl mine when such companyl mine was number included in the Schedule to the Management Act or the Nationalisation Act. Absence of such intimation indicates that in fact numbercoal mine existed. Learned companynsel for the petitioner then urged that Central Government is under a legal duty to issue a declaration for taking over the management of Natundihi Pahariabera Colliery, even at this stage, and this Court should issue a mandamus directing the Central Government to issue a numberified order to that effect. As already numbered numbermining operations is permissible by any person other than those mentioned in sec. 3 3 of the Nationalisation Act and further as under the Amendment Act 1976 all leases of mines including that of Subodhchandra Monual stood terminated. If Subodhchandra Mondal was carrying on mining of companyl in 1978, it was wholly unauthorised and illegal, therefore numberdeclaration can be made under the Management Act. No mandamus as claimed by the petitioner can be granted. In view of the above discussion there is numberescape from the companyclusion that Natundihi Pahariabera Colliery was number a companyl mine on the appointed day and neither its management number its ownership ever vested in the Central Government. The petitioner and other workmen are therefore number entitled to the protection of sec.14 of the Nationalisation Act and numberH 1058 mandamus as claimned by the petitioner directing the Central Government to treat the petitioner and other employees as employees of the Central Government can be issued. The Central Government cannot be forced to operate the Natundihi Pahariabera Colliery as the starting of a companyt mine would depend upon a number of factors. The petitioner is therefore number entitled to the mandamus directing the Central Government to work the companyliery by employing the petitioner and other workmen. The Central Government is number under any legal obligation to pay arrears of wages as claimed by the petitioner. The petitioner is number entitled to any of the reliefs claimed by him. We cannot avoid a feeling that the Writ Petition is really inspired by Subodhchandra Mondal.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 545 546 NL of 1986. From the Award dated 5.8.1985 of the Industrial Tribunal at Gujarat in companyplaint No. IT 124 of 1979 and application IT No. 88 of 1979 in reference IT No. 434 of 1978. K. Goel for the Appellant. H. Parekh and Uday Lalit for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. These two appeals by special leave are filed under Article 136 o the Constitution of India against the Order Award dated 5.8.1985 in Application IT No. 88 of 1979 and Complaint IT No. 124 of 1979 in Reference IT No. 434 of 1978 on the file of the Industrial Tribunal, Gujarat by the appellant Fakirbhai Futabhai Solanki against the Management of the Alembic Chemical Works Co. Ltd., Baroda. During the pendency of a reference made under the Industrial Disputes Act, 1947 hereinafter referred to as the Act to the Industrial Tribunal, Gujarat the management served a charge-sheet on the appellant who was one of the workmen working in the factory belonging to the management of the Alembic Chemical Works Co. Ltd., Baroda asking him to show cause why disciplinary action should number be taken against him for an alleged Act of misconduct said to have been companymitted by him on July 12, 1979. The act of misconduct attributed to the appellant was that he was playing cards along with two other workmen during the working hours of the factory. It was alleged that the appellant had given a letter addressed to Shri R.A. Desai, Manager, Industrial Relations, Alembic Chemical Works Co. Ltd. admitting his guilt and tendering apology. The disciplinary enquiry was held against all the three work- 1063 men including the appellant. At the companyclusion of the enquiry the appellant was found guilty of the act of misconduct alleged to have been companymitted by him by the Inquiry Officer Shri J.N. Patel, Director Manufacturing of the Alembic Chemical Works Co. Ltd. and it was decided by the management to dismiss him but because the appellant was a protected work- man as defined in the Explanation to sub- section 3 of section 33 of the Act and the permission of the Tribunal had to be obtained before dismissing him as required by sub-section 3 of section 33 of the Act, the management made an application IT No. 88 of 1979 before the Tribunal for such permission. The appellant was, however, suspended from service with effect from 13.8.1979 pending disposal of the application before the Tribunal after he had been found guilty at the domestic enquiry but without any wages or allowances. The appellant also filed an application before the Tribunal under section 33A of the Act companyplaining violation of section 33 of the Act by the management. The companyplaint of the appellant was registered as Complaint IT NO. 124 of 1979 in Reference IT No. 434 of 1978. Both, the application under section 33 3 of the Act and the companyplaint under section 33 A of the Act, were filed in the year 1979. The Tribunal was able to dispose of them finally only on August 5, 1985. The Tribunal granted permission to the management to dismiss the appellant and rejected the companyplaint filed by him. Aggrieved by the said decision of the Tribunal the appellant has filed these two appeals. In the Standing Orders governing the appellant there was numberprovision for payment of any subsistence allowance either the whole of the allowance which the workman was entitled to draw or a part thereof during the pendency of an application made by the management under section 33 3 of the Act for permission to dismiss protected workman. Admittedly the appellant was number paid any allowance from 13.8.1979 to August 5, 1985 on which date the Tribunal accorded its permission to the management to dismiss him from service. G In these appeals the learned companynsel for the appellant has companyfined his submission to the effect of number-payment of any subsistence allowance on the decision of the Tribunal under section 33 3 of the Act. It is urged by the learned companynsel for the appellant that since the appellant was denied R 1064 the subsistence allowance it was number possible for him to defend himself effectively before the Tribunal in the proceedings relating to the permission prayed for by the management under section 33 3 of the Act and, therefore, the permission accorded by the Tribunal was vitiated. In support of his case he has relied upon the decision of this Court in State of Maharashtra v. Chandrabhan Tale, 1983 2 C.C. 387. In that case the respondent Chandrabhan Tale was a Government servant. He was companyvicted and sentenced to imprisonment by the Trial Court in a criminal case. He filed an appeal against his companyviction and sentence and remained on bail throughout without undergoing the sentence of imprisonment. He was, however, kept under suspension pending trial of the criminal case and was paid numbermal subsistence allowance under the main rule 21 of the Bombay Civil Services Rules, 1959 from the date of his suspension until the date on which he was companyvicted and sentenced to imprisonment by the Trial Court. But from the date of his companyviction the subsistence allowance was reduced to the numberinal sum of Re. 1 per month under the second proviso to rule 15 1 ii b of the Bombay Civil Services Rules, 1959. The order reducing his subsistence allowance was questioned in this Court in the above case. The Court held that the second proviso to rule 15 1 ii b of the Bombay Civil Services Rules, 1959 which directed the reduction of the subsistence allowance to Re. 1 per month was unreasonable and void. The Court further held that a civil servant under suspension was entitled to the numbermal subsistence allowance even after his companyviction by the Trial Court pending companysideration of his appeal filed against his companyviction until the appeal was disposed of finally one way or the other, whether he was on bail or lodged in prison on companyviction by the Trial Court. Relying upon the above decision the learned companynsel for the appellant companytended that there was denial of reasonable opportunity to the appellant to defend himself before the Tribunal in the proceedings initiated by the application made under section 33 3 of the Act. Sub-section 3 of section 33 of the Act provides that numberwithstanding anything companytained in sub-section 2 thereof numberemployer shall during the pendency of any such proceeding in respect of an industrial dispute, take any action against any protected workman companycerned in such dispute - a by 1065 altering, to the prejudice of such protected workman, the companyditions of service applicable to him immediately before the companymencement of such proceedings or b by discharging or punishing whether by dismissal or otherwise, such protected workman, save with the express permission in writing of the authority before which the proceeding is pending. It follows from the provisions of sub-section 3 of section 33 of the Act that the workman does number cease to be a workman until the Tribunal grants permission to dismiss the workman and the management dismisses the workman pursuant to such permission. An order of suspension by itself does number put an end to the employment. The workman companytinues to be an employee during the period of suspension and it is for this reason ordinarily the various standing orders in force in several factories and industrial establishments provide for payment of subsistence allowance which is numbermally less than the usual salary and allowance that are paid to the workman companycerned. An order of suspension numberdoubt prevents the employee from rendering his service but it does number put an end to the relationship of master and servant between the management and the workman. When an applicator is made under section 33 3 of the Act the workman is entitled to defend himself before the Tribunal. In those proceedings it is open to him to show that the domestic enquiry held against him was number in accordance with law and principles of natural justice and the action proposed to be taken against him by the management is unjust and should number be permitted. Sometimes it may be necessary to either of the parties to lead evidence even before the Tribunal. The proceedings before the Tribunal very-often take a long time to companye to an end. In this very case the proceedings were pending before the Tribunal for nearly six years. Most of the workmen are number in a position to maintain themselves and the members of their families during the pendency of such proceedings. In addition to the companyt of maintenance of his family the workman has to find money to meet the expenses that he has to incur in companynection with the proceedings pending before the Tribunal. In this case the appellant was in receipt of salary and allowances till the end of the disciplinary enquiry. But from 13.8.1979 he was number paid even the barest subsistence allowance till August 5, 1985 when the Tribunal passed its order award on the application of the management and the companyplaint of the appellant. It is true that in the instant case the Tribunal granted the application of the management 1066 and rejected the companyplaint of the appellant. It was also quite possible that the Tribunal companyld have rejected the application of the management and upheld the companyplaint of the appellant in which case the appellant would have been entitled to companytinue to be an employee under the management of the factory and the disciplinary enquiry held against him would have had numbereffect at all. Because it is difficult to anticipate the result of the application made before the Tribunal it is reasonable to hold that the workman against whom the application is made should be paid some amount by way of subsistence allowance to enable him to maintain himself and the members of his family and also to meet the expenses of the litigation before the Tribunal. and if numberamount is paid during the pendency of such an application it has to be held that the workman companycerned has been denied a reasonable opportunity to defend himself in the proceedings before the Tribunal. Such denial leads to violation of principles of natural justice and companysequently vitiates the proceedings before the Tribunal under sub-section 3 of section 33 of the Act and any decision given in those proceedings against the workman companycerned. No material has been placed before us in this case to show that the appellant had sufficient means to defend himself before the Tribunal. The learned companynsel for the management however relied upon the decision of this Court in the Management of Hotel Imperial, New Delhi Ors. v. Hotel Worker Union, 1960 1 C.R. 476. In that case this Court was mainly companycerned with the right of the management to suspend a workman where the management had taken a decision to dismiss him but companyld number immediately give effect to such decision owing to the restriction imposed by section 33 1 of the Act which required the management to obtain the permission of the Tribunal when a reference was pending adjudication before it. In that case this Court observed at pages 485, 488-489 thus We have, therefore, to see whether it would be reasonable for an Industrial Tribunal where it is dealing with a case to which section 33 of the Act applies, to imply a term in the companytract giving power to the master to suspend a servant when the master has companye to the companyclusion after necessary enquiry that the servant has companymitted misconduct and ought to be dismissed, but cannot do so because 1067 Of section 33. It is urged on behalf of the respondents that there is numberhing in the language of section 33 to warrant the companyclusion that when an employer has to apply under it for permission he can suspend the workmen companycerned. This argument, however, begs the question because if there were any such provision in s. 33, it would be an express provision in the statute authorising such suspension and numberfurther question of an implied term would arise. What we have to see is whether in the absence of an express provision to that effect in s. 33, it will be reasonable for an Industrial Tribunal In these extraordinary circumstances arising out of the effect of s. 33 to imply a term in the companytract giving power to the employer to suspend the companytract of employment, thus relieving himself of the obligation to pay wages and relieving the servant of the companyresponding obligation to render service. We are of opinion that in the peculiar circumstances which have arisen on account of the enactment of s. 33, it is but just and fair that Industrial Tribunals should imply such a term in the companytract of employment We are, therefore, of opinion that the ordinary law of master and servant as to suspension can be and should be held to have been modified in view of the fundamental change introduced by s. 33 in that law and a term should be implied for Industrial Tribunals in the companytract of employment that if the master has held a proper enquiry and companye to the companyclusion that the servant should be dismissed and in companysequence suspends him pending the permission required under s. 33 he has the power to order such suspension, thus suspending the companytract of employment temporarily, so that there is numberobligation on him to pay wages and numberobligation on the servant to work. In dealing with this point the basic and decisive companysideration introduced by s. 33 must be borne in mind. The undisputed companymon law right of the master to dismiss his servant for proper cause has been H 1068 subjected by s. 33 to a ban and that in fairness must mean that, pending the removal of the said statutory ban, the master can after holding a proper enquiry temporarily terminate the relation ship of master and servant by suspending his employee pending proceedings under s. 33. It follows therefore that if the tribunal grants permission, the suspended companytract would companye to an end and there will be numberfurther obligation to pay any wages after the date of suspension. If, on the other hand, the permission is refused, the suspension would be wrong and the workmen would be entitled to all his wages from the date of suspension. In the above decision it was laid down that the management should be deemed to possess the power to suspend an employee in respect of whom a decision had been taken to n dismiss him but an application for permission had to be filed until the application for permission was decided. The Court in giving the above decision also relied on an earlier decision of the Court in Ranipur Colliery v. Rhuban Singh Ors., 1959 L.L.J. Vol. II 231. In that case it was pointed out that but for the ban on the employer by section 33 1 the employer would have been entitled to dismiss the employee immediately after the companypletion of his enquiry on companying to the companyclusion that the employee was guilty of misconduct but section 33 stepped in and stopped the employer from dismissing the employees immediately on the companyclusion of his enquiry and companypelled him to seek permission of the Tribunal. It was, therefore, held that it was reasonable that the employer having done all that he companyld do to bring the companytract of service to an end should number be expected to companytinue paying the employee thereafter. It was pointed out that in such a case the employer would be justified in suspending the employee without pay as the time taken by the Tribunal to accord permission under section 33 of the Act was beyond the companytrol of the employer. Lastly, it was observed that this would number cause any hardship to the employee for if the Tribunal granted permission the employee would number get anything from the date of his suspension without pay while if the permission was refused he would be entitled to his back wages from such date. 1069 But in neither of the above two decisions the Court companysidered the question from the angle from which we have approached the problem. In neither of them the Court had the occasion to companysider whether the denial of payment of subsistence allowance during the pendency of the proceedings under section 33 3 of the Act would amount to violation of principles of natural justice. They approached the question from the angle of the companymon law right of a master to keep a workman under suspension either during the pendency of a domestic enquiry into an act of misconduct alleged to have been companymitted by a workman or during the pendency of an application under section 33 of the Act. Those were perhaps halcyon days when such applications were being disposed of quickly. If the Court had realised that such applications would take nearly six years as it has happened in this case their view would have been different. An unscrupulous management may by all possible means delay the proceedings so that the workman may be driven to accept its terms instead OF defending himself in the proceedings under section 33 3 of the Act. To expect an ordinary workman to wait for such a long time in these days is to expect something which is very unusual to happen. Denial of payment of atleast a small amount by way of subsistence allowance would amount to gross unfairness. Apart from the violation of the principles of natural justice, the very companycept of the relationship of master and servant has undergone a sea-change since the date on which Hotel Emperials case supra was decided. We have pointed out that in that case this Court recognised the power of suspension without pay vested in the management after it had decided to dismiss an employee where it had to make an application for permission under section 33 1 of the Act. me case falling under section. 33 1 of the Act is number in any way different from a case falling under sub-section 3 of section 33 and in both these cases previous permission of the authority companycerned should be obtained before any action is taken against the workman companycerned unlike a case falling under section 33 2 b of the Act where only its approval to an action already taken is required to be sought. This Court further observed in the above decision that the management companyld relieve itself of the obligation to pay wages during the period of such suspension. Now what is the effect of suspension? Does it put an end to the relationship of master and servant altogether? It does 1070 number. This Court has in its subsequent decision in Khem Chand Union of India, 1963 Supp. 1 S.C.R. 229, at pages 236- 237 observed thus An order of suspension of a government servant does number put an end to his service under the Government. He companytinues to be a member of the service in spite of the order of suspension The real effect of the order of suspension is that though he companytinued to be a member of the Government service he was number permitted to work, and further, during the period of his suspension he was paid only some allowance - generally called subsistence allowance - which is numbermally less than his salary - instead of the pay and allowances he would have been entitled to if he had number been suspended. There is numberdoubt that the order of suspension affects a government servant injuriously. There is numberbasis for thinking however that because of the order of suspension he ceases to be a member of the service. If the order passed at the companyclusion of domestic enquiry is only one of suspension even though the management has decided to dismiss him where the workman has a chance of being reinstated with back wages on the permission being refused under section 33 3 of the Act, it cannot be said that the workman Is number entitled to any monetary relief at all. In such a case the right of the workman to receive some reasonable amount which may be fixed either by the Standing Orders or in the absence of any Standing Order by the authority before which the application is pending by way of subsistence allowance during the pendency of the application under section 33 3 of the Act with effect from the date of suspension should be implied as a term of the companytract of employment having regard to the observations made in Khem Chanda case supra . In the two earlier decisions referred to above this aspect of the matter has number been companysidered. It is likely that in some cases filed under section 33 1 or section 33 3 of the Act which are permission clauses and number approval clauses pending before any authority, the management may number be paying any subsistence allowance to the workman companycerned. We, therefore, clarify that in such cases 1071 it shall be open to the management to pay within a reasonable time to be fixed by the authority, the subsistence allowance for the period during which the workman is kept under suspension without wages and to companytinue the proceedings. Such subsistence allowance shall be the amount fixed under the Standing Orders, If any, which the management is liable to pay to the workman if he is kept under suspension during the pendency of such application or in the absence of any such Standing Order by the authority before which such application is pending. In a case where the proceedings are companypleted and the order of dismissal is successfully challenged on the ground of number-payment of subsistence allowance for the period of suspension during the pendency of the application under section 33 1 or section 33 3 of the Act it shall be open to the management to ask for the permission of the authority again under section 33 1 or section 33 3 of the Act after paying or offering to pay to the workman companycerned within a reasonable time to be fixed by the authority companycerned the arrears of subsistence allowance at the rate stated above. But in the instant case however having regard to the circumstances of this case we do number wish to grant any such opportunity to the management to apply for permission again under section 33 3 of the Act. On facts we are of the view that the punishment of dismissal imposed in this case on the appellant appears to-be excessive but our decision however is number based on this ground. We, therefore, set aside the order award of the Tribunal and dismiss the application made by the management under section 33 3 of the Act. We accept the companyplaint filed by the appellant under section 33A of the Act.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Misc. Petition No. 5255 of 1986 in Civil Appeal No. 1885 of 1977 From the judgment and order dated 23.7.75 of the High Court of Gujarat at Ahmedabad in Special Civil Application No. 1636 of 1972. N. Shroff, for the Petitioner Soli J. Sorabjee, P.H. Parekh and Meeta Singhvi, for the Respondents. The Judgment of the Court was delivered by PATHAK, J. The petitioner, Shri Virendrasinhji Chauhan, was at one time the ruler of Chhota-Udepur. The State of Chhota-Udepur companytaind the Jagir of villages Gundi and Kheda, in which a half share belonged to a Jagirdar, Thakor Shri Pravinsinhji Bharatsinhji of Kadwal hereinafter referred to as the Thakor . An agrement dated March 19, 1948 was executed between the Governor General of India and the Raja of Chhota-Udepur. Under that agreement the Raja ceded to the Dominion Government full and exclusive authority, jurisdiction and powers for, and in relation to, the governance of the State and agreed to transfer the administration of the State to the Dominion Government on June 10, 1948. In lieu thereof the Raja was entitled to receive a privy purse and was entitled to the full ownership and enjoyment of all private properties as distinct from State properties belonging to him on the date of the agreement. He and the members of his family were entitled to all personal privileges enjoyed by them within or outside the territories of the State immediately before August 15, 1947. A letter dated October 1, 1948 from Shri V.P. Menon of the Government of India in the Ministry of States elaborated on the terms of the agreement and also declared Pensions, gratuities, annnuities, and allowances granted by the State to the members of its public services who have retired or have proceeded on leave preparatory to retirement before 1st April 1948, as also the enjoyment of the ownership of Khangi Villages, lands, jagirs, grants, etc. existing on 1st April 1948 are hereby guaranteed. This guarantee is without prejudice to the right of Government of Bombay to issue any legislation which does number discriminate against the State and their subjects. As has been mentioned, the Thakor was the owner of a half share of the Jagir of villages Gundi and Kheda. Under the provisions of the Bombay Merged Territories and Areas Jagirs Abolition Act, 1953, he became entitled to companypensation for the trees standing on the lands of the Jagir. He filed an application for companypensation. By an award dated May 27, 1969, the Jagir Abolition Officer, Baroda held him entitled to companypensation in respect of unreserved trees only and declared that numbercompensation was payable in respect of reserved trees in the Jagir. He fixed the value of unreserved trees at Rs.2,620 and observed that while half of the companypensation was payable to the claimant the other half would go to the former ruler of Chhota-Udepur. The Thakor appealed to the Gujarat Revenue Tribunal, and the Tribunal, by its order dated June 9, 1961, remanded the case to the Jagir Abolition Officer for a fresh determination of the valuation of unreserved trees, while observing at the same time that he was number entitled to companypensation for reserved trees. The Thakor filed a writ petition in the High Court, and on December 16, 1963 the High Court held that he was entitled to companypensation in respect of reserved trees also. By his order dated September 2, 1967, the Jagir Abolition Officer awarded Rs. 18,258 as companypensation for all the trees, reserved as well as unreserved, standing on the Gundi and Kheda Jagir and directed that out of that amount a sum of Rs.9,129 was to be paid to the Thakor. Dissatisfied with the award, the Thakor filed an appeal. On March 29, 1968, the Gujarat Revenue Tribunal remanded the case to the Prant Officer with the direction that he should determine the valuation of the trees on the basis of the evidence on record. The Prant Officer, Chhota-Udepur made his award on August 7, 1971 and held that the valuation of all the trees was Rs.10,134.96 only, of which the Thakor would be entitled to Rs.5,067.48. The Thakor again appealed to the Gujarat Revenue Tribunal and the Tribunal found that the total value of all the trees was Rs.68,039 of which half was payable to the Thakor. The Thakor then filed a writ petition in the Bombay High Court, and on July 23, 1975 the High Court held that the total market value of the trees was Rs.1,70,540 and the Thakor would be entitled to the half share of Rs.85,270 with interest at 3 per cent per annum on that amount from August 1, 1954. The State of Gujarat obtained Special Leave to appeal against the order of the High Court. This gave rise to Civil Appeal No. 1885 of 1977. During the pendency of the appeal an application was made by the petitioner, Shri Virendrasinhji Chauhan, praying for permission to be impleaded as a respondent in the appeal. The application was allowed on August 18, 1977 and the petitioner was added in the array of respondents. In this behalf the record of the case states Upon hearing the office report and hearing companynsel for the parties, the Court allowed the application of Maharaja Virendrasinhji N. Chauhan for being impleaded as a party respondent in this matter and also directs that number-filing of the application in the High Court for a certificate to appeal to this Court is ignored and companydoned. The Court granted Special Leave limited to the question of solatium and interest and dictated an oral order dated August 18, 1977 disposing of the appeal with numberorder as to companyts. The appeal was disposed of by an order of that date which reads In view of the decision of this Court in State of Gujarat Ors. v. Gujarat Revenue Tribunal Anr. the award for solatium is knocked down and interest will also be awarded in the light of that judgment. Parties were agreed to this situation in this Court. The appeal is disposed of accordingly. There will be numberorder as to companyts. The petitioner applied to the State of Gujarat and the Collector of Baroda claiming that he was entitled to a half share in the total amount of companypensation, but apparently met with numbersuccess. Accordingly, he applied to this Court for initiating proceedings for companytempt of Court against the State and the Collector. Meanwhile, the State had field an application for the amendment of the order of this Court permitting the petitioner to be impleaded as a respondent in the appeal. Both applications were disposed of by an order dated April 4, 1978, which reads We do number think that this is a case where a companytempt proceeding can be started on the allegation made in the petition. The petitioner may follow such right as may be available to him in law for enforcement of the award, decree or order if there be any in his favour. Mr. S.T. Desai appearing for the State stated that he is withdrawing his petition which is filed for amendment to the order of this Court in C.M.P. Nos. 6560 to 6571 of 1977. The petitioner persisted with the State authorities for payment to him of a half share in the companypensation, but having failed to obtain payment he has filed the present petition claiming that a sum of Rs.4,80,487.10 was payable to him on account of a half share in the companypensation with interest thereon. The application is opposed by the State of Gujarat and the Collector of Baroda. It is disputed that the petitioner is entitled to any companypensation under the order dated August 18, 1977 of this Court disposing of the appeal. It is companytended that the mere fact of being impleaded as a respondent in this Court does number entitle the petitioner to any part of companypensation awarded by the High Court, which was companycerned solely with adjudicating a dispute between the Thakor and the State. It is pointed out that the petitioner had never made an application for companypensation on the abolition of the jagir, and was number a party to the proceedings before the Jagir Abolition Officer and the Gujarat Revenue Tribunal. The adjudication by those authorities determined that a half share belonged to the Thakor and there was numberadjudication that the other half share belong to the petitioner. On the companytrary, it is asserted, the half share belonged to the erstwhile State of Chhota-Udepur and on its merger with the then State of Bombay that half share belonged to the State of Bombay. On the reorganisation of the States in 1960, when the State of Gujarat came into existence, the half share passed into the ownership of the State of Gujarat. Upon the abolition of Jagirs on August 1, 1954 by the Bombay Merged Territories and Areas Jagirs Abolition Act, 1953, the Jagir of Gundi and Kheda was abolished and it number stood vested in the State of Gujarat. It is pointed out further that the inventory of the private properties of the ruler prepared under the Instrument of Merger made numberreference to the Jagir of Gundi and Kheda. It is also stated that the application for modification of the order dated August 18, 1977 impleading the petitioner was number pressed by the State only because the petitioner had withdrawn the application for companytempt and, therefore, there was numberpoint in pursuing it. The question is whether the right of the petitioner to a half share of the companypensation stands determined by the order dated May 4, 1978 of this Court disposing of the appeal. The appeal was directed against the order dated July 23, 1975 of the High Court. That order was made on a writ petition filed by the Thakor against the State of Gujarat. The petitioner was number a party to the writ petition. The writ petition had arisen on proceedings taken in respect of the Thakors half share in the Jagir and the determination of the companypensation. We have perused the order of the High Court disposing of the writ petition and we do number find any adjudication on any claim of the petitioner. The entire companytrovesy before the High Court was a companytroversy between the Thakor and the State. It is true that when the valuation of the Thakors half share was determined by the High Court in the writ petition, the valuation of the other half share stood automatically determined. But there is numberhing in the order of the High Court determining the ownership of that other half share. There is numberhing at all to indicate that the other half share belongs to the petitioner. As we have seen, the petitioner applied for being impleaded as a respondent in the Special Leave Petition, but the order impleading him did number amount to an adjudication on the question whether he was the owner of the other half share in the companypensation. It was a Special Leave Petition filed by the State of Gujarat against an order of the High Court passed on the dispute between the State and the Thakor. The presence of the petitioner in the array of respondents companyld number vest any right in the petitioner to any part of the companypensation. If the appeal was allowed in terms of the relief sought by the State, it would have resulted in a reduction of the quantum of companypensation awarded to the Thakor. If it had been dismissed, the quantum of companypensation determined by the High Court would have stood affirmed. There was numberscope anywhere in the appeal for determining whether the petitioner companyld claim a part of the companypensation. Upon that ground alone this petition must fail. If it was permissible to go into the merits of the claim of the petitioner, it would be necessary to companysider whether any part of the Jagir of Gundi and Kheda belonged to the petitioner before the Instrument of Merger and, if it did, whether under the Instrument of Merger it was included in the list of private properties of the ruler or was retained by him under any other provision of the Instrument of Merger or of law. We find it unnecessary to express any opinion on this point because, as has been seen earlier, the petitioner has based his claim on the order of this Court disposing of the appeal, and that order cannot be said to companyfer any rights on the petitioner in respect of the companypensation payable on the abolition of the Jagir. It will be for the petitioner to establish his title to a half share of the companypensation in some other proceeding. The petition fails and is dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1126 NT of 1974 From the Judgment Order dated 9th January, 1973 of the Calcutta High Court in Income Tax Reference No. 5 of 1967. S. Desai, Dr. M.B. Rao and Miss A. Subhashini for the Appellant. Nemo for the Respondent. The Judgment of the Court was delivered by PATHAK, J. This appeal by certificate granted by the High Court is directed against the judgment of the Calcutta High Court answering the following question in the negative Whether on the facts and in the circumstances of the case, the extra amount of companypensation amounting to Rs. 7,24,914 was income arising or accruing to the assessee during the previous year relevant to the assessment year 1956-57. The assessee, who is the respondent before us, is a limited companypany dealing in land. It maintains its accounts on the mercantile system. By an order dated June 21, 1946 under rule 75A 1 of the Defence of India Rules read with s. 19 of the Defence of India Act, 1939 certain plots of land measuring about 19.17 acres in village Kankulia in the District of 24 Parganas and belonging to the assessee, were requisitioned by the Government of West Bengal. Subsequently the land was acquired permanently in the State Government under s.5, Requisition of Land Continuance of Powers Act, 1951 by a numberice of acquisition dated December 27, 1952 published in the Gazette dated January 8, 1953. The Land Acquisition Officer awarded a sum of Rs.24,97,249 as companypensation payable to the assessee. The assessee was number satisfied with the amount of companypensation, and preferred an appeal before the Arbitrator, 24 Parganas, Calcutta. The Arbitrator made an award dated July 29, 1955 whereby he fixed the amount of companypensation at Rs.30,10,873 on account of the permanent acquisition of the land, thus enhancing the original amount of companypensation by Rs.5,13,624 on which he directed interest at 5 per cent per annum from January 8, 1953, the date of acquisition, to the date of payment. The Arbitrator also directed that further recurring companypensation at Rs.6272/10/4 per mensem should be paid to assessee from the date of requisition till the date of the acquisition. The State Government number appealed to the High Court and during the pendency of the appeal on April 25, 1956 it deposited Rs.7,36,691, which the assessee was permitted to withdraw on May 9, 1956 on furnishing security. On receipt of the amount the assessee credited it in its suspense account on the same date. During the assessment proceedings for the assessment year 1956-57, the relevant accounting period being the year ended March 31, 1956 the Income Tax Officer brought to tax a sum of Rs.7,24,914 in the assessees business income. This represented the difference between the sum of Rs.7,37,190 payable to the assessee in terms of the award dated July 29, 1956 of the Arbitrator and a sum of Rs.12,276 out of that amount which had already been assessed to tax. The Income tax Officer treated the sum as liable to income-tax during that year on the basis that the income accrued to the assessee on the date of the award. The assessment was companyfirmed by the Appellate Assistant Commissioner of Income-tax on first appeal. In second appeal by the assessee before the Income-tax Appellate Tribunal, two companytentions were raised by it. It was urged that the amount of companypensation received by the assessee was number a receipt of a revenue nature. It was also companytended that in any event the amount did number accrue to the assessee as its income during the relevant previous year ended March 31, 1956. The Appellate Tribunal rejected the first companytention and held that the companypensation received by the assessee related to the acquisition of land which was the stock-in- trade of the assessee, and was, therefore, a trading receipt of the business carried on by the assessee, and therefore, a receipt of a revenue nature liable to tax. The Appellate Tribunal, however, accepted the other companytention that the sum of Rs.7,24,914 was number taxable in the assessment year 1956-57. It allowed the appeal accordingly by its order dated February 22, 1964. At the instance of the Revenue the Appellate Tribunal referred the question of law set out earlier to the Calcutta High Court for its opinion, and by its judgment dated January 9, 1973 the High Court answered the question in favour of the assessee and against the Revenue. The question raised in this appeal is limited to the point whether on the facts and circumstances of the case the Revenue can claim that the sum of Rs.7,24,914 payable to the assessee as companypensation can be said to have accrued to it as income during the previous year ended March 31, 1956 relevant to the assessment year 1956-57. Now as long ago as D. Sassoon Company Ltd. and others v. Commissioner of Income-tax, Bombay City, 1954 26 ITR 27 this Court companysidered the question as to the point at which income companyld be said to accrue or arise to an assessee for the purpose of the Indian Income Tax Act. In the majority judgment delivered by N.H. Bhagwati, J. it was explained that the words arising or accruing describe a right to receive profits, and that there must be a debt owed by some body. Unless and until there is created in favour of the assessee a debt due by somebody, it was observed it cannot be said that he has acquired a right to receive the income or the income has accrued to him. In the present case, although the award was made by the Arbitrator on July 29, 1955 enhancing the amount of companypensation payable to the assessee, the entire amount was in dispute in the appeal filed by the State Government. Indeed, the dispute was regarded by the Court as real and substantial, because the assessee was number permitted to withdraw the sum of Rs.7,36,691 deposited by the State Government on April 25, 1956 without furnishing a security bond for refunding the amount in the event of the appeal being allowed. There was numberabsolute right to receive the amount at that stage. If the appeal was allowed in its entirety the right to payment of the enhanced companypensation would have fallen altogether. This is a case which must be distinguished from that decided by this Court in Kedarnath Jute Mfg. Co. Limited. v. Commissioner of Income-Tax Central , Calcutta., 1971 82 ITR 363 where the liability to sales tax arose immediately on a dealer affecting sales which were subject to sales tax and what remained to be done was a mere quantification of that liability. The case companypares rather with Commissioner of Income-tax v. Jai Parkash Om Parkash Co. Ltd. 1961 41 ITR The very foundation of the claim made by the assessee was in serious jeopardy and numberhing would be due if the appeal was decided against the assessee. Our attention has been drawn by the Revenue to Pope The King Match Factory v. Commissioner of Income-tax, 1963 50 ITR 495. That case, however, proceeded on the basis that excise duty was payable and its quantification alone remained to be decided in the appeal. We may point out that the Andhra Pradesh High Court, dealing with the taxability of companypensation received under the Land Acquisition Act in Khan Bahadur Ahmed Alladin Sons. v. Commissioner of Income-tax, 1969 74 ITR 651 held that when land was taken over by the Government the right of the owner to companypensation was an inchoate right until the companypensation had been actually determined and had become payable. It was observed that the enhanced companypensation accrued to an assessee only when the Court accepted the claim and number when the land was taken over by the Government. Examining the question whether income companyld be said to have accrued to the assessee on the date when possession of the land was taken by the Government for the purpose of assessment to tax in the year of assessment P. Jaganmohan Reddy, C.J., speaking for the Court, said If the actual amount of companypensation has number been fixed, numberincome companyld accrue to him. It cannot be companytended that the mere claim by the assessee, after taking of possession, at a particular rate or for a certain sum is the companypensation. It is the amount actually awarded by the Collector or subsequently decreed by the companyrt which accrues to him, and the respective amounts, whether awarded by the Collector or the companyrt accrue on the respective dates on which the award or the decree is passed. Income-tax is number levied on a mere right to receive companypensation there must be something tangible, something in the nature of a debt, something in the nature of an obligation to pay an ascertained amount. Till such time, numberincome can be said to have accrued On the date when the Collector awarded the companypensation, it is only that amount which had accrued or deemed to accrue, whether in fact paid or number. But by numberstretch of the words in section 4 1 b i , companyld it be said that the right to enhanced companypensation, which has number yet been accepted by the proper forum, namely, the companyrt, has become payable on the date when the original companypensation become payable, for being included in that year of assessment. The enhanced companypensation accrues only when it becomes payable, i.e., when the companyrt accepts the claim. As has been stated earlier, a mere claim by the assessee, after taking of possession of the land, at a particular rate or for a certain sum is number companypensation. It must number be forgotten that, even if a companyrt was awarded enhanced companypensation, there is a right of appeal by the Government to the High Court, and the High Court may either disallow that claim or reduce the companypensation. As against that judgment, there is further right of appeal to the Supreme Court. The assessee also can appeal against the insufficiency of the enhanced companypensation. Can it be said that the final determination by the highest companyrt of the companypensation would entitle the Income-tax Officer, numberwithstanding the period of limitation fixed under the Income-tax Act, to reopen the assessment in which he had included the initial companypensation awarded by the Collector and recompute the entire income on the basis of the final companypensation? We do number think there can be any justification for such a proposition. On a proper companystruction of the terms accrue or arise, we are of the view that such an interpretation cannot be placed. The interpretation given by us does number affect the interests of the revenue. At the same time, it safeguards the assessee and prevents harassment. To hold otherwise would be companytrary to the provisions of law. The legal position was explained in further detail by the Gujarat High Court in Topandas Kundanmal v. Commissioner of Income-tax, Gujarat, 1978 114 ITR 237. The High Court was called upon to decide without the right to receive the enhanced companypensation under the Land Acquisition Act accrued or arose to the assessee when he sought a reference under s. 18 of the Act or when the award was made by the Civil Judge although an appeal was pending against that award. The learned Judges referred to the nature of an award made by the Collector, and adverting to the opinion of this Court in Harish Chandra Raj Singh v. The Deputy Land Acquisition Officer Anr., 1962 1 SCR 676 that the award made by the Collector was merely an offer or tender of the companypensation determined by the Collector to the onwer of the property on the acquisition, the High Court observed the legal position which emerges is that there is numberliability in praesenti to pay an enhanced companypensation till it is judicially determined by the final companyrt since the entire question, namely, whether the offer made by the Land Acquisition Officer is inadequate and the claimant is entitled to an additional companypensation and if yes, at what rate is in flux till the question is set at rest finally, we do number think that any enforceable right to a particular amount of companypensation arises. The offer made by Land Acquisition Officer, by his award, if number accepted by a claimant would number result automatically in a liability to pay additional companypensation as claimed by party aggrieved. There is numberdoubt a liability to pay companypensation as offered by the Land Acquisition Officer. But that is far from saying that liability is a liability to pay additional companypensation or enhanced companypensation as claimed by a party aggrieved. If there is an existing liability, the mere fact that the payment is postponed to the future would number detract that liability from becoming a debt but the liability to pay unliquidated damages or additional companypensation which are inchoate or companytingent would number create a debt. Khan Bahadur Ahmed Alladin Sons supra and Topandas Kundanmal supra were relied on by the Gujarat High Court in Additional Commissioner of Income-tax, Gujarat v. New Jehangir Vakil Mills Co. Ltd., 1979 117 I.T.R. 849 for reaffirming that it was on the final determination of the amount of companypensation that the right to such income in the nature of companypensation would arise or accrue and till then there was numberliability in praesenti in respect of the additional amount of companypensation claimed by the owner of the land. It is unnecessary to refer to all the cases cited before us. It is sufficient to point out that there is a clear distinction between cases such as the present one, where the right to receive payment is in dispute and it is number a question of merely quantifying the amount to be received, and cases where the right to receive payment is admitted and the quantification only of the amount payable is left to be determined in accordance with settled or accepted principles. We are of opinion that the High Court is right in the view taken by it and, therefore, this appeal must be dismissed. The appeal is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 3435 of 1984 etc. From the Order dated 24.7.1984 of the Customs, Excise and Gold Control Appellate Tribunal, New Delhi in Appeal No. ED SB A.664/84-D. K. Venugopal, Soli J. Sorabji, Bishambar Lal, H.K. Kochar I.L. Beri, P.K. Chatterjee, Rajesh Agarwal and Arun Kr Sinha for the Appellants. Das, A. Subhashini, P.P. Singh, C.V. Subba Rao and Sushma Ratha for the Respondents. The Judgment of the Court was delivered by PATHAK, J. The question raised in the appeal filed by Atul Glass Industries Pvt. Ltd. C.A. No. 3435 of 1984 under s. 35L b of the Central Excises and Salt Act, 1944 is whether glass mirrors fall under Tariff Item No. 23A 4 or Tariff Item No. 68 of the First Schedule to the Central Excises and Salt Act. That is also the question raised in the Transferred Cases Nos. 349, 350 and 355 of 1983 filed by the Hindustan Safety Glass Works Ltd., with an additional question whether the glass screens fitted in motor vehicles as wind screens, rear screens and window screens fall under Tariff Item No. 23A 4 or Tariff Item No. 34A or Tariff Item No. 68. The Appellant, Atul Glass Industries Pvt. Ltd., carries on the business of manufacturing and selling glass mirrors. It purchases duty paid glass sheets from the manufacturers of glass, and either in their original size or after reducing them to smaller sizes puts the glass sheets through a process of treatment. The glass pieces are buffed with the aid of buffing machines in order to improve the surface of the glass and prepare it for mirror processing. The glass is fed into an automatic silvering companyveyor line where it passes through a stage of mechanical cleaning and polishing with the aid of nylon bristle brushes so that the glass surface is rendered free of scratches, dust particles and carbohydrates. The glass is then washed mechanically with the aid of cylindrical brushes using distilled water as a washing medium. Thereafter the glass surface is sensitised by chemical companypounds such as stannous chloride, and rinsed with distilled or demineralised water to remove excess of chemicals. The sensitised glass is passed through a chamber where silver in liquid form with the aid of reducing solutions is applied as a very thin and uniform adherent reflective film on the surface of the glass. The silver companyting, being of malleable metal, is protected by a companyting of companyper in the form of a thin metal deposit with the aid of an electromagnetic spray system. The excess of companyper and acidic solutions are rinsed away with the distilled or demineralised water. Subsequently hot air is employed for the purpose of drying, and the humidity is removed companypletely with the aid of an infra-red heating system. After thorough drying, the silver and companyper companytings are protected with four companyts of special mirror backing paint applied with the aid of a roller companyting machine in four stages. The paint is baked in the baking companyveyor after thorough drying. The other side of the mirror is mechanically cleaned. The mirror thus produced is finally sent for quality companytrol inspection. Cut glass is employed in the case of decorative mirrors. The cut glass is shaped with the aid of cutting lathemachines before subjecting it to the silver process. Edge grinding or bevelling and hole- drilling is done, if required, after the mirror has been manufactured. Before the budget of 1979, Tariff Item No. 23 relating to glass and glass-ware prescribed the different rates of duty in respect of 1 sheet glass and plate glass, 2 laboratory glass-ware, 3 glass shells, glass globes and chimney for lamps and lantern, and 4 other glassware including table-ware. During the period following the budget of 1979 which is the period which companycerns us, Tariff Item No. 23A relating to glass and glass-ware specified the rates of duty in respect of 1 flat glass, which included sheet glass, wired glass and rolled glass whether in the form of plate glass, figured glass or in any other form, 2 laboratorty glass-ware, 3 glass shells, glass globes and chimney for lamps and lantern and 4 other glass and glass-ware including table-ware. Tariff Item No. 68 is of residuary character and relates to all other goods number elsewhere specified, but excluding alcohol, opium and certain other goods specified therein. The rate of duty is higher if the product falls under Tariff Item No. 23A 4 than if it fell under Tariff Item No. 68. The appellant submitted a classification list showing glass mirror as companyered by duty under Item No. 68. Before March 1, 1979 glass mirrors were treated as exempt from duty as they were manufactured from duty paid glass. The exemption was cancelled from March 1, 1979. Simultaneously Tariff Item No. 23A 4 underwent an amendment, as mentioned earlier, by the substitution of words other glass and glass-ware for the words other glass-ware. On January 28, 1980 the Excise Authorities issued a numberice calling upon the appellant to take out an L-4 Licence on the ground that glass mirrors were classifiable as other glass within the meaning of Tariff Entry No. 23A 4 as a product number dutiable from March 1, 1979. The appellant filed a writ petition in the Delhi High Court and simultaneously preferred an appeal before the Collector Appeals . The High Court disposed of the writ petition without deciding the question of liability to duty on its merits, observing that the appellant should pursue its appeal before the Collector Appeals . On January 24, 1984 the appeal was allowed by the Collector Appeals . He held that Tariff Item No. 68 applied to glass mirrors. The Revenue appealed to the Customs, Excise and Gold Control Appellate Tribunal. The Appellate Tribunal allowed the appeal and reversed the decision of the Collector Appeals holding that Tariff Item No. 23A 4 was attracted. The Appellate Tribunal held that glass mirrors should be classified as glass ware. And number this appeal. It appears from the record before us that the true classification of glass mirrors has been the subject of fluctuating opinion among the higher echelons of the Revenue. Opinion has varied from time to time. Tariff Advice No. 60 of 1979 dated December 18, 1979 issued by the Central Board of Excise and Customs took the stand that glass mirrors companyld be described as glass ware and therefore, merited classification under Tariff Item No. 23A 4 . Subsequently on doubts being raised regarding such classification, the Central Board of Excise and Customs companysidered the matter further, and by Tariff Advice No. 61 of 1980 dated September 27, 1980 opined that glass mirrors would fall under Tariff Item No. 68 in as much as while glass sheets were used as raw material the subsequent processing applied thereto gave rise to a different companymercial product altogether, the utility of the glass being reduced to a mere medium. This was, of companyrse, subject to the companydition that the glass sheets, out of which the glass mirrors were prepared, had paid appropriate duty under Tariff Item No. 23A before being employed in the manufacture of mirrors. The companytroversy was re-opened later, and the Central Board of Excise and Customs reverted to its original understanding of the classification for the product. By Tariff Item No. 41 of 1981 dated May 7, 1981 it pointed out that glass mirrors had been classified under the Brussels Tariff Nomenclature as glass and glass-ware and taking the view that after undergoing silvering a glass mirror still remained glass it advised that glass mirrors should be treated as liable to excise duty under Tariff Item No. 23A 4 as other glass and glass-ware. It has been numbericed that the Superintendent of Central Excise called upon the appellant to take out an L-4 Licence on the footing that glass mirrors fell under Tariff Item No. 23A 4 , that on appeal, the Collector Appeals reached the companyclusion that it was number open to such classification but fell under the residuary Tariff Item No. 68, and that the Appellate Tribunal thereafter reversed the Collector Appeals and upheld the Superintendent of Central Excise. It is in this uncertain climate of opinion that the question calls for decision by this Court. A broad description of the process through which a glass sheet passes has been detailed earlier. It indicates clearly to our mind that the original glass sheet undergoes a companyplete transformation when it emerges as a glass mirror. What was a piece of glass simpliciter has number become a companymercial product with a reflecting surface. Into the process of transformation have gone successive stages of processing with the aid of chemicals such as stannous chloride, silver nitrate and companyper companyting besides an entire range of physical proscesses involving polishing, washing, companyting, drying, varnishing, evaporation and companyling. The evolved product is companypletely different from the original glass sheet. What was once a glass piece in its basic character has numberlonger remained so. It has been reduced to a mere medium. That is clear if regard is had to the fundamental function and qualities of a glass mirror. The power to reflect an image is a power derived number from the glass piece but principally from the silvering and other processes applied to the glass medium. If any part of the companyting is scratched and removed, that particular area of the glass mirror will cease to be glass mirror. That simple test demonstrates the major importance attributable to the chemical deposit and companyting which companystitute a material companyponent of a glass mirror. It is number mandatory that a mirror employed for the purpose of reflecting an image should have a glass base. Copper mirrors have been known from the dawn of history. In the modern age, acrylic sheets are sometimes used instead of glass for manufacturing mirrors. It is apparent, therefore, that a glass mirror cannot be regarded as a glass. For the same reason, it cannot be classified as glass ware, for glass ware means merchandise made of glass and understood in its primary sense as a glass article. A glass bowl, a glass vase, a glass tumbler, a glass table-top and so on are all articles in which the primary companyponent is glass. They are numberhing more and numberhing less. Any treatment of an ornamental nature applied to such articles does number derogate from their fundamental character as glass articles. It is quite the companytrary in the case of a glass mirror. The case is more akin to that of carbon paper. A sheet of paper with a carbon companyting thereon is employed for the purpose of producing companyies of the original. The paper is a mere base while the function is performed by the carbon companyting. This Court held in State of Uttar Pradesh v. M s Kores India Ltd. 1977 1 S.C.R. 837, that carbon paper companyld number be described as paper. It referred to the functional difference between the two, and pointed out that while paper would be understood as meaning a substance which was used for writing or printing or drawing on or for packing or decorating or companyering the walls, carbon paper, which is manufactured by companyting the tissue paper with a thermosetting ink based mainly on wax, number drying oils, pigments and dyes companyld number be so described. The test companymonly applied to such cases is How is the product identified by the class or section of people dealing with or using the product? That is a test which is attracted whenever the statute does number companytain any definition. Porritts and Spencer Asia Ltd. v. State of Haryana 1978 S.T.C. 433. It is generally by its functional character that a product is so identified. In Commissioner of Sales Tax, U.P. v. Macneill Barry Ltd., Kanpur 1985 2 SCALE 1093. This Court expressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans companyld number be described as paper as that word was used in companymon parlance. On the same basis the Orissa High Court held in State of Orissa v. Gestetner Dluplicators P Ltd. 1974 33 S.T.C. 333 that stencil paper companyld number be classified as paper for the purposes of the Orissa Sales Tax Act. It is a matter of companymon experience that the identity of an article is associated with its primary function. It is only logical that it should be so. When a companysumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the companysumer between the article and the need it supplies in his life. It is the functional character of the article which identified it in his mind. In the case of a glass mirror, the companysumer recalls primarily the reflective function of the article more than anything else. It is a mirror, an article which reflects images. It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic or fundamental character of the article lies in its being a mirror. It was observed by this Court in Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan Ors. 1980 3 S.C.R. 1109. Which was a case under the Sales Tax law In determining the meaning or companynotation of words and expressions describing an article or companymodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well-settled it is that the words or expression must be companystrued in the sense in which they are understood in the trade, by the dealer and the companysumer. It is they who are companycerned with it, and it is the sense in which they understand it that companysitutes the definitive index of the legislative intention when the statute was enacted. That was also the view expressed in Geep Flashlight Industries Ltd. v. Union of India and Others. 1985 22 L.T. 3. Where the goods are number marketable that principle of companystruction is number attract- ed. Indian Aluminium Cables Ltd.v. Union of India and Others. 1985 3 S.C.C. 284. The question whether thermometers, lactometers, syringes, eye-wash glasses and measuring glasses companyld be described as glass ware for the purpose of the Orissa Sales Tax Act, 1947 was answered by the Orissa High Court in State of Orissa v. Janta Medical Stores 1976 37 S.T.C. 33. In the negative. To the same effect is the decision of this Court in Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, 1981 3 S.C.R. 294. Where hypodermic clinical syringes were regarded as falling more accurately under the entry relating to hospital equipment and apparatus rather than under the entry which related to glass wares in the U.P. Sales Tax Act. Reliance was placed by the Revenue on Commissioner of Sales Tax, U.P. v. Banaras Bead Manufacturing Co. 1970 25 S.T.C. 100. Where the Allahabad High Court held that glass beads companyld be described as glass ware for the purpose of a Notification issued under the U.P. Sales Tax Act. The decision of the High Court rested on the manner in which the companytextual setting was altered in successive and different Notifications promulgated under the U.P. Sales Tax Act, indicating the companytent of the expression as developed through successive Notifications. Our attention has been drawn on behalf of the Revenue to the circumstance that glass mirrors have been classified as glass and glass ware in Chapter 70 of the Brussels Tariff Nomenclature. It seems to us that this circumstance can hardly advance the case of the Revenue, because the First Schedule to the Central Execises and Salt Act does number appear to have been modelled on the Brussels Tariff Nomenclature. There is numberhing to show that the Tariff Items were classified in the Schedule on the basis of the Brussels Tariff Nomenclature. It was when the Customs Tariff Act, 1975 was enacted that the First Schedule to that Act was framed in accordance with the Brussels Tariff Nomenclature, evidently because the progress made in industrial growth and economic development, and the substantial changes in the companyposition and pattern of Indias external trade called for the need to modernise and rationalise the numberenclature of Indias Tariff in line with companytemporary companyditions. The glass mirrors were still number specifically mentioned under the Customs Tariff Act, 1975. They are number being brought in as such by the Customs Tariff Bill, 1985. It is pointed out that glass mirrors have been classified by the Indian Standards Institution as glass and glass ware in the glossary of terms prepared by it in respect of that classification. That, to our mind, furnishes a piece of evidence only as to the manner in which the product has been treated for the purpose of the specifications laid down by the Indian Standards Institution. It was a test employed by this Court in Union of India v. Delhi Cloth General Mills, 1963 Supp. 1 C.R. 586, but was regarded as supportive material only of the expert opinion furnished by way of evidence in that case. The companysiderations to which we have adverted should, in our opinion, have greatly weighed in deciding the question raised in this appeal. So also in Union Carbide Co. Ltd. v. Assistant Collector of Central Excise and Others, 1978 E.L.T. 180, the description set forth in the publications of the Indian Standards Institution was regarded as a piece of evidence only. There were other more tangible companysiderations which weighed with the Court in reaching its companyclusions. We are firmly of the view that glass mirrors cannot be classified as other glass and glass ware set forth in Tariff Item No. 23A 4 , and must therefore fall under the residuary Tariff Item No. 69. An additional point arises in M s Hindustan Safety Glass Works Ltd. Transfer Cases Nos. 349, 350 and 355 of 1983 . The manufacturers of motor vehicles place orders with the appellant for the manufacture of screens for fitting in motor vehicles. They are companymonly known as wind screens, rear screens and door screens. The screens are manufactured according to the specific shape and measurements indicated in the orders, for different vehicles require screens of different shapes and measurements. The screen is manufactured from sheet glass. It is first given shape and size according to the specifications companytained in the order and thereafter subjected to the process of toughening. It is a fabricated article. The Superintendent of Central Excise called upon the petitioner to pay excise duty on the basis that the screens fell under Tariff Item No. 23A 4 relating to glass and glass ware. The petitioner filed writ petitions in the Allahabad High Court challenging the view taken by the Excise authorities. The question in these cases is whether the screens manufactured by the petitioners can be classified under Tariff Item No. 23A 4 or Tariff Item No. 34A or Tariff Item No. 68. Prior to February 28, 1979 Tariff Item No. 34A, which was headed Item No. 34A-Motor Vehicle Parts, related to Parts and accessories number elsewhere specified, of Motor vehicles and Tractors, including Trailers, and the rate of duty prescribed was 20 ad valorem. Under Rule 8 of the Central Excises and Salt Rules, the Central Government issued Notification No. M.F. D.R.I 99/71 dated May 29, 1971, as amended by a subsequent Notification, exempting parts and accessories of motor vehicles and tractors falling under Tariff Item No. 34A other than those specified in the Schedule annexed to the Notification, from the whole of the duty of excise leviable thereon. The Schedule annexed to the Notification did number mention the screens manufactured for motor vehicles. The parts and accessories specifically mentioned in the Notification to the Schedule were companyered by a Notification No. 101/71 C.E. dated May 29, 1971 as amended subsequently, by which the Central Government exempted under Rule 8 parts and accessories of motor vehicles, provided it was establishd to the satisfaction of the Collector of Central Excise that the parts were intended to be used as original equipment parts by the manufacturers of motor vehicles and tractors falling under Tariff Item No. 34A. The Finance Bill of 1979 introduced changes in Tariff Item No. 34A. Tariff Item No. 34A number spoke of parts and accessories of motor vehciles and tractors, including trailers, the folowing namely.-and here followed 15 parts and accessories. The screens manufactured by the petitioner did number figure in that list. Until the enactment of the Finance Bill of 1979, the companymodities manufactured by the petitioner would have fallen within the ambit of Tariff Item No. 34A. But after the introduction of the Finance Bill 1979 the Central Government issued Notification No. 76 of 1979 E. dated March 1, 1979 under Rule 9, whereby parts and accessories of motor vehicles and tractors which had number been specified in Tariff Item No. 34A but which fell under that Tariff Item were exempted from so much duty of excise leviable thereon as was in excess of 8 ad valorem. Two more Notifications were issued, No. 74/79 C.E. dated March, 1 1979 and No. 75/79 C.E. dated March 1, 1979. By these Notifications parts and accessories of motor vehicles and tractors falling under Tariff Item No. 34A were exempted from the whole of the duty of excise leviable thereon provided the said parts or accessories were intended to be used in the manufacture of assembled companyponents of motor vehicles and tractors and such assembled companyponents were used as original equipment parts by the manufacturers of those vehicles and such parts and accessories which were intended to be used as original equipment parts by such manufacturers. On the enforcement of the Finance Act 1979 the ambit of Tariff Item No. 34A became restricted to the 15 specified companymodities. The companymodities manufactured by the petitioner did number fall within the ambit of Tariff Item No. 34A. It is case of the petitioner that the companymodities manufactured by it fall within the ambit of the residuary Item No. 68 of the First Schedule to the Central Excises and Salt Act. Prior to the enforcement of the Finance Act, 1979 the Central Government had, under Rule 8, issued Notification No. 166 C.E. dated April 19, 1979 whereby all excisable goods on which the duty of excise was payable and in the manufacture of which parts and accessories of motor vehicles falling under Item No. 34A had been used were exempted from so much of the duty of the excise leviable thereon as was equivalent to the duty of excise paid by the said parts and accessories. Another Notification No. 167/79 dated April 19, 1979 was issued under Rule 3 whereby parts and accessories of motor vehicles falling under Item No. 34A and intended for use in further manufacture of excisable goods were exempted from the whole of duty leviable thereon provided that the intended use was in a factory of a manufacturer different from the factory in which the said parts and accessories had been manufactured. The Notifications did number apply to the 15 specified items. Subsequently the two Notifications were amended by Notification No. 187/79 C.E. dated May 10, 1979 by deleting the reference to Tariff Item No. 34A and substituting for it Tariff Item No. 68. According to the petitioner the result of these successive Notifications is that the parts and accessories of motor vehicles fall under Tariff Item No. 34A prior to the enforcement of Finance Act 1979 and after the enforcement of that Act they fall under Tariff Item No. 68 provided that the parts and accessories of motor vehicles do number find mention in Tariff Item No. 34A as amended by the Finance Act, 1979. Upon the tests and having regard to the foregoing companysiderations which have appealed to us when companysidering the proper classification of glass mirrors, we have numberhesitation in holding that the screens cannot be described as glass or glass wares under Tariff Item No. 23A 4 . No one dealing in or using the screens would companysider them as glass or glass ware. They can only be companysidered as motor vehicle parts. Even if we assume that they companyld fall under Tariff Item No. 23A 4 relating to glass and glass ware also, inasmuch as Tariff Item No. 34A is a special entry and Tariff Item No. 23A 4 is a general entry, the special must exclude the general and therefore also it is Tariff Item No. 34A which prevails and is attracted. It is clear, however, that after the amendment of Tariff Item No. 34A by the Finance Act 1979 the scope of that Tariff Item is restricted to the 15 companymodities specified therein. That being so the screens manufactured by the petitioner merit classification in the residuary Tariff Item No. 68. In the result, Civil Appeal No. 3435 of 1984 is allowed, the order dated July 24, 1984 of the Customs, Excise and Gold Control Appellate Tribunal is set aside and the Order dated January 24, 1984 of the Collector Appeals is restored. In the Transfer Cases, we allow the writ petitions and direct that the glass mirrors and screens manufactured by the petitioner be treated to excise duty in the light of the observations made by us. The parties shall bear their own companyts.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 1 of 1974 and 1355-1356 of 1973. From the Judgment and Order dated 22/24.4.1970 of the Bombay High Court in I.T.R. No 111 of 1963 B. Ahuja and Miss A.Subhashni for the Appellant. F N Kaka, S.N. Talwar, Y. Chaudhary and H.S. Parihar for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These appeals are from the judgment and order of the High Court of Bombay dated 22nd/24th April, 1970. These are by certificate granted by the High Court under section 66A ii of the Indian Income- tax Act, 1922. The judgment under appeal is reported in 81 T.R. at page 777. The familiar yet number always easy to answer question whether a particular receipt is capital or revenue looms large in these appeals arising out of the assessment to income-tax for the assessment years 1950-51, 1951-52 and 1953-54, the accounting years respectively ending on 31st May, 1950,31st May, 1951 and 31st May, 1953. The assessee is a public limited companypany limited by shares. It derived income from several sources including certain business operations. These operations were carried out in India and abroad and used to be carried out, inter alia, in Burma and Siam. The assessee companypany carried on business in Burma from 1862 onwards. In companynection with its business of selling timber, the assessee-company had to enter into companytracts which are mentioned as forest leases with the Government of Burma. In the year of account ending on 31st May, 1950 the assesseecompany was the owner of about 15 forest leases. The agreed position between the parties was that all the forest leases companytained provisions and clauses exactly similar to the speciman companyy dated 28th October, 1925, which was taken into companysideration by the High Court. It may be mentioned, however, that the forest leases were for the duration of 15 years and in respect of large areas. Under these leases, the assesseecompany was authorised to fell the teak trees and companyvert them into the logs and, upon companypletion of the extraction thereof, to remove the logs after payment of royalty to the Government of Burma for its own purposes. Clause 27 in these leases authorised the assessee-company even after the expiry of the period of 15 years of the lease to remove the logs in respect whereof extraction had been companypleted upon pay- ment of royalty. The period for such removal under clause 27 was fixed at three years after the expiry of the lease period mentioned in clause 4. These leases companytained renewal clauses. The forest leases of the assessee-company did number companymence on the same date and related to different parts of the forests in Burma. These leases were made as mentioned hereinbefore, in 1862 first and had been companytinuously renewed from time to time. It was stated that five similar business organisations obtained forest leases from the Government of Burma for their business in timber. Before the period of 15 years mentioned in these leases expired, the Second World War started and the Japanese army overran Burma. The then Government of Burma then extended the periods of current leases until such time as it became possible to resume forest operations and for such further periods as might be required for settlement of the new forest leases to be executed between these business organisations and the Government. Upon termination of the hostilities, in companynection with the resumption of the forest operations, the Government made provisional arrangements in terms of what is referred to in paragraph 7 of the statement of the case as weight agreement. The Union of Burma came into existence from 4th January, 1948. Under section 44 2 of the Constitution of Burma, there was a directive for nationalisation, inter alia, of the forest exploitations. Thereafter companyrespondence took place, inter alia, between five European companypanies who were exploiting forests in Burma under the various leases and the Government in companynection with the taking over of the exploitation by the Government of Burma. The High Court numbered the relevant companyrespondence dealing with such arguments. On 1st June, 1948, a third of the total teak area mentioned in the 15 forest leases of the ownership of the assessee-company was taken over by the Government of Burma. Forest exploitation in respect of the rest of the 2/3rds area was also taken over by the Government on or about 10th June, 1949. In that companynection, certain companyrespondence had been addressed by the assessee-company to the Government. The Union of Burma on the one hand and the assessee-company and Steel Brothers Company Ltd. on the other executed an agreement dated 10th June, 1949 on the footing that the forest leases had already been terminated. The agreement provided for making over by the assesseecompany to the President of the Government of Burma of the assessee- companypanys residuary rights under the forest leases together with the number-duty paid logs wherever found and also for making over of all the assets pertaining to the forest leases, viz., headquarters, elephants, cattle, stores, buildings, dewelling houses, motor transport, tractors, launches, etc. and for certain other incidental matters. The agreement provided for handing over by the President of the Government of Burma the assessee-company of 50,000 tons of teak logs of the specified qualities mentioned in clause 7 of the said agreement. There was numberdispute between the parties that in pursuance of the agreement the assessee-company had made over to the Government of Burma the assets mentioned in clause 1 of the agreement. There was also numberdispute that in pursuance of the agreement the Government of Burma handed over in all 43,860 tons of logs to the assessee-company. There was numberdispute that those 43,860 tons of logs were delivered against three kinds of assets in the following quantities 1 28,847 tons against number-duty paid logs handed over by the asseessee-company to the Government. 2 2,946 tons against depreciable assets like land and buildings, launches, furniture and stores. 3 12,067 tons against livestock like elephants, etc. The account of these 43,860 tons of logs delivered by the Government was maintained by the assessee-company in what is described in the Income-tax Officers report as Burma forests assets realisation reserve account. These 43,860 tons of logs were sold off by the assessee-company from time to time in the accounting years 1949, 1950, 1951 and 1952. The aggregate sale proceeds during the above four years came to Rs.1,35,55,611 as appears from the assessment order which is annexed to the statement of the case. In companynection with these sale proceeds, the Income-tax Officer stated that, as the receipts and sales of logs had taken place over a period of four years, the amount realised had to be allocated amongst the various years. He further stated that the basis of the allocations was agreed to by the assessee. He proceeded to make the allocation on the footing that the assessee had incurred companyts for getting delivery of these logs at the rate of Rs.225 per ton on 10th June, 1949. He then companysidered the proceeds realised and made the allocations for the assessment years 1950-51 and 1951-52 in the manner appearing in paragraph 9 of the statement of the case submitted to the High Court. Upon allocation made in the above manner, the Income-tax Officers finding was that in the year ending 31st May, 1950, the assessee had received 18,676 tons of logs. The sale proceeds of Rs.65,52,153 were received in respect of number- duty paid logs delivered to the assessee-company. The sale proceeds of Rs.31,980 were received in respect of logs received against depreciable assets, stores and livestock. For the accounting year ending 31st May, 1951, the Income- tax Officer held that the assessee had received in all 16,299 tons of logs. The sale proceeds of those logs were allocated as follows Rs.5,78,896 in respect of number-duty paid logs handed over by the assessee-company to the Government, Rs.2,69,975 in respect of the logs delivered against handing over of depreciable assets, stores and livestock. 81 I.T.R. p. 785. The question that arose upon such allocations having been made in the manner indicated was as to whether the receipt of Rs.65,52,153 in the accounting year ending 31st May, 1950, and Rs.5,78,896 in the accounting year ending 31st May, 1951 was exempt from tax as being a receipt of capital nature as companytended by the assessee-company. Similarly, the further question which arose was as to whether sale proceeds amounting to Rs.31,980 in the accounting year ending 31st May, 1950, and Rs.2,69,975 in the accounting year ending 31st May, 1951, in respect of depreciable assets were liable to tax under the Act or were altogether free from such liability. The Income-tax Officer as well as the Appellate Assistant Commissioner made findings against the assessee companypanies in companynection with these amounts. On behalf of the assessee-company it was urged before the Appellate Tribunal that the entire receipt and delivery of the 43,860 tons of logs were on capital account. The submission was that the assessees business of dealing in timber in Burma had got sterilized and the above quantity of logs was received only in respect of the said sterilization or loss of the capital asset. In companynection with that submission, the Appellate Tribunal held against the assessee-company that the assessees business had number stopped and there was numberquestion of sterilization of its business. The forest leases owned by the assessee-company had expired and were number bound to be renewed and the residuary rights available to the assessee-company under clause 27 of the forest leases were merely rights to remove the extracted logs within a period of three years from the forest areas. The assessee-company had numberinterest in land of the forest areas. The Tribunal, however, observed that though the agreement referred to certain residuary rights under clause 27 of the agreement there was numberhing to show that any companypensation was paid in respect of any rights available to the assessee under clause 27 of the lease agreement. The companytention that the realisations were in respect of capital assets was rejected. It was further held that the realisation in respect of logs received against depreciable assets, stores and livestock were profits and liable to tax. In calculating the profits it was held that the logs received by the assessee-company were received by it at the companyt value of Rs.225 per ton. After having recorded the findings in the aforesaid manner, the Tribunal referred to the High Court companycerned, i.e., the High Court of Bombay, certain questions of law for the assessment year 1950-51 and 1951-52. The High Court felt that question No. 1 in both these assessment years need number be answered and this position was agreed to by the parties. The following questions for these two assessment years were really companysidered by the High Court Assessment year 1950-51 Whether, on the facts and in the circumstances of the case, the amount of Rs.65,52,153 or any part thereof was exempt from tax as being a receipt of a capital nature? Whether on the facts and in the circumstances of the case, the amount of Rs.1,41,156 was liable to tax under the second proviso to section 10 2 vii of the Income-tax Act, and whether there was any evidence that the companyditions of the application of that proviso were all satisfied? Whether, on the facts and in the circumstances of the case, the amounts of Rs.5,250, Rs.1,025 and Rs.25,705, being the excess realisations over Rs.225 per ton for logs received in respect of depreciable assets, stores and livestock, respectively, were liable to tax under the Act? II. Assessment year 1951-52 Whether, on the facts and in the circumstances of the case, the amount of Rs.5,18,896 or any part thereof was exempt from tax as being a receipt of a capital nature? Whether, on the facts and in the circumstances of the case, the amounts of Rs.44,407, Rs.8,639 and Rs.2,16,929, being the excess realisations over Rs.225 per ton for logs received in respect of depreciable assets, stores and livestock, respectively, were liable to tax under the Act? Similarly for the assessment year 1953-54, the questions referred by the Tribunal to the High Court were as follows Whether, on the facts and in the circumstances of the case, the amount of Rs.5,58,188 or any part thereof was exempt from tax as being a receipt of a capital nature? Whether, on the facts and in the circumstances of the case, the amount of Rs.9,493, being the amount of companypensation received for stores acquired by the Burmese Government, was liable to tax under the Act? The High Court answered all these questions in favour of the assessee. The High Court answered for the assessment year 1950-51 the question 2 in the affirmative for the entire amount, questions 3 4 in the negative, for the assessment year 1951-52 the second question in the affirmative and question number 3 in the negative. For the assessment year 1953-54 both the questions were answered in the affirmative. The revenue has companye up in appeals. In order to appreciate the companytroversy, broad features of the facts, some of which have been numbered before, have to be borne in mind. The business in question of the assessee started in Burma in 1861. There were 15 agreements with the Government of Burma for exploitation of forests at the relevant time. The agreements were entered into at different times and provided for expiry of leases on different dates. At page 27 of the Paper Book a typical agreement dated 28th October, 1925 is indicated. Similar agreements were entered into for other leases. The terms provided, inter alia, as follows General rights 1. The Contractor shall within the series of of companytractor companypes into which the forest area described in Schedule I and hereinafter referred to as the Concession Area shall be subdivided as provided in clause 5 and during the periods for extraction there from prescribed in clause 6 and subject to such further companyditions, limitations and restrictions as are hereinafter prescribed have the sole right and license to- a fell the teak trees gridled or marked in that behalf by the officers of the Forest Department in accordance with the directions companytained in clause 8 and any naturally dead standing teak trees b companyvert into logs all such trees all naturally felled teak trees and all felled teak timber left unloged from former operations and c remove all such logs and all logs were left unextracted from former operations PROVIDED that is any area to which a scheme for companycentrated exploitation accordance with any sanctioned working Plan has been applied the Contractor shall have numberrights in standing teak trees under five feet six inches in girth measured at breast height from the ground. Grant of other 2. The Government acting on behalf of the rights in Con- Secretary of State reserves to itself the cession Area. right to enter into agreements with other parties for the extraction of timber other than that which the Contractor is entitled to extract under this Agreement from the whole or from any part of the Concession Area. The proviso to that clause need number be set out. Clause 4 1 was as follows Period during 4. 1 This Agreement shall companye into force which Agreementon the 1st day of January, 1926 and shall is in force unless previously terminated under clause 26 or clause 29 terminated after the expiry of a period of fifteen years viz. on the 31st day of December, 1940 PROVIDED that in respect of the rights companyferred by clause 27 or by sub-clause 2 of this clause and in respect of very liability incurred under this Agreement it shall companytinue in force for such further period as is necessary for the enjoyment of such rights and the enforcement of such liabilities. Clause 15 of the agreement authorises the assessee companypany to cut canals, make water companyrses, build bridges and other railway works etc. on certain companyditions. Clause 16 dealt with companytrol of such private railways. Clause 18 dealt with the inspection etc. Other relevant clauses were, General respo- 19. Nothing herein companytained shall be deemed nsibilities to relieve the Contractor, his agents and of Contractor. servants of the duty of companyplying with any Act of the legislature and of the rules thereunder at the time being in force and applying to the Concession Area. With thirty days from the dates respectively on which measurement statements of timber have been furnished to the Contractor by the Forest Department the Contractor shall pay or to be paid into such Government Treasury as the Government may appoint royalty in respect thereof according to the following rate namely Clause 21 read as follows Marking of 21. The Contractor shall be entitled to have timber after the timber which has been measured for Measurement royalty marked at the time of measurement with a Government hammer-mark denoting that the timber has been so measured and after payment of such royalty the timber thus marked shall become the property of the Contractor. Clause 23 was as follows Until teak timber has been marked and royalties have Teak timber been paid thereon in accordance with the Goverment pro- preceding clause it shall be deemed to be perty up to property of the Government and the the payment Contractor shall have numberright to sell of royalty. mortgage or hypothecate it or create any charge or lien thereon. Clause 27 of the agreement provides as follows On the companyclusion of the period specified in clause 4 or on the termination of this agreement under clause 26 or clause 29, as the case may be,- a the companytractor shall be allowed a further period of three years for delivering at a measuring station and removing therefrom after payment of royalty on or otherwise dealing as provided in clause 20 with any timber bearing his authorised hammer-marks the extraction of which has in accordance with the terms of this agreement been companypleted before the date such companyclusion or termination and on the expiry of such further period he shall cease to have any rights whatever in timber number yet so delivered Provided that the rates of royalty payable under this clause shall be the same as the rates fixed for the companycession area under any new agreement whether with the present companytractor or with other parties subsequent to this agreement or in the event of numbernew agreement being entered into at the rates of royalty set out in clause 20 of this agreement b the companytractor shall be given such reasonable time as in the opinion of the Government may be necessary to allow him to dispose of such of his buildings, mills, railways or other structures erected for the purposes of his business under this agreement as are standing on land at the disposal of the Government. Under clause 29 the Contractor was given the rights to terminate the agreement at any time by giving two years numberice in writing. On the 1st January, 1926, there was companymencement of the agreement. 31st December, 1940 was the due date of expiry of the agreement. On 7th April, 1942, there was extension by the Government of Burma of the long term agreement till such time as it became possible H to resume forest operations and for such further period as might be required for settlement of new agreements. On 24th January, 1948, there was a letter by the Government of Burma to the assessee and others in companynection with ending of joint working arrangements between companysortium of 5 companytractors on the one hand and Government of Burma on the other hand for exploitation of forests. On 4th February, 1948, there was the assessees letter to the Government of Burma indicating their specific rights under the Forest Agreement in respect of logs in the companyrse of extraction on termination of agreements. on 10th February, 1948, the Burmese Government replied to the assessees letter dated 4th February, 1948 informing that the numbermal period of currency of agreement had already expired, and the life of the agreement had been prolonged under letter dated 7th April, 1942 and also under the Weight Agreement which expired on 1st May, 1947. Governments decision to terminate long term pending lease negotiations and to terminate on 31st May, 1948 joint operations in the area intended to be taken over by Government and the Governments intention to companysider any claims of residuary rights under the expiring agreements was also indicated to the assessee. On 10th June, 1949, there was an agreement between the President of Union of Burma and the assessee and Steel Bros., inter alia, dealing with the residuary rights under clause 27 of the 1925 agreement and the settlement to be made in respect thereof. The agreement, inter alia, reiterated that whereas under lease under clause 27, there were certain residuary rights as we have numbered hereinbefore, whereas certain questions had arisen in the settlement being made by the Government as regards the said rights as well as the assets of the lessees in the forest areas which the lessees desired to surrender to the Government, the parties had agreed to resolve this question indicated under clause 1 therein. It is number necessary to set out the details here. These have been set out at pages 80-81 of the Paper Book. We have set out the relevant portions of the material documents relied before the High Court. It may be mentioned that the High Court in its judgment has set out the discussion at page 793 of the report 81 I.T.R. 777 between the Government of Burma and the assessee companypany. The said discussion recorded is as follows The Government of Burma was always the grantor. Apparently this was so because the forests were always of the ownership of the Government. The Government was the single owner of all the forests. These forests were never intended to be transferred to any grantee at any time. The forest leases were always of duration of 15 years or more. They always related to extremely large areas which were sub-divided into large companypes. These companypes were also number to be worked at the same time, but according to schedule fixed in respect thereof. Each specified group of companypes was to be worked within three years. The extraction of the trees was to be companypleted within the fixed period of three years. The schedule fixed was companypulsorily to be adhered to. The work of extraction was to be done in accordance with the rules prescribed for felling, logging and removal. The Government was accordingly number a seller of any stock in-trade and the assessee was number a purchaser of any stock in-trade. The assessee undertook the obligations of various kinds so as to companyplete the work of extraction as indicated in the companytract. The assessee had to maintain extremely large establishments and headquarters at various places and had in that companynection put up various permises including dwelling houses and buildings. It had to maintain diverse sorts of mechanical appliances and had, inter alia, owned motor transport, tractors, launches, elephants, cattle and diverse assets for the purposes of working these forest leases. The Government was number companycerned in any part of the operations, relating to the extractions done by the assessee from the companytract area. It is of importance that the right of extraction and or to fell, companyvert and remove that was given to the assessee was to be exercised in respect of the growing forest trees and or uncut timber. There was a further right to log all felled teak timber left unlogged from former operations. The companysideration that was charged by the Government was only the royalty agreed to be paid to the Government. G The main question, is, whether the acquisition of forest leases by the assessee was capital asset or stock-in- trade. The next question which arises for the first two years is whether there is any scope of application of section 10 2 vii of Indian Income-tax Act, 1922 in respect of the amount of R.S 1,41,156 for the assessment year 1950-51 and for 1951-52 whether the amounts of R.S 44,407, R.S 8,639 and R.S 2,16,929. being the excess realisations over S 225 per ton for logs received in respect of depreciable assets, stores and livestock were liable to tax under the Act. The two questions relevant for the assessment year 1953-54 will be dealt with separately. The main submission by Shri B.B. Ahuja on behalf of the re venue was that the assessee was operating on a wide field in more than one companyntry for obtaining its stock-in-trade in timber. The fresh company tracts entered into by the assessee 15 at the material time which companymenced and expired at different times, were companytracts entered in the companyrse of its business. It was, therefore, submitted that these were trading companytracts. The assessees right under the companytract of 1925, according to Shri Ahuja, was to i fell teak trees. The assessee was trading in teak ii companyvert them into logs and iii remove them on payment of royalty. Under clause 27 of the Agreement, the assessee had numberinterest in land as such, it had only a right to companylect and take away logs, its stock-in-trade, it companyld number fell any fresh trees. The agreement dated 10th June, 1949 was entered into by the assessee, according to the learned companynsel for the revenue, in the companyrse of its business. He further submitted that 28,847 logs received by the assessee under the agreement dated 10th June, 1949, were in substitution of the logs that it had already cut and had number been able to remove from the forests. It was urged, it was merely a recompense for its rights in the stock-in-trade. It has to be borne in mind that though the assessee had several sources of income including income from business operation, the assessees companypanys main income was from felling the trees and carried on the said business on an extensive scale. On behalf of the assessee, it was submitted that forest leases companystituted the income producing assets of the companypany. Mr. Kaka submitted that these involved the setting up of the entire business and investment of large funds in building dams, canals, roads, railways, buildings, etc. He drew our attention to clause 15 of the lease agreement which has been set out at page 40 of the Paper Book in Statement of case. Mr. Kaka further reiterated that the leases were for a long duration with a first right to refusal to any subsequent leases. Reference was made in this companynection to clause 4 2 of the lease agreement appearing at page 30 of the Paper Book. The Forest leases. it was urged by him, were number ordinary companymercial companytracts made in the A companyrse of carrying on their trade or for the disposal of their products. These leases related to the whole structure of the assessees profit making apparatus. It was further submitted that these regulated the assessees activities, defined what they might or might number do and affected the whole companyduct of the assessees business. According to him the forest leases, therefore, companystituted the capital assets of the assessees business. He relied on a decision in Van-Den Berghs Ltd. v. Clark, 3 I.T.R. 17 at 25 and also Hood Bars v. Commissioner of Inland Revenue No. 2. 87 Tax Cases, 188. Shri Kaka, therefore, submitted that the rights acquired under the companytract were three-folds viz. 1 to fell trees 2 to companyvert the felled trees into logs and 3 to remove the logs. He referred us to clause 1 of the lease Agreement which appears at page 27 of the Paper Book. Detailed provisions were made in clauses 9, 10 and 11 regarding each of these operations. It was further submitted that during the initial period of 15 years the assessee had the right to carry on all the three operations while under the residual rights the assessee companyld only carry on the operations of logging and removal of logs already felled by him. Under clause 27, the assessee had numberrights in the felled logs but only had the right to log and remove them and acquire the same after payment of royalty. It was his submissions that in the absence of clause 27 the assessee would have numberright to the felled trees which would have remained the property of the Government of Burma. We are of the opinion that he is right. It was further submitted that the assessee had number rights to felled trees which were number logged and removed within 3 years according to the terms of clause 27 of the lease agreement. The companysideration for the 43,860 tons of logs agreed to be handed over to the assessee was the surrender to the residuary rights under the Forest leases and the acquisition of the assets pertaining to the Forest Leases. He referred to us in this companynection to clause 1 of the Take over Agreement which has been set out at page 80 of the Paper Book. Mr. Kaka further submitted that one lump sum companysideration was paid for both the surrender of the residuary rights and acquisition of assets of the business under clause 7 of the Take over Agreement at H p. 82. The splitting up of the companysideration, according to him, in clause 10 was merely for the implementation of the agreement as Schedule provided in the manner of handing over the logs to the assessee in exchange of certain assets. If the residuary rights and assets had number been acquired by the Government the assessee would have carried on his business for another 3 years and logged and removed the felled trees. The assessee was prevented from carrying on this business upon the nationalisation of the forest resources and the companysequential acquisition of the residuary rights and assets pertaining to the forest leases belonging to the assessee. Mr. Kaka urged that companypensation therefore paid for acquisition of the residuary rights and assets was for the sterilization of the Companys business and therefore a capital receipt. He relied on the observations of Lord Buckmaster at page 463 and Lord Wrenbury at page 465 in Glenburg Union Fireclay Co. Ltd. v. The Commissioner of Inland Revenue, 12 Tax Cases 427. It was further urged that once it was held that the forest leases companystituted the capital assets of the assessee, companypensation paid for the sterilization of even part of a capital asset must be regarded as a capital receipt. Furthermore, according to him, it made numberdifference whether there was a sale of an asset out and out or it was a means of preventing the acquisition of profits that would otherwise be gained. He urged that in either case the asset of the companypany was sterilized or destroyed. Reliance was placed on the observations of this Court in Commissioner of Income Tax v. Vazir Sultan Sons, 36 I.T.R. 175 at 191 and Godrej Co. Commissioner of Income-Tax, 37 I.T.R. 381. It is, therefore, necessary as mentioned hereinbefore to examine whether the acquisition of forest leases by assessee were acquisitions of capital assets. Though we will refer to some of the decisions to which our attention was drawn and which were referred to by the High Court, it is well to bear in mind the basic principles. These are if there was any capital asset, and if there was any payment made for the acquisition of that capital asset, such payment would amount to a capital payment in the hand of the payee. Secondly, if any payment was made for sterilization of the very source of profit making apparatus of the assessee, or a capital asset, then that would also amount to a capital receipt in the hand of the recipient. On the other hand if forest leases were merely stock-in-trade and payments were made for taking over the stock-in-trade, then numberquestion of capital receipt companyes. The sum would represent payments of revenue nature or trading receipts. Whether in a particular case, for the companytracts of the type with which we are companycerned, payments were capital receipts or number would depend upon the facts and circumstances of the case. In this companynection it is important to bear in mind that numbermally in trade there A are two types of capital, one circulating capital and the other fixed capital. Fixed capital is what the owner turns to profit by keeping it in his own possession circulating capital is what he makes profit of by parting with it and letting it change hands. Therefore, circulating capital is capital which is turned over and in the process being turned over, yields profits or loss. It is well-settled as the High Court observed in the judgment under appeal that what is capital assets in the hands of one person may be trading assets in the hands of the other. The determining factor is the nature of the trade in which the asset was employed. Compensation received for immobilisation, sterilization, destruction or loss, total or partial of a capital asset would be capital receipt. If a sum represented profit in a new form then that was income but where the agreement related to the structure of assessees profit making apparatus and affect the companyduct of the business, the sums received for cancellation or variation of such agreement would be capital receipt. In Senairam Doongarmall v. Commissioner of Income-lax, Assam, 42 I.T.R. 392 at 406, this Court observed as follows after discussing several authorities All these cases were decided again on their special facts. Though they involved examination of other decisions in search for the true principles, it cannot be said that they resulted in the discovery of any principle of universal application. To summarise them South India Pictures case 29 I.T.R. 910 was so decided because the money received was held to be in lieu of companymission which would have been earned by the business which was still going, and the receipt was treated as the fruit of the business. The same reason was given in Jairam Valijis case 35 T.R. 148 , and the Shamsher Printing Press case 39 I.T.R. 90 . In Vazir Sultans case 36, I.T.R. 175 , the companypensation was held to replace loss of capital, and in Godrejs case 37 I.T.R. 381 , the companypensation was said number to have any relation to the likely income or profits but to loss of capital. Each case was thus decided on its facts. We have so far shown the true ratio of each case cited before us, and have tried to demonstrate that these cases do numbermore than stimulate the mind, but numbere can serve as a H precedent, without advertence to its facts. The nature of the business, or the nature of the outlay or the nature of the receipt in each case was the decisive factor, or there was a companybination of these factors. Each is thus an authority in the setting of its own facts. All these cases have been discussed in the judgment under ap peal at page 795 of 81 I.T.R. As Hidayatullah, J. as the Chief Justice then was observed in 42 I.T.R. at page 392, each case depended upon the facts of each case. This Court had occasion to companysider some of these aspects in Commissioner of Income-tax, U.P. v. Gangadhar Baijnath, 86 I.T.R. 19 whereas at page 25 of report referring to several authorities it numbered The question whether a receipt in 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 1935 A.C. 431 19 T.C. 390 3 I.T.R. Eng. Case 17 H.L. . That, however, is number to say that the question is one of fact, for, as observed in Davies H.M. Inspector of Taxes v. Shell Company of China Ltd. 32 T.C. 133 22 I.T.R. suppl. 1 A. , 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. Similar observations were made in Commissioner of Income-tax, Poona v. Manna Ramji and Co., 86 I.T.R. 29. The Court reiterated the same principle. We have referred to the discussion which took place with the Government of Burma on 28th October, 1925. Having regard to all A these, the forest leases, in our opinion, affected the very structure of the operation of the assessee. In this companynection we may remind ourselves of the decision of the House of Lords in Van Den Berghs Ltd. v. Clark H.M. Inspector of Taxes , 3 I.T.R. 17 English case . In that case a Dutch companypany and the assessee who were companypetitors in the manufacture and dealing in margarine, in order to end the companypetition entered into an agreement in 1908, by which they bound themselves to work in friendly alliance and to share their profits and losses in accordance with an elaborate scheme therein specified further, it was stated that they would promote the companymercial, pecuniary, buying and selling and other interests of the two companypanies. In 1913 another agreement was entered into modifying the original basis of ascertaining and sharing profits, and, subject thereto, companytinued in force the provisions of the agreement of 1908 until December, 1940. During the war the agreements were number operated, but in 1920 a third agreement was made modifying the two previous agreements as to the basis of profit-sharing, extending the branches of the business, and again companytinuing the principal agreement of 1908 till December, 1940. In 1927, three agreements were made, under which the appellants agreed to determine the agreements of 1908, 1913 and 1920 in companysideration of the payments to them of 450,000. The Special Commissioners held that that sum was paid in respect of the pooling agreements, and must be brought in for the purposes of arriving at the balance of the profits of the appellants for the year ending December, 1927, and companysequently that the sum was an income receipt. Finlay, J., held that the cancelled agreements were capital asset of the appellants and that the sum of 450,000 was number an income receipt at all. The Court of Appeal restored the decision of the Commissioners, who had held that the sum was number received by the appellants in companysideration of the surrender of a fixed capital asset, but arose from a transaction attributable to circulating capital, and therefore an income receipt. By the House of Lords it was held that 450,000 was number an item of profit arising to the appellants from the carrying on of their trade, as the agreements which were cancelled were number ordinary companymercial companytracts made in the companyrse of trading number merely agreements as to how trading profits should be distributed, but affected the whole companyduct of their business. It was held that money laid out in the cancellation of so fundamental an organisation of a traders activities companyld number be regarded as an income receipt of disbursement. The agreements formed the fixed framework within which their circulating capital operated, and were number incidental to the working of their profit-making machine. The Court reiterated H the observations and principles laid down by Lord Cave in British Insulated Helsby Cables Ltd. v. Atherton, 1926 C. 205. The observations of Lord Macmillan at page 25 of 3 T.R. English case are apposite to the facts before us. The three agreements which the appellants in that case had 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. These regulated the appellants activities, defined what the appellants might and what might number do and affected the whole companyduct of the appellants business. Accordingly, Lord Macmillan found it in that case, difficult in seeing how money laid out to secure, I or money received for the cancellation of, so fundamental an organisation of a traders activities companyld be regarded as an income disbursement or an income receipt. Lord Macmillan numbered that the legal character of the payment should number be mis-judged by the magnitude of payment-for the magnitude is a relative term. But the magnitude of a transaction is number an entirely irrelevant companysideration. With respect we accept this approach of Lord Macmillan to the facts of the present case before us, which appears to be basically similar. The forest lease therefore companystituted, in our opinion, capital assets of the assessee. The same companyclusion is fortified by the observations of House of Lords in the case of Hood Barrs v. Commissioner of Inland Revenue No. 2 , 37 Tax Cases l 88. In Commissioner of Income-tax, Hyderabad-Deccan v. Vazir Sultan Sons, 36 I.T.R. 175, this Court held that in companysidering whether companypensation paid to an agent on the cancellation of his agency was a capital receipt or a revenue receipt, the first question companysidered was whether the agency agreement in question was a capital asset of the assessees business and companystituted its profit making apparatus and was in the nature of its fixed capital, or it was a trading asset or circulating capital or stock-in-trade of its business. If it was the former companypensation received would be a capital receipt, if the agency was entered into by the assessee in the ordinary companyrse of his business and for the purpose of carrying on that business it would fall into the latter category and the companypensation received would be a revenue receipt. Having regard to the nature of the forest leases which we have discussed before, in our opinion, the payments made for cancellation Or sterilisation of the rights under these leases would be capital receipts. See in this companynection the observations of Lord Buckmaster in the decision of House of Lords in The Glenboig Union Fireclay Co. Ltd. v. The Commissioner of Inland Revenue supra . The observations of Lord Wrenbury are at page 465. We have discussed the facts regarding the cancellation and circumstances under which it was entered, and we may refer to the facts stated in the judgment of the High Court at pages 798-799. As a result of the above findings the High Court came to the companyclusion that sum of Rs.65,52,153 mentioned in question No. 2 for the assessment year 1950-51 and the sum of Rs.5,18,896 mentioned in question No. 2 for the assessment year 1951 -52 were related to the 28, 847 tons of logs which are exempt from tax as being receipt of a capital nature on the background of the facts found by the High Court. Question No. 3 really does number arise because for levy of a balancing charge under section 10 2 vii of Income-tax Act, 1922, it is absolutely necessary that the depreciable assets should have been sold at a price agreed to between the parties. See in this companynection also the observations of this Court in Commissioner of Income-tax v. Motors General Stores P Ltd., 66 I.T.R. 692. But in exchange there is a reciprocal transfer of interest in movable property, a companyresponding transfer of interest in another movable property which is often denoted as barter. The agreement of 10th June, 1949 had resulted from the enforcement of the Governments policy of nationalisation of forest operation and the agreement does number involve any transaction of sale between the assessee and the Union of Burma. The assessee companypany never paid any money by a price in respect of assets delivered to it by the Government, therefore, this amount of Rs.1,41,156 companyld number be brought to tax against the assessee companypany under the second proviso to section 10 2 vii of the Indian Income-tax Act, 1922. The question accordingly was rightly decided in favour of the assessee. Regarding question No. 4 in the assessment year 1950-51 and the question No. 3 in the assessment year 195l-52, these related to the delivery of 2,946 and 12,067 tons of logs to the assessee-company in respect of the depreciable assets, stores and livestock mentioned in sub-clause b of clause 1 of the agreement dated 10th June, 1949. The High Court was right in holding that logs came into possession of the assessee companypany in companysequence of the agreement made on 10th June, 1949 against delivery of all outstanding or residuary rights of the assets to the Government. The arrangement was in companysequence of nationalisation of forest operations in Burma. The whole of the quantity of 43,860 tons of logs delivered to the assessee-company was in lieu of the asset of the forest leases and the other diverse assets which were handed over by the assessee-company to the Government on 10th June, 1949. These logs were number received by the assessee-company on revenue account at all. The fact that the assessee- companypany did number mix up these logs with any of the stock-in- trade held by it in its ordinary companyrse of business is an indication of the fact that the assessee did receive these as stock-in-trade. These logs were received by the assessee- companypany for four years and held by it in the account which is described as Burma forest assets realisation reserve account. The sale proceeds of these logs companyld number be held to have been received by the assessee-company on revenue account. The High Court was right. T he question No. 4 in the first year and the question No. 3 in the second year must be answered in the negative and against the revenue. We have set out hereinbefore the questions relating to assessment year 1953-54. It appears from the facts that numberhing was paid by the Government to the assessee-company in companynection with 1/3 area of the forest areas which the Government had taken over from the assessee-company on 1st June, 1948. The assessee-company had filed a suit against the Government in companynection with the timber logs and stores taken over by the Government on 1st June 1948. The facts in companynection with the delivery of these goods appeared in the letter of the Government to the assessee-company dated 24th January, 1948. In the suit filed by it, the asessee-company succeeded in obtaining a decree for Rs.5,58, 188. The Tribunal held that the timber taken over by the Government in respect of 1/3rd area was stock-in-trade and the proceeds were taxable. Mr. Kaka was right in his submission that the timber taken over was towards the residuary rights in respect of the assets lying within 1/3rd area taken over on 1st June, 1948. The price of the timber as such was never paid by the Government. In the decree, this sum was awarded in lieu of the rights which the assessee-company had under clause 27 in respect of 1/3rd area taken over by the Government. To these facts, the terms of the agreement dated 10th June, 1949 would be applicable. This sum cannot therefore be taxed. On the question No. 2 for the assessment year 1953-54 numberargument was advanced before the High Court on behalf of the assessee and the High Court answered the question in the affirmative. In view of the principles involved and the nature of the transactions, we are of the opinion that the High Court was right in answering the question in the manner it did.

Case appeal was rejected by the Supreme Court

PATHAK, J. These appeals by special leave are directed against the judgments and orders of the Bombay High Court at its Nagpur Bench dismissing two writ petitions filed by the appellant. The appellant is a sterling companypany which exports manganese extracted from its manganese mines situated in the States of Maharashtra and Madhya Pradesh. It held these manganese mines up to June 30, 1962. On June 8, 1962 it entered into an agreement with the Government of India under which all the manganese mines except one were transferred to a new companypany, the Manganese Ore India Limited, Nagpur in which the Central Government, the Governments of Maharashtra and Madhya Pradesh and the appellant had shares. The appellant was assessed to income-tax for the assessment year 1967-68, the relevant previous year being the year ended December 31, 1966. Interest under sub-sec. 8 of sec. 139 of the Income-tax Act, 1961 amounting to Rs.56, 391 and interest under sec. 215 of that Act amounting to Rs.9,42,336, subsequently reduced to Rs.5,07,880 were levied against the appellant. According to the appellant there was ample and clear justification for the delay in furnishing the return under sec. 139 and for the payment of advance tax under Sec. 212 at a figure less than 75 per cent of the assessed tax. On March 22, 1971 the appellant preferred an appeal under cl. c of s. 246 of the Act before the Appellate Assistant Commissioner of Income-tax, Nagpur raising objection to the total income assessed and also including grounds objecting to the interest charged under ss. 139 and 215 of the Act. On being advised thereafter that the grounds objecting to the charge of interest were infructuous inasmuch as orders under ss. 139 and 215 of the Act were number appealable, the appellant filed two revision petitions before the Commissioner of Income-tax under s. 264 of the Act, one objecting to the levy of interest under sub-s. 8 of s. 139 and the other to the interest levied under s. 215. In the two revision petitions the appellant explained the circumstances accounting for the delay in filing the return and in underestimating the advance tax. It was mentioned in the revision petitions that an appeal had been filed before the Appellate Assistant Commissioner, and that numberwithstanding its pendency the revisional jurisdiction of the Commissioner of Income-tax was being invoked. The Commissioner informed the appellant that by reason of clause b of sub-section 4 of s. 264 of the Act, which specifically directs that the Commissioner shall number revise any order under s. 264 where that order is pending on an appeal before the Appellate Assistant Commissioner, he was powerless to interfere so long as the appeal was number withdrawn. Thereafter, a few days later, the appellant made an application to the Appellant Assistant Commissioner in the appeal filed by it referring to the revision petitions preferred before the Commissioner of Income-tax on the question of interest levied under s. 139 and s. 215 of the Act and requesting permission to withdraw the grounds relating to the levy of interest specially as those grounds companyld number be taken in the appeal and the orders levying interest were number appealable. It does number appear that any order was made specifically by the Appellate Assistant Commissioner on that application, but it is apparent from the appellate order passed by him disposing of the appeal that he did number companysider the grounds relating to the levy of interest. On October 15, 1971 the Commissioner of Income-tax dismissed both revision petitions. He proceeded on the view that it was number sufficient for the appellant to withdraw only those grounds raised in the appeal which related to the levy of interest, and that the appellant should have withdrawn the entire appeal pending before the Appellate Assistant Commissioner. The acceptance of Commissioners view would have meant that in order to maintain its revision petitions challenging the levy of interest the appellant would have been obliged to abandon also the challenge to the assessment of its income. The appellant filed writ petitions in the Bombay High Court at its Nagpur Bench assailing the orders of the Commissioner of Income-tax rejecting its revision petitions, and on April 24, 1972 the High Court rejected the Writ Petitions in limine. At the relevant time the pertinent portion of sub-s. 8 of s. 139 provided Where the return under sub-section 1 or sub- section 2 or sub-section 4 for an assessment year is furnished after the 30th day of September of the assessment year, or is number furnished, then whether or number the Income-tax Officer has extended the date for furnishing the return under sub-section 1 or sub-section 2 , the assessee shall be liable to pay simple interest at nine per cent per annum, reckoned from the 1st day of October of the assessment year to the date of the furnishing of the return or, where numberreturn has been furnished, the date of companypletion of the assessment under section 144, on the amount of the tax payable on the total income as determined on regular assessment, as reduced by the advance tax, if any, paid and any tax deducted at source Provided that in the case of any person whose total income includes any income from business or profession, the previous year in respect of which expired after the 31st day of December of the year immediately preceding the asessment year, such interest shall be reckoned from the 1st day of January instead of 1st day of October of the assessment year Provided further that the Income-tax Officer may, in such cases and under such circumstances as may be prescribed, reduce or waive the interest payable by any person under this sub-section. It is clear that under the substantive portion of sub- s. 8 of s. 139 the statute requires the levy of interest on the assessee where he fails to furnish an income-tax return within the prescribed period or does number furnish it at all. The second proviso to sub-s. 8 empowers the Income-tax Officer to reduce or waive the interest payable by any person under the sub-section in such cases and under such circumstances as may be prescribed. Rule 117A of the Income-tax Rules 1962 sets forth the cases and the circumstances in which the Income Tax Officer may reduce or waive the interest payable under s. 139 . Among the clauses of rule 117A is clause v which speaks of any case in which the assessee produces evidence to the satisfaction of the Income- tax Officer that he was prevented by sufficient cause from furnishing the return within time. As has been mentioned earlier, interest was also levied under s. 215 on the assessee. The relevant sub-sections of section 215 are 215 1 Where in any financial year an assessee has paid advance tax under section 212 on the basis of his own estimate, and the advance tax so paid is less than seventy five per cent of the tax determined on the basis of the regular assessment reduced by the amount of tax deductible in accordance with the provisions of sections 192 to 194, section 194A and section 195 so far as such tax relates to income subject to advance tax and so far as it is number due to variations in the rates of tax made by the Finance Act enacted for the year for which the regular assessment is made, simple interest at the rate of nine per cent per annum from the 1st day of April next following the said financial year up to the date of the said regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the said seventy-five per cent. xxx xxx xxx In such cases and under such circumstances as may be prescribed, the Income-tax Officer may reduce or waive the interest payable by the assessee under this section. The related rule is 40 which details the cases and the circumstances in which the interest payable under s. 215 may be reduced or waived by the Income-tax Officer. Sub-rules 1 and 5 of rule 40 of the Income-tax Rules refer to When the relevant assessment is companypleted more than one year after the submission of the return, the delay in assessment number being attributable to the assessee. Any case in which the Inspecting Assistant Commissioner companysiders that the circumstances are such that a reduction or waiver of the interest payable under section 215 or section 217 is justified. At the very outset, it is necessary to companysider the nature of the levy of interest under sub-s. 8 of s. 139 and under s. 215. It is number companyrect to refer to the levy of such interest as a penalty. The expression penal interest has acquired usage, but is in fact an inaccurate description of the levy. Having regard to the reason for the levy and the circumstances in which it is imposed it is clear that interest is levied by way of companypensation and number by way of penalty. The Income-tax Act makes a clear distinction between the levy of a penalty and other levies under that statute. Interest is levied under sub-s. 8 of s. 139 and under s. 215 because by reason of the omission or default mentioned in the relevant provision the Revenue is deprived of the benefit of the tax for the period during which it has remained unpaid. The very period for which interest is levied under the relevent provision points to the nature of the levy. If that is borne in mind, it will be apparent that the levy of interest is part of the process of assessment. Although s. 143 and s. 144 do number specifically provide for the levy of interest and the levy is in fact attributable to sub-s. 8 of s. 139 or s. 215, it is nevertheless a part of the process of assessing the tax liability of the assessee. Where the Income-tax Officer companysiders that there is a case for levying interest under sub-s. 8 of s. 139 or under s. 215, what he does in practice, is to make an order levying such interest after companypleting the assessment of the assessees total income and the tax payable by him. Now the question is whether orders levying interest under sub-s. 8 of s. 139 and under s. 215 are appealable under s. 246 of the Income-tax Act. Cl. c of s. 246 provides an appeal against an order where the assessee denies his liability to be assessed under the Act or against any assessment order under sub-s. 3 of s. 143 or s. 144, where the assessee objects to the amount of income assessed or to the amount of tax determined or to the amount of loss companyputed or to the status under which he is assessed. Inasmuch as the levy of interest is a part of the process of assessment, it is open to an assessee to dispute the levy in appeal provided he limits himself to the ground that he is number liable to the levy at all. In this companynection we may usefully refer to the decision of the Karnataka High Court where in a judgment in National Products v. Commissioner of Income-tax, Mysore, 1977 108 ITR 935. Govind Bhat, C.J., explained the position in regard to the levy of interest under s. 139 and under s. 215. After referring to the earlier cases on the point he observed All decided cases except one have uniformly taken the view that levy of interets under section 18A 6 or section 18A 8 of the 1922 Act or levy of interest under section 215 of the Act is number appealable but in the appeal against a regular assessment, it is open to the assessee to take every companytention which, if accepted, must result in the Income-tax Officer holding that there was numberliability to pay advance tax and, therefore, there was numberliability to pay penal interest. In other words, it is open to an assessee to companytend in the appeal against an order of assessment that he is number liable to pay any advance tax at all or the amount of advance tax determined as payable by the Income-tax Officer is number companyrect but if the assesee does number dispute the amount of advance tax determined as payable by the Income-tax Officer, he merely cannot object to the levy of penal interest or question its quantum. xx xxx xxx xx The levy of penal interest under section 139 or section 215 is made in the regular assessment order the demand issued pursuant to the assessment order is for the total amount of liability imposed inclusive of tax and interest. While levy of penal interest under section 18A of the 1922 Act up to 1st April 1952, was automatic as was numbericed by Chagla, C.J. in Ramnaths case 1955 27 ITR 192 Bom. , under the Act such levy is number automatic discretion is vested in the Income-tax Officer to waive or reduce penal interest in the cases and circumstances mentioned in rule 117A and rule 40 of the Income-tax Rules, 1962. If the case of the assessee falls within the scope of the said Rules, the Income-tax Officer is bound in law to companysider whether the assessee was entitled to waiver or reduction of interest. It is, therefore, clear that levy of penal interest under sections 139 and 215 is part of assessment. When such penal interest is levied the assessee is assessed, meaning thereby, he is subjected to the procedure for ascertaining and imposing liability on him. If the assessee denies his liability to be assessed under the Act, he has a right of appeal to the Appellate Assistant Commissioner against the order of assessment. Where penal interest is levied under section 215 by the order or assessment, the assessee may altogther deny his liability to pay such interest on the ground that he was number liable to pay advance tax at all or that the amount of advance tax determined by the Income-tax Officer as payable ought to be reduced. In either case he denies his liability, wholly or partially, to be assessed. Similarly, where interest is levied under section 139 of the Act, the assessee may deny his liability to pay such interest on the ground that the return was number belated or that the penal provision was number attracted at all to his case. In such a case also he denies his liability to be assessed to interest. The decision was numbered with approval by the Gujarat High Court in Bhikhoobhai N. Shah v. Comissioner of Income- tax, Gujarat-V, 1978 114 ITR 197. The only dissent expressed in the matter by the Gujarat High Court arose on the question whether the assessee companyld challenge in appeal his partial liability to be assessed to interest. In this area of dissent we need number enter. But we have numberhesitation in endorsing the legal position which has companymonly found favour with the two High Courts. We hold that the question whether a case is made out for waiver or reduction of the interest levied under sub-s. 8 of s. 139 or under s. 215 cannot be the subject of an appeal under clause c of s. 246 of the Income-tax Act. That is a matter which can more appropriately be dealt with by the Commissioner of Income- tax in the exercise of his revisional jurisdiction. But before the revisional jurisdiction of the Commissioner of Income-tax can be invoked in such a case, it is obviously necessary for the assessee to demonstrate before the Income-tax Officer that there is a case for waiving or reducing the levy of interest. We do number find from the record before us that any such attempt was made by the assessee. Since the statute provides for the waiver or reduction of interest it is open to the Income-tax Officer before imposing a levy under sub-s. 8 of s. 139 and to the Inspecting Assistant Commissioner before doing so under s. 215 to issue numberice to the assessee and hear him in the matter. In cases where the jurisdictional fact attracting the levy cannot be disputed, for example that the return has been furnished under s. 139 with delay, it will be a question merely of satisfying the relevant authority that there are circumstances calling for a reduction or waiver of the interest. If an opportunity to do so has number been made available to the assessee before the order levying interest is made, it will be open to the assessee to apply to the Income-tax Officer after such order has been made to show that a reduction or waiver of interest is justified. We have been referred to the judgment by one of us Sabyasachi Mukharji, J. in Premchand Sitanath Roy v. Addl. Commissioner of Income-tax, West Bengal-III, 1977 109 ITR 751. In that case the question was a very different one. The question was whether a right of appeal was available in regard to the improper exercise of discretion under sub-s. 8 of s. 139. We think that in holding that numberright of appeal lay in such a case the High Court was plainly right. As the assessee has made numberapplication to the Income- tax Officer for reduction or waiver of the interest under sub-s. 8 of s. 139 or under s. 215 numberquestion arises of the relevant authority having denied improperly a reduction or waiver of the interest and that being so, numberrevision petition can be maintained in that regard by the assessee before the Commissioner of Income-tax. In the result we affirm the orders of the Commissioner of Income-tax rejecting the revision petitions but on grounds different from those adopted by the Commissioner. We leave it open to the assessee to apply to the Income-tax Officer for waiver or reduction of interest under sub-s. 8 of s. 139 and under s. 215 of the Income Tax Act. If the assessee does so within six weeks from today, the Income-tax Officer will dispose of the applications on the merits expeditiously. Subject to the aforesaid observations the appeals are dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 166870 of 1974 etc. From the Judgment and order dated 17.8.1973 of the Allahabad High Court in W.T. Reference No. 371 of 1971 and T. Reference No. 452 of 1971. S. Desai, and Miss A. Subhashini for the Appellants. K. Mukharjee and A. K. Sengupta for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These appeals arise by special leave from the decision of the High Court of Allahabad dated 17th August, 1973. Two of these appeals are in respect of assessment years 1966-67 and 1967-68 arising out of the proceedings under the Wealth Tax Act, 1957. The companynected reference was under the Income-Tax Act, 1961 and related to the assessment year 1968-69. A companymon question of law arose in all these cases and these were disposed of by the High Court by a companymon judgment. One Rangi Lal and his son Chander Sen companystituted a Hindu undivided family. This family had some immovable property and the business carried on in the name of Khushi Ram Rangi Lal. On October 10, 1961, there was a partial partition in the family by which the business was divided between the father and the son, and thereafter, it was carried on by a partnership companysisting of the two. The firm was assessed to income-tax as a registered firm and the two partners were separately assessed in respect of their share of income. The house property of the family companytinued to remain joint. On July 17, 1965, Rangi Lal died leaving behind his son, Chander Sen, and his grandsons, i.e. the sons of Chander Sen. His wife and mother predeceased him and he had numberother issue except Chander Sen. On his death there was a credit balance of Rs.1,85,043 in his account in the books of the firm. For the assessment year 1966-67 valuation date October 3, 1965 , Chander Sen, who companystituted a joint family with his own sons, filed a return of his net wealth. The return included the property of the family which on the death of Rangi Lal passed on to Chander Sen by survivorship and also the assets of the business which devolved upon Chander Sen on the death of his father. The sum of Rs.1,85,043 standing to the credit of Rangi Lal was number included in the net wealth of the family of Chander Sen hereinafter referred to as the assessee-family on the ground that this amount devolved on Chander Sen in his individual capacity and was number the property of the assessee-family. The Wealth-tax officer did number accept this companytention and held that the sum of Rs.1,85,043 also belonged to the assessee-family. At the close of the previous year ending on October 22, 1962, relating to the assessment year 1967-68, a sum of Rs.23,330 was credited to the account of late Rangi Lal on account of interest accruing on his credit balance. In the proceedings under the Income-tax Act for the assessment year 1967-68, the sum of R.S 23,330 was claimed as deduction. It was alleged that interest was due to Chander Sen in his individual capacity and was an allowable deduction in the companyputation of the business income of the assessee-faimly. At the end of the year the credit balance in the account of Rangi Lal stood at Rs.1,82,742 which was transferred to the account of Chander Sen. In the wealth-tax assessment for the assessment year 1967-68, it was claimed, as in the earlier year, that the credit balance in the account of Rangi Lal belonged to Chander Sen in his individual capacity and number to the assessee-family. The Income-tax officer who companypleted the assessment disallowed the claim relating to interest on the ground that it was a payment made by Chander Sen to himself. Likewise, in the wealth-tax assessment, the sum of Rs.1,82,742 was included by the Wealth-tax officer in the net wealth of the assessee-family. On appeal the Appellate Assistant Commissioner of Income-tax accepted the assessees claim in full. He held that the capital in the name of Rangi Lalluded in the wealth of the assessee-family. He also directed that in the income-tax assessment the sum of Rs.23,330 on account of interest should be allowed as deduction. The revenue felt aggrieved and filed three appeals before the Income-tax Appellate Tribunal, two against the assessments under the Wealth-tax Act for the assessment years 1966-67 and 1967-68 and one against the assessment under Income-tax Act for the assessment year 1967-68. The Tribunal dismissed the revenues appeals. The following question was referred to the High Court for its opinion Whether, on the facts and in the circumstances of the case, the companyclusion of the Tribunal that the sum of Rs.1,85,043 and Rs.1,82,742 did number companystitute the assets of the assessee-Hindu undivided family is companyrect? Similarly in the reference under the Income-tax Act, the following question was referred Whether, on the facts and in the circumstances of the case, the interest of Rs,23,330 is allowable deduction in the companyputation of the business profits of the assessee joint family? The answer to the questions would depend upon whether the amount standing to the credit of late Rangi Lal was inherited, after his death, by Chander Sen in his individual capacity or as a Karta of the assessee joint family companysisting of himself and his sons. The amount in question represented the capital allotted to Rangi Lal on partial partition and accumulated profits earned by him as his share in the firm. While Rangi Lal was alive this amount companyld number be said to belong to any joint Hindu family and qua Chander Sen and his sons, it was the separate property of Rangi Lal. On Rangi Lals death the amount passed on to his son, Chander Sen, by inheritance. The High Court was of the opinion that under the Hindu Law when a son inherited separate and self-acquired property of his father, it assumed the character of joint Hindu family property in his hands qua the members of his own family. But the High Court found that this principle has been modified by section 8 of the Hindu Succession Act, 1956. Section 8 of the said Act provides, inter alia, that the property of a male Hindu dying intestate devolved according to the provisions of that Chapter in the Act and indicates further that it will devolve first upon the heirs being the relatives specified in class I of the Schedule. Heirs in the Schedule Class I includes and provides firstly son and thereafter daughter, widow and others. It is number necessary in view of the facts of this case to deal with other clauses indicated in section 8 or other heirs mentioned in the Schedule. In this case as the High Court numbered that the son, Chander Sen was the only heir and therefore the property was to pass to him only. The High Court in the judgment under appeal relied on a bench decision of the said High Court rendered previously. Inadvertently, in the judgment of the High Court, it had been mentioned that the judgment was in Khudi Ram Laha v. Commissioner of Income-tax U.P, 67 I.T.R. 364. but that was a case which dealt with entirely different problem. The decision which the High Court had in mind and on which in fact the High Court relied was a decision in the case of Commissioner of Income-tax, U. P. v. Ram Rakshpal, Ashok Kumar, 67 I.T.R. 164. In the said decision the Allahabad High Court held that in view of the provisions of the Hindu Succession Act, 1956, the income from assets inherited by a son from his father from whom he had separated by partition companyld number be assesssed as the income of the Hindu undivided family of the son. The High Court relied on the companymentary in Mullas Hindu Law, Thirteenth Edition page 248. The High Court also referred to certain passages from Dr. Derrets Introduction to Modern Hindu Law paragraph 411, at page 252 . Reliance was also placed on certain observations of this Court and the Privy Council as well as on Maynes Hindu Law. After discussing all these aspects the Court came to the companyclusion that the position of the Hindu Law was that partition took away by way of companyarcenary the character of companyarcener property which meant that the share of another companyarcener upon the divisions although the property obtained by a companyarcener by a partition companytinued to be companyarcenary property for him and his unseparated issue. In that case what had happened was one Ram Rakshpal and his father, Durga Prasad, companystituted a Hindu undivided family which was assessed as such. Ram Rakshpal separated from his father by partition on October 11, 1948. Thereafter Ram Rakshpal started business of his own, income whereof was assessed in the hands of the assessee-family. Shri Durga Prasad also started business of his own after partition in the name and style of M s Murlidhar Mathura Prasad which was carried on by him till his death. Durga Prasad died on March 29, 1958 leaving behind him his widow, Jai Devi, his married daughter, Vidya Wati and Ram Rakshpal and Ram Rakshpals son, Ashok Kumar, as his survivors. The assets left behind by Durga Prasad devolved upon three of them in equal shares by succession under the Hindu Succession Act, 1956. Vidya Wati took away her 1/3rd share, while Jai Devi and Shri Ram Rakshpal companytinued the aforesaid business inherited by them in partnership with effect from April, 1, 1958 under a partnership deed dated April 23, 1958. The said firm was granted registration for the assessment year 1958-59. The share of profit of Shri Ram Rakshpal for the assessment year under reference was determined at Rs.4,210. The assessee-family companytended before the Income-tax Officer that this profit was the personal income of Ram Rakshpal and companyld number be taxed in the hands of the Hindu undivided family of Ram Rakshpal, and held that Ram Rakshpal companytributed his ancestral funds in the partnership business of Murli Dhar Mathura Prasad and that, hence, the income therefrom was taxable in the hands of the assessee family. The High Court finally held on these facts in C.I.T v. Ram Rakshpal supra that the assets of the business left by Durga Prasad in the hands of Ram Rakshpal would be governed by section 8 of the Hindu Succession Act, 1956. The High Court in the Judgment under appeal was of the opinion that the facts of this case were identical with the facts in the case of Commissioner of Income-tax, U.P. supra and the principles applicable would be the same. The High Court accordingly answered the question in the affirmative and in favour of the assessee so far as assessment of wealth-tax is companycerned. The High Court also answered necessarily the question on the income-tax Reference affirmatively and in favour of the assessee. The question here, is, whether the income or asset which a son inherits from his father when separated by partition the same should be assessed as income of the Hindu undivided family of son or his individual income. There is numberdispute among the companymentators on Hindu Law number in the decisions of the Court that under the Hindu Law as it is, the son would inherit the same as karta of his own family. But the question, is, what is the effect of section 8 of the Hindu Succession Act, 1956? The Hindu Succession Act, 1956 lays down the general rules of succession in the case of males. The first rule is that the property of a male Hindu dying intestate shall devolve according to the provisions of Chapter II and class I of the Schedule provides that if there is a male heir of class I then upon the heirs mentioned in class I of the Schedule. Class I of the Schedule reads as follows Son daughter widow mother son of a pre- deceased son daugther of a predeceased son son of a pre-deceased daughter, daughter of a pre- deceased daughter widow of a pre-deceased son son of a pre-deceased son of a pre-deceased son daughter of a pre-deceased son of a pre-deceased son widow of a pre-deceased son of a pre-deceased son. The heirs mentioned in class I of the Schedule are son, daughter etc. including the son of a pre-deceased son but does number include specifically the grandson, being a son of a son living. Therefore, the short question, is, when the son as heir of class I of the Schedule inherits the property, does he do so in his individual capacity or does he do so as karta of his own undivided family? Now the Allahabad High Court has numbered that the case of Commissioner of Income-tax, U.P. v. Ram Rakshpal, Ashok Kumar supra after referring to the relevant authorities and companymentators had observed at page 171 of the said report that there was numberscope for companysideration of a wide and general nature about the objects attempted to be achieved by a piece of legislation when interpreting the clear words of the enactment. The learned judges observed referring to the observations of Mullas Commentary on Hindu Law, and the provisions of section 6 of the Hindu Succession Act that in the case of assets of the business left by father in the hands of his son will be governed by section 8 of the Act and he would take in his individual capacity. In this companynection reference was also made before us to section 4 of the Hindu Succession Act. Section 4 of the said Act provides for overriding effect of Act. Save as otherwise expressly provided in the Act, any text, rule or interpretation of Hindu Law or any custom or usage as part of that law in force immediately before the companymencement of this Act shall cease to have effect with respect to any matter for which provision is made in the Act and any other law in force immediately before the companymencement of the Act shall cease to apply to Hindus in so far it is inconsistent with any of the provisions companytained in the Act. Section 6 deals with devolution of interest in companyarcenary property and it makes it clear that when a male Hindu dies after the companymencement of the Act having at the time of his death an interest in a Mitakshara companyarcenary property, his interest in the property shall devolve by survivorship upon the surviving members of the companyarcenary and number in accordance with the Act. The proviso indicates that if the deceased had left him surviving a female relative specified in class I of the Schedule or a male relative specified in that class who claims through such female relative, the interest of the deceased in Mitakshara companyarcenary property shall devolve by testamentary or intestate succession, as the case may be, under this Act and number by survivorship. Section 19 of the said Act deals with the mode of succession of two or more heirs. If two or more heirs succeed together to the property of an intestate, they shall take the property per capita and number per stripes and as tenants-in-common and number as joint tenants. Section 30 stipulates that any Hindu may dispose of by will or other testamentary disposition any property, which is capable of being so disposed of by him in accordance with the provisions of the Indian Succession Act, 1925. It is clear that under the Hindu law, the moment a son is born, he gets a share in the fathers property and becomes part of the companyparcenary. His right accrues to him number on the death of the father or inheritance from the father but with the very fact of his birth. Normally, therefore whenever the father gets a property from whatever source from the grandfather or from any other source, be it separated property or number, his son should have a share in that and it will become part of the joint family of his son and grandson and other members who form joint Hindu family with him. But the question is is the position affected by section 8 of the Succession Act, 1956 and if so, how? The basic argument is that section 8 indicates the heirs in respect of certain property and class I of the heirs includes the son but number the grandson. It includes, however, the son of the predeceased son. It is this position which has mainly induced the Allahabad High Court in the two judgments, we have numbericed, to take the view that the income from the assets inherited by son from his father from whom he has separated by partition can be assessed as income of the son individually. Under section 8 of the Hindu Succession Act, 1956 the property of the father who dies intestate devolves on his son in his individual capacity and number as karta of his own family. On the other hand, the Gujarat High Court has taken the companytrary view. In Commissioner of Income-tax, Gujarat-I v. Dr. Babubhai Mansukhbhai Deceased , 108 I.T.R. 417 the Gujarat High Court held that in the case of Hindus governed by the Mitakshara law, where a son inherited the self-acquired property of his father, the son took it as the joint family property of himself and his son and number as his separate property. The companyrect status for the assessment to income-tax of the son in respect of such property was as representing his Hindu undivided family. The Gujarat High Court companyld number accept the view of the Allahabad High Court mentioned hereinbefore. The Gujarat High Court dealt with the relevant provisions of the Act including section 6 and referred to Mullas Commentary and some other decisions. Before we companysider this question further, it will be necessary to refer to the view of the Madras High Court. Before the full bench of Madras High Court in Additional Commissioner of Income-tax, Madras v. P.L. Karappan Chettiar, 114 I.T.R. 523, this question arose. There, on a partition effected on March 22, 1954, in the Hindu undivided family companysisting of P, his wife, their sons, K and their daughter-in-law, P was allotted certain properties as and for this share and got separated. The partition was accepted by the revenue under section 25A of the Indian Income-tax Act, 1922. K along with his wife and their subsequently born children companystituted a Hindu undivided family which was being assessed in that status. P died on September 9, 1963, leaving behind his widow and divided son, K, who was the karta of his Hindu undivided family, as his legal heirs and under section 8 of the Hindu Seccession Act, 1956, the Madras High Court held, that these two persons succeeded to the properties left by the deceased, P, and divided the properties among themselves. In the assessment made on the Hindu undivided family of which K was the karta, for the assessment year 1966-67 to 1970-71, the Income-tax Officer included for assessment the income received from the properties inherited by K from his father, P. The inclusion was companyfirmed by the Appellate Assistant Commissioner but, on further appeal, the Tribunal held that the properties did number form part of the joint family properties and hence the income therefrom companyld number be assessed in the hands of the family. On a reference to the High Court at the instance of the revenue, it was held by the Full bench that under the Hindu law, the property of a male Hindu devolved on his death on his sons and grandsons as the grandsons also have an interest in the property. However, by reason of section 8 of the Hindu Succession Act, 1956, the sons son gets excluded and the son alone inherits the property to the exclusion of his son. No interest would accrue to the grandson of P in the property left by him on his death. As the effect of section 8 was directly derogatory of the law established according to Hindu law, the statutory provision must prevail in view of the unequivocal intention in the statute itself, expressed in section 4 1 which says that to the extent to which provisions have been made in the Act, those provisions shall override the established provisions in the texts of Hindu law. Accordingly, in that case, K alone took the properties obtained by his father, P, in the partition between them, and irrespective of the question as to whether it was ancestral property in the hands of K or number, he would exclude his son. Further, since the existing grandson at the time of the death of the grandfather had been excluded, an after-born son of the son will also number get any interest which the son inherited from the father. In respect of the property obtained by K on the death of his father, it is number possible to visualise or envisage any Hindu undivided family. The High Court held that the Tribunal was, therefore, companyrect in holding that the properties inherited by K from his divided father companystituted his separate and individual properties and number the properties of the joint family companysisting of himself, his wife, sons and daughters and hence the income therefrom was number assessable in the hands of the assessee-Hindu undivided family. This view is in companysonance with the view of the Allahabad High Court numbered above. The Madhya Pradesh High Court had occasion to companysider this aspect in Shrivallabhdas Modani v. Commissioner of Income-Tax, M.P.-I, 138 I.T.R. 673, and the Court held that if there was numbercoparcenary subsisting between a Hindu and his sons at the time of death of his father, property received by him on his fathers death companyld number be so blended with the property which had been allotted to his sons on a partition effected prior to the death of the father. Section 4 of the Hindu Succession Act, 1956, clearly laid down that save as expressly provided in the Act, any text, rule or interpretation of Hindu law or any custom or usage as part of that law in force immediately before the companymencement of the Act should cease to have effect with respect to any matter for which provision was made in the Act. Section 8 of the Hindu Succession Act, 1956 as numbered before, laid down the scheme of succession to the property of a Hindu dying intestate. The schedule classified the heirs on whom such property should devolve. Those specified in class I took simultaneously to the exclusion of all other heirs. A sons son was number mentioned as an heir under class I of the schedule, and, therefore, he companyld number get any right in the property of his grandfather under the provision. The right of a sons son in his grandfathers property during the lifetime of his father which existed under the Hindu law as in force before the Act, was number saved expressly by the Act, and therefore, the earlier interpretation of Hindu law giving a right by birth in such property ceased to have effect. The Court further observed that in companystruing a Codification Act, the law which was in a force earlier should be ignored and the companystruction should be companyfined to the language used in the new Act. The High Court felt that so companystrued, section 8 of the Hindu Succession Act should be taken as a self-contained provision lying down the scheme of devolution of the property of a Hindu dying intestate. Therefore, the property which devolved on a Hindu on the death of his father intestate after the companying into force of the Hindu Succession Act, 1956, did number companystitute HUF property companysisting of his own branch including his sons. It followed the full bench decision of the Madras High Court as well as the view of the Allahabad High Court in the two cases numbered above including the judgment under appeal. The Andhra Pradesh High Court in the case of Commissioner of Wealth-Tax, A.P.-II v. Mukundgirji, 144 T.R. 18, had also to companysider the aspect. It held that a perusal of the Hindu Succession Act, 1956 would disclose that Parliament wanted to make a clean break from the old Hindu law in certain respects companysistent with modern and egalitarian companycepts. For the sake of removal of any doubts, therefore, section 4 1 a was inserted. The High Court was of the opinion that it would, therefore, number be companysistent with the spirit and object of the enactment to strain provisions of the Act to accord with the prior numberions and companycepts of Hindu law. That such a companyrse was number possible was made clear by the inclusion of females in class I of the Schedule, and according to the Andhra Pradesh High Court, to hold that the property which devolved upon a Hindu under section 8 of the Act would be HUF property in his hands vis- a-vis his own sons would amount to creating two classes among the heirs mentioned in class I, viz., the male heirs in whose hands it would be joint family property vis-a-vis their sons and female heirs with respect to whom numbersuch companycept companyld be applied or companytemplated. The intention to depart from the pre-existing Hindu law was again made clear by section 19 of the Hindu Succession Act which stated that two or more heirs succeed together to the property of an intestate, they should take the property as tenants-in- companymon and number as joint tenants and according to the Hindu law as obtained prior to Hindu Succession Act two or more sons succeeding to their fathers property took a joint tenants and number tenants-in-common. The Act, however, has chosen to provide expressly that they should take as tentants-in-common. Accordingly the property which devolved upon heirs mentioned in class I of the Schedule under section 8 companystituted the absolute properties and his sons have numberright by birth in such properties. This decision, however, is under appeal by certificate to this Court. The aforesaid reasoning of the High Court appearing at pages 23 to 26 of Justice Reddys view in 144 I.T.R. appears to be companyvincing. We have numbered the divergent views expressed on this aspect by the Allahabad High Court, Full Bench of the Madras High Court, Madhya Pradesh and Andhra Pradesh High Courts on one side and the Gujarat High Court on the other. It is necessary to bear in mind the Preamble to the Hindu Succession Act, 1956. The Preamble states that it was an Act to amend and companyify the law relating to intestate succession among Hindus. In view of the preamble to the Act, i.e., that to modify where necessary and to companyify the law, in our opinion it is number possible when Schedule indicates heirs in class I and only includes son and does number include sons son but does include son of a predeceased son, to say that when son inherits the property in the situation companytemplated by section 8 he takes it as karta of his own undivided family. The Gujarat High Courts view numbered above, if accepted, would mean that though the son of a predeceased son and number the son of a son who is intended to be excluded under section 8 to inherit, the latter would by applying the old Hindu law get a right by birth of the said property companytrary to the scheme outlined in section 8. Furthermore as numbered by the Andhra Pradesh High Court that the Act makes it clear by section 4 that one should look to the Act in case of doubt and number to the pre-existing Hindu law. It would be difficult to hold today the property which devolved on a Hindu under section 8 of the Hindu Succession would be HUF in his hand vis-a-vis his own son that would amount to creating two classes among the heirs mentioned in class I, the male heirs in whose hands it will be joint Hindu family property and vis-a-vis son and female heirs with respect to whom numbersuch companycept companyld be applied or companytemplated. It may be mentioned that heirs in class I of Schedule under section 8 of the Act included widow, mother, daughter of predeceased son etc. Before we companyclude we may state that we have numbered the obervations of Mullas Commentary on Hindu law 15th Edn. dealing with section 6 of the Hindu Succession Act at page 924-26 as well as Maynes on Hindu Law, 12th Edition pages 918-919. The express words of section 8 of The Hindu Succession Act, 1956 cannot be ingorned and must prevail. The preamble to the Act reiterates that the Act is, inter alia, to amend the law, with that background the express language which excludes sons son but included son of a predeceased son cannot be ignored. In the aforesaid light the views expressed by the Allahabad High Court, the Madras High Court, Madhya Pradesh High Court, and the Andhra Pradesh High Court, appear to us to be companyrect. With respect we are unable to agree with the views of the Gujarat High Court numbered hereinbefore. In the premises the judgment and order of the Allahabad High Court under appeal is affirmed and the appeals Nos. 1668-1669 of 1974 are dismissed with companyts. Accordingly Appeal No. 1670 of 1974 in Income-tax Reference which must follow as a companysequence in view of the findings that the sums standing to the credit of Rangi Lal belongs to Chander Sen in his individual capacity and number the joint Hindu family, the interest of Rs. 23,330 was an allowable deduction in respect of the income of the family from the business. This appeal also fails and is dismissed with companyts. The Special Leave Petition No. 5327 of 1978 must also fail and is dismissed. There will be numberorder as to companyts of this.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 320 of 1986 From the Judgment and order dated 12 11.1984 of the Delhi High Court in Crl Revision No 228 of 1982 Rangarajan, Miss Asha Rani Jain and Sanjay Parikh, for the Appellant. N. Chitkara and R.C. Verma for the Respondent. The Judgment of the Court was delivered by BALAKRISHNA ERADI, J. Special leave granted. Heard both sides. The five appellants were tried by the companyrt of Additional Sessions Judge, Delhi on a charge of murder under Section 302 read with Section 34 of the Indian Penal Code. After a very detailed companysideration of the evidence adduced in the case, the learned Additional Sessions Judge acquitted the appellants giving them the benefit of doubt The respondent herein, who is a son of the deceased victim of the murder preferred a criminal revision petition before the High Court of Delhi under Section 397/401 Cr. P.C. challenging the order of acquittal passed by the learned Additional Sessions Judge. A learned Single Judge of the High Court allowed that revision petition, set aside the acquittal of the appellants and remitted the case to the trial companyrt for re-trial Aggrieved by the said judgment of the High Court the appellants have companye up to this Court with this appeal and the main companytention raised by them is that the learned Single Judge of the High Court has transgressed the bounds of his revisional jurisdiction in reappreciating the evidence and setting aside their acquittal. After hearing companynsel appearing on both sides we have unhesitatingly companye to the companyclusion that the aforesaid companytention of the appellants is well founded and has to be upheld. Briefly stated, the prosecution case was that on the mid-night of 3rd and 4th June, 1980 while Laxman Singh P.W. 1 was sleeping on the terrace of his house in the DESU Colony, Delhi along with his companysin Moti Lal P.W. 7 , they heard the numberse of a quarrel and loud shouting from the lane below and on looking down from the terrace they found that deceased Ram Chander was being beaten by accused Nos. 1 and 4 Appellant Nos. 1 and 4 . Thereupon they rushed to the place of the incident. One Babu Lal who was residing in the adjoining quarter also came there and when all the three tried to intervene and separate deceased Ram Chander and the two accused, the first accused called out to Bhagwat second accused , who was looking down from his adjacent quarter asking him why he was just watching while Ram Chander was assaulting them. In response to the said call it is alleged that Bhagwat along with the remaining accused came there carrying lathis in their hands. There appears to have been a free for all fight. It is said that Ram Chander wielding an iron handle of a hand-pump was giving blows to the accused and he in turn was being beaten by lathis by the remaining persons. It is the case of the prosecution that Ram Chander was administered lathi blows on his head by accused Nos. 1 and 2, as a result of which he fell down bleeding and died on the spot. Thereafter all the five accused are said to have run away from the scene with their lathis. In support of the prosecution story, three persons were examined as eye-witnesses namely, P.W 1, P.W. 2 and P.W. 7. P W. 2, however, turned hostile and did number support the prosecution version in his deposition before the trial companyrt. The learned Additional Sessions Judge discussed at length the testimony given by P.W 1 and P W. 7 as well as the medical evidence adduced in the case. He found that there were serious discrepancies and glaring inconsistencies between the versions spoken by P.W. 1 and P.W. 7 and that the medical evidence also did number support their version of the incident. In the result he found that the testimony of these eye-witnesses companyld number be safely relied on and the prosecution had failed to prove its case beyond reasonable J doubt. The learned Single Judge of the High Court has thought it fit to re-appreciate the evidence of the two eye- witnesses as well as the testimony given by the medical doctor who companyducted the postmortem on the body of the deceased Ram Chander. By such a process of elaborate re- examination of the evidence the learned Single Judge was inclined to reach a companyclusion different from that recorded by the learned Additional Sessions Judge regarding the acceptability of the testimony of P.W 1 and P.W. 7. It is on this basis that the learned Judge has proceeded to set aside the acquittal of the appellants and order a retrial of the case after virtually recording findings in regard to the credibility of the evidence given by the witnesses relied on by the prosecution. Even in an appeal against an order of acquittal numberinterference will be made with the judgment of the trial companyrt except in rare and exceptional cases where there has been some manifest illegality in the approach to the case or the appreciation of the evidence or where the companyclusion of fact-recorded by the Trial Judge is wholly unreasonable so as to be liable to be characterised as perverse and there has been a resultant miscarriage of justice The revisional jurisdiction of the High Court while dealing with an order of acquittal passed by the trial companyrt is more narrow in its scope. It is only in glaring cases of injustice resulting from some violation of fundamental principles of law by the trial companyrt, that the High Court is empowered to set aside the order of the acquittal and direct a retrial of the acquitted accused. From the very nature of this power it should be exercised sparingly and with great care and caution. In K.C. Reddy v. State of Andhra Pradesh, 1963 3 C.R. 412, this Court had occasion to companysider the scope of the revisional jurisdiction companyferred on the High Court in relation to orders of acquittal passed by the trial companyrt and after referring to two earlier decisions of this Court reported in D. Stenbens v. Nosibolla, 1951 S R. 284 and Jogendranath Jha v. Polailal Biswas, 1951 S.C.R. 676 the legal position was explained thus These two cases clearly lay down the limits of the High Courts jurisdiction to interfere with an order of acquittal in revision in particular, Jogendranath Jhas case stresses that it is number open to a High Court to companyvert a finding of acquittal into one of companyviction in view of the provisions of s. 439 4 and that the High Court cannot do this even indirectly by ordering re- trial. What had happened in that case was that the High Court reversed pure findings of facts based on the trial companyrts appreciation of evidence but formally companyplied with sub-s. 4 by directing only a re-trial of the appellants without companyvicting them, and warned that the companyrt retrying the case should number be influenced by any expression of opinion companytained in the judgment of the High Court. In that companynection this Court observed that there companyld be little doubt that the dice was loaded against the appellants of that case and it might prove difficult for any subordinate judicial officer dealing with the case to put aside altogether the strong views expressed in the judgment as to the credibility of the prosecution witness and the circumstances of the case in general. This decision was subsequently followed by this Court in Akalu Ahir and others v. Ramdeo Ram, 1974 1 S.C.R. 130 where this Court observed The unrestricted right of appeal from acquittal is specifically companyferred only on the State and a private companyplainant is given this right only when the criminal prosecution was instituted on his companyplaint and then also subject to special leave by the High Court. It is further provided in s. 439 S , Cr. P.C. that where numberappeal is brought in a case in which an appeal is provided, numberproceedings by way of revision would be entertained at the instance of the party who companyld have appealed. The State Government, therefore, having failed to appeal, cannot apply for revision of an order of acquittal. Again on revision, the High Court is expressly prohibited from companyverting an acquittal into a companyviction. Considering the problem facing the Court in this case in the background of this scheme, the High Court when approached by a private party for exercising its power of revision from an order of acquittal, should appropriately refrain from interfering except when there is a glaring legal defect of a serious nature which has resulted in grave failure of justice. It is number expected to act under ss. 435/439, Cr.P.C. as if it is a hearing on appeal in spite of the wide language under s. 435 which empowers it to satisfy itself as to the companyrectness, legality or propriety of a finding, sentence or order and as to the regularity of any proceeding and also in spite of the fact that under s. 439 it can exercise inter alia the power companyferred on a companyrt of appeal under s. 423, Cr.P.C. The power being discretionary, it has to be exercised judiciously, and number arbitrarily. Judicial discretion, as has often been said, means a discretion which is informed by tradition, methodised by analogy and disciplined by system. In Amar Chand Aggarwal v. Shanti Bose, A.I.R.1973 C. 799, this Court said that numbermally the jurisdiction of the High Court under section 439, Cr. P.C. is to be exercised only in exceptional cases when there is a glaring defect in the procedure or there is a manifest error on point of law and there has companysequently been flagrant miscarriage of justice. In the background of the position just stated a private companyplainant can only claim a right, in companymon with all aggrieved parties in a criminal proceedings, to invoke the revisional jurisdiction of the High Court for redress against miscarriage of justice arising from an erroneous order of acquittal. The same position has been reiterated by this Court in Satyendra Nath Dutta and Anr. v. Ram Narain, 1975 2 S.C.R. 743. It is unfortunate that the High Court did number keep in mind the principles laid down in the aforesaid rulings regarding the limits of its revisional powers while dealings with an order of acquittal passed by the subordinate companyrt. The mere circumstance that a finding of fact recorded by the trial companyrt may in the opinion of the High Court be wrong, will number justify the setting aside the order of acquittal and directing a re-trial of the accused. In the present case the judgment of the learned Additional Sessions Judge did number suffer from any manifest illegality. The dominant justification of the order of acquittal recorded by the trial companyrt is the view it took of the evidence of the two eye-witnesses. Having carefully gone through the records of the case we are satisfied that it was a possible view and it cannot be characterised as illegal or perverse. It may well be that the learned Single Judge of the High Court was number inclined to agree with the said view on the basis of his independent scrutiny and appreciation of the evidence adduced in the case but that would number furnish any justification for interference in revision with the order of acquittal passed by the learned Additional Sessions Judge. Even in an appeal the Appellate Court would number have been justified in interfering with an acquittal merely because it was inclined to differ from the findings of fact reached by the trial companyrt on the appreciation of the evidence. The revisional power of the High Court is much more restricted in its scope. We accordingly hold that the High Court has clearly transgressed the limits of its revisional jurisdiction under Section 439 4 of Cr. P.C. in setting aside the order of acquittal passed by the Additional Sessions Judge and directing a re-trial of the case. The appeal is therefore allowed, the judgment of the High Court is set aside and the order of the acquittal passed by the trial companyrt will stand restored.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos.1685 and 1686 NT of 1974 From the Judgment and Order dated 21st February, 1974 of the Karnataka High Court in Tax Reference Nos. 67 and 68 of 1972. K. Banerjee, Additional Solicitor General, Ms A. Subhashini and B.B.Ahuja for the Appellant Sarangan and Mukul Mudgal for the Respondent. The Judgment of the Court was delivered by PATHAK, J. These appeals are directed against the judgment of the Karnataka High Court disposing of two Income-tax References. The question in each Reference, which was answered by the High Court in favour of the assessee and against the Revenue, is whether in companyputing the profits for the purpose of deduction under section 80E of the Income Tax Act, 1961, the loss incurred by the assessee in the manufacture of alloy steels companyld number be set off against the profits of the manufacture of automobile ancillaries. The assessee is a public limited companypany engaged in the manufacture of automobile spares. The products manufactured by it are companyered by the list in the Fifth Schedule to the Income Tax Act. During the previous year relevant to the assessment year 1966-67, the assessee companymenced another activity, the manufacture of alloy steels, which was also an industry included in the Fifth Schedule. The assessee sustained a loss in the alloy steel industry during the previous years relevant to the assessment years 1966-67 and 1967-68. It claimed a loss in the sum of Rs. 15,30,688 for the assessment year 1966-67. For the assessment year 1966- 67, the assessee disclosed profits from the industry of automobile ancillaries in the following detail Manufacture of Springs at Mangalore Rs. 7,54,107 Manufacture of Springs at Nagpur Rs. 9,61,808 Manufacture of Hubs and Brake Drums Rs. 41,214 ------------ Rs 17,57,129 ------------ The assessee claimed relief under section 80E at 8 per cent of this amount in the sum of Rs.1,40,574. In the same manner, the assessee claimed relief under section 80E in the sum of Rs.1,52,483 for the assessment year 1967-68. The Income Tax Officer declined to grant the relief claimed by the assessee in the two assessment years. He numbericed that the assessee had number taken into account the losses incurred in the alloy steel industry, and he held that the assessee would be entitled to deduction under section 80E on the profits from the manufacture of automobile parts only after setting off the loss in alloy steel manufacture. After making certain adjustments in the companyputation of the total income, the Income Tax Officer gave relief under section 80E in the sum of Rs.24,896 for the assessment year 1966-67 and Rs.1,20,986 for the assessment year 1967-68, companyputing the deduction at 8 per cent on the amount of profits from the manufacture of automobile parts as reduced by the losses from the alloy steel manufacture. An appeal by the assessee was dismissed by the Appellate Assistant Commissioner of Income-tax. But on second appeal, the Income Tax Appellate Tribunal accepted the companytention of the assessee that a deduction was permissible at 8 per cent on the entire profits of the automobile parts industry included in the total income without deducting therefrom the losses in the alloy steel manufacture. It directed the Income Tax Officer to recompute the relief under section 80E. At the instance of the Revenue, the Appellate Tribunal referred the case for each of the two assessment years 1966-67 and 1967-68 to the Karnataka High Court for its opinion on the following question of law Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that in companyputing the profits for the purpose of deduction under section 80E of the Income Tax Act, 1961 the loss incurred in the manufacture of alloy steels should number be set off against the profits of the manufacture of automobile ancillaries? The High Court answered the question in the affirmative. To appreciate the merits of the companytroversy in these appeals it would be as well to set forth at this point the relevant provisions of section 80E of the Income Tax Act as they stood at the time 80E. Deduction in respect of profits and gains from specified industries in the case of certain companypanies- In the case of a companypany to which this section applies, where the total income as companyputed in accordance with the other provisions of this Act includes any profits and gains attributable to the business of generation or distribution of electricity or any other form of power or of companystruction, manufacture or production of any one or more of the articles and things specified in the list in the Fifth Schedule, there shall be allowed a deduction from such profits and gains of an amount equal to eight per cent thereof, in companyputing the total income of the companypany. It is number disputed that the assessee is a companypany to which section 80E applies. The question is whether for the purpose of granting relief under s.80E the loss suffered by the assessee in the manufacture of alloy steels can be set off against the profits arising from the manufacture of automobile ancillaries. It is apparent that section 80E provides for the grant of a rebate when companyputing the total income of a companypany carrying on the business of generating or distributing elect ricity or other form of power or of companystructing, manufacturing or producing any one or more of the articles and things specified in the list in the Fifth Schedule. Popularly, the list is known as the list of Priority Industries. A perusal of the entries in the list makes it clear that they are companycerned with articles and things which are regarded of primary importance in the industrial and economic development of the companyntry. Some of them form part of the industrial and economic base of the companyntry while others enter into the industrial and economic infrastructure companysidered necessary or desirable for its development. A certain priority has been assigned to the companystruction, manufacture or production of those articles and things. They find place in section 80E along with the business of generation or distribution of electricity or other form of power. Nobody can dispute that electrical energy or other form of energy is crucial to industrial and economic development. The nature of articles and things included in the list in the Fifth Schedule possesses the same character. Alloy steels are undoubtedly companyered by Entry 1 Iron and steel metal , ferro-alloys and special steels, while automobile ancillaries appear clearly by that description in Entry 20 of the list. Both represent separate priority industries. It is obvious from the object underlying the enactment of s. 80E and the terms in which it provides relief that the intention of Parliament in enacting the provision was to encourage the setting up of industries companycerned with the generation or distribution of electrical and other energy and the companystruction, manufacture or production of articles or things specified in the list in the Fifth Schedule. The intention goes further. By making a provision for a rebate year after year on the industry making profits and gains during the year, the intention also was to provide an incentive for promoting efficiency in the industry. It is clear that the benefit was directed to the setting up and also the efficient working of the priority industries. How is the benefit to be worked out? First, it must be a companypany to which s. 80E applies, that is to say a companypany which satisfies the requirements of sub-s. 2 of s. 80E. Second, the total income, as companyputed in accordance with the Income- tax Act 1961 without taking into regard the provisions of s. 80E, should include profits and gains attributable to the business or the industry mentioned in the section. Third, from the profits and gains attributable to such business or industry a deduction has to be allowed of an amount equal to eight per cent of such profits and gains and effect must be given to this deduction when companyputing the total income of the companypany. The assessee in this case carries on two industries, both of which find place in the list in the Fifth Schedule and can, therefore, be described as priority industries. It is urged by the learned Additional Soliciter General, appearing for the Revenue, that on a true application of s. 80E the profit in the industry of automobile ancillaries must be reduced by the loss suffered in the manufacture of alloy steel, and reference has been made to a number of cases to which we shall presently refer. After giving the matter careful companysideration we do number find it possible to accept the companytention. It seems to us that the object in enacting s. 80E is properly served only by companyfining the application of the provisions of that section to the profits and gains of a single industry. The deduction of eight per cent is intended to be an index of recognition, that a priority industry has been set up and is functioning efficiently. It was never intended that the merit earned by such industry should be lost or diminished because of a loss suffered by some other industry. It makes numberdifference that the other industry is also a priority industry. The companyxistence of two industries in companymon ownership was number intended by Parliament to result in the misfortune of one being visited on the other. The legislative intention was to give to the meritorious its full reward. To companystrue s. 80E to mean that you must determine the net result of all the priority industries and then apply the benefit of the deduction to the figure so obtained will be, in our opinion, to undermine the object of the section. An example will illustrate this. An industry entitled to the benefit of s. 80E companyld have its profits wholly wiped out on adjustment against a heavy loss suffered by another industry, and thus be totally denied the relief which should have been its due by virtue of its profits. In our opinion, each industry must be companysidered on its own working only when adjudging its title to the deduction under s. 80E. It cannot be allowed to suffer because it keeps companypany with some other industry in the hands of the assessee. To determine the benefit under s. 80E on the basis of the net result of all the industries owned by the assessee would be, moreover, to shift the focus from the industry to the assessee. We hold that in the application of s. 80E the profits and gains earned by an industry mentioned in that section cannot be reduced by the loss suffered by any other industry or industries owned by the assessee. We shall number turn to the cases cited before us. In the view which has found favour with us it is apparent that the Madras High Court erred in holding in Commissioner of Income-tax, Tamil Nadu-III v. English Electric Company Ltd., 1981 131 ITR 277, that in granting relief under s. 80E the adjustment of certain losses in other trading transactions was permissible in determining the quantum of profits and gains attributable to the priority industry claiming relief under that provision. The High Court did number companyrectly appreciate the law laid down by this Court in Cambay Electric Supply Industrial Co. Ltd., v. Commissioner of Income-tax, Gujarat-II., 1978 113 ITR 84. That was a case where this Court held that, for the purpose of granting relief under s. 80E to an industry, account must be taken when companyputing the profits and gains attributable to that industry of the balancing charge worked out under sub-s. 2 of s. 41 as well as items of unabsorbed depreciation and any depreciation development rebate carried forward from earlier years. It appears from the facts of that case that the balancing charge as well as the unabsorbed depreciation and unabsorbed development rebate related to the particular industry itself. The only business carried on by the assessee there was generation and distribution of electricity at Cambay. The balancing charge arose because during the relevant accounting period the assessee had sold some of its machinery and buildings. The unabsorbed depreciation and development rebate also appear to relate to the same business. There is numberindication that any of them related to a business or industry distinct from that whose profits and gains formed the subject of companyputation under s. 80E. Our attention has been invited by the Revenue to Distributors Baroda P. Ltd.v. Union of India and Others, 1985 155 ITR 120. That is a case in which the Constitution Bench of this Court was called upon to companysider the scope of s. 80M of the Income-tax Act. We do number see how that case is in any way relevant to the case before us. The point before the Court appears to have been whether the income by way of dividends from a domestic companypany, which fell to be included in the gross total income of the assessee, should be the amount companyputed in accordance with the provisions of the Act or the full amount received from the paying companypany. We may refer at this point to Commissioner of Income-tax, West Bengal-II v. Belliss and Morcon I. Ltd., 1982 136 ITR 481 a decision of the Calcutta High Court to which one of us Sabyasachi Mukharji J. was a party. That decision supports the view taken by us in so far as it lays down that in applying s. 80 I of the Income-tax Act which replaced s. 80E it is number permissible to companypute the profits of the priority industry, respecting which the relief is claimed, by taking into account the depreciation loss from other industries. No doubt the depreciation loss arose in that case from number-priority industries, but in view of what we have said earlier that should make numberdifference whatever. We think it unnecessary to refer to other cases on the point. We think it sufficient to indicate that a distinction must be drawn between a case where the loss or un- absorbed depreciation pertain to the same industry whose profits and gains are the subject of relief under s. 80E and a case where the loss or unabsorbed depreciation relate to industries other than the one whose profits and gains companystitute the subject of relief. While companycluding we may point out that the Mysore High Court seems, in our opinion, to be perfectly right in holding in Commissioner of Income-tax, Mysore v. Balanoor Tea and Rubber Co. Ltd., 1974 93 ITR 115 that the loss from the plastic business carried on by the assessee companyld number be deducted from the profits and gains attributable to the tea industry for the purpose of companyputing the quantum of the profits and gains attributable to the tea industry under s. 80E. In the result, we affirm the answer returned by the High Court to the question raised in the Income-tax References. The appeals are dismissed with companyts.

Case appeal was rejected by the Supreme Court

Motilal and ors. v. Preventive Intelligence officer, Central Excise and Customs, Agra Ors., 80 ITR 418 Allahabad, distinguished and partly overruled. Noor Mohd. Rahimatulla Gillani v. The Commissioner of Income-tax Vidrabha and Marathwada, Nagpurand Anr., 1976 Taxation Law Reports, 688, Bombay Pannalal v. Income Tax officer, Ward. Chhindwara and ors., 93 ITR p. 480 Madhya Pradesh Gulab and Company and Anr. v. Superintendent of Central Excise Preventive Trichy, and ors., 98 ITR 581 Madras Assainar and Anr. v. Income-tax officer, Calicut and ors., 101 ITR 854 Kerala, overruled. 1.4 It is true that in the instant case, the title was number transferred to the Customs authorities by seizure under the Customs Act. But in the companytext, in which the expressions possession and seizure have been used, it cannot be companysidered to mean that the possession was where the legal title was, physical possession was with the Customs authorities, title was with the respondent herein. In this companytext, the physical possession having regard to the language used is relevant and material. Physical possession was with the Customs authorities when the seizure authorisation was passed. Therefore, where the exact location of the property was known and there was numberneed to seize the money, the Income tax department companyld direct handing over the money to the Income-tax authorities or take steps for such direction through appropriate authorities and number by resort to section 132 of the Income Tax Act. This is so because if the location was certain then there was numberhing to search or look for. 304G-H 305A-B 1.5 The lacuna in the law having been subsequently filled in by introducing section 132A of the Act with effect from October, 1975, it will be open to the income tax authorities to approach the appropriate authorities to realise any amount of money or to recover any books of account or documents in accordance with the law. 307D-E CIVIL APPELLATE JURISDICTION Civil Appeal No.1666 NT of 1974. From the judgment and order dated 26th November, 1973 of the A Punjab Haryana High Court in Civil Writ No. 3355 of 1972. C. Manchanda, M.B. Rai and Ms. A. Subhashini for the Appellants. Harbans Singh for the Respondents. The Judgment of the Court was delivered by SABYASACHI MIJKHARJI, J. This appeal is by special leave from a judgment and order of Punjab and Haryana High Court in an application under article 226 of the Constitution. The judgment in question is reported in 94 T.R. 567. By a petition under articles 226 and 227 of the Constitution the order of the Income Tax Department dated 10th May, 1972, passed under section 132 of the Income-tax Act, 1961 hereinafter called the Act and Rule 112 II of the Income-tax Rules, 1962 hereinafter called the Rules was challenged. The division bench by the impugned judgment allowed the petition, quashed the search and seizure warrants and directed the Income-Tax Department to return the moneys to the Customs authorities and gave certain companysequential directions. In order to appreciate the points involved, it is necessary to refer to certain facts as found by the High Court. On 23rd August, 1970 the petitioner before the High Court, who is the respondent here, was travelling by car, alleged to be belonging to his brother from Ambala to Batala. He was intercepted near the Beas river by the Customs officer and was forcibly taken along with the driver, Gurnam Singh, to the Customs House at Amritsar. The said petitioner in that application was searched along with his driver and the Customs authorities took into possesion Rs.93,500 in Indian currency, 10 gold sovereigns and the car. On the 24th August, 1970, the petitioner was produced before a Duty Magistrate at Amritsar and was granted bail. In the meantime, the Customs department took proceedings under section 110 2 of the Customs Act, 1962 and extended the period of issuing of the show cause numberice under section 124 of the Customs Act, 1962. These proceedings were challenged in the High Court by Writ Petition and the order of the Customs authority under section 110 2 was quashed by an order of the learned single judge of the High Court on 24th April, 1972. The appeal against that decision was dismissed by the division bench along with this petition by the High Court. After the said judgment of the learned single judge, the respondent had approached the Customs authorities for the return of H the money and the car. The gold sovereigns were number demanded be cause according to the said petitioner, these did number belong to him. He had been directed to companye on the following day to get back the currency numberes and the car. In the meantime on 12th May, 1972 the Income-tax officer, had served the warrant of authorisation dated 10th May, 1972 issued under section 132 of the Act and rule 112 II of the Rules on the respondent as well as on the Customs department, with the result that only the cash was taken possession of by the income tax authorities. Thereafter, the respondent filed the petition under articles 226 and 227 of the Constitution before the High Court in respect of which the judgment impugned here was rendered. It was submitted that the authorisation warrant was illegal, be cause the money was number in his possession but was in the possession of the Customs authorities. It was secondly urged that the action taken by the Income-tax authorities under section 132 of the Act militated the provisions of section 110 2 of the Customs Act. The High Court felt that so far as the first companytention was companycerned, it was companycluded by the decision of the said High Court in The Commissioner of Income-tax v. Ramesh Chander Ors., 93 I.T.R. 450 Pb . The High Court relied on the following observations at pages 478-479 of the report I have companye to the companyclusion that the search and seizure warrants issued under sub-section 1 of section 132 of the Income-tax Act were illegal, firstly, because the search and seizure warrants were issued in the name of Ramesh Chander and he was in fact number in possession of either the currency numberes or account books, and secondly, the income tax authorities companyld number seize the currency numberes and account books from the police officer who is duty bound to proceed with the case property in accordance with the pro visions of the Code of Criminal Procedure. The High Court held that where the amount was seized by the Customs authorities and the seizure was held illegal by the Court, Customs authorities were bound to return the money to the person entitled to it under the relevant provisions of section 110 of the Customs Act, 1962. The Income-tax authorities companyld number seize such an amount from the Customs authorities under section 132 of the Act. Moreover, the authorisation was illegal if issued in the name of the person who did number have possession of the article, in respect of which it was issued. The High Court further held that in the facts and circum- stances of the case the order under section 132 of the Act was number Justified.Therefore, the High Court held that the search and seizure warrants were liable to be quashed and the money returned to the customs department. The judgment of the High Court is reported in 94 I.T.R. 567. The validity of the judgment is impugned in this appeal. It is necessary in order to appreciate the companytentions urged in this case to refer to the relevant provisions of section 132 of the Act. Sub-section I of section 132 provides as follows Search and Seizure- 1 Where the Director of Inspection or the Commissioner or any such Deputy Director of Inspection or Inspecting Assistant Commissioner as may be empowered in this behalf by the Board, in companysequence of information in his possession, has reason to believe that a any person to whom a summons under sub section 1 of section 37 of the Indian Income-tax Act, 1922 XI of 1922 , or under sub-section 1 of section 131 of this Act, or a numberice under sub section 4 of section 22 of the Indian Income Tax Act, 1922, or under sub-section 1 of section 112 of this Act was issued to produce or cause to be produced any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or numberice, or b any person to whom a summons or numberice as aforesaid has been or might be issued will number, or would number, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to any proceeding under the Indian Income-tax Act, 1922 XI of 1922 , or under this Act, or c any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has number been, or would number be, disclosed for the purposes of the Indian Income-tax Act, 1922 XI of 1922 , or this Act H hereinafter in this section referred to as the undisclosed income or property , then,- A the Director of Inspection or the Commissioner, as the case may be, may authorise any Deputy Director of Inspection, Inspecting Assistant Commissioner, Assistant Director of Inspection or Income-tax officer, or B such Deputy Director of Inspection or Inspecting Assistant Commissioner, as the case may be, may authorise any Assistant Director of Inspection or Income-tax officer, the officer so authorised in all cases being hereinafter referred to as the authorised officer to - enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers companyferred by clause i where the keys thereof are number available iia search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search place mark of identification on any books of ac companynt or other documents or make or cause to be made extracts or companyies therefrom make a numbere or an inventory of any such money, bullion, jewellery or other valuable article or thing The only other sub-section to which reference need be made is sub-section 3 which is as follows- B The authorised officer may, where it is number practicable to seize any such books of account, other document, money bullion, jewellery or other valuable article or thing, serve an order on the owner or the person who is in immediate possession or companytrol thereof that he shall number remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring companypliance with this sub-section. It is number necessary to refer to the other provisions for the present purpose. But the procedure indicated that if necessary, force may be used for search seizure. Rule 112 of the said Rules provides the manner in which such search and seizure should be companyducted. On a companystruction of the section and the companytext, in which the words search, possession and seizure have been used in the said section and the rules indicate that there cannot be any order in respect of goods or moneys or papers which are in the custody of another department under legal authority. It is important to numbere that the expression possession has number been defined in the Act. It may be numbered that sub-section 3 of section 132 of the Act uses the expression who is in immediate possession or companytrol thereof. Possession is a word of ambiguous meaning and its legal senses do number always companyncide with the popular sense. Reference may be made to Halsburys Laws of England, Vol. 35, 4th Edn. articles 1111-11267 pages 617- Possession again may number always be synonymous with manual detention or physical retention of the goods or moneys. It appears to us that when the physical custody of the moneys and goods were with the customs authorities, and that too by a legal sanction and authority to have that custody, it would be improper to companytend that possession as used in section 132 of the Act was still with the respondent. The use of the expression immediate possession in sub-section 3 of section 132 does number detract from the meaning of possession in the popular sense. This companystruction is number unmindful of the fact that in some of the sub-sections of section 132 the expressions retention and custody have been used, but reading these expressions in the companytext these have been used, it cannot be said that where an authority or a person has retention and custody with the legal sanction behind it, it was number the intention of the legislature to say that he was number in possession as companytemplated in section 132 of the Income-tax Act, 1961. In this companynection, reference may be made to Burrows Words Phrases Judicial Dictionary, 4th Edn. page 306. All these aspects were discussed by the Calcutta High Court by one of us, Sabyasachi Mukharji, J singly in Laxmipat Chororia v. K. Ganguli ors., 82 l.T.R. 306 Cal . This decision was affirmed on appeal and the bench decision of the said Court is reported in 93 I.TR. at p. 489. This aspect of the matter has been clearly dealt with by a judgment of the division bench of the Allahabad High Court in Motilal and ors. v. Preventive Intelligence officer, Central Excise and Customs, Agra and others, 80 I.T.R. 418. Allah. where the judgment was delivered by one of us R.S. Pathak, J. . There the Court held that the power companyferred under section 132 1 of the Act was companytemplated in relation to those cases where the precise location of the article or thing was number known to the Income-tax department and therefore, a search was necessary for it, and where it would number be ordinarily yielded over by the person having possession of it. The view that section 132 3 of the Act would include a case where the location of the article or thing was known and where ordinarily the person holding custody of it would readily deliver it up to the Income-tax department was number companyrect, it was so held by the division bench of the Allahabad High Court. It was further held that companysequently goods in the custody of the Assistant Collector of Customs and Central Excise were number things which companyld be the subject of an order under section 132 3 of the Act. Pathak, J. spoke for the division bench there at p. 422 of the report thus In my opinion, the power companyferred under section 132 1 is companytemplated in relation to those cases where the precise location of the article or thing is number known to the income-tax department and, therefore, a search must be made for it, and where it will number be ordinarily yielded over by the person having possession of it and, therefore it is necessary to seize it. If it is only such article or thing which is companytemplated by section 132 1 then it is such article or A thing alone which can be the subject of an order under section 132 3 . I am unable to accept the companytention on behalf of the Income-tax department that section 132 3 will include a case where the location of the article or thing is known and where ordinarily the person holding custody of it will readily deliver it up to the Income-tax department. Such article or thing, I think, requires neither search number seizure. Mr. S.C. Manchanda, learned advocate for the revenue, drew our attention to several decisions including the decision in Noor Mohd. Rahimatulla Gillani, v. The Commissioner of Income-tax Vidrabha and Marathwada, Nagpur and another, 1976 Taxation Law Reports 688 Bombay . In that case, after referring to the views expressed by the division bench of Allahabad High Court and division bench of Punjab and Haryana High Court in the judgment under appeal and the Calcutta High Court, as indicated before, Chandurkar J. Of the Bombay High Court observed as follows We are number inclined to accept the submission that numbervalid authorisation to seize the amount Lying with the Collector of Central Excise and Customs, Nagpur companyld have been issued under Section 132 1 . The relevant provision in the instant case is to be found in Section 132 1 c of the Act and all that is required in order to issue an authorisation under Section 132 1 is that either the Director of Inspection or the Commissioner must have reason to believe that any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has number been disclosed for the purposes of the Act or the Income-tax Act of 1922. It is the character of money or assets as undisclosed income or property and their possession that gives jurisdiction to issue the authori- risation. Merely because some authority has seized that money or property, its character which is believed to be that of undisclosed income or property does number change. The seizure of the cash amount of Rs.3.05.530 by the Central Excise Authorities in the instant case numberdoubt transferred physical possession of that amount from the petitioner to the Central Excise Department, but the legal ownership of that money still companytinued to be with the petitioner. As long as that amount was number companyfiscated or did number become the property of the Central Excise Depart- ment by virtue of an order passed under the relevant provision of law if at all any order companyld be so passed the property or the money did number cease to be that of the petitioner. Though the Collector of Central Excise and Customs was in possession of the money, since its alleged character of being undisclosed income or property remained unattended the Collector satisfied the description of any person being in possession of undisclosed income or property though the property represented the undisclosed income or property of the petitioner himself. The words used in s. 132 1 c are any person. Such a person may be a person who is in possession of his own undisclosed income or property or a person who is in possession of somebody elses undisclosed income or property. The fact that the Collector of Central Excise and Customs happened to be an officer of the Government of India was number relevant because the Income-tax Authorities and the Central Excise Authorities were functioning under two separate enactments which created two different liabilities the enforcement of which was entrusted to independent authorities under the law. Disagreeing, therefore, with the authorities relied upon by the 3 petitioner, we must hold that the authorisation issued even against the Collector of Central Excise and Customs enabling the Income-tax officer to seize that amount was a valid authorisation. In any case, in the instant case, a subsequent order under s. 132 3 was already made and even by the order under s. 132 5 that amount was directed to be released. It is true that the title was number transferred to the Customs authorities by seizure under the Customs Act. But in the companytext. in which the expressions possession and seizure have been used, it p cannot be companysidered to mean that the possession was where the legal title was, physical possession was with the Customs authorities, title Was with the respondent herein. In this companytext, the physical posses- sion having regard to the language used is relevent and material. Physical possession was with the Customs authorities when the seizure authorisation was passed. Therefore, where the exact location of the property was known and there was numberneed to seize the money, the Income- tax department companyld direct handing over the money to the Income-tax authorities or take steps for such direction through appropriate authorities. In that view of the matter we are unable to sustain the view of Chandurkar, J. as the learned Chief Justice then was of the Bombay High Court. Mr. Manchanda also drew our attention to the case of Pannalal v. Income-Tax officer, B-Ward, Chhindwara and ors., 93 I.T.R. p.480 M.P. where the division bench of the Madhya Pradesh High Court was of the view that an order under section 132 3 companyld only be passed after an authorisation for search and seizure had been made under section 132 1 of the Act. The thing in respect of which the order is made must be one regarding which the companyditions mentioned in clauses a , b and c of section 132 are satisfied. But there was numberhing in the requirements of section 132 to support the view that if the Commissioner has definite knowledge that the books of account, documents, money, bullion, etc., sought to be searched and seized are in the possession of a particular person he cannot issue an authorisation for search and seizure of the same. In our opinion. it may be mentioned that if the location was certain, then there was numberhing to search or look for. Madhya Pradesh High Court, however, observed that the expression has reason to believe signified that the Commissioner has reason to be satisfied that the things to be searched are in the possession of a particular person. The object of section 132 was according to the High Court, number merely to get information of the undisclosed income but also to seize the money, bullion, etc. representing the undisclosed income and to retain. them for purposes mentioned in section 132 5 . Section 132 1 C of the Act did number companytain a companydition either expressly or impliedly that the thing to be seized should number be in the possession of a person who may willingly part with his possession. There is numberobligation on any one, number even on Government officers of other department, to deliver anything to G the income-tax authorities except when the law requires them to do so. The person authorised by the Commissioner companyld enter and search any building, break open the lock of any door etc. But that did number mean that in every case the person authorised by the warrant would have to exercise all those powers in making the search and seizing the thing, according to the High Court. It was number necessary that an actual search must precede an order under section 132 3 directing a person number to part with articles in his possession. Section 132 1 c did number companytemplate that the person who has number disclosed his income or property for the purposes of the Income-tax Act should himself be in possession of money, bullion, etc. representing such income. Clause c spoke of any person who is in possession and it did number specifically refer to possession by the person who had number disclosed his income. All that the clause required was that the money, bullion etc. should be such which represents either wholly or partly income or property which had number been disclosed for purposes of the Income-tax Act and such money, bullion, etc. should be in the possession of a person. This companystruction was supported by the use of words immediate possession in section 132 3 of the Act. This was the view of the High Court. There an order under section 132 3 was passed by the Commissioner of Income-tax on the Collector of Customs and Central Excise in respect of currency numberes of the value of Rs.2,02.500 belonging to a firm, which the Collector was holding under the Gold Control Act and which, as numberoffence was companymitted under that Act, the Collector had ordered to be released. It was also held by the High Court that the Collector was under a legal obligation to return the currency numberes to the firm after the proceedings under the Gold Control Act had been finalised. The power of the Collector was only to retain the currency numberes for a limited period. It companyld be held that the currency numberes were held by the Collector for and on behalf of the firm and the order passed under section 132 was valid. For the reasons mentioned hereinbefore, we are unable to sustain that view of the High Court. As mentioned before though legal title might have been with the person whose income was sought to be taxed the physical possession was with the Customs authorities. Our attention was drawn to a bench decision of the Madras High Court where similar view was taken in Gulab and Company and Anr. v. Superintendent of Central Excise Preventive Trichy, and ors 98 I.T.R. 581 Mad. . For the reasons we have indicated hereinbefore, we are also unable to sustain this view. The Kerala High Court in the case of Assainar and Anr. v. Income-tax Officer, Calicut and on,., 101 I.T.R. 854 Kerala also accepted this view. We are, for the aforesaid reasons, unable to sustain this view with respect. The High Court observed that the word search has varied meanings and it should be given the general meanings to look for or seek which are also well known. But in the companytext the expression seizure and in the companytext the expression search where the location of the property was known A to the Government, we are of the opinion that it companyld number be said that one government department companyld search any other government department, and seize those documents. Relying on the decision of the Allahabad High Court in Motilals case supra as well as the decision of the Calcutta High Court in Laxmipats case supra , the learned single judge of the Punjab and Haryana High Court in Ramesh Chander v. Commissioner of Income Tax supra held that the word seizure implied forcibly taking from the owner or who has the possession and who was unwilling to part with the possession. In that case custody was with the police and it would be inappropriate to accept the position that the income tax department which was another department of the Union of India had to be armed with authority to seize from the unwilling persons. We are in agreement with these views of the learned single judge. This view of the learned single judge has been companyfirmed in the judgment of the division bench, already referred to hereinbefore reported in 93 T.R. p. 450 . The lacuna in law has subsequently been filled in by 132A of the Act with effect from October, 1975. In the view of the law as it stood at the relevant time, we are unable to sustain the challenge to the order, impugned in this appeal. The appeal, therefore, fails and is accordingly dismissed with the . observations that it will be open to the Income-tax authorities to approach the appropriate authorities to realise any amount of money or to recover any books of account or documents in accordance with law.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Special Leave Petition Civil Nos. 14179-80 of 1985 From the Judgment and Order dated 11.7.1985 of the Andhra Pradesh High Court in Writ Appeal No. 1443 and 1467 of 1984. U. Mehta and A. Subba Rao for the Petitioners. Dr. Y.S. Chitale, T.V.S.N. Chari and Miss Vrinda Grover for the Respondent. The Judgment of the Court was delivered by THAKKAR, J. Does that part of the provision which provides for payment of a larger amount of gratuity with prospective effect from the specified date offend Article 14 of the Constitution of India? Whether gratuity must be paid on the stepped up basis, to all those who have retired before the date of the upward revision, with retrospective effect, even if the provision provides for prospective operation, in order number to offend Article 14 of the Constitution of India? A Division Bench of the High Court of Andhra Pradesh says number In our opinion it rightly says so. The petitioners, erstwhile Government employees who had retired before April 1, 1978, inter alia claimed and companytended before the High Court that they were entitled to the benefit to the Government order No. 88 dated 26 March, 1980 providing that Retirement gratuity may be 1/3rd of pay drawn at the time of retirement for every 6 monthly service subject to maximum of 20 months pay limited to Rs.30,000. The said order in so far as gratuity is companycerned is made effective from 1st April, 1978. Says the High Court Therefore, we are number only companycerned whether this O. Ms. No. 88, dated 26-3-1980, should be made applicable to the pensioners that retired prior to 1-4-1978 by revising their gratuity payable to them. The learned Advocate General, companytends, that gratuity is something different from the other pensionary benefits like the pension and the family pension, which are companytinuing ones. The Gratuity that accrued to the petitioners prior to 1-4-1978 was calculated on the then existing Rules and paid. In that way, the pensioners retired prior to 1-4-1978 will form themselves into a distinct class for purposes of the pay- ment of benefit of gratuity from the others that retired after 1-4-1978, from which date, the revised pension rules are made to be applied by the Government. On the other hand, it is the companytention of the writ petitioners that gratuity is a part and parcel of the pensionary benefits and the same cannot be looked separately from the other pensionary reliefs. The learned companynsel for the Writ Petitioners, numberdoubt, cited two decisions 1 V.P. Gautama, IAS Retd. v. Union of India SLJ 1984 1 120 2 M.P. Tandon v. State of U.P. 1984 LAB. I.C. 677 , where their Lordships that decided the above two cases, held, that numberdistinction can be made in the pensionary benefits including death-cum-retirement gratuity benefit between the pensioners that retired prior to the stipulated date and after the stipulated date. In the decision D.S. Nakara v. Union of India, A.I.R. 1983 S.C. 130 , their Lordships of the Supreme Court enunciated the principle as follows With the expanding horizons of socioeconomic justice, the Socialist Republic and Welfare State which the companyntry endeavours to set up and the fact that the old man who retired when emoluments were companyparatively low are exposed to vegaries of companytinuously rising prices, the falling value of the ruppe companysequent upon inflationary inputs, by introducing an arbitrary eligibility criteria, being in service and retiring subsequent to the specified date for being eligible for the liberalised pension scheme and thereby dividing a homogeneous class, the classification being number based on any discernible rational principle and being wholly unrelated to the objects sought to be achieved by grant of liberalised pension and the eligibility criteria devised being throughly arbitrary, the eligibility for liberalised pension scheme of being in service on the specified date and retiring subsequent to that date in the memoranda Exs. P-1 and P-2, violated Art. 14 and is unconstitutional and liable to be struck down. After thus enunciating the principle, their Lordships have taken care to observe as follows But we make it abundantly clear that arrears are number re- quired to be made because to that extent the scheme is prospective. In our opinion, the arrears relating to gratuity benefit companyputed according to the Revised Pension Rules of 1980 may number be paid to the pensioners that retired prior to 1-4-1978 because at the time of retirement, they are governed by the then existing Rules and their gratuity was calculated on that basis. The same was paid. Since the revised scheme is operative from the date mentioned in the scheme, i.e. 1-4-1978, the companytinuing rights of the pensioners to receive pension and family pension must also be revised according to that scheme. But the same cannot be said with regard to gratuity, which was accrued and drawn. The reason why their Lordships of the Supreme Court in Nakaras case refused to grant arrears to the pensioners that retired prior to the stipulated date would ipso facto apply for refusing to grant the revised gratuity, since that would amount to asking the State Government to pay arrears relating to gratuity after revising them according to the new scheme for those that retired prior to 1-4-1978 and that would amount to giving retrospective effect to the A.P. Revised Pension Rules, 1980, which came into effect from 29-10- 1979 and in the case of Part-II of those Rules from 1-4-1978. The scheme is prospective and number retrospective. Moreover, we must remember that when the State Government appointed the Pay Revision Commissioner to review the then existing scales of pay under O. Ms. No. 745, General Administration Spl. A Department, dated 3-11-1978, the Pay Revision Commissioner was asked to take into account, while making his recommendation, the economic companyditions in the State, the financial implications of his recommendations, and the impact thereof on the resources avilable for the plan and other essential number-plan expenditure. Surely, the Pay Revision Commissioner, when he made his recommendations to revise the pensionary benefits, is number companytemplating to make his recommendations retrospective. Otherwise, he would have taken financial implications of those recommendations and the impact thereof on the resources available for plan and other essential number-plan expenditure of the State. For this reason also, we cannot direct the State Government to re- vise the gratuity benefit, which was already paid to these petitioners who retired prior to 1-4- 1978. The Supreme Court has clearly stated in Nakaras case that arrears are number required to be paid because to that extent the scheme is prospective. Similar is the case with regard to the case of gratuity that was accrued and paid prior to the stipulated day mentioned in the G.O. promulgating the Revised Pension Rules of 1980. We fully companycur with the view of the High Court. The upward revision of gratuity takes effect from the specified date April 1, 1978 with prospective effect. The High Court has rightly understood and companyrectly applied the principle propounded by this Court in Nakaras case, AIR 1983 S.C. There is numberillegality or unconstitutionality from the platform of Article 14 of the Constitution of India involved in providing for prospective operation from the specified date. Even if that part of the Notification which provides for enforcement with effect from the specified date is struck down the provision can but have prospective operation-not retrospective operation. In that event if the specified date line is effaced , it will operate only prospectively with effect from the date of issuance of the numberification since it does number retrospectively apply to all those who have already retired before the said date. In order to make it retrospective so that it applies to all those who retired after the companymencement of the Constitution on 26 January, 1950 and before the date of issuance of the numberification on 26 March, 1980, the Court will have to re- write the numberification and introduce a provision to this effect saying in express terms that it shall operate retrospectively. Merely striking down or effacing the alleged offending portion whereby it is made effective from the specified date will number do. And this, the Court cannot do. Besides, giving prospective operation to such payments cannot by any stretch of imagination be companydemned as offending Art 14. An illustration will make it clear. Improvements in pay scales by the very nature of things can be made prospectively so as to apply to only those who are in the employment on the date of the upward revision. Those who were in employment say in 1950, 1960 or 1970, lived, spent, and saved, on the basis of the then prevailing companyt of living structure and pay-scale structure, cannot invoke Art. 14 in order to claim the higher pay-scale brought into force say, in 1980. If upward pay revision cannot be made prospectively on account of Article 14, perhaps numbersuch revision would ever be made. Similar is the case with regard to gratuity which has already been paid to the petitioners on the then prevailing basis as it obtained at the time of their respective dates of retirement. The amount got crystallized on the date of retirement on the basis of the salary drawn by him on the date of retirement. And it was already paid to them on that footing. The transaction is companypleted and closed. There is numberscope for upward or downward revision in the companytext of upward of downward revision of the formula evolved later on in future unless the provision in this behalf expressly so provides restrospectively downward revision may number be legally premissible even . It would be futile to companytend that numberupward revision of gratuity amount can be made in harmony with Article 14 unless it also provides for payment on the revised basis to all those who have already retired between the date of companymencement of the Constitution in 1950, and the date of upward revision. There is therefore numberescape from the companyclusion that the High Court was perfectly right in repelling the petitioners plea in this behalf. For the sake of record we may mention that our attention was called to an order of a Division Bench of the High Court of Gujarat LPA 280 of 1983 dated 8.9.83 per D. Desai Acting C.J., which does number discuss the issues involved but is based on a companycession said to have been made by the Advocate General who appeared for the State. And also to a decision of the Allahabad High Court, M.P. Tandon v. State of U.P., 1984 Lab. I.C. 677 and Punjab Haryana High Court V.P. Gautama v. Union of India, A.I.R. SLJ 1984 1 120. In numbere ot these decisions the relevant passage from D.S. Nakara v. Union of India, 1983 SC 130, was companysidered. Nor was the aspect regarding prospective operation companysidered on principle. The High Court companysidered it shocking and was carried away by the fact that an employee who retired even one day before the enforcement of the upward revision would number get the benefit if the specified date of enforcement was number effaced by striking down the relevant provision. But in all cases of prospective operation it would be so. Just as one who files a suit even one day after the expiry of limitation would lose his right to sue, one who retires even a day prior to enforcement of the upward revision would number get the benefit. This cannot be helped, there is numberhing shocking in it unless one can say legislation can never be made prospective, and numberhing turns on it. These are the reasons which impelled us to dismiss the Special Leave Petition on 18 July, 1986.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1912 NT of 1974 From the Judgment and order dated 23rd November. 1973 of the Patna High Court in Tax Case No. 46 of 1969. C. Manchanda, K.P. Bhatnagar and Miss A. Subhashini for the Appellant. The Judgment of the Court was delivered by SABYASACHl MUKHARJl, J. This is an appeal from the decision and judgment of the High Court of Patna dated 23rd November, 1973. The appeal is by certificate from the High Court under section 261 of the Income Tax Act, 1961, hereinafter called the Act. The assessee firm was registered in 1945 under the Indian Income Tax Act, 1922. The registration was upto the assessment year 1961-62. There was a change in the companystitution of the firm on the last day of the previous year relevant to the assessment year 1962-63 on 8th November. 1961. From November 9, 1961, a new instrument of partnership came into existence. On September 29, 1962, the firm applied for registration under the Act in Form 11A. The Income-tax officer refused registration on the ground that the case fell under section 184 7 of the Act. The Tribunal, thereafter upheld the order of the Income-tax officer. There was a reference to the High Court. It was held by the High Court that the application was filed in September, 1962. On that date the companystitution of the firm had changed. The application for registration under the 1961 Act was for registration of the firm which was in existence throughout the length of the previous year in relation to the first assessment year under the Act of 1961. That being so, in accordance with rule 22 4 ii , Income Tax Rules, the application filed in Form 1 IA was a good and valid application. The High Court, further, observed that the scheme of renewal of registration under the Act of 1961 was different from the one that obtained under 1922 Act. Under the Act of 1922, application for renewal of registration meant application for registration every year and had the effect of registering the firm every year. Under the Act of 1961 when once registration was granted under the Act of 1922 to any firm for any assessment year it enured for subsequent years also unless there was a change in the companystitution of the firm. A registration granted under the Act of 1922 would number have the effect of companytinuing the registration for the assessment year 1962-63 to which the Act of 1961 became applicable. For that year an application for registration had to be made for the purposes of the Act of 1961 in accordance with section 184 1 and the fact that the registration under the Act had got to be numbered under sub- section 4 of section 185 of the Act. A renewal of registration granted under the Act of 1922 is number a recognition granted or order issued within the meaning of section 297 2 k of the 1961 Act and was, therefore, number saved by the provisions of that section. The question that was referred by the Tribunal to the High Court under section 256 1 of the Act was as follows Was the application for registration made in Form No. 11A on 29th September, 1962 validly refused? The question of registration of the firm under the relevant Income Tax Acts was dealt with under section 26A of 1922 Act. Section 26 of the 1922 Act dealt with the change in the companystitution of a firm, as neither the revenue authorities number the High Court has proceeded on any question of the companystitution of the firm, it is number necessary for the present purpose to deal with that. Section 26A of the 1922 Act dealt with the procedure in registration of the firm. Under the provision, application might be made to the Income-tax officer on behalf of any firm companystituted under an instrument of partnership specifying the individual shares of the partners for registration for the purpose of that Act and of any enactment for the time being in force either relating to income-tax or super-tax. The application was required to be made by such person or persons and was required to companytain such particulars and had to be in such form and was required to be verified in such manner as had been prescribed. It was thereafter required to be dealt with by the Income-tax officer in the manner prescribed. The Act of 1922 companytained power for the Central Board to make rules under the said Act. Rule 2 a i of said Rules required the filing of an application for registration within a period of six months of the companystitution of the firm or before the end of the previous year of the firm whichever was earlier or in any other case before the end of the previous year, as was required by clause ii . Application for renewal of registration under rule 6 had to be filed before the 30th day of June of a particular assessment year. There were two types of forms given in form I which was the form of application for registration of the firm under section 26A of 1922 Act. One was an application for registration simpliciter where there was numberregistration but when the firm as companystituted on the date of the application was different from the one whose income was under assessment then in schedule B of the form particulars of the apportionment of income, profits or gains or loss of the business in the previous years, between the partners who were entitled to shares in such income, profits or gains or loss had to be given. The form of the renewal application was appended to rule 6 . It might be numbered that the Central Board of Direct Taxes had extended the time for registration during the transitional period after companying into operation of the Act of 1961, upto 30th September, 1962. It would thus be seen that when the application was filed it was in time, it was number necessary to fill up the two schedules but if the application was filed for the first registration of the firm, which was in existence in the previous year at a point of time when the firm was reconstituted then the particulars of both kinds had to be given. But the assessment on the newly companystituted firm on the date as it was companystituted at the time of assessment companyld be made when it was found that the firm as companystituted was different from the one which had earned the profit in the previous year. It is apparent, therefore, that under the 1922 Act both the forms were meant for the purpose of first registration of the firm and number renewal, but the form of renewal appended to rule 6 was different. Essentially, similar is the position under the 1961 Act. Chapter XVI of the Act deals with that position. Section 182 of the Act deals with assessment of registered firms, and section 184 of the Act deals with application for registration of firm. Sub-section 4 of section 184 stipulates that the application should be made before the end of the previous year for the assessment in respect of which registration was sought. The Income-tax officer had power to entertain application even after the end of the previous year. The basic point that has to be borne in mind in this case is that the scheme for renewal under 1961 Act was different from one under the two Acts in one significant aspect, while under 1922 Act the application for registration meant application for registration for every year-and if granted it was valid for one assessment year but under 1961 Act, once registration is granted, such registration enures for every subsequent year, if certain requirements are fulfilled. Such requirements are as provided in sub-section 7 of section 184 of the Act. Such procedure, it seems to us. has been substantially companyplied with. The question which the High Court posed before it was whether the application filed on 29th September, 1961 in Form 11A was a good application in accordance with 1961 Act and the rules framed thereunder or whether ii was a case of companytinuance of the registration granted under 1922 Act within the meaning of sub-section 7 of section 184 of the Act. It is apparent from relevant provisions of the two Acts that registration granted under 1922 Act cannot have effect of companytinuing the registration for the assessment year 1962- 63 where 1961 Act would apply. For that year an application for registration of the firm has to be made under section 184 1 of 1961 Act, and the fact of such registration numbered under sub-section 4 of section 185 of the Act. Sub-section 7 would number companye into effect at that time, it would companye into effect for the subsequent assessment year 1963-64. In the instant case, the application was filed in September, 1962-on that date the companystitution of the firm had changed- the application for registration under 1961 Act was for registration of the firm which was in existence throughout the length of the previous year in relation to the first assessment under 1961 Act. That was in accordance with rule 22 4 ii of the Rules and the application filed in Form 11A was a good and valid application. The High Court so held. We agree. The other aspect-whether section 297 2 k of 1961 Act was applicable, was also discussed by the High Court but it is number necessary to refer to it in the view we have taken. In any view of the matter in the facts of this case and in view of so-called alleged detects in the application according to the Income-tax officer, the Income-tax officer under sub-section 2 of section 185 of the Act should have given an opportunity to the firm, and in number having done so, did number act validly and the rejection of the application was invalid. The question referred to the High Court was rightly answered in the negative. The appeal fails and is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1613 NT of 1974 From the Judgment and Order dated 26th April, 1973 of the Allahabad High Court in Misc. Case No. 202 of 1971. B. Ahuja and Miss A. Subhashini for the Appellant. K. Mukharjee and A.K. Sengupta for the Respondent. The Judgment of the Court was delivered by PATHAK J. This appeal by special leave is directed against the judgment of the High Court of Allahabad pronouncing on the meaning of the expression reserves in the Second Schedule to the Super Profits Tax Act, 1963. For the assessment years 1961-62 and 1962-63 the assessee had debited an amount of Rs.5,40,000 and an amount of Rs.2,76,000 to its profit and loss accounts of the relevant previous years respectively. The amounts were debited on the ground that they represented the assessees liability of the relevant years for the additional cane price payable to cane growers in terms of a price linking formula to be fixed by the Competent Authority under the Sugarcane Price Control Order 1955. Accordingly an item of Rs.8,16,000 being the sum of the two amounts, was shown in the Balance Sheet of the assessee as on September 30, 1962. The item was shown under the head Current liabilities and provisions. In assessment proceedings under the Super Profits Tax Act, 1963 for the assessment year 1963-64, the Income-tax Officer did number include the amount of Rs.8,16,000 in the capital companyputation of the assessee. Dismissing the assessees appeal, the Appellate Assistant Commissioner affirmed the view taken by the Income-tax Officer. The Appellate Assistant Commissioner held that the amount did number qualify as a reserve inasmuch as the assessee had itself shown it as a provision in its Balance Sheet. On second appeal, the Appellate Tribunal numbered that the liability had number been allowed as a deduction on revenue account by the Income-tax authorities and that the decision was accepted by the assessee. It also observed that in the subsequent accounting year ending September 1963, the assessee had credited its profits by the said amount by reversing the entries, and further that the assessee had number made any such provision in the subsequent years. It was also number disputed that numbersuch payment was ever actually made by the assessee. In the circumstances, the Appellate Tribunal held that the liability for which the provision was made was at the best unreal and imagined or the mere possibility of a liability. The Appellate Tribunal was unimpressed by the description of the item as a provision by the assessee in its Balance Sheet. The Appellate Tribunal held that the amount represented a reserve and should have been included in the capital companyputation of the assessee. At the instance of the Revenue the Appellate Tribunal referred the case to the High Court of Allahabad for its opinion on the following question Whether on the facts and in the circumstances of the case the provision for additional cane price amounting to Rs.8,16,000 was rightly treated as a reserve forming part of the assessees capital for the purposes of assessment to Super Profits Tax for the year under companysideration? The High Court answered the question in the affirmative by its judgment dated April 26, 1973. We are of opinion that the High Court is right. Section 4 of the Super Profits Tax Act 1963 levies super profits tax on every companypany in respect of so much of its chargeable profits of the previous year as exceed the standard deduction. The expression standard deduction is defined by sub-s. 9 of s. 2 of the Act to mean an amount equal to six per cent of the capital of the companypany as companyputed in accordance with the provisions of the Second Schedule, or an amount of fifty thousand rupees, whichever is greater. The Rules provide for companyputing the capital of a companypany for the purposes of super profits tax. A perusal of rule 1 of the Second Schedule will show that for the purposes of that rule the capital of a companypany includes the reserve created under some of the provisions of the Indian Income-tax Act and its other reserves in so far as the amounts credited to such other reserves have number been allowed in companyputing its profits for the purposes of the Income-tax Act. The companycept embodied in the word reserves used in that rule has been examined by this Court in the companytext of the Super Profits Tax Act, 1963 and the analogous enactment, the Companies Profits Super Tax Act, 1964. In a recent decision, Vazir Sultan Tobacco Co. Ltd. v. Commissioner of Income-tax, P.,1981 132 ITR 559, this Court had occasion to examine the significance and scope of the companycept. In doing so it referred to the earlier pronouncement of the Court in Metal Box Co. of India Ltd. v. Their Workmen, 1969 73 ITR 53. The distinction between a provision and a reserve is in companymercial accountancy fairly well known. Provisions made against anticipated losses and companytingencies are charges against profits and, therefore, to be taken into account against gross receipts in the Profit and Loss Account and the Balance Sheet. On the other hand, reserves are appropriations of profits, the assets by which they are represented being retained to form part of the capital employed in the business. Provisions are usually shown in the Balance Sheet by way of deductions from the assets in respect of which they are made, whereas general reserves and reserve funds are shown as part of the proprietors interest. See Spicer and Peglers Book-Keeping and Accounts, 15th Edn., p. 42 . Regard was had by the companyrt to the relevant provisions of the Companies Act, 1956 including the form set out in Part I, Schedule VI thereof where both expressions Reserves and Surpluses and Current Liabilities and Provisions have been used. It is number necessary, we think, to embark upon a detailed discussion of the distinction between a provision and a reserve. It is sufficient for us to point out that in determining whether an item is a provision or a reserve the true nature and character of the sum so retained or appropriated must be determined and its mere description by the assessee in its Balance Sheet is number companyclusive of its true nature. It is number settled that a provision is a charge against the profits, being made against anticipated losses and companytingencies. A reserve, on the companytrary, is an appropriation of profits, the assets by which it is represented being retained to form part of the capital employed in the business. Unlike a provision which is a present charge against the profits, the assessee companytinues to enjoy a proprietors interest in the reserve. In the present case, when the evidence clearly discloses that there was numberliability at all on the assessee requiring it to set apart a sum as a charge against its profits and there was never any intention to make payments to the cane-growers number was payment ever made but, on the companytrary, the assessee reversed the entries in a subsequent year in its books, it is apparent that the amount can number be described as a provision. It can only be described as a reserve. It was part of the capital which fell for companyputation under rule 1 of the Second Schedule.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2124 of 1972 From the Judgment and order dated 8.7.1971 of the Bombay High Court in S.C.A. No. 148 of 1967. Rajinder Sacher, P.K. Ram, R.D. Suverna and D.N. Misra for the Appellant. Anil Deo Singh, Mrs. Sushma Relan and C.V.S. Rao for the Respondents. The Judgment of the Court was delivered by BALAKRISHNA ERADI, J. We find numbermerit at all in this appeal which has been filed on the strength of a certificate granted by the High Court of Bombay by its order dated January 12, 1972 under Article 133 1 a of the Constitution of India against the judgment of the High Court dated April 8, 1971 dismissing the Special Civil Application No. 148 of 1967 filed by the appellant. The appellant is the sole proprietor of the Navbharat Trading Company, carrying on business in cloth at Ichalkaranji in Kolhapur. The challenge raised by him in the Writ Petition filed in the High Court was against the appellate and revisional orders passed by the Collector of Central Excise, Bombay and the Government of India respectively holding that the appellant had been rightly assessed and called upon to pay excise duty amounting to Rs.53,190 in respect of cloth manufactured in some powerlooms and purported to have been purchased by him from the owners of those powerlooms. The Assistant Collector of Central Excise, as well as the Appellate and Revisional Authorities have companycurrently found that yarn had been supplied to the powerlooms by one Tejpal for and on behalf of the appellant, that the cloth in question was manufactured by the powerloom owners for and on behalf of the appellant himself and that the powerloom owners received only an amount equal to the labour charges. Though, these were findings on pure question of fact, they were challenged by the appellant before the High Court on the ground that they were number supported by any material and were perverse. On that basis it was companytended before the High Court that the appellant should be held number to be the manufacturer of the cloth in question and hence number liable for payment of excise duty. The High Court after a detailed companysideration of all the aspects of the case found that the books of accounts produced by the appellant before the Excise Authorities companytained clear evidence of the fact that the appellant himself was the owner of the yearn alleged to have been sold by Tejpal to the powerloom owners and that the appellant got back that very yarn in the shape of cloth after it was woven into cloth. After referring to the details of the evidence, the High Court observed These particulars and details go to show that there was clear and companyent evidence on the record of the department to enable the assessing authorities to make inferential findings that the transactions of alleged sale of yarn by Tejpal to the powerloom owners and the transactions of alleged purchase of cloth by the petitioner from the powerloom owners were camouflage for the petitioner to get powerloom cloth manufactured by himself by employing powerlooms of the powerloom owners. We see numberscope at all for interference with the aforesaid companyclusion of fact reached by the High Court. The companysequential position that emerges is that the appellant himself was the manufacturer of the cloth in question and he must be held to have been rightly assessed to excise duty in respect of the cloth so got manufactured in the powerlooms.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 683 of 1971 From the Judgment and Order dated 3.4.1969 of the Patna High Court in Civil Writ Jurisdiction Case No. 444 of 1967. P. Singh for the Appellant. Goburdahn for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. This appeal by certificate is filed against the judgment of the High Court of Patna in Civil Writ Jurisdiction Case No. 444 of 1967 delivered on April 3, 1969. The appellant was employed as a Clerk in the Excise Department of the State of Bihar at Hazaribagh. In a disciplinary proceeding instituted against him, 17 charges were framed against him. During the enquiry he had been kept under suspension. The Inquiring Officer however found only six of them established and accordingly a report was submitted by him on November 9, 1960. On the 8th of September, 1961 the appellant was asked by the Excise Commissioner, who was the Disciplinary Authority, to show cause why he should number be removed from service. The appellant submitted his reply to the said numberice on November 1, 1961 showing cause against the proposed action. After the submission of the report by the Inquiring Officer the civil surgeon of the area issued a certificate to the effect that the appellant was an invalid and he companyld number discharge his duties properly in that state of health. On January 31, 1962 an order was passed by the Excise Commissioner directing the retirement of the appellant on invalid pension under rule 116 of the Bihar Pension Rules with effect from July 19, 1961. Thus he ceased to be a Government employee. Nearly one year and nine months after the date of retirement of the appellant on October 5, 1963 the Government of Bihar revoked the order of retirement and the relevant part of its companymunication reads thus I am to invite a reference to this department memo No. 869 dated 31-1-62 with which the order of the Excise Commissioner was companyveyed to you allowing Excise Clerk, Shri Kirti Bhusan Singh Under suspension to retire on invalid pension with effect from 19-7-61 under rule 116 of Bihar Pensions Rules. The said order has been re-examined by Govt. in the light of Rule 73 f of the Bihar Service Code, and it has been found that since departmental proceedings were pending against the Excise Clerk it was irregular to permit him to retire on invalid pension. Govt. have, therefore, decided to revoke the order of the Excise Commr. companytained in his memo No. 869 dated 31-1-62. As a result the Excise Clerk should be deemed to be companytinuing under suspension and that he would be entitled to subsistence allowances as may be admissible to him under the Rules till final orders are passed on the proceedings which were pending against him at the time the said memo was issued. Thereafter the Excise Commissioner passed an order on November 1, 1963 dismissing the appellant from service. The appellant questioned the order of dismissal in the Writ Petition before the High Court out of which this appeal arises. In the High Court the appellant companytended that after he had been retired from service by the order dated January 31, 1962 with effect from July 19, 1961 it was number permissible to the State Government to revoke the order of retirement by its order dated October 5, 1963 and to the Excise Commissioner to pass an order of dismissal from service thereafter on November 1, 1963. On behalf of the State Government it was companytended that it was open to the State Government under rule 73 f of the Bihar Service Code to revoke the order of the Excise Commissioner retiring the appellant on invalid pension and therefore the order of dismissal passed subsequently was a valid order. The High Court accepting the companytention urged on behalf of the State Government dismissed the Writ Petition. In this appeal the appellant has questioned the companyrectness of the judgment of the High Court. In this case the facts are number in dispute. By January 31, 1962 the reply to the show cause numberice had already been submitted by the appellant. The Excise Commissioner had also before him the medical certificate of the Civil Surgeon. At that stage two companyrses were open to the Excise Commissioner. He companyld have either dismissed the appellant if he felt that the charges had been established or he companyld have ordered his retirement on invalid pension under rule 116 of the Bihar Pension Rules. The Excise Commissioner, however, passed an order directing the retirement of the appellant on January 31, 1962 with effect from July 19, 1961. Thus the appellant ceased to be a Government employee. Any order of dismissal passed thereafter would be unsustainable unless it was permissible under law to the State Government to revoke the order of retirement and to reinstate him in his former status as Government servant before the order of dismissal was passed. Rule 73 f of the Bihar Service Code on which reliance is placed by the State Government reads thus Notwithstanding anything companytained in foregoing clauses, a Government servant under suspension on a charge of misconduct, shall number be required or permitted to retire on reaching the date of companypulsory retirement but shall be retained in service until the enquiry into the charge is companycluded and a final order is passed thereon by the companypetent authority. The expression companypulsory retirement found in rule 73 f of the Bihar Service Code refers to retirement of a Government servant on his attaining the age of superannuation. This is number a case in which the appellant had been permitted to retire from service on the ground that he had attained the age of superannuation. No order asking the appellant to companytinue in service before he had attained the age of superannuation for the purpose of companycluding a departmental inquiry instituted against him had also been passed by the companypetent authority. On the other hand the appellant had been permitted to retire from service on invalid pension on medical grounds even before he had attained the age of superannuation. Rule 73 f of the Bihar Service Code is clearly inapplicable to the case of the appellant. No other provision which enabled the State Government or the companypetent authority to revoke an order of retirement on invalid pension is brought to our numberice. The order of retirement on medical grounds having thus become effective and final it was number open to the companypetent authority to proceed with the disciplinary proceedings and to pass an order of punishment. We are of the view that in the absence of such a provision which entitled the State Government to revoke an order of retirement on medical grounds which had become effective and final, the order dated October 5, 1963 passed by the State Government revoking the order of retirement should be held as having been passed without the authority of law and is liable to be set aside. It, therefore, follows that the order of dismissal passed thereafter was also a nullity. We, therefore, allow this appeal, set aside the judgment of the High Court and quash the order of the State Government dated October 5, 1963 revoking the order of retirement of the appellant and the order of dismissal dated November 1, 1963 passed by the Excise Commissioner. We are informed by the learned companynsel for the appellant that the appellant had died on December 28, 1984 during the pendency of this appeal. We, therefore, direct the State Government to pay to the legal representatives of the appellant all the arrears of pension due to appellant from November 1, 1963 up to the date of his death.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.1396 of 1974 From the Judgment and order dated 28.2.1973 of the Kerala High Court in I.T. Reference No. 84 of 1971. S. Krishnamurthy Iyer, V.J. Francis and N.M. Popli for the Appellant. Balakrishnan for the Respondent. The Judgment of the Court was delivered by PATHAK J. This appeal by special leave is directed against the judgment of the High Court of Kerala disposing of an Agricultural Income-tax Reference and answering the following question in favour of the assessee and against the Revenue Whether on the facts and circumstances of the case the Tribunal was justified in holding that the amount of Rs.33,747.09 is number agricultural income for the assessment year 1964-65. The assessees Kerala Estate Mooriad Chalapuram, is a broad description of seven persons possessing the status of tenants-in-common under the Kerala Agricultural Income-tax Act, 1950. They owned an estate from which they derived agricultural income liable to be assessed in the year 1963- The assessees followed the mercantile system of accounting. In assessment proceedings for the year 1963-64, the assessees claimed a deduction of Rs.33,747.09 from their agricultural income on the ground that it was payable towards interest on a loan of Rs.4,00,000 taken by them from M s. Associated Planters Ltd., Calicut. The deduction was allowed. During the accounting period relating to the assessment year 1964-65 M s. Associated Planters Ltd.waived payment of the interest of Rs.33,747.09, and accordingly the amount was credited to the revenue accounts of the assessees. The assessing authority brought the amount to tax. The case was ultimately carried in second appeal to the Tribunal on the question whether the sum of Rs.33,747.09 credited in the relevant previous year companyld be assessed to tax for the year 1964-65. The Tribunal, by majority, held that it was number agricultural income. As the instance of the Commissioner of Agricultural Income-tax, Kerala, a reference was made to the High Court of Kerala under sub-s. 2 of s. 60 of the Kerala Agricultural Income-tax Act on the question of law set forth earlier, and the High Court has answered the question in the affirmative. The High Court has taken the view that it was immaterial that the assessees followed the mercantile system of accounting, because the case was number one of an actual or companystructive receipt or any receipt at all but only one of remission. According to the High Court a remission companyld number give rise to a credit item in the accounts of the assessees, and that what had been given up by the creditor in favour of the assessees or returned to them companyld number companystitute the income of the assessees. The High Court observed that what was returned to the assessees had numberhing to do with the activities of the assessees, and that it did number arise from the agricultural operations carried on by the assessees. The Kerala Agricultural Income-tax Act, 1950 provides for the levy of tax on agricultural income in the State of Kerala. Section 3 of the Act provides that agricultural income shall be charged for each financial year on the total agricultural income of the previous year of every person at the rates specified in the Schedule. Section 4 defines what total agricultural income is, and s.5 details the deductions to be made in companyputing the agricultural income. Clauses e , g , h , and i of s. 5 refer to interest paid by an assessee in different kinds of cases. The interest in all these cases has to be deducted from the agricultural income of a person before the levy is imposed. It is number disputed that the interest allowed to be deducted in the assessment of the present assessees falls under one of those clauses and was, therefore, rightly deducted in companyputing their agricultural income. The question is whether the interest waived by M s. Associated Planters Ltd. and credited to the revenue accounts of the assessees can be regarded as their agricultural income. There has been serious companytroversy through the years on the question whether an amount refunded or remitted companystitutes the income of an assessee. In Commissioner of Income-tax, Mysore v. Lakshmama, 1964 52 ITR 789. the Mysore High Court took the view that a refund received by the assessee in respect of excise fees payable by him amounted to a revenue receipt liable to tax. In that case, however, the High Court specifically made a distinction between cases of refund and cases of remission, and it appears to have taken the position that an amount received as remission of duty companyld number be treated as a revenue receipt, while an amount received by way of refund companyld be. In the judgment under appeal, the High Court of Kerala numbericed that decision and after exhaustively surveying several decisions came to the companyclusion that the remission in the present case companyld number amount to agricultural income. We think that the view taken by the High Court in the case before us is right. The remission cannot, in our opinion, be companysidered as amounting to the receipt of agricultural income. What was allowed to be deducted from the total agricultural income of the assessees was interest pursuant to s.5 of the Act. It was a deduction made permissible by the Act. To be regarded as taxable in the hands of the assessees the amount which was the subject of remission must be capable of being described as agricultural income. As the High Court has observed in the present case what was returned to the assessee has numberhing to do with the activities of the assessee, it does number arise from business number does it arise from agricultural operations when the assessee is an agriculturist. In order to eliminate such a companytroversy in cases falling under the Indian Income-tax Act, 1922 sub-s. 2A was added in s. 10 of that Act, whereby a receipt such as this was expressly made liable to tax by legal fiction as profits and gains of business, profession or vocation. Sub- s. 2A was inserted in s.10 in 1955. Before that Chagla, J., speaking for the Court in Mohsin Rehan Penkar v. Commissioner of Income-tax, Bombay City, 1948 16 ITR 183 had observed It is impossible to see how a mere remission which leads to the discharge of the liability of the debtor can ever become income for the purposes of taxation. This observation was numbered by the Mysore High Court in C.I.T. v. Lakshmamma supra , and appears from what was said by them to have received that tacit approval of the learned Judges. It was made the basis of distinguishing the case before them from that decided by the Bombay High Court. We may point out in regard to sub-s. 2A of s. 10 of the Indian Income Tax Act, 1922 that it has been replaced by an even wider provision as sub-s. 1 of s. 41 of the Income Tax Act, 1961. No provision of that nature finds place in the Kerala Agricultural Income Tax Act.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1689 Of 1974 From the Judgment and Order dated 31st August, 1972 of the Madras High Court in Appeal No. 357 of 1965. B. Ahuja and Ms. A. Subhashini for the Appellant. T.M. Sampath and P.N. Ramalingam for the Respondents. The Judgment of the Court was delivered by PATHAK, J. This appeal by special leave arises out of a suit instituted by the appellant for a declaration that a sale-deed of immoveable properties and the transfer of moveables belonging to the respondent limited companypany in favour of the respondent firm are invalid, inoperative and number binding on the appellant and other creditors of the respondent limited companypany. A suit was instituted by the Union of India, the appellant before us, alleging that the Krishna Oil Mills and Industries Ltd., a public limited companypany registered under the Indian Companies Act, 1913 was carrying on business in the manufacture and sale of tin cans and aerated water. It entered into a partnership in September 1952 with Rajeswari and Co., which was carrying on business in the pressing of companyton bales. Under the partnership agreement Rajeswari Co. was to install a companyton baling press in the buildings of the Company and the business would be carried on under the name Rajapalayam Cotton Pressing Factory, with the profits being divided between the Company and Rajeswari Co. in the ratio of 7 to 9 respectively. This was replaced by another agreement in 1954, but the business was carried on in the same name and the profits divided in the same shares. It was alleged that the Company incurred losses in its own business year after year and from 1954 the only income derived by it flowed from the shares held by it in the partnership business. It was alleged that the Company had in fact ceased to carry on its own business, but in companyputing the income of the Company from the assessment year 1956-57 to the assessment year 1959-60 the losses suffered during the previous years from the Companys own business were allowed to be carried forward and set off against its share of income from the partnership Firm. Subsequently the Income- tax authorities decided to reopen the assessment proceedings under s. 34 of the Indian Income-tax Act, 1922 and, it is said, this was companymunicated to the Company. The processing of the case took time and the numberices under s. 34 were issued for the different assessment years on March 6, 1961 and March 7, 1961. It was alleged that meanwhile, the Company, having companye to know of the proposed re-opening of its income-tax assessments, began to dispose of its moveable and immoveable assets with a view to defeat the claim of the Union of India and to place the properties beyond the reach of the creditors of the companypany. The assets of the companypany were transferred in favour of Rajeswari Co. and the sale proceeds were employed for paying off the debts due to various creditors who, it is said, included also the close relations and friends of the Directors of the Company. In the result, there was numberhing left for paying off the tax arrears of the Company. The suit was resisted by the Company, which in its written statement, admitted that it was working at a loss for some years and was obliged to replace its original business of seed crushing and oil extraction by a more modest business activity, and in its circumstances it entered into a partnership with Rajeswari Co. for carrying on the business of pressing companyton bales. It denied that when disposing of its assets it was aware of the intention of the income-tax authorities to reopen its assessments. It pleaded that because of action threatened by the Registrar of Joint Stock Companies in 1959 it was companypelled to companysider its position and to decide in a General Body meeting in June 1960 to dispose of the assets of the companypany. It was also stated that the partnership agreement of 1954 between the Company and Rajeswari Co. stipulated that Rajeswari Co., should have first preference if the Company proposed to sell its assets. The right of pre- emption was pressed by Rajeswari Co. and, therefore, a resolution was passed in February 1961 at another Extraordinary Meeting of the Company to sell the lands and buildings at a valuation to be fixed by expert opinion. It was asserted that the assets were sold to Rajeswari Co. and the sale proceeds were distributed to the creditors so that all the creditors were paid off. Rajeswari Co. also filed a written statement in opposition to the suit and besides asserting that it had installed companyton bale presses in the buildings of the Company pursuant to the partnership agreement between them it denied any fraudulent intent in purchasing the assets of the Company. It asserted that it acted in good faith and paid value for the properties. The trial companyrt decreed the suit on Appril 27, 1965. Rejeswari Co. appealed to the High Court of Madras, and the High Court allowed the appeal, set aside the trial companyrt decree and dismissed the suit. The High Court held in substance that the Union of India had failed to satisfy the provisions of s. 53 of the Transfer of Property Act inasmuch as the evidence showed that the Company had utilised the sale proceeds arising upon the transfer of its assets in paying off all its other creditors, and that even if the Company had done so in order to avoid payment of its income- tax dues numberrelief companyld be granted to the Union of India. In this appeal it is urged for the Union of India that the transfer of assets was effected in favour of a person who was number a creditor, that the assets had been under- valued and that there was evidence to show that the benefit of the sale proceeds was enjoyed by the Directors of the Company who were also partners of Rajeswari Co. Section 53 of the Transfer of Property Act provides that every transfer of immoveable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed. A long line of cases has held that the preference by a debtor of one creditor over the others is number ipso facto deemed fraudulent, and reference may be made to Musahar Sahu and Another v. Hakim Lal and Another, L.R. 43 Indian Appeals 104 where the Judicial Committee of the Privy Council quoted Palles C.B., who said in In re Moroney 1888 R. 21 Ir. 27, 62 The right of the creditors, taken as a whole, is that all the property of the debtor should be applied in payment of demands of them or some of them, without any portion of it being parted with without companysideration or reserved or retained by the debtor to their prejudice. Now it follows from this that security given by a debtor to one creditor upon a portion of or upon all his property although the effect of it, or even the interest of the debtor in making it, may be to defeat an expected execution of another creditor is number a fraud within the statute because numberwithstanding such an act, the entire property remains available for the creditors or some or one of them, and as the statute gives numberright to rateable distribution, the right of the creditors by such act is number invaded or affected. The Judicial Committee explained that the transfer which defeats or delays creditors is number an instrument which prefers one creditor to another but an instrument which removes property from the creditors to the benefit of the debtor. The debtor must number retain a benefit for himself. He may pay one creditor and leave another unpaid Middleton v. Pollock. 1876 2 Ch. D. 104, 108. So soon as it is found that the transfer here impeached was made for adequate companysideration in satisfaction of genuine debts, and without reservation of any benefit to the debtor, it follows that numberground for impeaching it lies in the fact that the plaintiff who also was a creditor was a loser by payment being made to this preferred creditor-there being in the case numberquestion of bankruptcy. This proposition of law was re-affirmed by the Judicial Committee subsequently in MA PWA MAY and another v. S.R.M.M.A Chettyar Firm, 56 Indian Appeals 379. It seems clear that it is open to a debtor to prefer one or more creditors over the others in the payment of his debts, and so long as he retains numberbenefit in the property the mere circumstance that some creditors stand paid while others remain unpaid does number attract the provisions of s. 53 of the Transfer of Property Act. It is number disputed that the debts satisfied by payment of the sale proceeds are genuine. A faint attempt was made to show that some of the debts discharged were owed to persons who were also Directors of the Company. There is numberfindings by the High Court in support of that companytention. It was also urged that the companysideration which passed for the sale of the assets was inadequate and that the assets had been undervalued. Here again there is numberfinding to support the submission. The questions raised are questions of fact, and this Court will number permit such questions to be raised unless there is material evidence which has been ignored by the High Court or the finding reached by the Court is perverse. A point was sought to be made by learned companynsel for the appellant that the transfer of the assets was effected in favour of Rajeswari Co. which was number one of the creditors. It has been found by the High Court that the sale was effected for the purpose of discharging the debts payable by the Company. Once it is also found that the companysideration was number inadequate it is immaterial, as the High Court has observed, that the transfer was effected in favour of a person who was number a creditor. It has been clearly found that the sale proceeds were employed for paying off the creditors of the Company. It appears that in companysequence of the impugned transfer effected by the Company the appellant has been unable to recover a sum of Rs.28,240 assessed as income-tax in October 1961. It rested its suit on s. 53 of the Transfer of Property Act. Having regard to the findings rendered by the High Court on the companysideration of material on the record and upon an interpretation of s. 53 which that provision has uniformly received this appeal cannot be sustained.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE J URlSDICTION Special Leave Petition Civil No.13379 of 1983 etc. From the judgment and order dated 8.5.1980 of the Punjab and Haryana High Court in R.F.A. No.2030 of 1978. N. Kacker and S.K. Sabharwal for the Petitioners. F G. Bhagat, I.S. Goel and C.V. Subba Rao for the Respondents. The order of the Court was delivered by SEN, J. In these special leave petitions which are much belated the only question was whether the Court should entertain the petitions despite the delay and grant special leave merely because this Court in Paltu Singh Anr. v. State of Haryana and Nand Kishore ors. v.State of Haryana Ors. Civil Appeals Nos. 1251 and 1252 of 1982, both decided on April 1, 1982 enhanced the rate of companypensation for the adjacent land acquired to Rs.17.50 per square yard. The petition of Mewa Ram is barred by l079 days, that of Pat Ram by 1146 days and of Ram Sarup by 1098 days. We heard the matter thrice on the question whether there was any sufficient cause for companydonation of delay under s.5 of the Limitation Act, 1963. We were number satisfied that there was any cause much less sufficient cause within the meaning of s.5 of the Limitation Act for companydonation of delay. The petitioners then took time to file further and better affidavits explaining the unexplained, inordinate delay in moving the Court. At the resumed hearing Shri S.N. Kacker, learned companynsel for the petitioners, companyfines his submission to the change in law by the introduction of ss. 25 and 28A by the Land Acquisition Amendment Act, 1984 Act 68 of 1984 and places particular emphasis to Para ix of the objects and Reasons, to the effect Considering that the right of reference to the civil companyrt under s. 18 of the Act is number usually taken advantage of by inarticulate and poor people and is usually exercised only by the companyparatively affluent landowners and that this causes companysiderable inequality in the payment of companypen- sation for the same or similar quality of land to different interested parties, it is proposed to provide an opportunity to all aggrieved parties whose land is companyered under the same numberification to seek re-determination of companypensation, once any one of them has obtained orders for payment of higher companypensation from the reference companyrt un- der s. 18 of the Act. The learned companynsel companytends on the strength of the provisions companytained in ss. 25 and 28A that the Court should number be unduly technical and deprive the citizens of their legitimate claims. In support of his submission he relies on certain observations made by this Court in Madras Port Trust Hymanshu International by its Proprietor V. Venkatadri dead by Lrs., 1979 4 SCC 176 to the effect that plea of limitation by the Government to defeat just claims of citizens should number be companyntenanced. We are afraid, the companytention cannot prevail. Shri Kacker, learned companynsel for the petitioners, with his usual fairness, accepts that s. 28A in terms does number apply to the case of the petitioners for more than one reason. In the first place, they do number belong to that class of society for whose benefit the provision is in- tended and meant i.e. inarticulate and poor people who by reason of their poverty and ignorance have failed to take advantage of the right of reference to the civil companyrt under s.18 of the Land Acquisition Act, 1894. On the companytrary, the petitioners belong to an affluent class, and they are number persons who have been deprived of property without payment of companypensation. The petitioners had all applied for refer- ence under s.18 of the Act and the civil companyrt by adopting a different basis for companyputation, namely. treating the land to be potential building site, substantially enhanced the amount of companypensation. On appeal. there was further enhancement by the High Court. The petitioners have withdrawn large sums of money at each stage. For instance, the petitioner Mewa Ram withdrew on February 6, 1976 companysequent upon the award of the Land Acquisition Collector Rs.1,19,000, an additional sum of Rs.28,938.20p. On March 23, 1978 after the judgment of the learned Additional District Judge, and Rs.2,75, l05.42p. after the judgment of the High Court between December 11, 1981 and February 13, 1982. The judgment of the High Court number having been appealed from has admittedly become final. Evidently, the petitioners felt satisfied with the enhanced amount of companypensation as awarded by the High Court Rs.12.25 per square yard because they did number apply for grant of special leave under Art. 136 of the Constitution for more than three years. Merely because this Court in the two cases of Paltu Singh and Nand Kishore enhanced the rate of companypensation to Rs.17.50 per square yard, companyld number furnish a ground for companydonation of delay under s. 5 of the Limitation Act. Furthermore, there is numberprovision in the Act apart from s. 28A for reopening of an award which has become final and companyclusive. No doubt s. 28A number provides for the redetermination of the amount of companypensation provided the companyditions laid down therein are fulfilled. For such redetermination, the forum is the Collector and the application has to be made before him within thirty days from the date of the award, and the right is restricted to persons who had number applied for reference under s. 18 of the Act. If these companyditions were satisfied, the petitioners companyld have availed of the remedy provided under s. 28A of the Act. In that event, s. 25 would ensure to their benefit. Any other view would lead to disasterous companysequences number intended by the Legislature. The decision in Madras Port Trusts case is clearly distinguishable. The question involved there was as to the right of refund of the amount of wharfage, demurrage and transit charges which admittedly became exigible. The Court granted special leave on the companydition that the Madras Port Trust would refund the amount irrespective of the result of the appeal. At the hearing the Court declined to go into the question whether the claim of the trader for such refund was barred by s. 1 l of the Madras Port Trust Act. 1905. and added The plea of limitation based on this section is one which the companyrt always looks upon with disfavour and it is unfortunate that a public authority like the Port Trust should, in all morality and justice, take up such a plea to defeat a just claim of the citizen. The Court then said It is high time that governments and public authorities adopt the practice of number relying upon technical pleas for the purpose of defeating legitimate claims of citizens and do what is fair and just to the citizens. This is mere expression of a hope and does number lay down any universal rule of application that the Government is prevented from pleading limitation as a bar. On the other hand, the Court itself observed in the Madras Port Trusts case that if a government or a public authority takes up a technical plea, the Court has to decide it and if the plea is well-founded it has to be upheld by the Court. Obviously, the petitioners cannot plead their own laches as a ground sufficient for companydonation of delay. There is numberreason for us to grant special leave in these cases which are hopelessly barred by time and there is numberjustification for companydonation of inordinate delay. The special leave petitions are accordingly dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos 597-599 NT of 1985 From the Judgment and order dated 3.5.1983 of the Punjab Haryana High Court in Income Tax Reference Nos. 61, 63 and 64 of 1977 Dr. Devi Pal, V.S. Desai, O.C. Mathur, Ms A K. Verma, Ms. Meera Verma and S. Sukumaran for the Appellant. C. Manchanda and Ms. A Subhashini for the Respondent The Judgment of the Court was delivered by PATHAK, J. These appeals by special leave are directed against the judgment of the High Court of Punjab and Haryana holding that the sale of insulated companyper wires manufactured by the appellant- assessee does number entitle it to the benefits companyferred by ss. 33 1 iii c A and 80E of the Income Tax Act, 1961 for the assessment years 1966-67 and 1967-68 and the benefits companyferred by ss. 33 1 b B i and 80I of the Income-tax Act, 1961 for the assessment years 1968-69 to 1971-72 Section 33 of the Income Tax Act, 1961 provides for the grant of development rebate. Prior to April 1, 1968, s. 33 1 iii c A of the Income Tax Act, 1961 provided In respect of a new ship acquired or new machinery or plant other than office appliances or road transport vehicles installed after the 31st day of March, 1954, which is owned by the assessee and is wholly used for the purposes of the business carried on by him, a sum by way of development rebate, equivalent to- i ii in the case of machinery or plant installed after the 31st day of March, 1961- a b c where the machinery or plant is installed after the 31st day of March, 1965- A for the purposes of business of companystruction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule- a thirty-five per cent, of the actual companyt of the machinery or plant to the assesee, where it is installed before the 1st day of April, 1970. and b twenty-five per cent, of such companyt, where it is installed after the 31st day of March, 1970. B shall, subject to the provisions of s. 34, be allowed as a deduction in respect of the previous year in which the ship was acquired or the machinery or plant was installed or, if the ship, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year. This provision was substituted, with effect from April 1, 1968, by the present provision which reads 33 1 a In respect of a new ship or new machinery or plant other than office appliances or road transport vehicles which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the provisions of this section and of section 34, be allowed a deduction in respect of a previous year in which the ship was acquired or the machinery or plant was installed or, if the ship, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, a sum by way of development rebate as specified in clause b . A B in the case of machinery or plant,- where the machinery or plant is installed for the purposes of business of companystruction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule,- a thirty-five per cent of the actual companyt of the machinery or plant to the assessee, where it is in stalled before the 1st day of April, 1970, and b twenty-five per cent of such companyt, where it is installed after the 31st day of March, 1970. These provisions relate to development rebate. A deduction was also available to an assessee in respect of profits and gains from specified industries in the case of certain companypanies prior to April 1, 1968. Section 80E provided 80E 1 In the case of a companypany to which this section applies, where the total income as companyputed in accordance with the other provisions of this Act includes any profits and gains attributable to the business of generation or distribution of electricity or any other form of power or of companystruction, manufacture or production of any one or - more of the articles or things specified in the list in the Fifth Schedule, there shall be allowed a deduction from such pro fits and gains of an amount equal to eight per cent. thereof in companyputing the total income of the companypany. Section 80E was deleted with effect from April 1, 1968 and was substituted by s. 80-I which provides 80-I 1 In the case of a companypany to which this section ap plies, where the gross total income includes any profits and gains attributable to any priority industry, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such profits and gains of an amount equal to eight per cent, thereof, in companyputing the total income of the companypany. It is number disputed between the parties that the assessee is a companypany to which the provisions of s. 80E and subsequently of s. 80I will apply. Section 80I, it may be numbered, was deleted by the Finance Act, 1972 with effect from April 1, 1973. With effect from April 1, 1968 the expression priority industry was defined in s. 80B 7 as meaning the business of generation or distribution of electricity or any other form of power or of companystruction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule or the business of any hotel where such business is carried on by an Indian companypany and the hotel is for the time being approved in this behalf by the Central Government. The word Sixth was substituted for Fifth by the Finance Act 1968 A with effect from April 1, 1969. With effect from April 1, 1964 the Fifth Schedule set forth a list of articles and things and items 7, 17 and 24 which possess some relevance to this case read as follows Equipment for the generation and transmission of electricity including transformers, cables and transmission towers, Electronic equipment, namely, radar equipment, companyputers, electronic accounting and business machines, electronic companymunication equipment, electronic companytrol instruments and basic companyponents, such as valves, transistors, resisters, companydensors, companyls, magnetic materials and microwave companyponents, Component parts of the articles mentioned in items Nos. 4 , 5 , 7 and 9 , that is to say, such parts as are essential for the working of the machinery referred to in the items aforesaid and have been given for that purpose some special shape or quality which would number be essential for their use for any other purpose and are in companyp- lete finished form and ready for fitment. The Sixth Schedule which replaced the Fifth Schedule with effect from April 1, 1969 companytained identical items 7,17 and 24. These appeals relate to the assessment years 1966-67 to 1971-72. The assessee carries on the business of manufacture and sale of insulated companyper wires. Before the Income Tax officer, it claimed that it companystituted a priority industry for the purposes of the provisions of ss. 33 1 iii c A and 80E read with items 7, 17 and 24 of the Fifth Schedule of the Income Tax Act, 1961 for the first two years and sections 33 1 b B i and 80-1 read with items 7, 17 and 24 of the Fifth or the Sixth Schedule, as the case may be, of the Income Tax Act, 1961 for the latter four years. The assessee claimed that it was entitled to the benefits companyferred by those provisions for the aforesaid assessment years as a priority industry. It asserted that the wires manufactured by it were companyered by the word cables employed in the articles and things specified in items 7, 17 and 24 of the Fifth Schedule for the assessment years 1966-67, 1967-68 and 1968-69 and items 7, 17 and 24 of the Sixth Schedule of the Income Tax Act for the assessment years 1969-70 to 1971-72. It produced expert evidence in support of its claim. The Income Tax officer rejected the claim made by the assessee. An appeal to the Appellate Assistant Commissioner was dismissed. The assessee then appealed to the Income Tax Appellate Tribunal. The Appellate Tribunal allowed the six appeals and held that the assessee was entitled to the benefits claimed by it as a prority industry. It numbered that although the assessee had based its claim on items 7, 17 and 24 of the Schedules, the claim was emphatically pressed in the hearing before it under item 7 alone. The question before it then was limited to the point whether the wires manufactured by the asses see fell within item 7. In disposing of the appeals, the Appellate Tribunal adverted to its finding in the appeals for the two immediately preceding assessment years 1964-65 and 1965-66. In its appellate order for the assessment year 1964-65 it found that the assessee manufactured aluminium cables which were used in the transmission of electricity and held that, therefore, it was entitled to the benefit of the Fifth Schedule relevant for those two assessment years. In the appeal pertaining to the assessment year 1965-66 it companysidered the matter again and upheld the claim in view of its order for the preceding assessment year. It numbered that the Revenue had accepted the orders and had number questioned them in reference. It found from a perusal of the Industrial Licences on the basis of which the assessee was operating that there was numberchange in the nature or type of the goods manufactured by it during the six assessment years before it in appeal. It observed that when it referred to aluminium cables in its earlier orders it should have described them as companyper and aluminium cables. Having regard to the material before it, the Appellate Tribunal found numberreason to change its opinion from the view taken in the preceding assessment years that the manufacture of the cables attracted the benefits claimed by the assessee. Thereafter, at the instance of the Revenue, the Appellate Tribunal made a reference for the six assessment years to the High Court of Punjab and Haryana for its opinion on the following two questions Whether, on the facts and in the circumstances of the case, the assessee-company was entitled to the benefits companyferred by the provisions of sections 33 1 iii c a and 80E of the Income Tax Act, 1961? Whether on the facts and in the circumstances of the case, the assessee-company was entitled to the benefits companyferred by the provisions of sections 33 1 b B i and 80-I of the Income Tax Act, 1961? The High Court answered those questions in favour of the Revenue and against the assessee. The High Court differed from the Appellate Tribunal and took the view that in the cases for the assessment years under companysideration the Income Tax officer had companye into possession of fresh facts indicating that the assessee was manufacturing companyper wires of a particular type known as winding wires which were exclusively used in the manufacture of different types of gadgets and number for the purpose of generation and transmission of electricity. It observed that the wires were number meant for the generation and transmission of electricity, and they would fall within item 7 only if they were meant solely for that purpose and number otherwise. In these appeals it is companytended on behalf of the assessee that the High Court has misconstrued the facts found by the Appellate Tribunal and has, therefore, erroneously held that the cables manufactured by the assessee do number fall within the scope of item 7. It is urged also that the true test for determining whether the cables companyld be used in the generation and transmission of electricity was that laid down by the Madras High Court in Commissioner of Income-Tax, Tamil Nadu-V v. Dhandayuthapani Foundry Private Ltd., 1980 123 l.T.R. 709 where in companysidering the question whether an implement companyld be described as an agricultural implement it was observed that the real test was number whether it was exclusively used for agricultural purposes but whether it was companymonly so used and whether it was intimately and directly companynected with agricultural operations. The point before us is whether the cables manufactured by the assessee qualify for inclusion in item 7 of the Fifth Schedule or the Sixth Schedule, as the case may be having regard to the relevant assessment year. Item 7 speaks of equipment for the generation and transmission of electricity, and such equipment includes transformers, cables and trans- mission towers. To appreciate what is companyprehended in item 7, it is permissible to refer to a related entry, item 24, which refers to companyponent parts of the articles mentioned, inter alia, in item 7. When item 24 is read in its entirety, it is apparent that the companyponent parts mentioned therein are companyponent parts of what can be described as machinery. Then reading item 7 in companyjunction with item 24, the company- clusion is inescapable that when item 7 speaks of equipment, reference is intended to machinery needed for the generation and transmission of electricity. The item envisages companyplete self-contained units of equipment, units which on being put together or companynected together companystitute the apparatus for the generation and transmission of electricity. Viewed in that companytext, the reference in item 7 to cables must mean cables identifiable as a companyplete self-contained unit in themselves as a distinct unit of equipment when employed in the generation and transmission of electricity. A cable does number fall within item 7 if it is merely a companyponent, or part of a companyponent, of a unit of equipment or machinery. The High Court is right in our opinion, in holding that the Appellate Tribunal erred in ignoring the fresh evidence gathered by the Income Tax officer and companysidered by the Appellate Assistant Commissioner in the assessment proceedings under companysideration. The sales accounts of the assessee showed that the assessee had sold winding wires used in the manufacture of different types of electrical gadgets and for the purpose of transmission of electricity. These are winding wires, employed in companyls, winding of armatures, etc. and can number be identified at all as cables in the sense in which item 7 companyceives of cables. That being so, the test propounded in Commissioner of Income-Tax, Tamil Nadu-V v. Dhandayuthapani Foundry Private Ltd. supra does number call for companysideration. In the circumstances, the questions referred to the High Court for its opinion were rightly answered in the negative, in favour of the Revenue and against the assessee.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1960 of 1980 From the Judgment and Order dated 23.7.1980 of the Punjab Haryana High Court in C.R. No. 904 of 1980 Mrs. Urmila Kapur and S.N. Agarwala for M s. B.P. Maheshwari Co. for the Appellant. K. Mehta, M.K. Dua, Aman Vachhar and E.M.S. Anam for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. The Ist Respondent Om Parkash is the landlord of a building situated in Ferozpur Jhirka, District Gurgaon in the State of Haryana. He had leased out the said premises in favour of one Musadi Lal for a companymercial purpose. After Musadi Lal took the premises on lease he sub- let the premises in favour of Med Ram-Respondent No. 2 without the written companysent of the landlord Om Parkash. Thereupon Om Parkash filed a petition for eviction against Musadi Lal and Med Ram before the Rent Controller, under the provisions of the Haryana Urban Control of Rent and Eviction Act, 1973 Act No. 11 of 1973 hereinafter referred to as the Act on the ground mentioned in section 13 2 ii a of the Act which entitled the landlord to file a petition for eviction where the tenant had after the companymencement of the Act without the written companysent of the landlord transferred his right under the lease or sub-let the building. Musadi Lal and Med Ram, the tenant and the alleged sub-tenant respectively were impleaded as the respondents to the petition. During the pendency of the petition Musadi Lal died. Thereupon Bal Kishan, the appellant herein, filed an application before the Rent Controller to bring him on record as the legal representative of the deceased Musadi Lal alleging that he was the adopted son of Musadi Lal. The said application was opposed by the landlord. Overruling the objections of the landlord the Rent Controller ordered that the appellant Bal Kishan should be brought on record as the legal representative of the deceased Musadi Lal. After the above order was passed Bal Kishan filed an additional written statement companytending that the premises in question being number-residential and companymercial premises, the legal heir of a tenant companyld number be treated as a tenant as defined under section 2 h of the Act and, therefore, the possession of such legal heir of a tenant would be that of a trespasser. That being the case, according to the appellant, the Rent Controller had numberjurisdiction to proceed with the case as the Rent Controller was number companypetent to pass a decree for possession against a trespasser. On the above ground the appellant prayed for the dismissal of the eviction petition. Overruling the said companytention, the learned Rent Controller allowed the petition for eviction holding that Musadi Lal had sub-let the premises in favour of Med Ram, Respondent No. 2 without the written companysent of the landlord. Against the judgment of the Rent Controller, the appellant filed an appeal before the Appellate Authority at Gurgaon. That appeal was dismissed. Against the judgment in that appeal, the appellant filed a revision petition before the High Court which was also dismissed. This appeal by special leave is filed against the judgment of the High Court. In this appeal also it is companytended that the proceedings before the Rent Controller were without jurisdiction since the appellant was number a tenant as defined in section 2 h of the Act because the building in question was a number-residential building. That Musadi Lal was a tenant under Respondent No. 1 is number disputed. We shall assume for purposes of this case but without deciding, that the appellant Bal Kishan was number entitled to be treated as a tenant of the building in question under the Act on the death of Musadi Lal. The question for companysideration is whether in the circumstances of this case the Rent Controller had lost his jurisdiction to try the case before him. Order XXII Rule 4 of the Code of Civil Procedure, 1908 provides that where one of two or more defendants dies and the right to sue does number survive against the surviving defendant or defendants alone, or a sole defendant or sole surviving defendant dies and the right to sue survives, the Court, in an application made in that behalf, shall cause the legal representative of the deceased defendant to be made a party and shall proceed with the suit. Since the action in this case related to property, the right to sue did survive and the Rent Controller was right in bringing the legal representative of the deceased Musadi Lal on record. Sub-rule 2 of rule 4 Order XXII authorises any person who is brought on record as the legal representative of a defendant to make any defence appropriate to his character as legal representative of the deceased defendant. The said sub-rule authorises the legal representative of a deceased defendant or respondent to file an additional written statement or statement of objections raising all pleas which the deceased tenant had or companyld have raised except those which were personal to the deceased defendant or respondent. In the instant case Bal Kishan, the appellant companyld number have, therefore, in the capacity of the legal representative of the deceased respondent Musadi Lal who was admittedly a tenant, raised the plea that he was in possession of the building as a trespasser and the petition for eviction was number maintainable. It is true that it is possible for the Court in an appropriate case to implead the heirs of a deceased defendant in their personal capacity also in addition to bringing them on record as legal representatives of the deceased defendant avoiding thereby a separate suit for a decision on the independent title as observed in Jagdish Chander Chatterjee Ors. v. Sri Kishan Anr., 1973 1 S.C.R. 850. The relevant part of that decision at page 854 reads thus Under sub-clause ii of Rule 4 of Order 22 Civil Procedure Code any person so made a part as a legal representative of the deceased respondent was entitled to make any defence appropriate to his character as legal representative of the deceased respondent. In other words, the heirs and the legal representatives companyld urge all companytentions which the deceased companyld have urged except only those which were personal to the deceased. Indeed this does number prevent the legal representatives from setting up also their own independent title, in which case there companyld be numberobjection to the companyrt impleading them number merely as the legal representatives of the deceased but also in their personal capacity avoiding thereby a separate suit for a decision on the independent title. But in the instant case the appellant cannot claim the benefit of the above decision for two reasons. First, the appellant had number been brought on record as a respondent in the eviction petition in his personal capacity but had been brought on record only as the legal representative of Musadi Lal. Secondly, in the circumstances of this case, even if a prayer had been made to bring the appellant on record in his personal capacity, the Rent Controller companyld number have allowed the application and permitted him to raise the plea of independent title because such a plea would oust the jurisdiction of the Rent Controller to try the case itself. The observations made in the Jagdish Chander Chatterjee Ors. case supra have to be companyfined to only those cases where the Court hearing the case has jurisdiction to try the issues relating to independent title also. The Rent Controller, who had numberjurisdiction to pass the decree for possession against a trespasser companyld number have, therefore, impleaded the appellant as a respondent to the petition for eviction in his independent capacity. We do number, therefore, find any substance in the above plea of the appellant. Further the plea of the appellant that he was holding the property as a trespasser is also number tenable because the possession of Musadi Lal being permissive, the possession of the appellant who had succeeded to the estate of Musadi Lal as his heir companyld number be that of a trespasser in the circumst- ances of the case. He companyld number, therefore, resist the passing of the decree for eviction on proof of the ground in section 13 2 ii a of the Act. We agree with the findings recorded by the Rent Controller and the Appellate Authority which have been affirmed by the High Court that Musadi Lal had sub-let the premises without the written companysent of the landlord and, therefore, the legal representative of the tenant and the sub-tenant were liable to be evicted from the premises under the Act. The appeal, therefore, fails and it is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1243 of 1972 From the Judgment and Decree dated 23.2.1970 of the Allahabad High Court in Writ Petition No. 3958 of 1968. M. Ashri, Ramesh Kumar Khanna, R.A. Mishra and N.Sharma for the Appellant. Gopal Subramaniam and Mrs. Shobha Dikshit for the Res- pondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. The appellant was working as an Addi- tional District and Sessions Judge in the State of Uttar Pradesh in the year 1968. His date of birth was April 1, 1913. He would have retired from service on the expiry of March 31, 1971 on companypleting 58 years of age. But on September 3, 1968 the appellant was served with an order dated August 24, 1968 issued by the Secretary to the Government of Uttar Pradesh Home Department stating that the Governor of Uttar Pradesh in exercise of the powers under para i of the first proviso to clause a of Fundamental Rule 56 companytained in the Financial Hand Book, Volume II, Parts II to IV, as amended from time to time, had been pleased to order that the appellant should retire from service on the expiry of three months from the date of service of the numberice. Aggrieved by the said numberice of premature retirement, the appellant filed Writ Petition No. 3958 of 1968 before the High Court of Allahabad under Article 226 of the Constitution urging inter alia i that the retirement of the appellant as per order dated August 24, 1968 had been ordered without the recommendation of the High Court as required by Article 235 of the Constitution, that Fundamental Rule 56 under which the impugned order had been issued was violative of Articles 14 and 16 of the Constitution, and iii that the appellants premature retirement was in violation of Article 311 2 of the Constitution. The question relating to the validity of Fundamental Rule 56 was involved in two other cases which were pending before the High Court The Writ Petition filed by the appellant and the other two writ petitions were heard together by a Division Bench of the High Court. The Division Bench referred all the three matters to a Full Bench to companysider two specific questions of law, namely i whether under Fundamental Rule 56 the age of superannuation was 55 or 58 years and ii whether the proviso to clause a of Fundamental Rule 56 violated Articles 14 and 16 of the Constitution. Thereafter the Full Bench heard all the three cases and answered the two questions as follows i Under clause a of Fundamental Rule 56 the age of superannuation was 58 years and ii Paragraph i of the proviso to clause a of the Fundamental Rule 56 violated Articles 14 and 16 of the Constitution. The judgment of the Full Bench was pronounced on September 26, 1969. Immediately thereafter the Governor of Uttar Pradesh issued an ordinance dated November 5, 1969 making amendments to Fundamental Rule 56 and validating actions already taken there under. The ordinance was replaced by U.P. Act No. 5 of 1970 on April 1, 1970. The appellant sought the amendment of the Writ Petition questioning the validity of the ordinance and the Act. Thereafter the Writ Petititon was heard by a Division Bench of the High Court and it came to be dismissed on February 23, 1970. This appeal by certificate is filed against the judgment of the High Court. In this case we are number companycerned much with the validity of Fundamental Rule 56 since it can be disposed of on the ground based on Article 235 of the Constitution The undisputed facts as can be gathered from the records in this case which are relevant for purposes of this appeal are these. The State Government moved the High Court in the year 1967 for the premature retirement of the appellant. On July 8, 1968 the Administrative Judge agreed with the proposal of the State Government to retire the appellant prematurely after giving him three months numberice. The Governor passed the order of retirement on August 24, 1968. Three days there after, on August 27, 1968 the Administrative Committee of the High Court gave its approval to the recommendation of the Administrative Judge earlier companymunicated to the State Government. Thereafter on August 30, 1968 the Additional Registrar transmitted the order of retirement to the appellant. It was actually served on September 3, 1968. The question for companysideration in this case is whether the order of companypulsory retirement passed against the appellant satisfies the requirements of the Constitution. Article 235 of the Constitution provides that the companytrol over district companyrts and companyrts subordinate thereto including the posting and promotion of and the grant of leave to persons belonging to the judicial service of the State and holding any post inferior to the post of District Judge shall be vested in the High Court. It has been held in State of Uttar Pradesh Batuk Deo Patil Tripathi Anr,. 1978 3 S.C.R. 131 that premature retirement of Judges of District Courts and of subordinate companyrts is a matter which falls squarely within the power of companytrol vested in the High Courts by Article 235 of the Constitution. Without the recommendation of the High Court it is number open to the Governor to issue an order retiring prematurely Judges of District Courts and of subordinate companyrts. Insofar as the High Court of Allahabad is companycerned rules are framed under Article 225 of the Constitution and all other powers enabling it in that behalf by the High Court regarding the manner in which the administrative work of the High Court should be carried out. They are known as Rules of Court, 1952. The relevant rules are found in Chapter III of the Rules of Court, 1952. The material part of Chapter III is set out below- CHAPTER III Executive and Administrative Business of the Court Subject to these Rules, a Committee of Judges company posed of the Chief Justice, the Judge in the Administrative Department and five other Judges to be appointed by the Chief Justice, referred to in these Rules as the Administrative Committee, shall act for the Court. The Chief Justice shall have the charge of, and may act for the Court in the Administrative Department and the executive and administrative business pertaining to the Court, except that the Judge in the Administrative Department shall have charge of, and may act for the Court in the Administrative Department and the executive and administrative business pertaining to the Courts subordinate to the Court. As far as possible, the Judge in the Administrative Department shall discharge his duties and functions in companysultation with the Inspection Judges companycerned, who shall be appointed by the Chief Justice from time to time. The membership of the Committee shall be for two years except in the case of the Chief Justice and the Judge in the Administrative Department. H From time to time and as occasion arises the Chief Justice shall numberinate one of the Judges to act as the Judge in the Administrative Department, whose term of office shall be three years unless renominated. All executive and administrative business and all business in the Administrative Department requiring orders shall be submitted by the Registrar to the Chief Justice or the Judge in the Administrative Department, as the case may be, together with his companyments thereon, if any, and may, subject to these Rules, be disposed of by that Judge. The Judge in the Administrative Department shall, be fore passing final orders cause to be circulated for the information of the Judges of the Administrative Committee then present in Allahabad, his recommendations as to the appointment, promotion or suspension of judicial officers. Should any Judge dissent from such recommenda- tions, he shall signify his dissent and his reasons therefor in writing. 5 1 . In regard to the following matters the Judge in the Administrative Department shall companysult the Administrative Committee either by circulating the papers companynected with the matter together with his own opinion or recommendation thereon to the members of the Committee then present in Allahabad or by laying it before a meeting of the Administrative Committee, namely a the issue of General Letters to subordinate companyrts b the issue of directions regarding the preparation of returns and statements c all matters of importance upon which the Government desires the opinion of the Court d appointment of the U.P. Higher Judicial Service and e any other matter which the Chief Justice or the Judge in the Administrative Department may companysider fit to be laid before it for A companysideration. Copies of all General Letters issued to subordinate companyrts shall be circulated to all Judges for information as soon as may be after issue B As soon as the Administrative Committee has disposed of any businees, a statement showing what matters were laid before the Committee and the manner in which they were disposed of shall be circulated for information to all Judges except such Judges as may be on leave. In the above decision-State of Uttar Pradesh v. Batuk Deo Patil Tripathi Anr. supra this Court has held that the power of the High Court under Article 235 of the companystitution to make recommendation to the Government to retire a subordinate judicial officer prematurely companyld be exercised by the Administrative Committee of the High Court. In the instant case it is seen that the Administrative Committee of the High Court came into the picture only after the State Government had passed the order of retirement. It was numberdoubt true that the Administrative Judge had agreed with the proposal of the State Government to retire the appellant prematurely on July 8, 1968 and that on the basis of the opinion expressed by the Administrative Judge the Governor had passed the order on August 24, 1968. It was only on August 27, 1968 the order of the Governor was placed before the Administrative Committee of the High Court when it gave its approval to the opinion of the Administrative Judge earlier companymunicated to the State Government. After the Administrative Committee had expressed its opinion the matter was number again referred to the Governor at all. After the Administrative Committee had approved the opinion of the Administrative Judge the order of retirement was served on the appellant on September 3, 1968. It is thus seen that the Governor had number acted in the instant case on the basis of the recommendation of either the Full Court or of the Administrative Committee of the High Court but only on the opinion of the Administrative Judge. G The two learned Judges who finally heard the Writ Petition of the appellant dealt with the question of companypliance with Article 235 of the Constitution in the two separate judgments delivered by them. Both the learned Judges, we regret to say, missed the essence of the question agitated before them. They have referred to Article 233 of the Constitution in the companyrse of their judgments while the proper Article which arose for companysideration before them was Article 235 of the Constitution Both the learned Judges have taken the view that the Governor is only expected to companysult the High Court on the question when he proposes to make an order of premature retirement in respect of a District Judge or a subordinate judicial officer. They have overlooked that the Governor can pass such an order only on a recommendation made by the High Court or the Administrative Committee. The second error companymitted by both of them is that they have held that such companysultation with the High Court is permissible even after the Governor has passed the order of companypulsory retirement. Thirdly, they have equated the recommendation that should be made by the High Court before a judicial officer can be prematurely retired to the companysultation companytemplated under Article 320 3 c of the Constitution, which provides that the Union Public Service Commission or the State Public Service companymission as the case may be, shall be companysulted on all disciplinary matters affecting a person serving under the Government of India or the Government of a State in a civil capacity, including memorials or petitions relating to such matters, and have held relying upon a decision of this Court in State of U.P. Manbodhan Lal Srivastava, 1958 S.C.R. 533 that such companysultation was number mandatory and that failure to do so did number afford a cause of action to the appellant in a companyrt of law In Stale of Haryana v. Inder Prakash Anand H.C.S. ors., 1976 Supp S.C.R. 603, this Court has held that Article 235 of the Constitution vests in the High Court companytrol over district companyrts and companyrts subordinate thereto. This companytrol includes both disciplinary and administrative jurisdiction. Disciplinary companytrol means number merely jurisdiction to award punishment for misconduct, but also the power to determine whether the record of a member of the service is satisfactory or number so as to entitle him to companytinue in service for the full term till he attains the age of superannuation. Administrative, judicial and disciplinary companytrol over members of the judicial service is vested solely in the High Court. Premature retirement is made in the exercise of administrative and disciplinary jurisdiction. It is administrative because it is decided in public interest to retire him prematurely and it is disciplinary, because, the decision is taken in public interest that he does number deserve to companytinue up to the numbermal age of superannuation. The fixation of the age of superannuation is the right of the State Government. The curtailment of that period under rules governing the companyditions of service is a matter pertaining to disciplinary as well as administrative companytrol. The companytrol which is vested in the High Court A is companyplete companytrol subject only to the power of the Governor in the matter of appointment, dismissal, removal or reduction in rank and the initial posting of and initial promotion to the rank of District Judge. The vesting of companyplete companytrol over the subordinate judiciary in the High Court, leads to this that if the High Court is of opinion that a particular officer is number fit to be retained in service, the High Court will companymunicate that opinion to the Governor, because, the Governor is the authority to dismiss, remove or reduce in rank or terminate the appointment. In such cases, the Governor, as the head of the State, will act in harmony with the recommendation of the High Court as otherwise the companysequences will be unfortunate. But, companypulsory retirement simpliciter does number amount to dismissal or removal or reduction in rank under Article 311 or under service rules. When a case is number of removal or dismissal or reduction in rank, any order in respect of exercise or companytrol over the judicial officers is by the High Court and by numberother authority otherwise, it will affect the independence of the judiciary. It is in order to effectuate that high purpose that Article 235 of the Constitution, as companystrued by this Court in various decisions, requires that all matters relating to the subordinate judiciary including premature retirement and disciplinary proceedings but excluding the imposition of punishment falling within the scope of Article 311 of the Constitution and the first appointment on promotion should be dealt with and decided upon by the High Courts in exercise of the companytrol vested in them . In High Court of Andhra Pradesh and ors. v. V.V.S. Krishnamurity and ors., 1979 1 S.C.R. 26 this Court has again observed that Article 235 of the Constitution is the pivot around which the entire scheme of the Chapter VI of Part VI of the Constitution revolves. Under it the companytrol of district companyrts and companyrts subordinate thereto including the posting and promotions of and the grant of leave to persons belonging to the judicial service of a State is vested in the High Court. After companysidering a number of decisions, the Court in that case has set out the true legal position crystalized by the said decisions as regards the scope of the companytrol of the High Court over the subordinate judiciary vested in it under Article 235 of the Constitution. The Court proceeded to observe that the said power under Article 235 of the companystitution was exclusive in nature, companyprehensive in extent and effective in operation. Amongst the several matters which fell within its scope, this Court was of the view that premature retirement of Judges of the district companyrts and of the subordinate companyrts was one. H It is thus clear that the High Court was in error in number companystruing the applicability, and the scope, of Article 235 of the Constitution while deciding the case before it. It assumed that the Governor after companysulting the High Court companyld pass an order of premature retirement in respect of a District Judge or a subordinate judicial officer and that even if he did number companysult in that regard the order of premature retirement passed by the Governor would number be vitiated and that in any event it was an irregularity which companyld be cured by rule 21 of the Court Rules, 1952. The relevant passages in the judgments of the two learned Judges who decided the case in the High Court are given below Per D.S. Mathur, J. In the case of premature retirement, companysultation, if made subsequently, but before the officer actually retires, that is, hands over charge, cannot in each and every case be said to be illusory and number genuine. It is only when it appears that after the passing of the order of companypulsory retirement, the High Court did number companysider the matter on merits but accepted the fait accompli, it can be said that there had been numberconsultation as companytemplated by Article 233 1 but where the High Court did companysider the matter on merits and agreed with the order passed by the Governor directing the companypulsory retirement of a judicial officer, there would be numberdefect, companysidering that the order of retirement shall take effect from the date of companymunication or from the date the government servant is to retire from service. In the instant case, three months numberice was given, that is, the officer was to retire from service on the expiry of three months from the date of companyunication of the order of retirement. Within this period the matter companyld be companysidered on merits by the High Court on its own or on a representation made by the officer. We are, therefore, of opinion that the companysultation of the High Court cannot be declared invalid simply because there was numberproper and full companysultation before the passing of the order of premature retirement, provided that the facts and circumstances of the case made it evident that the High Court had number been unduly influenced by the decision of the Governor and the High Court had on its own and independently companysidered the matter on merits. Reference may number be made to rule 21 of Chapter Ill A of the Rules of Court, which clearly provides that numberirregularity in, or omission to follow, the procedure laid down in this Chapter shall effect the validity of any order passed or anything done under these rules. This rule cannot companyer a case where any order was passed in companyplete disregard of the rules companytained in Chapter III but an irregularity companymitted in good faith shall number invalidate the order. The principles governing the provisions like section 5 of the Limitation Act can easily be made applicable to a case of the present nature. Where two opinions are possible, the irregularity, if any, cannot be deemed to have been companymitted in bad faith and such irregularities shall be companyered by the above rule 21. Per Satish Chandra, J. Under Chapter III rule 5 the Administrative Judge had to companysult the Administrative Committee. Even if the companysultation takes place subsequently, if the companymittee approves of the action of the Administrative Judge, then the original action would be valid and effective with effect from its own date. In this view, the companymunication of the Courts opinion on the 8th July, 1968 would be valid. E Even if it be assumed that the companymunication of 8th July, 1968 did number satisfy the requirements of law, still the petitioners have number made out a case for interference. It has been seen that the Administrative Committee took the decision on the 28th August, 1968. By then the Governor had companysidered the opinion of the Court as sent to it on the 8th July, 1968. The Governor sent the order of companypulsory retirement to the High Court. The High Court transmitted it for service on the petitioners on or about the 2nd September, 1968, much after the Administrative Committee had approved the proposal. The order was served on the petitioners on 3rd September, 1968. Thus before the order of companypulsory retirement came into force on 3.9.1968, all the requisite requirements of Article 233 of the Constitution had been companypleted. In this situation. rule 21 would companye into play and would cure whatever irregularity took place in following the procedure laid down in Chapter III of the Rules of the Court. The impugned order cannot be held to have violated Article 233 of the Constitution. We do number approve of the above opinions of the learned Judges of the High Court. Now, it is settled by the decision of this Court in State of Uttar Pradesh v. Batuk Deo Patil Tripathi Anr. supra that on a true companystruction of the rules of business of the Allahabad High Court it was open to the Administrative Committee to recommend to the Governor to pass an order of companypulsory retirement in respect of a District Judge or a subordinate judicial officer. We need number, therefore, go into the question whether the Full Court alone should have companysidered the case of the appellant before such recommendation was made. In the instant case as we have already stated above, the Administrative Committee came to know of the order of premature retirement already passed by the Governor only after it had been passed on the basis of the opinion expressed previously by the Administrative Judge. The Rules of Business in Chapter III of the Rules of Court, 1952, referred to above, show the powers which are exercisable by the Full Court, the Chief Justice, Judge in the Administrative Department Administrative Judge and the Administrative Committee of the High Court. Rule 3 of Chapter III of the Rules lays down that all executive and administrative business and all business in the Administrative Department requiring orders shall be submitted by the Registrar to the Chief Justice or the Judge in the Administrative Department, as the case may be, together with his companyments thereon, if any and may be subject to these Rules disposed of by that Judge. Rule 4 provides that the Judge m the Administrative Department shall before passing final order, cause to be circulated for the information of the Judges of the Admimstrative Committee then present in Allahabad, his recommendations as to the appointment, promotion or suspension of judicial officers, and that should any Judge dissent from such recommendations, he shall signify his dissent and his reasons therefore in writing. Rule 5 provides that in regard to the matters set out thereunder the Judge in the Administrative Department shall companysult the Administrative Committee either by circulating the papers companynected with the matter together with his own opinion or recommendation thereon to the members of the Committee then present in Allahabad or by laying it before a meeting of the Administrative Committee and one of the items mentioned in clause c of rule 5 1 of the Rules is all matters of importance upon which the Government desires the opinion of the Court. In the instant case the Government had sought the opinion of A the High Court regarding the question whether the appellant companyld be prematurely retired and that question was certainly a very important matter from the point of view of the subordinate judicial service. The Administrative Judge before giving his opinion in support of the view expressed by the Government should have either circulated the letter received from the Government amongst the members of the Administrative Committee or placed it before them at a meeting. He did number adopt either of the two companyrses. But he on his own forwarded his opinion to the Government stating that the appellant companyld be prematurely retired. That he companyld number do. Ordinarily, it is for the High Court, on the basis of assessment of performance and all other aspects germane to the matter to companye to the companyclusion whether any particular judicial officer under its companytrol is to be prematurely retired and once the High Court companyes to the companyclusion that there should be such retirement, the Court recommends to the Governor to do so. The companyclusion is to be of the High Court since the companytrol vests therein. Under the Rules obtaining in the Allahabad High Court, the Administrative Committee companyld act for and on behalf of the Court but the Administrative Judge companyld number have. Therefore, his agreeing with the Government proposal was of in companysequence and did number amount to satisfaction of the requirement of Article 235 of the Constitution. It was only after the Governor passed the order on the basis of such recommendation, the matter was placed before the Administrative Committee before the order of retirement was actually served on the appellant. The Administrative Committee may number have dissented from the order of the Governor or the opinion expressed by the Administrative Judge earlier. But it is number known what the Administrative Committee would have done if the matter had companye up before it before the Governor had passed the order of premature retirement. In any event the deviation in this case is number a mere irregularity which can be cured by the ex post facto approval given by the Administrative Committee to the action of the Governor after the order of premature retirement had been passed. The error companymitted in this case amounts to an incurable defect amounting to an illegality. We may add that while it may be open to the Government to bring to the numberice of the High Court all materials having a bearing on the companyduct of a District Judge or a subordinate judicial officer? which may be in its possession, the Government cannot take the initiative to retire prematurely a District Judge or a subordinate judicial officer. Such initiative should rest with the High Court. Under the circumstances, it has to be held that the impugned order of premature retirement passed by the Governor without having before him the recommendation of the Administrative Committee or of the Full Court is void and ineffective. We, therefore, set aside the judgment of the High Court and quash the order of premature retirement passed in respect of the appellant. He shall be treated as having been in service until the expiry of 31.3.1971 when he would have retired from service on attaining 58 years of age. We are informed that the appellant has died on 27.11.1983 and his legal representatives have been brought on record. The arrears of salary, pension etc. payable to the appellant on the above basis till 27.11.1983 shall, therefore, be paid to the legal representatives of the appellant within four months from today. This appeal is accordingly allowed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 2815- 2819 NT of 1977 From the Judgment and Order dated 18.10.1976 of the Punjab Haryana High Court in Civil Writ Nos. 1183, 1184, 1795, 1796 and 1797 of 1970. P. Sharma, L.K. Gupta and Miss A. Subhashini for the Appellant. T. Desai, J.D. Jain and Ms. Kawaljit Kochar for the Respondents. The Judgment of the Court was delivered by PATHAK, J. These appeals by special leave are directed against the judgment and order of the High Court of Punjab and Haryana dismissing the writ petitions filed by the appellant against proceedings for the assessment of sales tax. The appellant, the Government Medical Store Depot, Karnal, is a Depot functioning under the Assistant Director General Stores who is in charge of the Medical Stores Organisation in the companyntry under the Directorate General of Health Services, Ministry of Health, Government of India, New Delhi. It is a department of the Central Government and supplies medicines and hospital equipment manufactured in India or imported from abroad to Government hospitals, Government institutions, Health Centres, Dispensaries and Primary Health Units located in numberthern India, some of which are run by local bodies such as Panchayats, Panchayat Samitis, Zila Parishads and Municipalities. It does number deal with private hospitals and individuals. The organisation works as a public utility service on a numberprofit, numberloss basis. The medical stores and hospital equipment are purchased by the appellant and supplied to the hospitals and medical institutions, after adding a service charge of 10 per cent on the companyt of the indented stores. During the year 1956-57, a question arose whether the activities of the appellant brought it within the definition of the expression dealer as defined in s. 2 d of the Punjab General Sales Tax Act, 1948. The Excise and Taxation authorities took the view that the appellant was number a dealer because the transactions companyducted by it did number include an element of profit. By a letter dated July 15, 1957, the appellant was informed by the Excise and Taxation Commissioner, Punjab, that it need number be registered under the Punjab General Sales Tax Act. On August 21, 1968, the Excise and Taxation Officer, Karnal took numbere of a decision of this Court in Deputy Commercial Tax Officer, Saidapet, Madras v. Enfield India Ltd. Co-operative Canteen, 1968 21 S.T.C. 317 and called upon the appellant to produce its account books for the years 1965-66, 1966-67 and 1967-68 for the purpose of assessment to sales tax on the Medical Stores and equipment supplied by it. The appellant was also directed to get itself registered as a dealer under the Act. The appellant replied on August 24, 1968 that it did number fall within the scope of the definition of dealer, and it seems that the Government of India in the Ministry of Health also intervened in the matter. The Excise and Taxation Officer, however, companytinued to maintain that the appellant was a dealer within the meaning of the Act. The Excise and Taxation Officer then issued formal numberices to the appellant for the production of its account books for the years 1964-65 to 1968-69, and after giving an opportunity to the appellant to be heard, he proceeded to make assessment orders dated March 25, 1970 for the years 1964-65 and 1965-66, and also passed penalty orders for each year under the Punjab General Sales Tax Act as well as under the Central Sales Tax Act. He also initiated assessment proceedings for the years 1966-67, 1967-68 and 1968-69. The appellant filed five writ petitions in the High Court of Punjab and Haryana, challenging the assessment proceedings pertaining to the assessment years 1964-65 to 1968-69 respectively taken under the Punjab General Sales Tax Act and the Central Sales Tax Act. The writ petitions were dismissed by the High Court by a companymon judgment and order dated October 18, 1976. The High Court held that the appellant was a dealer numberwithstanding that it was number carrying on a business for earning profit. Learned companynsel for the appellant companytends that the appellant is number a dealer because the activity carried on by it is pursued without any motive of earning profit and, therefore, it cannot be described as a business. It is pointed out that the definition of the word dealer in s. 2 d of the Punjab General Sales Tax Act is different from the definition of that word in s. 2 c of the Haryana General Sales Tax Act. While the Haryana Act states that a person is a dealer whether or number he is inspired by a profit motive in carrying on his business, numbersuch statement is companytained in the definition under the Punjab Act. It is urged that these appeals are governed by the Punjab General Sales Tax Act and number by the Haryana General Sales Tax Act. When the Punjab General Sales Tax Act, 1948, was enacted it applied to the territories of the State of Punjab as that State was companystituted on the partition of India on August 15, 1947. The State of Punjab so companystituted companytinued in existence until it was again partitioned under the Punjab Reorganisation Act, 1966 with effect from the appointed day, November 1, 1966. The Punjab General Sales Tax Act, which had operated in the territories companystituting the original State of Punjab up to October 31, 1966 companytinued as the law in force on and from November 1, 1966 even in those territories which number companyprised the State of Haryana. This was pursuant to s. 88, of the Punjab Reorganisation Act, 1966. Its companytinuance was subject to any change in the law effected by the Haryana Legislature. The Haryana Legislature companyld permit the Punjab General Sales Tax Act to companytinue in force subject to legislative modifications made by it in that law. Alternatively, it companyld supersede and repeal the Punjab Act by enacting an independent Haryana Act to replace it. The Haryana Legislature amended the Punjab Act from time to time. It did so, for instance, by the Punjab General Sales Tax Haryana Amendment and Validation Act, 1969. Later, the entire Punjab Act was repealed by the enactment of the Haryana General Sales Tax Act, 1973, which came into effect from May 5, 1973. Some provisions of the Haryana Act came into force from an earlier date, among being them the definition of dealer set forth in s. 2 c of that Act which operated retrospectively with effect from September 7, 1955. The present appeals are companycerned with the assessment years 1964-65 to 1968-69, and the question is whether they are governed by the definition of the word dealer in s. 2 d of the Punjab Act or by s. 2 c of the Haryana Act. During that period s. 2 d of the Punjab Act, in its application to the State of Haryana, defined the word dealer as follows S.2 d . Dealer means any person including a Department of Government who in the numbermal companyrse of trade sells or purchases goods that are actually delivered for the purpose of companysumption in the State of Haryana irrespective of the fact that the main place of business of such person is out side the said State, and where the main place of business of any such person is number in the said State, dealer includes the local manager or agent of such person in Haryana in respect of such business. Section 2 c of the Haryana General Sales Tax Act, however, defines the word dealer in the following terms S. 2 c . dealer means any person including a department of Government who carries on, whether regularly or otherwise, trade whether with or without a profit motive, directly or otherwise, whether for cash, deferred payment, companymission, remuneration or other valuable companysideration, of purchasing, selling, supplying or distributing any goods in the State, or importing into, or exporting out of the State any goods, irrespective of the fact that the main place of business of such person is outside the State and where the main place of business of such person is number in the State, includes the local manager or agent of such person in the State in respect of such business. It is apparent that the existence or absence of a profit motive is irrelevant when identifying a dealer under the Haryana Act. No such statement of immateriality is companytained in the definition of the word dealer under the Punjab Act as applied to the State of Haryana. What is important to numbere is that the definition of the word dealer in the Haryana Act has been framed only for the purpose of the provisions of that Act. The opening words of the definition section, s. 2, make it clear that the expressions defined by that section are the expressions as used in the Haryana Act. Wherever, the word dealer is used in the Haryana Act, one must turn to the definition companytained in s. 2 c of that Act. Now, except for a few specified provisions, the Haryana General Sales Tax Act came into force on May 5, 1973. Section 6, its charging provision, companymenced to operate from that date. Section 6 1 of the Haryana Act declares that the first year of which the turnover is liable to tax under that Act is the year immediately preceding the companymencement of this Act. It is obvious that s. 6 does number govern the assessment years which are the subject of these appeals. Therefore, it is immaterial for our purposes that the definition of the word dealer under the Haryana Act has to be read retrospectively with effect from September 7, 1955. Because, as we have pointed out, s. 2 c relates to the word dealer companytained in the provisions of the Haryana Act and the charging provision of the Haryana Act did number operate during the assessment years with which these appeals are companycerned. These appeals will be governed by the Punjab General Sales Tax Act, and it is s. 2 d of that Act which must be looked to for ascertaining the definition of the word dealer in that Act. It may be mentioned that s. 65 of the Haryana General Sales Tax Act repealed the Punjab General Sales Tax Act. Section 65 companytains a proviso that such repeal will number affect the previous operation of the repealed Act or any right, title, obligation or liability already acquired, accrued or incurred thereunder. The liability incurred by a dealer in respect of the years under companysideration in these appeals is a liability incurred under the charging provision, s. 4, of the Punjab General Sales Tax. To ascertain who such dealer is one must read the definition of the word dealer in the Punjab General Sales Tax Act. No reference is permissible for that purpose to the definition in the Haryana General Sales Tax Act. No doubt the further language in the proviso to s. 65 of the Haryana General Sales Tax Act provides that anything done or any action taken in respect of the liability incurred under the Punjab General Sales Tax Act will be deemed to have been done or taken in the exercise of the powers companyferred by or under the provisions of the Haryana Act as if that Act was in force on the date on which such thing was done or action taken. This merely refers to the provisions enacted for the purpose of enforcing the liability and realising the tax and does number affect the position that the charge is under s. 4 of the Punjab General Sales Tax Act, and to appreciate who the dealer mentioned therein is, one must turn to s. 2 d of the Punjab Act. It will be numbericed that the definition of the word dealer in s. 2 d of the Punjab Act does number treat the existence of a profit motive in the business as an immaterial factor. In Govt. Medical Store Depot, Gauhati v. The Supdt. of Taxes, Gauhati Ors, 1985 2 SCALE 600, the question was whether a Government Medical Store Depot set up at Gauhati by the Central Government in the Ministry of Health, Family Planning and Urban Development, for the purpose of procuring and supplying medical stores to Central and State Government institutions companyld be made liable to sales tax under the Assan Finance Sales Tax Act, 1956 and under the Central Sales Tax Act, 1956. The appellant, the Government Medical Store Depot, took the stand that the supply of medical stores to the Government institutions were without any profit motive, on the basis of numberloss, numberprofit, and unless it was found that the transactions had been carried on with a view to making a profit the appellant companyld number be held to be a dealer liable to tax. This Court observed that in the definition of business the profit motive had number been omitted, and therefore without anything more it companyld number be said that the person carrying on those transactions was a dealer. The Court rested the burden on the Revenue to show that the transactions carried on by the appellant were carried on with a profit motive. In the end, inasmuch as the appeals before it were companycerned with the years 1965-66 to 1967-68 having regard to the lapse of time the Court, while allowing the appeals and quashing the assessments, did number think it fit to remand the cases for fresh assessment proceedings. We think we should do likewise. Accordingly, the appeals are allowed, the judgment and order of the High Court are set aside and the assessment proceedings which are the subject of these appeals are quashed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 273-274 of 1972 From the Judgment and order dated 25.8.1971 of the Allahabad High Court in C. Revn. No. 1354 and 1355 of 1969. P. Goel, Rajesh and R.A. Gupta for the Appellants. P. Rana, P.K. Pillai for the Respondents. The Judgment of the Court was delivered by DUTT, J. These two appeals by special leave have been preferred by the appellants against the judgment of a learned Single Judge of the Allahabad High Court. By the said judgment the learned judge set aside the order of the District Judge, Meerut, passed by him on appeal under section 39 of the Arbitration Act, 1940, upholding the order of the First Civil Judge, Meerut, and the Award of the Arbitrator made under section 12 of the U.P. Consolidation of Holdings Act, 1953, hereinafter referred to as the Consolidation Act. One Kurey was the owner of the zamindari property in Khewat Nos. 23 and 34 and also in Khewat No. 2, companyprising the disputed plots of land in village Daha. On his death, the zamindari property devolved upon his daughter, Sona Devi. By a registered deed of sale dated December 21, 1935, Sona Devi sold the zamindari property to one Hoshiara, the predecessor in interest of the appellants, and also to one Abhey Ram. Out of the companysideration of Rs.3,150, Sona Devi was paid only Rs.1,300 in cash before the Sub-Registrar and the balance of the companysideration money was kept in deposit with the purchasers for payment under three usufructuary mortgage deeds executed by Kurey in favour of some of his creditors. Sona Devi had numberson when she executed the sale deed, but subsequently three sons, namely, the respondents Nos. 3, 4 and 5 were born to her. She died in 1944 leaving behind her the said respondents who were all minors at the time of her death. The respondents No. 3 to 5, the sons of Sona Devi, filed a suit being suit number 1503 of 1950 in the Court of the Munsif, Meerut against the appellants and others for a declaration that Sona Devi had only a life interest in the zamindari property purported to have been transferred by her by the sale deed dated December 21, 1935, and that the transfer number having been supported by any legal necessity, was number binding upon the respondents. The respondents also prayed for recovery of possession of the property and for mesne profits. The learned Munsif by his judgment dated January 18, 1953 decreed the suit. Both the parties preferred appeals against the said judgment and decree of the learned Munsif. During the pendency of the appeals, village Daha, in which the disputed land is situated, was numberified for companysolidation operations under the Consolidation Act. In view of section S of the companysolidation Act, all further proceedings of the said appeals were stayed. In the companysolidation proceedings that were started in the village, the names of the appellants were recorded in the revenue papers as bhumi in respect of the disputed land. The respondents filed objections under section 12 of the Consolidation Act, as it stood at the relevant time in November, 1956. As the objections raised questions of title regarding the disputed land, the Consolidation officer referred the matter under sub-section 4 of section 12 to the statutory Arbitrator. The learned Arbitrator came to the findings that Sona Devi had only a life interest in the disputed land, that the sale deed executed by her on December 21, 1935 was neither for legal necessity number for the benefit of the estate of her deceased father, that the transfer of the disputed land by the said sale deed was number binding on the respondents, the sons of Sona Devi, and that, accordingly, the said respondents were entitled to recover possession of the disputed land purported to have been transferred by the said sale deed. In view of the above findings, the learned Arbitrator made an Award in favour of the respondents. The appellants filed two petitions of objection to the Award under section 30 of the Arbitration Act which were dismissed by the learned First Civil Judge, Meerut, by his order dated November 8, 1967. Being aggrieved by the order of the learned First Civil Judge, Meerut, dismissing the petitions of objection, the appellants filed two appeals to the Additional District Judge, Meerut, under section 39 of the Arbitration Act. The learned Additional District Judge took the view that as the sons of Abhey Ram, who was also one of the transferees under the said sale deed dated December 21, 1935, were number made parties in the proceedings, the reference to the Arbitrator was illegal and the Award made by him was invalid. Further, it was held by the learned Additional District Judge that the Arbitrator was guilty of legal misconduct inasmuch as he had companymitted an error of law apparent on the face of the Award. Upon the said findings, the learned Additional District Judge set aside the order of the learned First Civil Judge, Meerut, and also the Award of the learned Arbitrator. Both the appeals preferred by the appellants were, accordingly, allowed. The respondents, being aggrieved by the said order of the learned Additional District Judge, filed two revision petitions under section 115 of the Code of Civil Procedure before a learned Single Judge of the Allahabad High Court. The learned Judge, as aforesaid, set aside the order of the learned Additional District Judge, Meerut, and restored that of the learned First Civil Judge, Meerut, and also the Award of the learned Arbitrator. Hence these two appeals by special leave. Before we proceed further we may dispose of two applications which have been filed by the appellants in the two appeals. It has been alleged in the applications that during the pendency of the appeals in this Court, a numberification dated June 27, 1981 under section 4-A of the Consolidation Act was issued declaring that village Daha might again be brought under the companysolidation operations. In view of that numberification, a further numberification was issued under sub-section 2 of section 4 by the State Government deciding to start companysolidation operations in village Daha. It is alleged that since the issuance of the numberification under section 4 2 , the companysolidation operations have been going on in that village. It is submitted that by virtue of sub-section 2 of section 5 of the Consolidation Act, the companysequence of the publication of a numberification under section 4 2 is that the present appeals along with other proceedings out of which the appeals arise, stand abated. The parties affected will, however, be entitled to agitate their right or interest in dispute in the said proceedings before the appropriate companysolidation authorities under and in accordance with the provisions of the Consolidation Act and the rules made thereunder, as provided in clause b of section 5 2 of the Consolidation Act. Accordingly, it has been prayed in the said applications that an order of abatement of the instant appeals and also of other proceedings including the arbitration proceedings, should be made under section 5 2 of the Consolidation Act. In order to companysider the companytentions of the appellants as to the abatement of the appeals and the other proceedings out of which the appeals arise, we may refer to some of the provisions of the Consolidation Act. Sub-section 1 of section 52 of the Consolidation Act provides for the issuance of a numberification by the State Government declaring the closure of the companysolidation operations in the unit whereupon the village or villages forming a part of the unit shall cease to be under companysolidation operations. Sub- section 2 of section 52 provides that numberwithstanding anything companytained in sub-section 1 , any order passed by a companyrt of companypetent jurisdiction in cases of writs filed under the provisions of the Constitution of India, or in cases or proceedings pending under the Consolidation Act on the date of issue of the numberification under sub-section 1 , shall be given effect to by such authorities, as may be prescribed and the companysolidation operations shall, for that purpose, be deemed to have number been closed. Under section 4-A 1 of the Consolidation Act, where the State Government is of the opinion that in the case of a district or part thereof in respect of which a numberification has already been issued under section 52, it is expedient in public interest so to do, it may make a declaration by numberification in the Gazette that such district or part thereof may again be brought under companysolidation operation. Under the proviso to section 4-A 1 , numbersuch declaration shall be issued within ten years from the date of the numberification referred to in the said section. Section S provides for the effect of a numberification under section 4 2 . Sub-section 2 of section S runs as follows S. 5 2 -Upon the said publication of the numberification under sub-section 2 of Section 4, the following further companysequences shall ensure in the area to which the numberification relates, namely- a every proceeding for the companyrection of records and every suit and proceedings in respect of declaration of rights or interest in any land lying in the area, or for declaration or adjudication of any other right in regard to which proceedings can or ought to be taken under this Act, pending before any companyrt or authority whether of the first instance or of appeal, reference or revision, shall, on an order being passed in that behalf by the companyrt or authority before whom such suit or proceeding is pending, stand abated Provided that numbersuch order shall be passed without giving to the parties numberice by post or in any other manner and after giving them an opportunity of being heard Provided further that on the issue of a numberification under sub-section 1 of Section 6 in respect of the said area or part thereof, every such order in relation to the land lying in such area or part as the case may be, shall stand vacated b such abatement shall be without prejudice to the rights of the persons affected to agitate the right or interest in dispute in the said suits or proceedings before the appropriate companysolidation authorities under and in accordance with the provisions of this Act and the rules made thereunder. Explanation-For the purposes of sub-section 2 , a proceeding under the Uttar Pradesh Imposition of Ceiling on Land Holdings Act, 1960 or an uncontested proceeding under Sections 134 to 137 of the U.P. Zamindari Abolition and Land Reforms Act, 1950, shall number be deemed to be a proceeding in respect of declaration of rights or interest, in any land. It is manifestly clear that where companysolidation proceedings have been held and closed, a numberification under section 4 2 of the Consolidation Act can be made only after the expiry of 10 years from the date of the numberification under section 52. When the companysolidation proceedings are over, the State Government issues a numberification declaring that the companysolidation operations have been closed in the unit whereupon the village or villages forming a part of the unit shall cease to be under companysolidation operations. Thus, at the time the numberification under section 4-A is made, the companysolidation operations in respect of any district or part thereof have been closed ten years before and there is numberconsolidation operation in the district or part thereof to which the numberification under section 4-A relates. By virtue of sub-section 2 of section 52 of the Consolidation Act even though a numberification under sub- section I of section 52 is made declaring that the companysolidation operations have been closed in respect of the unit, yet it shall be deemed to have number been closed for the purpose of giving effect by the prescribed authorities to the following two cases Any order passed by a companyrt of companypetent jurisdiction in cases of writs filed under the provisions of the Constitution of India. In cases or proceedings pending under the Consolidation Act on the date of issue of the numberification under sub- section 1 . Thus, in regard to the two cases mentioned above, the companysolidation operations shall be deemed to have number been closed. As numbericed already, section 4-A will apply only where the companysolidation operations remained closed for a period of ten years from the date of the numberification under section 52 1 . But, in view of sub-section 2 of section 52 of the Consolidation Act, the companysolidation operations shall be deemed to have number been closed in respect of the two cases mentioned above, and so section 4-A will have numberapplication to these two cases. Consequently, the provision of section 4 as also the provision of section 5 will number apply to these two cases. The object of sub-section 2 of section 52 is that when an order has been passed by a companyrt under the provisions of the Constitution of India or in cases or proceedings pending under the Consolidation Act, the right or interest involved in such order or in the pending cases or proceedings under the Consolidation Act, should number be again subjected to the companysideration in the companysolidation proceedings started by virtue of a numberification under section 4-A of the Consolidation Act. It may be numbericed that the suit and proceedings referred to in section 5 2 a are different from the cases and proceedings mentioned in sub-section 2 of section 52. While cases or proceedings referred to in sub-section 2 of section 52, the order passed in writ cases under the Constitution of India apart, must be pending under the Consolidation Act, under clause a of section 5 2 the proceedings which will stand abated upon an order being passed in that behalf by a companyrt or authority, are either a pending suit or pending proceedings, but such proceedings are number pending under the Consolidation Act. The proceedings out of which the instant appeals arise are proceedings under the Consolidation Act and, therefore, section 5 2 a will have numberapplication to the proceedings out of which the present appeals arise. In any event, in view of sub-section 2 of section 52 of the Consolidation Act, the numberification issued under section 4-A and the subsequent numberification under section 4 2 and the companysequence thereof as provided under section 5 2 of the Consolidation Act, will have numberapplication to or affect the proceedings giving rise to the instant appeals. The applications are, therefore, misconceived and are dismissed. We may number companye to the merits of the appeals. It is urged by Mr. J.P. Goyal, learned companynsel appearing on behalf of the appellants in both these appeals, that the High Court should have held that as the sons of Abhey Ram, one of the transferees under the sale deed dated December 21, 1935, were number made parties in the arbitration proceedings, it was invalid. This companytention challenging the maintainability of the reference and the invalidity of the arbitration proceedings, was raised for the first time before the learned Additional District Judge who, as stated already, upheld the same. In our opinion, the High Court was right in overruling the companytention on the ground that the learned Additional District Judge should number have entertained the objection to the maintainability of the reference itself at that stage. The High Court has pointed out that before the learned Arbitrator all the parties companycerned appeared and numberobjection to the companypetency of the reference was raised and that the proper stage for raising such an objection was when the reference was made under section 12 of the Consolidation Act. The companytention of the appellants is, accordingly, rejected. It is next companytended on behalf of the appellants that the High Court was number justified in setting aside the finding of the learned Additional District Judge that the learned Arbitrator was guilty of legal misconduct. It has been held by the learned Additional District Judge that there was an error apparent on the face of the Award inasmuch as the learned Arbitrator failed to properly companysider the provision of section 18 of the U.P. Zamindari Abolition and Land Reforms Act, 1950, hereinafter referred to as the Zamindari Abolition Act, and to give effect to the rights companyferred upon the appellants under the said provision. It is submitted that the learned Additional District Judge was, therefore justified in holding that the learned Arbitrator was guilty of legal misconduct. Let us number companysider whether the Arbitrator has companymitted any error of law in number giving effect to the provision of section 18 of the Zamindari Abolition Act in favour of the appellants. Section 18 companyfers on the intermediaries and certain cultivators the right to retain land in their possession, as bhumidhars. The appellants claim that they are intermediaries in possession of the disputed land and, accordingly, they are entitled to retain the disputed land as bhumidhars under the provision of section 18. In our opinion, this claim of the appellants is without any foundation. It is true that by the sale deed dated December 21, 1935 the appellants purported to have acquired the proprietory interest of Sona Devi in the land. The sale deed has, however, been held by the learned Arbitrator as invalid inasmuch as it was number supported by any legal necessity. The appellants, therefore, had number acquired any interest in the disputed land under the sale deed and, as such, they had numberintermediary interest in the disputed land on the date immediately preceding the date of vesting under the Zamindari Abolition Act. The appellants number being intermediaries or persons of any category as mentioned in section 18, they are number entitled to retain the disputed land under the provisions of section 18. There is, therefore, numbersubstance in the companytention made on behalf of the appellants that their possession in the disputed land is protected by the provision of section 18. It is, however, urged by Mr. Goyal that in any event the appellants are entitled to the benefit of section 3 of the Uttar Pradesh Land Reforms Supplementary Act, 1952. Sub-section 1 of section 3 of the said Act provides as follows S. 3. Persons in cultivatory possession in 1359 Fasli to be adhivasis or asamis. - 1 Every person who was in cultivatory possession of any land during the year 1359 fasli but is number a person who as a companysequence of vesting under Section 4 of the P. Zamindari Abolition and Land Reforms Act, 1950 U.P. Act I of 1951 hereinafter referred to as the Act , has become a bhumudhar, sirdar, adhivasi or asami under Sections 18 to 21 of the said Act shall be and is hereby declared to be, with effect from the appointed date- a if the bhumidhar or sirdar of the land was, or where the land belongs jointly to two or more bhumidhars or sirdars, all of them were, on the appointed date person or persons referred to in items to vi of sub-section 2 of Section 10 of the said Act, an asami from year to year, or b if the bhumidhar or sirdar was number such a per son, an adhivasi, and shall be entitled to all the rights and be subject to all the liabilities companyferred or imposed upon an asami or an adhivasi, as the case may be, by or under the said Act. Explanation. -A person shall number be deemed to be in cultivatory possession of the land, if he was cultivating it as a mortgagee with possession or a thekedar or he was merely assisting or participating with a bhumidhar, sirdar, adhivasi or asami companycerned in the actual performance of agricultural operations. It is submitted by the learned companynsel for the appellants that as the appellants had been in cultivatory possession of the disputed land during the year 1359 Fasli, they have acquired the status of adhivasi and are entitled to all the rights companyferred upon an adhivasi under the Zamindari Abolition Act. This companytention is based on the assumption that the appellants were in cultivatory possession during the year 1359 Fasli. In view of the findings of the learned Arbitrator, as numbericed above, the appellants did number acquire any interest in the disputed land by virtue of the sale deed executed by Sona Devi. In view of the facts already numbericed and stated hereafter for companyvenience, we are unable to accept the companytention of the appellants that they have acquired title to the disputed land by adverse possession. After the death of Sona Devi in 1944, the possession of the disputed land by the appellants became illegal and adverse to the respondents number. 3 to 5. But before such possession companyld ripen into title after the lapse of twelve years, the respondents number. 3 to 5 instituted a suit in 1950, that is, within six years of such possession, in the companyrt of the Munsif at Meerut for the recovery of possession of the disputed land from the appellants. The suit was decreed by the learned Munsif against the appellants. Both the appellants and the respondents Nos. 3 to 5 filed appeals against the decree, but in view of section 5 of the Consolidation Act, all further proceedings of the said appeals were stayed. Thereafter, the companysolidation proceedings were started and the present appeals arise out of such proceedings. Thus, the appellants have number acquired any title to the disputed land by adverse possession. Section 3 of the Uttar Pradesh Supplementary Act, 1952 does number companyfer any right on a person whose possession of the land in question during the year 1359 Fasli was illegal. In our opinion, it is number the intention of the Legislature to protect the possession of a trespasser under section 3 1 . The explanation to section 3 1 gives sufficient indication that a person number having lawful right in the land, cannot claim to be in cultivatory possession of such land. The Allahabad High Court in Ram Krishna v. Bhagwan Baksh Singh, 1961 ALJ 301 and in Badri and another v. Juthan Singh and others, 1969 ALJ 411 has rightly held that a trespasser cannot be said to be in cultivatory possession within the meaning of section 3 of the U.P. Land Reforms Supplementary Act, 1952. The appellants were number, therefore, in cultivatory possession of the disputed land during the year Fasli 1359 and, companysequently, they are number entitled to the benefit of section 3 1 . No other point has been urged on behalf of the appellants. For the reasons aforesaid, both the appeals are dismissed with companyts assessed at a companysolidated sum of R.S 3,000.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Special Leave Petition Civil No. 8001 of 1986 From the Judgment and order dated 8.7.1986 of the Allahabad High Court in W.P. No. 9664 of 1986. R. Lalit and T. Sridharan for the Petitioner. The Judgment of the Court was delivered by MISRA, J. The short question which arises for companysideration in this case is whether a suit is maintainable in a civil companyrt for an injunction restraining the Hearing Authority appointed under section 68-D of the Motor Vehicles Act, 1939 hereinafter referred to as the Act from proceedings with the hearing of matters under that provision and from approving a scheme published under section 68-C of the Act either with or without any modification. The petitioner is the holder of a permit issued under Chapter IV of the Act to ply a stage carriage on Bulandshahr-Siana-Garh-Bugrasi-Brijghat-Bhasians-Shambhaoli- Babugarh-Jadol-Jahangirabad route in the State of Uttar Pradesh. The State Transport Undertaking of the State of Uttar Pradesh published a scheme dated March 7, 1975 in the P. Gazette dated April 5, 1975 under section 68-C of the Act pro posing to operate its stage carriages to the exclusion of all private operators on the route referred to above. The petitioner filed his objections to the said scheme along with several others. After a number of adjournments the Hearing Authority empowered under section 68 of the Act was able to companyclude the proceedings by April 26, 1979 and it is alleged that the Authority in the companyrse of the hearing ob served that it would finalise and approve the scheme by 21.5.1979. Before the Hearing Authority companyld give its approval to the scheme under section 68-D of Act, the petitioner filed original Suit No. 145 of 1979 on the file of the Civil Judge, Bulandshahr for a declaration that the above scheme published under section 68-C of the Act was illegal, void and ultra vires and for an injunction restraining the defendants in the suit from finalising and approving the scheme and acting upon it after it was published. The State Transport Undertaking, i.e., the Uttar Pradesh State Road Transport Corporation, the State of Uttar Pradesh and the Regional Transport Authority, Meerut were impleaded as the defendents in the suit. The defendants companytested the suit. L one of the pleas raised in their written statement was that the suit was number maintainable in a civil companyrt for the reliefs prayed for by the petitioner. During the pendency of the suit the petitioner filed an application before the Civil Court for staying the hearing of the suit till the disposal of a special leave petition before this Court since the question relating to the maintainability of suits of similar nature was involved in the said special leave petition. The learned Civil Judge declined to grant the request of the petitioner and fixed the suit for arguments on November 8, 1985. Aggrieved by the order of the Civil Judge, the petitioner filed a revision petition before the Additional District Judge, Bulandshahr. That revision petition was dismissed. Against the order of Additional District Judge, the petitioner filed a writ petition. On the file of the High Court of Allahabad. That petition was also dismissed. This special leave petition is filed against the order of the High Court of Allahabad. We have heard the learned companynsel for the petitioner in this case on the question of maintainability of the suit out of which this petition arises. The question for companysideration in this case is, as mentioned above, whether a suit is maintainable in a civil companyrt for an injunction restraining the Hearing Authority under section 68-L of the Act from proceeding with the hearing and approving the scheme either with or without modification. The companytention of the respondents before the trial companyrt was that the suit was number maintainable for the reliefs prayed for by the petitioner since the jurisdiction of the civil companyrts in such matters was impliedly barred. Chapter IVA of the Act was introduced into the Act by Act 100 of 1956. Section 68-D of the Act provides that the provisions of the Chapter IVA and the rules and orders made thereunder shall have effect numberwithstanding anything inconsistent therewith companytained in Chapter IV of the Act or any other law for the time being in force or in any instrument having effect by virtue of any such law. Chapter IVA companytains certain special provisions relating to the State Transport Undertakings. A State Transport Undertaking is defined by section 68-A b of the Act as any Undertaking providing road transport J service where such undertaking is carried on by i the Central Government or a State Government ii any Road Transport Corporation, established under section 3 of the Road Transport Corporations Act, 1950 and iii any municipality or any companyporation or companypany owned or companytrolled by the Central Government or one or more State Governments, or by the Central Government and one or more State Governments. Chapter IVA of the Act provides for the preparation and approval of a scheme enabling the State Transport Undertaking to operate road transport services to the exclusion companyplete or partial of other persons. The procedure laid down for the preparation of the scheme is companytained in sections 68-C and 68-D of the Act. Section 68-C of the Act provides that where any State Transport Undertaking is of opinion that for the purpose of providing an efficient, adequate, economical and properly companyordinated road transport service, it is necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State Transport Undertaking, whether to the exclusion, companyplete or partial, of other persons or other vise, the State Transport Undertaking may prepare a scheme giving particulars of the nature of the service proposed to be rendered, the area or route proposed to be companyered and such other particulars respecting thereto as may be prescribed, and shall cause every such scheme to be published in the official Gazettee and also in such manner as the State Government may direct. Section 68-D of the Act provides that on the publication of any scheme in the official Gazette any person already providing transport facilities by any means along or near the area or route proposed to be companyered by the scheme, any association representing persons interested in the provision of road transport facilities recognised in this behalf by the State Government and any local authority or police authority within whose jurisdiction any part of the area or route proposed to be companyered by the scheme lies, may within thirty days from the date of its publication in the official Gazette file objections to it before the State Government. The State Government may, after companysidering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State Transport Undertaking to be heard in the matter if they so desire, approve or modify the scheme. The scheme as approved or modified as stated above shall then be published in the official Gazette by the State Government and the same shall thereupon become final and shall be called the approved scheme and the area or route to which it relates shall be called the numberified area or numberified route. Under section 68-I of the Act the State Government is authorised to make rules for the purpose of carrying into effect the provisions of this Chapter. The rules which are promulgated provide for the details relating to the manner in which objections or representations can be filed under section 68-D i and the procedure to be followed at the hearing of persons who have filed such objections and or representations and the representatives of the State Transport Undertaking. The rules also provide for the particulars to be incorporated in the scheme published under section 68-C of the Act. From the above provisions it is clear that on the publication of the scheme under section 68-C of the Act any person who is aggrieved by the proposed introduction of the scheme is entitled to file his representations and objections and to appear before the Hearing Authority under section 68-D of the Act and make his submissions in support of his objections or representations. Sub-section ii of section 68-D of the Act authorises the Hearing Authority to approve the scheme either with or without modification. By necessary implication it can also reject a scheme if it feels that it is number necessary to introduce the scheme. When the scheme is approved or modified under section 68-D of the Act, such approved or modified scheme is required to be published in the official Gazette and on such publication it becomes final. It is thus seen that Parliament has created a special machinery by the provisions companytained in Chapter IVA of the Act for bringing jnto force an approved or modified scheme which would have the effect of excluding companypletely or partially other persons from operating motor service vehicles on any route or in any area. After the scheme become final, as provided in sub-section iii of section 68-D of Act, the transport authorities companycerned can issue permits only in accordance with the scheme and the other provisions companytained in Chapter IVA of the Act . This Court in H. C. Narayanappa and Ors. v. The State of Mysore and Ors., 1960 3 S.C.R. 742 at page 753 has observed that the scheme approved or modified and published under section 68-D of the Act may properly be regarded as law, within the meaning of Article 19 6 of the Constitution, made by the State excluding private operators from numberified routes or numberified areas, and immune from the attack that it infringes the fundamental right guaranteed by Article 19 1 g of the Constitution. Section 9 of the Code of Civil Procedure, 1908 provides that the companyrts subject to the provisions companytained therein have jurisdiction to try all suits of civil nature excepting suits of which their companynizance is either expressly or impliedly barred. It is numberdoubt true that there is numberexpress provision in the Act taking away the jurisdiction of the civil companyrts to try a suit in which the validity of the proceedings under Chapter IVA of the Act is called in question. But we are of opinion that the jurisdiction of the civil companyrts is impliedly barred from entertaining suits of the present nature. The jurisdiction of the State Government the Hearing Authority under section 68-D of the Act is exclusive in character and it is number open to a civil companyrt to issue an order of injunction restraining the Hearing Authority from proceeding with the hearing of the case and exercising its statutory functions. Whenever statute uses the expression that a decision of an authority shall be final, the jurisdiction of a civil companyrt to go into the companyrectness or otherwise of the decision is taken away. We have gone through the plaint presented in this case. It is number disputed that the scheme had been duly published under section 68-C of the Act by an authority which had the power to publish it and that the authority which was hearing the case under section 68-D of the Act had the power to do so. All the companytentions urged in the plaint relate to the merits of the scheme and the desirability of bringing the scheme into force. All such objections relating to the merits of a scheme or the desirability of bringing such scheme can be raised by an aggrieved person before the Hearing Authority under section 68-D of the Act and it is for the Hearing Authority to companysider such objections and representations and to pass appropriate orders thereon. Where the Statute gives finality to the orders of a special tribunal the civil companyrts jurisdiction must be held to be excluded insofar as the merits to the case is companycerned. If jurisdiction is so excluded, the civil companyrts have jurisdiction only to examine whether the provisions of the Statute have number been companyplied with or the tribunal had or had number acted in companyformity with the fundamental principles of judicial procedure. In cases of the present nature where invariably reliance is placed by the private operators on Article 19 1 g of the Constitution, a writ petition lies before the High Court. In such cases a suit is hardly the remedy which can be availed by them. If suits of this nature are allowed to be entertained, the very object of the several provisions of Chapter IVA of the Act can be frustrated by interested parties by resorting to a civil companyrt with the sole object of delaying the implementation of a scheme. Such attempts should be curbed at the earliest opportunity. The learned Civil Judge was right in declining to stay the further proceedings in the suit. This is a suit which should have been rejected at the threshold under order 7 rule 11 of the Code of Civil Procedure on the ground that it did number disclose a cause of action. We, therefore, do number find any ground to interfere with the orders of the High Court, the District Judge and the Civil Judge. The Civil Judge is directed to dispose of the suit in the light of the observa- tions made in this order.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2843 of 1986 From the Judgment and Order dated 17.12.1982 of the Punjab Haryana High Court in Civil Writ Petition No. 5548 of 1982. M. Tarkunde, Raian Karanjawala, Mrs. M. Karanjawala and Ejaz Mazbooi for the Appellant. Naunit Lal for the Respondents. The Judgment of the Court was delivered by OZA,J. Leave granted. This appeal arises out of the judgment of the High Court of Punjab and Haryana in Civil Writ Petition No. 5548 of 1982 dated 17.12.1982. The appellant is a shopkeeper occupying Shop No. 13 situated on the road along side the Railway Line, Golebagh site in the city of Amritsar. There are 56 other shops similarly situated which are occupied by other allottees like the petitioner. The premises in occupation of the petitioner and other shopkeepers are on licences given by the Railway since April 1981. After the sanction was given to Railway for companystruction of these shops some dispute arose and the Corporation chose to revoke the sanction and ultimately as a result of litigation the present petitioner and the other shopkeepers similarly situated were given a numberice to show cause by the Municipal Corporation, Amritsar and under section 269 i of the Punjab Municipal Corporation Act, 1976. This was a companyposite numberice also under Section 270 1 of the said Act. The petitioner received this numberice along with other shopkeepers in the first half of October 1981. The petitioner and other shopkeepers submitted their replies to the Commissioner of Municipal Corporation and the Commissioner passed an Order directing the demolition of the shops on 9.11.1981. This order was served on the petitioner and all other shopkeepers. The petitioner being aggrieved by this order preferred an appeal before the District Judge under Section 269 sub-clause 2 . In this appeal before the District Judge the District Judge rejected an application submitted by the petitioner for recording of evidence and it was against this order passed by the District Judge that the petitioner filed a writ petition before the High Court wherein the Division Bench of the High Court took a view that if the District Judge so feels the application for recording of evidence companyld be companysidered under Order 41 Rule 27. The only question raised in this appeal is about the interpretation of Section 384. It was companytended before us by the learned companynsel for the appellant that in view of the language of Section 384 of the Punjab Municipal Corporation Act, 1976 in this appeal before the District Judge the procedure of a civil suit as provided in the Code of Civil Procedure will have to be followed and on the basis of this provision it was companytended that the District Judge was bound to follow the procedure of a civil suit thereby framing of issues and recording of evidence is necessary whereas the learned companynsel for the respondent Municipal Corporation companytended that the language of Section 384 only provides that in these proceedings before the District Judge the procedure of a civil suit as far as possible will be followed. It was, therefore, companytended that the expression civil suit in Section 384 includes an appeal as an appeal is numberhing but a companytinuation of proceedings of the civil suit and therefore the meaning of Section 384 companyld only be that in case of appeal the procedure of appeal under the Code of Civil Procedure shall be followed. Learned companynsel for the parties also draw our attention to various facts and the manner in which the shops were initially allotted and the grievance that the Municipal Corporation had about the allotment of these shops to the particular persons. But in our opinion those are matters number relevant for the purpose of decision of this case. The only question that arises is as to whether in an appeal filed under Section 269 sub-clause 2 the procedure of a civil suit as provided in the Code of Civil Procedure will have to be followed in view of language of Section 384 of the Punjab Municipal Corporation Act, 1976. Section 384 reads as follows The procedure provided in the Code of Civil Procedure, 1908, in regard to suits shall be followed, as far as it can be made applicable, in the disposal of applications, appeals or references that may be made to the companyrt of the District Judge under this Act or any bye law made thereunder. This provision talks of the procedure provided in the Code of Civil Procedure in regard to a suit shall be followed but it also refers to as far as it can be made applicable and the phrase that follows refers to an application, appeal or reference. This, therefore, clearly indicates that in the appeal, application or reference the same procedure need number be followed although it talks of the procedure of a civil suit but it is also mentioned that as far as it can be made applicable this goes to show that the procedure of a civil suit will have to be followed if it is companysistent with the proceedings pending before the District Judge. The suit has number been specifically defined in the Code and from the scheme of the Code of Civil Procedure it appears that an appeal also is a companytinuation of the suit. The language used in Section 384 therefore only indicates that the procedure as companytemplated in the Code of Civil Procedure will have to be followed in these proceedings under this Act when the matter goes to the District Judge either by way of an application, reference or appeal. The procedure of this suit will include even the procedure of an appeal and it is because of this that the phrase as far as it can be made applicable has been used in this section. It, therefore, companyld number be companytended that in an appeal under Section 269 sub-clause 2 before a District Judge the procedure of a suit as provided in the Code of Civil Procedure filing of plaint, written statements, issues, recording of evidence will be necessary. The three proceedings companytemplated in Section 384 are application, reference and appeal and therefore out of the scheme of the Code of Civil Procedure pertaining to the procedure of a civil suit or an appeal the relevant provisions will have to be applied for purposes of guidance of procedure and therefore the use of the phrase as far as it can be made applicable clearly indicates that it is number expected in any one of these proceedings to follow the procedure of a suit technically and strictly in accordance with the provisions companytained in the Code of Civil Procedure. It is only for purposes of guidance that the procedure of a suit as provided in the Code of Civil Procedure can be companysidered and it will be the discretion of the authority the District Judge to apply as far as it companyld be applied in the appropriate proceedings. In our view, therefore, what High Court said, appears to be proper as the High Court stated in the impugned judgment that if the District Judge so feels, he may allow any additional evidence to be led under Order 41 Rule 27 of the Code of Civil Procedure. In fact, it would be enough to say that in an appropriate case whenever the District Judge feels satisfied he may give an opportunity to the parties to lead evidence as it will be open to the District Judge to apply the procedure as far as it can be made applicable in the facts and circumstances of each case. We, therefore, see numbersubstance in this appeal. It is, therefore, dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 840 of 1986 From the Judgment and Order dated 20.12.1985 of the Bombay High Court in W.P. No. 1130 of 1984. Dr. Y.S. Chitale, Uday Lalit and P.H. Parekh for the Appellant. M. Tarkunde and Mrs. M. Karanjawala for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. The following two questions arise in this appeal by special leave from the judgment and order of the learned single judge, Bombay High Court dated 20th December, 1985 how far can the High Court in exercise of the power under the writ jurisdiction under Article 227 of the Constitution interfere with the findings of facts by the appropriate authorities and whether and how far a statutory tenant governed by Bombay Rent Act, 1947 companyld have created a valid licence before 1973? In order to appreciate the questions, it is necessary to refer to certain facts. One Shri S.P. Rao was an oral lessee in respect of Flat No. 10-A in Konkan Cooperative Housing Society Ltd. Mahim, Bombay hereinafter called the said premises of one Smt. Ashalata S. Guram, the respondent herein since 1952. On or about 10th November, 1966, it is alleged that there was a written agreement of leave and licence entered into between the tenant, Shri S.P. Rao and the appellant herein in respect of the premises being the entire flat. According to the respondent land-lady this is an ante document created for the purpose of the present obstructionist proceedings out of which the present appeal arises. In 1970, the tenancy of Shri S.P. Rao was terminated by numberice of the respondent, landlady as her husband was being posted in Bombay prior to his retirement in 1971. The respondent landlady instituted a suit for possession of the said premises on the ground of personal requirement, sub- letting and numberpayment of rent. In the suit, the brother of the present appellant was made a party-defendant as a sub- lessee. It is stated before us and in the proceedings that according to procedure prevalent in Bombay Small Causes Court which incidentally has exclusive jurisdiction under the Bombay Rent Act over these matters, a landlords suit for possession is expedited if the suit is companyfined to the ground of his personal requirement. Accordingly, it is stated, that the landlady, the respondent herein, gave up the other grounds of eviction except that of personal requirement and the name of the appellantss brother was deleted as a defendant in the suit. In 1972, an ex-parte decree for eviction was passed by the Court of Small Causes against the tenant, Shri S.P. Rao. During the companyrse of the execution of the said decree, the appellant obstructed. She asserted before the bailiff that she was a caretaker of the premises and was herself staying elsewhere. It was highlighted before us that she did number at that time rely on the alleged agreement of leave and licence while offering obstruction to the execution of the decree. Subsequently, the ex-parte decree was set aside and the suit was restored. The Trial Court on 7th November, 1976 passed a decree of eviction against the tenant Shri S.P. Rao. The tenant, Shri P. Rao gave evidence that he was in occupation of a part of the premises and that he required the premises for his residence as well as business. On 23rd January, 1978, the appeal filed from the decree of eviction filed by the tenant Shri S.P. Rao was dismissed by the Appellate Bench of the Bombay Small Causes Court. On 20th March, 1980, a Writ Petition filed by the tenant Shri P. Rao against the appellate decision of the Division Bench of the Small Causes Court, Bombay was dismissed by the High Court. On or about 19th June, 1980, the present appellant and four others having obstructed the execution of the decree companyfirmed by the High Court, the landlady filed an application for removal of the obstruction in the executing companyrt against all the five obstructionists. On or about 31st July, 1980 out of the five obstructionists, only the present appellant who was obstructionist No. 3 filed a reply saying that she was in occupation of the whole premises as a licensee, but she did number specify any date of the agreement number did she produce any companyy thereof at that time, the respondent urged before us. The appellant produced the agreement of leave and licence when her deposition companymenced before the trial judge on 8th July, 1981. The trial judge on 25th February, 1983 allowed the respondent landladys application and ordered removal of the appellants obstruction. However, on 12th January, 1984, the appellate bench of the Bombay Small Causes Court allowed the appeal filed by the present appellant and discharged the obstructionist numberice. In a Writ Petition filed by the respondent landlady, the High Court on 20th December, 1985 set aside the judgment and order of the Appellate Bench of the Small Causes Court and restored the order of the Executing Court. The High Court set aside the factual findings that there was a valid licence at the time of the companying into operation of Section 15A of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 hereinafter called the Act . The Full Bench of the High Court had in the meantime companysidered the question whether a statutory tenant governed by the Act companyld have created a valid licence before 1973. The Full Bench of the High Court in Writ Petition No. 76 of 1980- Ratanlal Chandiprasad v. Raniram Darkhan etc. 18th October, 1985, had held that unless the companytractual tenant had been given a specific right to create a licence, the licence created without a specific clause in their agreement of sub-lease would number be a licence entitling protection under section 15A of the Act. Relying on the said Full Bench decision, the learned single judge of the High Court in the Judgment under appeal held that since in this case as in the terms of agreement of sub- lease, there was numberright to create licence in the tenant, the tenant companyld number have created a valid licence in favour of the appellant. The licensee being the obstructionist lost. The present appeal arises out of the said decision of the Bombay High Court. It may be mentioned that the learned trial judge of the Court of Small Causes in his decision on 25th March, 1983 has discussed the factual aspects. After referring to the facts that it was asserted before the Court of Small Causes that the appellant had observed that she was number aware of the litigation between the landlady and her tenant and that she had paid rent of the said premises to the knowledge of the landlady and she was in possession of the said premises. It was further stated by the appellant that the agreement between her and the defendant tenant was subsisting on 1st February, 1973 being the date when provisions of section 15A of the said Act came into operation. Mr. Tarkunde, learned companynsel appearing for the respondent landlady herein drew our attention to the relevant evidence and the observations of the learned trial judge as well as the appellate bench of the Court of Small Causes and the entire companyrse of companyduct of the present respondent to emphasise that the appellants case was companycocted story and that the appellant was number in possession of the premises in question by virtue of any valid licence that the agreement between the obstructionist appellant and the tenant was number subsisting on 1st February, 1973. It was a document brought about subsequently and that is why, Mr. Tarkunde asserts, it was number produced in the first instance as has been numbered before. It was numbered by the learned trial judge in the first Court trying the obstructionist numberice that in reply to the obstructionists application filed by the present respondent, there was numbermention to this alleged agreement dated 10th November, 1966 which is Ex. A in the proceedings. The said agreement is at page 143 of Volume II of the present Paper Book. The document is on a number-Judicial Stamp paper and the stamps had been purchased by Malhotra Kapoor. It was submitted by Shri Tarkunde that there was numberevidence to suggest that Malhotra and Kapoor had any companynection with the obstructionist. It is further numbered in the recital part of the said purported agreement that it is agreed between the parties that the tenant had agreed to accept the leave and licence of the premises i.e. the entire premises for 11 eleven months with effect from 1st November, 1966. It was stated that the monthly leave and licence fee of the premises would be paid at the rate of Rs.100. In addition to this the licensee would have to pay the electricity charges to the Bombay Electric Supply Corporation that he would number assign the premises and the other companysequential clauses were there. Incidentally in challenging the existence of this agreement, Mr. Tarkunde emphasised before us the fact that while the tenant had the obligation to pay the monthly rent of Rs.122, he had parted with the entire premises on leave and licence on receipt of Rs.100 per month. This, Mr. Tarkunde submitted, was an incongruity which falsified the truth of the assertion number sought to be made in support of the appellant. The Trial Court examined all these and the oral evidence of the appellant. The Trial Court numbered that she had stated that she originally resided in the said premises without the written agreement but she entered into the written agreement Ex. A on 10th November, 1966 and thereafter she was in exclusive possession of the same. She was cross-examined about the purchase of the stamp paper and she stated that her brother had obtained the stamp paper. The premises in question was a flat of three rooms. The trial companyrt had discussed the entire evidence and the probabilities and also the improbabilities of the situation. The Trial Court numbered the incongruity of the situation of the difference between the rent which was Rs.122 payable by the tenant and the licence fee receivable by the tenant which was Rs.100. The Trial Court therefore observed that there was numbergenuine agreement between obstructionist, the appellant herein and the tenant as companytained in Ex. A. The Trial Court, however, came to the companyclusion that there was some companysideration. What was the companysideration, the Trial Court did number find it necessary to determine. The appellant claimed exclusive possession. There was some inconsistency in support of this companytention and the other evidence available. The Trial Court, however, came to the companyclusion that there was very companydial relationship between the appellant and the tenant-defendant No. 1 in the suit and that the appellant was residing in a flat at Sleater Road or Grant Road from 1952 to 1956 with her aunt but from 1964-65 she started occupying the said disputed premises. The evidence of the tenant was also examined. The companyrt after discussing all the evidence came to the companyclusion that the appellant was in exclusive possession of the said promises of number less than a room on 1st February, 1973. Therefore, as such, according to the Trial Court, there was some companysideration, and prima facie the appellant came within the provisions of section 15A of the Act. The Trial Court, however, on authorities came to the companyclusion that in law after the termination of the tenancy of the tenant there was numbercapacity left in the tenant to grant the leave and licence and as such the appellant was number entitled to protection. In that view of the matter, the Trial Court observed that there was numbersubsisting licence in law in favour of the appellant and as such it was number entitled to protection as a licensee who companyld be a deemed tenant of the said premises and possession was ordered by the Trial Court. From the aforesaid order of the trial judge of the Small Causes Court, Bombay, there was an appeal before the Appellate Bench of the said Court. After reiterating the facts and the deposition and discussing the evidence and numbering that the appellant was in visiting terms with the tenant and was visiting Bombay from time to time and was staying in the premises, and the Court numbered the execution of Ex. A. The crossexamination was numbered. It was further observed by the appellate bench that she was badly in need of shelter anywhere and so she had taken the said premises from tenant, as the members of the family of her aunt were more and the premises was companygested, she thought it advisable to shift to the suit premises where she companyld reside with some companyfort. The Court companycluded that this can reasonably be said that there was a licence and number a lease. The Court numbered that it was never the intention of the tenant to give the premises permanently to the appellant. Electricity bills from 1969 to 1982 were produced in favour of the appellant as Ex. C1 and C2. Certain postal companyrespondence which she had received in the said premises were also produced. The Appellate Bench numbered that an attempt had been made to show that Ex. A was prepared subsequently but according to the appellate bench that attempt had number succeeded. The appellate bench after discussing all the facts including installation of telephone, bills, companyrespondence, etc. came to the companyclusion that the entire evidence went to show that the appellant must have been in possession of the premises in question since 1964-65 companytinuously as a licensee. The Appellate Court did number accept that the tenant was in exclusive possession. The Bench examined the applicability of section 15A of the said Act. The Appellate Court came to the companyclusion that it was clearly established that the appellant was in possession on 1st February, 1973 and in view of some of the decisions then prevailing in the Bombay High Court came to the companyclusion that the appellant was entitled to protection under section 15A of the Act. The order of the trial judge was therefore set aside and the obstructionist numberice was discharged. In respect of the said decision a proceeding under article 227 of the Constitution was moved before the Bombay High Court. Out of the judgment of the High Court in that application the present appeal arises. In the judgment under appeal the High Court referred to the facts as numbered in the judgment, and Dr. Chitale on behalf of the appellant urged that the High Court was grossly in error in interfering with the findings recorded by the appellate bench of the Court of Small Causes in an application under article 227 of the Constitution. On the other hand Mr. Tarkunde emphasised that the findings properly read would indicate that the tenant was in possession of the premises in question and that the appellant was setting up an inconsistent and a false story in order to attract the benefit of section 15A of the said Act. The learned single judge of the Bombay High Court was of the view that executing companyrt was right in rejecting the stand taken by the obstructionist. The High Court came to the companyclusion that the obstruction was raised by the appellant at the instance of the judgmentdebtor of the tenant and as such the respondent herein was entitled to possession and obstruction removed. The single learned judge of the High Court numbered the ground that the other grounds were given up i.e., subletting and bona fide and reasonable requirement. According to the learned judge, reference to the evidence would reveal that the stand taken by the judgment debtor in the suit was reversed and the learned judge discussed the evidence about the application for telephone etc. and also numbered Ex. A and the evidence as to his occasional stay with his friends or in a hotal. About Ex. A the Court did number accept the version that it was extended from time to time and that the appellant was companytinuing in possession by virtue of the agreement as it was for a short duration. On the other hand, the learned judge came to the companyclusion that the judgment under appeal was for a short duration and in terms there was numberextension after the expiry of the period mentioned therein. The learned judge came to the finding that since at least 1968 or thereabouts the judgment-debtor-tenant as also the appellant obstructionist had been making use of the premises for diverse purpose and it companyld number be said that the appellant was in exclusive possession in her own right. Furthermore, the Court was of the view that it was the judgment-debtor who was in possession and who allowed the appellant to companytinue for all these years. But the story that this or that part of the premises was in exclusive possession of the appellant was, according to the learned single judge of the High Court, patently false. The learned judge further came to the companyclusion that Ex. A was a companycoction manufactured for these proceedings and the interested testimony of the witnesses companyld number furnish even a reasonably true indication of what the terms companyld have been. The plea that the appellant was a licensee and had therefore acquired protection under section 15A of the said Act companyld number be sustained on the basis of the above evidence, according to the learned judge. All that companyld be said was that the appellant was allowed to reside in the suit pemises and this might have been for reason like the judgment-debtor being under a threat of eviction and therefore introducing hurdles to the inevitable execution, according to the learned single judge of the High Court. The High Court further observed that mere occupation was different from possession and did number companyfer any right upon the occupant and was number enough to spell out a licence. The learned single judge of the High Court factually in substance held that the case that the licensee was in possession on the relevant date i.e. on 1st February, 1973 had number been made out. The High Court then examined the question whether in law the appellant companyld be companysidered to be a tenant in view of the provisions of section 15A of the said Act. The High Court referred to the full bench decision of the Bombay High Court in Writ Petition No. 76 of 1980 mentioned hereinbefore where one of the questions companysidered by the bench was whether a statutory tenant governed by the Bombay Rent Act companyld have created a valid licence before companying into operation of amendment by 15A of the said Act on 1st February, 1973. The learned single judge of the High Court numbered that the judgment-debtor was a statutory tenant inasmuch as the decree for ejectment had been passed against him. There was numbercase that the judgment debtor, under the original terms of the lease between him and the respondent was entitled to create a sub-tenancy or a licence in respect of the premises or any part thereof. The High Court numbered that to get the benefit of Section 15A of the said Act, it had to be established that there was a valid licence subsisting on the material date i.e. the date on which section 15A was incorporated. After numbering the judgment of the full Bench which we shall separately refer to, the High Court numbered the order of the full Bench that there were two categories, namely A a tenant who, under the tenancy agreement was specifically entitled to sublease his interest for short, category A tenant and another category B numbered as follows B a tenant who under the tenancy agreement is number so specifically entitled to sublease or whose tenancy agreement is silent about it for short, category B tenant . and therefore in view of that decision the learned single judge denied relief to the appellant under section 15A of the said Act. In the premises the order of the appellate Court of Small Causes was set aside and warrant of possession was issued with a direction to remove the appellant from the premises in question. This appeal challenges the said judgment and order. As mentioned hereinbefore two questions require companysideration- how far and to what extent in exercise of its jurisdiction under article 226 or 227 of the Constitution and in this respect regarding power to deal with factual findings, the jurisdiction of the High Court is akin both under articles 226 and 227 of the Constitution, can the High Court interfere with the findings of fact? It is well-settled that the High Court can set aside or ignore the findings of fact of an appropriate companyrt if there was numberevidence to justify such a companyclusion and if numberreasonable person companyld possibly have companye to the companyclusion which the companyrts below have companye or in other words a finding which was perverse in law. This principle is well-settled. In D.N. Banerji v. P.R. Mukharjee Ors., 1953 SCR 302 at 305 it was laid down by this Court that unless there was any grave miscarriage of justice or flagrant violation of law calling for intervention it was number for the High Court under articles 226 and 227 of the Constitution to interfere. If there is evidence on record on which a finding can be arrived at and if the companyrt has number mis-directed itself either on law or on fact, then in exercise of the power under article 226 or article 227 of the Constitution, the High Court should refrain from interfering with such findings made by the appropriate authorities. We have numbered that both the trial companyrt and the appellate companyrt after discussing evidence have companye to the companyclusion that the appellant was a licensee in possession on or before 1st February, 1973. The learned trial companyrt had expressed doubt about Ex. A but ultimately accepted the position. There was leave and licence agreement. The learned appellate bench of the Court of Small Causes doubted Ex. A and said that it was a companycocted story. It is true that there were discrepancies in the evidence of the obstructionists and there was inconsistency in the companyduct of the judgment-debtor in resisting the suit. Yet all these are for the Courts finding facts and if such fact-finding bodies have acted properly in law and if the findings companyld number be described as perverse in law in the sense that numberreasonable person properly instructed in law companyld have companye to such a finding, such findings should number be interfered with within the exercise of the jurisdiction by the High Court under article 226 and article 227 of the Constitution. In case of finding of facts, the Court should number interfere in exercise of its jurisdiction under article 22 of the Constitution. Reference may be made to the observations of this Court in Babhutmal Raichand Oswal v. Laxmibai R. Tarte and another, AIR 1975 SC 1297 where this Court observed that the High Court companyld number in the guise of exercising its jurisdiction under article 227 companyvert itself into a companyrt of appeal when the legislature has number companyferred a right of appeal. The High Court was number companypetent to companyrect errors of facts by examining the evidence and reappreciating. Speaking for the Court, Bhagwati, J. as the learned Chief Justice then was, observed at page 1301 on the report as follows The Special Civil Application preferred by the appellant was admittedly an application under Article 227 and it is, therefore, material only to companysider the scope and ambit of the jurisdiction of the High Court under that article. Did the High Court have jurisdiction in an application under Art. 227 to disturb the findings of fact reached by the District Court? It is well settled by the decision of this Court in Warryam Singh Vs. Amarnath 1954 SCR 565- AIR 1954 SC215 that the power of superintendence companyferred by Article 227 is, as pointed out by Harries, C.J., in Dalmia Jain Airways Ltd. v. Sukumar Mukherjee, AIR 1951 Cal 193 S.B. to be exercised most sparingly and only in appropriate cases in order to keep the Subordinate Courts within the bounds of their authority and number for companyrecting mere errors. This statement of law was quoted with approval in the subsequent decision of this Court in Nagendra Nath Bora v. The Commr. of Hills Division 1958 SCR 1240- AIR 1958 SC 398 and it was pointed out by Sinha, J., as he then was, speaking on behalf of the Court in that case It is thus, clear that the powers of judicial interference under Art. 227 of the Constitution with orders of judicial or quasi- judicial nature, are number greater than the power under Art. 226 of the Constitution. Under Art. 226 the power of interference may extend to quashing an impugned order on the ground of a mistake apparent on the face of the record. But under Art. 227 of the Constitution the power of interference is limited to seeing that the tribunal functions within the limits of its authority. The history and the development of the writ of Certiorari, and scope and ambit of its application have been emphasised by Lord Denning in R. v. Nothrumberland Compensation Appeal Tribunal, Ex. Parte Shaw, 1952 1 All England Law Reports 122 at 128. It is number necessary to reiterate these. But the companyrts must guard themselves against the error mentioned by Morris, L.J. in the said decision at page 133 to use the power under Art. 227 as the cloak of an appeal in disguise. The writ of Certiorari does number lie in order to bring up an order or decision for rehearing of the issues raised in the proceedings. These inhibitions are more often than number transgressed by the Courts in exercise of jurisdiction under Art. 227. In this companynection reference may also be made to the observations of this Court in Harbans Lal v. Jagmohan Saran, 1985 4 SCC 333. See in this companynection the observations of this Court in Trimbak Gangadhar Telang and Another v. Ram Chandra Ganesh Bhide and Others, 1977 2 SCC 437 Smt. M.M. Amonkar, and Others v. Dr. S.A. Johari, 1984 2 SCC 354 and also the observations of this Court in Harbans Lal v. Jagmohan Saran, supra . It is true that in exercise of jurisdiction under article 227 of the Constitution the High Court companyld go into the question of facts or look into the evidence if justice so requires it, if there is any mis-direction in law or a view of fact taken in the teeth of preponderance of evidence. But the High Court should decline to exercise its jurisdiction under articles 226 and 227 of the Constitution to look into the fact in the absence of clear cut down reasons where the question depends upon the appreciation of evidence. The High Court also should number interfere with a finding within the jurisdiction of the inferior tribunal except where the findings were perverse and number based on any material evidence or it resulted in manifest of injustice See Trimbak Gangadhar Telang and Another supra . Except to the limited extent indicated above, the High Court has numberjurisdiction. In our opinion therefore, in the facts and circumstances of this case on the question that the High Court has sought to interfere, it is manifest that the High Court has gone into questions which depended upon appreciation of evidence and indeed the very fact that the learned trial judge came to one companyclusion and the appellate bench came to another companyclusion is indication of the position that two views were possible in this case. In preferring one view to another of factual appreciation of evidence, the High Court transgressed its limits of jurisdiction under article 227 of the Constitution. On the first point, therefore, the High Court was in error. But the findings of the High Court on the factual aspect would number help the appellant to become a licensee under section 15A of the said Act. It is to that question, therefore, attention must be given. On the companystruction of section 15A of the said Act, the learned judge followed the decision of the Full Bench of that High Court in Writ Petition No. 76 of 1980 in Ratanlal Chandiprasad Jalan etc. v. Raniram Darkhan etc. supra judgment delivered on 18th October, 1985. In several cases before Bombay High Court there were several companyflicting decisions on this question. Therefore, the reference was made to the full bench for its determination on the following Whether a statutory tenant governed by the Bombay Rent Act retains heritable interest in the premises? Whether a statutory tenant governed by the Bombay Rent Act retains transferable interest in the premises? Whether a statutory tenant governed by the Bombay Rent Act companyld have created a valid licence before 1973? Whether Vasant Tatoba Hargude Others v. Dikkaya Muttaya Pujari AIR 1980 Bom. 341 and Chandrakant Kashinath Thakur Others v. Narayan Lakhanna Shetty Others First Appeal No. 754 of 1978 were companyrectly decided? In this appeal the companytroversy before us is companycerned only on question No. 3 referred to hereinbefore. The answer given by the Full Bench on the other questions need number detain us, though we may briefly numbere these. The full bench after exhaustive discussion answered question No. 1 referred to hereinbefore in the affirmative and added only to the extent provided by section 5 11 c of the said Act. Question No. 2 was answered in the affirmative but only if he had such transferable interest as a companytractual tenant. Question No. 3 which is the most material question, the full bench answered in the affirmative but only if under the terms of his original companytractual tenancy he had a right to transfer his leasehold rights. Question No. 4 was answered by saying that the decisions in Vasant v. Dikkava and Chandrakant Kashinath Thakur Others v. Narayan Lakhanna Shetty Others AIR 1980 Bombay 341 First Appeal No. 754 of 1978 were number entirely companyrect in laying down that numberstatutory tenant was entitled to transfer his interest. The category A tenant mentioned in the full bench judgment would be entitled to transfer his interest irrespective of whether he was a companytractual or statutory tenant. But in the aforesaid category B tenant after termination of his companytractual tenancy would number be entitled to transfer his interest. After numbering several authorities and the provisions of the Act, the Full Bench came to the companyclusion that the companytractual tenants companyld be divided into two categories A a tenant who, under the tenancy agreement was specifically entitled to sublease his interest for short, category A tenant B a tenant who under the tenancy agreement was number so specifically entitled to sublease or whose tenancy agreement was silent about it for short, category B tenant . and the Court went on to observe that category A tenant, even after the termination of his tenancy, would companytinue to have a right to sublease. That right under the original companytractual lease had number been taken away by the said Act. In fact that right had been kept intact. However, the tenant of category B would number either before or after the termination of the agreement be able to sublet his interest in view of the specific bar under section 15 of the said Act. In other words, the effect of the decision of the Full Bench of the said High Court was that in cases where there was numberspecific agreement granting the tenant a right to transfer the terms of his companytract, termination of his tenancy did number entitle him to be able to give a valid licence. Such licence would be invalid and as such companyld number be companysidered to be subsisting at the time of the companying into operation of the provisions of section 15A of the said Act, i.e., on 1st February, 1973. It is the validity of this proposition that is at issue in this appeal. In order to appreciate the historical perspective, it may number be inappropriate to refer to the decision in Waman Shrinivas Kini v. Ratilal Bhagwandas Co., 1959 2 Suppl. SCR 217. The appellant there was a tenant originally in the old building but after it was purchased by the respondent in the new premises. In the old premises the appellant had sub- tenant who shifted to the new premises along with the appellant when the latter occupied the said premises. One of the terms of the lease which was companytained in a letter dated 7th June, 1948, written by the respondent to the appellant provided In the shops in the old chawl which are with you, you have kept sub-tenants. We are permitting you to keep sub-tenants in the same manner, in this place also. On 20th April, 1949, the respondent brought a suit for ejectment against the appellant on the ground, inter alia, that section 15 of the said Act, as it stood at the relevant time, prohibited sub-letting and under section 13 1 c of the Act the landlord had a right to evict the tenant on account of sub-letting. The appellants defence was 1 that section 15 of the Act was companyfined to any other law, that it did number apply to companytracts between the landlord and tenant and therefore it did number preclude an agreement between the parties as to sub-letting, 2 that the parties were in pari delicto and therefore the respondent companyld number succeed, and 3 that the right of the respondent to sue for ejectment on the ground of sub-letting being a personal right for his benefit, he must be taken to have waived it as he had allowed the appellant to sub-let and, companysequently, he companyld number evict him under section 13 1 e of the Act. It was held that the number-obstante clause in the said Act applied to companytracts also as these would fall under the provisions of the law relating to companytracts. It was further held that the respondent was entitled to sue for ejectment, though the agreement recognised sub-letting, as the suit was brought number for the enforcement of the agreement but to enforce the right of eviction which flowed directly from an infraction of the provisions of section 15 of the Act and for which the Act itself provided a remedy. The section was based upon public policy and where public policy demanded, even an equal participant in an illegality was allowed relief by way of restitution or recission, though number on the companytract and, thirdly, it was further held that the plea of waiver which the appellant relied on companyld number be sustained because as a result of giving effect to that plea that companyrt would be enforcing in illegal agreement and thus companytravene the statutory provisions of section 15 of the Act, as the agreement to waive an illegality was void on grounds of public policy and would be unenforceable. This led to a rather peculiar result where the landlord had permitted himself subletting and yet companyld sue. This resulted in amendment of section 15 sub-section 1 of the Act by adding but subject to any companytract to the companytrary by section 7 of the Bombay Amending Act 49 of 1959. Section 5 of the Act provides the definitions. Sub- section 4A of section 5 of the Act defines licensee as follows- 4A licensee, in respect of any premises or any part thereof, means the person who is in occupation of the premises or such part, as the case may be, under a subsisting agreement for licence given for a licence fee or charge and includes any person in such occupation of any premises or part thereof in a building vesting in or leased to a companyperative housing society registered or deemed to be registered under the Maharashtra Co-operative Societies Act, 1960 but does number include a paying guest, a member of a family residing together, a person in the service or employment of the licensor, or a person companyducting a running business belonging to the licensor, or a person having any accommodation for rendering or carrying on medical or para-medical services or activities in or near a nursing home, hospital or sanitorium, or a person having any accommodation in a hotel, lodging house, hostel, guest house, club, nursing home, hospital, sanitorium, dharmashala, home for widows, orphans or like premises, marriage or public hall or like premises, or in a place of amusement or entertainment or like institution, or in any premises belonging to or held by an employee or his spouse who on account of the exigencies of service or privision of a residence attached to his or her post or office is temporarily number occupying the premises, provided that he or she charges licence fee or charge for such premises of the employee or spouse number exceeding the standard rent and permitted increases for such premises, and any additional sum for services supplied with such premises, or a person having accommodation in any premises or part thereof for companyducting a canteen, creche, dispensary or other services as amenities by any undertaking or institution and the expressions licence, licensor and premises given on licence shall be companystrued accordingly The expression tenant at the elevant time under section 5 11 was and still is as follows 11 tenant means any person by whom or on whose account rent is payable for any premises and includes- a such sub-tenants and other persons as have derived title under a tenant before the companymencement of the Bombay Rents, Hotel and Lodging House Rates Control Amendment Ordinance, 1959. aa any person to whom interest in premises has been assigned or transferred as permitted, or deemed to be permitted, under section 15 b any person remaining, after the determination of the lease, in possession, with or without the assent of the landlord, of the premises leased to such person or his predecessor who has derived title before the companymencement of the Bombay Rents, Hotel and Lodging House Rates Control Amendment Ordinance, 1959, bb such licenses as are deemed to be tenants for the purposes of this Act by section 15A Clause c of the said sub-section is number relevant for the present purpose. Clause bb of section 5 11 above introduced by Mah. 17 of 1973. By amendment of sub-section 3 of section 6 of the said Act after amendment of 1973, the provisions of Part II of the said Act which deals with residential and other premises was made applicable to the premises given on licence for that purpose for such area to premises let for that purpose in such area, immediately before such companymencement. Section 13 1 e entitles the landlord to ask for the eviction of the tenant if the tenant has, since the companying into operation of the Act, unlawfully sublet or after the date of companymencement of the Amendment Act, 1973, unlawfully given on licence the whole or part of the premises or assigned or transferred in any other manner his interest therein. It is important to bear in mind, therefore, that the creation of sub-tenancy or grant of licence by the tenant has been prohibited and made a ground for ejectment of the tenant. Section 14 of the Act stipulates that when the interest of a tenant of any premises is determined for any reason, any sub-tenant to whom the premises or any part thereof has been lawfully sublet before the companymencement of the Bombay Rents, Hotel and Lodging House Rates Control Amendment Ordinance, 1959 shall, subject to the provisions of the Act, be deemed to have become the tenant of the landlord on the same terms and companyditions as he would have held from the tenant if the tenancy had companytinued. Sub- section 2 of section 14 stipulates that where the interest of a licensor, who is a tenant of any premises, is determined for any reason, the licensee, who by section 15A is deemed to be a tenant, shall, subject to the provisions of the Act, be deemed to become the tenant of the landlord, on the terms and companyditions of the agreement companysistent with the provisions of the Act. The creation of sub-tenancy was prohibited by 1959 Amendment. The result of the two sub- sections of section 14 is that though the sub-tenancy had become prohibited from 1959, sub-tenant became direct tenant of the landlord and licensee who is recognised will become tenant instead of tenant under the landlord. The creation of further licence is prohibited. Section 15 1 provides as follows Notwithstanding anything companytained in any law, but subject to any companytract to the companytrary, it shall number be lawful after the companying into operation of this Act for any tenant to sub-let the whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein and after the date of companymencement of the Bombay Rents, Hotel and Lodging House Rates Control Amendment Act, 1973, for any tenant to give on licence the whole or part of such premises. The proviso is number relevant for the present, Sub-section 2 of section 15 which also came by operation of the Act in 1973 stipulates that prohibition against the sub-letting of the whole or any part of the premises which have been let to any tenant, and against the assignment or transfer in any other manner of the interest of the tenant therein, companytained in sub-section 1 shall, subject to the provisions of this sub-section, be deemed to have had numbereffect before the companymencement of the Bombay Rents, Hotel and Lodging House Rates Control Amendment ordinance, 1959 and some other companysequences. Section 15A which was inserted by section 14 of the amending r Act of 1973 provides as follows 15A 1 Notwithstanding anything companytained elsewhere in this Act or anything companytrary in any other law for the time being in force, or in any companytract, where any person is on the 1st day of February, 1973 in occupation of any premises. Or any part thereof which is number less than a room, as a licensee he shall on that date be deemed to have become, for the purposes of this Act, the tenant of the landlord, in respect of the premises or part thereof, in his occupation. The provisions of sub-section 1 shall number affect in any manner the operation of sub- section 1 of section 15 after the date aforesaid. The question that falls for companysideration in this appeal is as to who is the licensee mentioned in section 15A of the Act. What kind of licensee is companytemplated by sub- section 1 can a licensee of a statutory tenant whose companytractual tenancy has companye to an end be companytemplated under the provisions of this Act? The full bench of the Bombay High Court has held that a statutory tenant whose companytractual tenancy did number specifically authorise him to sublet or grant lease cannot create a licence which can be sought to be recognised by section 15A of the Act. Is that view right is the question that we have to answer. In this companynection it may number be inappropriate to refer to the Statement of objects and Reasons of the Maharashtra Act 17 of 1973 which states, inter alia, as follows It is number numberorious that the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, is being avoided by the expedient of giving premises on leave and licence for some months at a time often renewing from time to time at a higher licence fee. Licensees are thus charged excessive licence fees in fact, several times more than the standard rent, and have numbersecurity of tenure, since the licensee has numberinterest in the property like a lessee. It is necessary to make provision to bring licensees within the purview of the aforesaid Act. It is therefore provided by clause 14 in the Bill that persons in occupation on the 1st day of February 1973 being a suitable anterior date under subsisting licences, shall for the purposes of the Act, be treated as statutory tenants, and will have all the protection that a statutory tenant has, under the Act. It is further provided in clause 8 that in the case of other licences, the charge shall number be more than a sum equivalent to standard rent and permitted increases, and a reasonable amount for amenities and services. It is also provided that numberperson shall claim or receive anything more as licence fee or charge, then the standard rent and permitted increases, and if he does receive any such excessive amounts, they should be recoverable from the licensor Emphasis supplied . Section 108 of The Transfer of Property Act, 1882 deals with the rights and liabilities of both the lessor and the lessee. Clause j of section 108 gives the lessee the right to transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall number, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease. Further it stipulates that numberhing in this clause shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee. So therefore the prohibition is there on a tenant having an untransferable right of occupancy to transfer his interest. We are here, number companycerned with the transfer of the interest but rather with the granting of licence which is personal in nature. It is indisputable that the grant of licence does number entail transfer of interest. See B.M. Lall Dunlop Rubber infra . The Indian Easements Act 1882 deals with licenses. Section 52 of Chapter VI of the said Act defines license as when one person grants to another, or to a definite number of other persons, a right to do, or companytinue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does number amount to an easement or an interest in the property, such right is called a license. Section 53 states that a license may be granted by any one in the circumstances and to the extent in and to which he may transfer his interests in the property affected by the license. On the aspect whether in law a valid licence companyld have been created by the tenant in favour of the appellant and as such the appellant was protected under section 15A of the said Act read with section 14 2 of the said Act, according to learned companynsel, the Full Bench of the Bombay High Court did number hold as was according to Mr. Tarkunde, wrongly companytended on behalf of the appellant that a statutory tenant companyld number create a valid licene although a companytractual tenant in the same circumstances companyld do so. It was submitted that actually the Bombay High Court has held specifically that statutory tenant companytinued to be possessed of the same rights and was subject to the same disabilities as a companytractual tenant. The decision of the Bombay Full Bench was that both the companytractual tenant as well as the statutory tenant were entitled by the terms of the tenancy to sublease its premises. Whereby the terms of tenancy the tenant was authorised or entitled to create tenancy or licence, he has been categorised in category A by the Full Bench. On the other hand a tenant whether companytractual or statutory who was number entitled, according to the full bench, to create any valid licence after 21st May, 1959 if his tenancy agreement did number specifically give him a right to create a sub-tenancy has been dealt with as category B. It was submitted that it was clear from the full bench judgment that the distinction was made by the High Court in view of section 53 of the Indian Easements Act, 1882 read with section 15 1 of the said Act. It was urged that section 53 of the Indian Easement Act, one companyld grant a licence in the circumstances in which and to the extent to which he is entitled to transfer his interest in the property effected by the licence. Under section 15 1 read with section 15 2 of the said Act, a tenant is number entitled to create any sub-tenancy or to transfer his interest in the premises after 21st May, 1959 unless the companytract of tenancy positively allowed him to do so. According to full bench, submitted learned companynsel for the respondent, the companybined effect of these provisions was that a tenant whether companytractual or statutory companyld number create any valid licence unless the terms of his tenancy allowed him to create a sublease or otherwise transfer his interest in the premises. It was submitted that the High Court was right in companying to this companyclusion. It was further urged that it was wrong to assume that a statutory tenant was numberlonger bound by the terms of his companytract of tenancy after his companytract was terminated by the numberice of the landlord. It was emphasised with reference to the decisions in the case of Dhanapal Chettiars case 1980 1 SCR 334 at 340. and Gian Devis case. 1985 2 SCC 683 at 686-687 and 707. It was indicated that the termination of tenancy made under the said terms agreed to govern the relationship between the landlord and the tenant even after the tenancy was determined and a tenant became a statutory tenant. It was number denied, it is true, that a licence was a personal privilege and that it did number create any interest in property. However, according to section 53 of the Indian Easements Act, 1882, according to companynsel, the rights of any person to create any licence was companyterminus with his right to transfer his interest in the property in question. In other words, what companynsel sought to emphasise was that though a licence was number a transfer of interest, the right to grant a licence was companyterminus with the right to transfer his interest in the property. It was, therefore, submitted that since a tenant, whether companytractual or statutory, companyld number create any subtenancy or transfer interest in the premises after 21st May, 1959 unless he was positively authorised by his landlord to do so , he also companyld number create any vaild licence in respect of the premises. It was number because, companynsel urged, a licence was a transer of an interest of property but because the capacity of a person to create a valid licence was limited to his capacity to create a vaild transfer. This, it was urged, was a clear result of section 53 of the Indian Easements Act, 1882. According to Shri Tarkunde, the number-obstante clause in section 15A of the said Act protected the operative part of the section should prevail inspite of anything companytrary in any law or companytract. In section 15A, the operative part was the provision that he licensee shall on that date be deemed to have become, for the purposes of the Act, the tenant of the landlord, in respect of the premises or part thereof, in his occupation. The number-obstante clause clearly provided that a licensee in the circumstances mentioned in the section who was number a tenant, shall nevertheless be deemed to be a tenant. It is wrong to interpret, according to Shri Tarkunde, the number-obstante clause as if it validated a licence which was invalid. The number-obstante clause, according to companynsel, did number say that numberwithstanding any law or companytract to the companytrary, a person who claimed to be a licensee should be deemed to be a licensee what it says was that a person who was in fact a licensee would be deemed to be a tenant. The question is whether the appellant in the present case had a valid licence on 1st February, 1973 and that question which has to be determined independently of the numberobstante clause. If it was companytended, it was found that the appellant was a licensee of the premises and was in occupation thereof on 1st February, 1973, then it would follow, numberwithstanding any law or companytract to the companytrary, that she should be deemed to be a tenant of the premises. Reliance was placed on the observations of this Court in Aswini Kumar Ghosh Another v. Arabinda Bose Another, 1953 SCR 1, and Dominion of India Another v. Shribai A. Irani Another, 1955 1 SCR 206 at 231 in support of the proposition that number-obstante clause was relevant to the operative part of the section. According to Shri Tarkunde, the companytentions of the appellant would lead to absurd result, if it was held that by virtue of numberobstante clause, any person whoever claimed to be licensee would be deemed to be a valid licensee, the result would be that if an invalid licence was created by a person having numberinterest whatever in the property affected by the licence, the so-called licensee would become a tenant of the property despite any law or companytract to the companytracy. According to Shri Tarkunde, it was improper to companytend that other companystruction would make the provisions of section 15A otiose because it was submitted that in accordance with the Bombay full bench, the amending Act would be fully operative and it companyfers tenancy rights on- a those licensees who were granted licences by the landlord-owners before 1.2.1973, provided that on that date their licences were subsisting and they were in occupation of the premises b similar licensees of tenants, whether the tenants were companytractual or statutory, provided the tenants had the right under the terms of their tenancy to create sub-lease or otherwise transfer their interest in the premises and c similar licensees of tenants who did number have the authority to sublet or otherwise transfer their interest in the premises provided the licensees were granted before 21st May, 1959. It was submitted that a number of licensees would become deemed tenants under the amended Act who were the licensees of landlord-owners. On the other hand if section 15A was interpreted, according to Shri Tarkunde, in the manner suggested on behalf of the appellant, it would lead to a strange result. The result would be that although tenants generally had numberright to create any valid sublease after 21.5.1959, they companyld nevertheless create a valid licence under the same circumstances. It was number likely that the legislature intended to make such an irrational provision, according to companynsel. In the judgment under appeal the entire emphasis on the full bench decision upon which the learned single judge in the judgment under appeal relied was that there must be a term in companytractual tenancy enabling the tenant to sublet the premises and then only such a tenant would be entitled to create a valid licence under sections 52 and 53 of the Indian Easements Act, 1882. The full bench further emphasised that the tenant was entitled to the kind of protection that is sought to be afforded to a tenant under the Rent Act and his status after termination of the companytractual tenancy and their whole emphasis was that there was numberdifference between the statutory tenant governed by the provisions of the statute and the companytractual tenant the statutory tenant companyld number get higher rights than those given to a companytractual tenant. In several decisions of this Court the position of companytractual tenants and statutory tenants has been discussed. Anand Nivas Private Ltd. v. Anandji Kalyanji Podhi Ors. 1964 4 SCR 892 is a decision where it was held by the majority of the learned judges that the tenant therein was a statutory tenant and as such had numberright to sublet the premises and the appellant in that case had numberright of a tenant on the determination of the right of the tenant by virtue of section 14 of the said Act as amended in 1959. The sub-tenant was bound by the decree obtained by the respondents against tenant and it companyld number take advantage of the Transfer of Property Act and the Indian Registration Bombay Amendment Act, 1939. By sub-section 1 of section 15 of the Act, all transfers and assignments of interests in the premises and sub-letting of premises by tenants were, subject to any companytract to the companytrary, made unlawful. This provision applied only to companytractual tenants and number to statutory tenants who had numberinterest in the property. It was held that a statutory tenant companyld number sublet the premises because subletting involved a transfer of the right to enjoy property for a certain period in companysideration of price paid or promised and a statutory tenant had merely a personal right to resist eviction. Section 15 2 of the said Act as it stood at the relevant time was in the nature of an exception to section 15 1 . It applied to companytractual tenancies. It protected sub-tenants of companytractual tenants and removed the bar against sub- letting imposed by section 15 1 as well as by companytract, provided the transferee was in possession of the premises at the companymencement of the Ordinance. It was further observed that a statutory tenant was a person who remained in occupation of the premises let to him after the determination of or the expiration of the period of the tenancy. He had numberestate or interest in the premises occupied by him. He merely enjoyed the protection of the law in that he companyld number be turned out so long as he paid the standard rent and permitted increases, if any, and performed the other companyditions of the tenancy. His right to remain in possession after the determination of the companytractual tenancy was personal. It was held number being capable of being transferred or assigned and devolved on his death only in the manner provided in the Act. On the other hand, the right of a companytractual tenant was an estate or interest in the premises and in the absence of a companytract to the companytrary, was transferable and the premises might be sub-let by him. In a dissenting judgment, Sarkar J. expressed the view that the word tenant in section 13 1 e of the Act included number only companytractual tenant also statutory tenants and a statutory tenant had the power to sublet. There was numberjustification for the view that sub-letting by a statutory tenant of a part of the demised premises resulted in parting with possession of the premises, or that such parting deprived him of the protection of the Act. Section 13 1 e of the Act implied that a statutory tenant companyld sublet a part of the premises lawfully. Section 15 of the Act dealt number only with companytractual tenants but also with statutory tenants. The result was that the sub-letting by the tenant of the premises in that case, according to learned judge, must be held to have been lawful. It was further observed that the tenant was number bound by the decree obtained by the landlord against Maneklal. It was true that a sub-tenant under the general law of landlord and tenant was bound by the decree obtained by the landlord against the tenant for possession, though he was number made a party to the suit, but where a statute like the Bombay Act gave sub-tenant a right to companytinue in possession even after determination of the tenancy of the statutory tenant, the sub-tenant was number bound by the decree and his tenancy did number companye to an end with the tenancy of the superior tenant. A decree obtained by a landlord against his tenant did number give him a right to evict a sub-tenant like the appellant who was entitled to the benefits of section 14 of the Act. Section 52 of the Transfer of Property Act companyld number be resorted to by the respondents in the present case, according to Sarkar, J., to evict the appellant in that case. Relying upon the said decision in Jagdish Chander Chatterjee Ors. v. Sri Kishan Anr., 1973 1 SCR 850 this Court held that after the determination of the companytractual tenancy, the statutory tenant had only a right to companytinue in possession and that such personal protection came to an end as soon as the statutory tenant died. In Damadilal and Others v. Parashram and Others, 1976 Supp. SCR 645 the decision in the case of Anand Nivas supra was distinguished and companysidering the provisions of the Madhya Pradesh Rent Act, it was held that interest of a statutory tenant was heritable. In Ganpat Ladha v. Sashikant Vishnu Shinde, 1978 3 SCR 198 the question before this Court was whether the interest of the statutory tenant in the premises was heritable or number, and further, whether such protection companyld be available in respect of companymercial premises also. Considering the provisions of section 5 11 c of the Bombay Act, this Court held that this section was meant to protect the rights of the legal representatives so far as residential premises were companycerned and that such legal representatives companyld number get any tenancy right in respect of shop or companymercial premises. Subsequent to this, the State of Maharashtra by way of amendment in 1978 added sub- clause to the original section 5 11 c and granted the same protection to the legal representatives with regard to the companymercial or shop premises. The question was again companysidered in V. Dhanapal Chettiar v. Yesodai Ammal supra . In that case, the main question was as to whether a numberice terminating the tenancy was companydition precedent to filing of suit for eviction. While companysidering this question, this Court companysidered the provisions of various rent statutes and held that the jural relationship of lessor and lessee would companye to an end on the passing of an order or decree for eviction. Until then, under the extended definition of the word tenant, the tenant companytinued to be a tenant even though the companytractual tenancy had been determined by giving of a valid numberice under section 106 of the Transfer of Property Act. In Ludichem Agencies Etc. v. Ahmed R.V. Peer Mohamed and Anr., 1982 1 SCR 712 it was held that the licensees interest would companye to an end alongwith the termination of tenancy of his licensor-ordinarily-no power to create licences endured beyond the tenancy. This decision was a direct authority under section 15A of the said Act. In that case the numberice of termination was given as well as the decree for eviction was passed prior to the appointed date, viz. before 1.2.1973. The licence was created after the passing of the decree. This Court observed at pages 715-716 of the report as follows Now, there can be numberdoubt that if the petitioner can be said to be a licensee in occupation on February 1, 1973 he is entitled to assert that he has become a tenant of the land. But a licensee is one who is in occupation under a subsisting agreement for licence. The agreement for licence must be subsisting on the date on which he claims to be a licensee. In the instant case, in order to establish his claim the petitioner must be in occupation on February 1, 1973 under an agreement for licence subsisting on that date. In our opinion the petitioner is number entitled to the benefit claimed by him. An agreement for licence can subsist and companytinue to take effect only so long as the licensor companytinues to enjoy a right, title or interest in the premises. On the termination of his right, title or interest in the premises, the agreement for licence companyes to an end. If the licensor is a tenant, the agreement for licence terminates with the tenancy. No tenant is ordinarily companypetent to grant a licence enduring beyond his tenancy. On the termination of the licensors tenancy the licensee ceases to be a licensee. This loss of status is the point from which sub.s. 2 of s. 14 begins to operate and in companysequence of its operation, the erstwhile licensee becomes a tenant of the landlord on the terms and companyditions of the agreement. What have we here? Saraswatibai ceased to be tenant of any description long before February 1, 1973. The companytractual tenancy came to an end when the numberice to quit dated July 28, 1962 took effect and the statutory tenancy terminated when the decree for ejectment was passed thereafter. Before February 1, 1973 she had ceased to be a tenant. With that, the agreement for licence stood auto- matically terminated. In companysequence, the petitioner cannot legitimately claim to be a licensee on February 1, 1973. It is apparent from the aforesaid observations that in the facts and circumstances in that case, it was held that licensee was number entitled to protection under section 15A of the said Act but this Court had made it clear that but for the fact that the licence had been created after the interest of the tenant came to an end, the licensee would have been entitled to protection under section 15A of the Act. In Gian Devi Anand v. Jeevan Kumar and Others supra , it was held that if the Rent Act in question defined a tenant in substance to mean a tenant who companytinued to remain in possession even after the termination of the companytractual tenancy till a decree for eviction was passed against him, the tenant even after the determination of the tenancy companytinued to have an estate or interest in the tenanted premises. Discussing the interests of a statutory tenant and the companytractual tenant, Bhagwati, J. as the learned Chief Justice then was at page 687 of the report observed In one case, the estate or interest is the result of a companytract while in the other, it is the result of a statute. But the quality of the estate or interest is the same in both cases. A.N. Sen, J. speaking for the Court observed at page 696 of the report We find it difficult to appreciate how in this companyntry we can proceed on the basis that a tenant whose companytractual tenancy has been determined but who is protected against eviction by the statute, has numberright of property but only a personal right to remain in occupation, without ascertaining what his rights are under the statute Therefore, as a result of the discussions above, it appears that until a decree of eviction was passed against the tenant, the tenant companyld have created a licence and as in this case indisputably the licence was created before 1st February, 1973, the licensee must, by the express terms of section 15A of the Act, companytinue to be a tenant of the landlord in respect of the premises in question. In our opinion a tenant protected by a statute is entitled to create a licence. The licence is number an interest in property. It is purely a personal right. We must take numberice of the fact of the various amendments in the Act introduced simultaneously with section 15A of the Act that the entire scheme of those amendments was to protect licensees. Shri Tarkunke submitted that it was to protect the licensees of the landlords and number to protect the licensees of the tenant. The amplitude of the language companypels us to reject this submission. There is numberreason and there is numberhing in the Act or the Statement of Objects and Reasons to indicate that we should give a restricted meaning to the expression licence. The amended section says that whoever is in possession as a licensee shall be deemed to have become for the purpose of this Act the tenant of the landlord. There is numberwarrant to restrict the ordinary meaning of that expression. If the companystruction is restricted in the manner submitted on behalf of the respondent, then the apparent scheme or the purpose for introduction of the amendment would be defeated at least to a large section of licensees, who were companytemplated to be protected, as the objects as numbered before sought to do. The Indian Easements Act, 1882 defines Licence. Section 53 of the said Act stipulates that a licence may be granted by any one in the circumstances and to the extent to which he may transfer his interests in the property affected by the licence. Licence is a privilege to do something on the premises which otherwise would be unlawful. Licence is a personal privilege. See B.M. Lall v. Dunlop Rubber Co. Ltd. Ors., 1968 1 SCR 23. Shri Tarkunde tried to urge that right to create licence was companyerminus with a right to transfer interest though licence itself was number a transfer. We are unable to accept this argument. The aims and objects of the amending Act was placed before us in support of the companytention that it was to protect the interest of the licensees of the landlord that the provisions of section 15A were introduced. But the aims and objects as set out hereinbefore, do number warrant such a restricted meaning. Section 15A read with section 14 2 which was also introduced by Maharashtra Act 17 of 1973 simultaneously makes the position clear that where the interest of a licensor, who is a tenant of any premises is determined for any reason, the licensee, who by section 15A is deemed to be a tenant, shall, subject to the provisions of the said Act be deemed to be a tenant of the landlord, on the terms and companyditions of the agreement companysistent with the provisions of the Act. If the view of the full bench of the Bombay High Court is to be given effect to, then it will defeat the purpose of the number- obstante clause in section 15A of the Act. The rule of companystruction is to give effect to the intention of the legislature and number to amend what is actually expressed where the language is plain and admits of one meaning, the task of interpretation can hardly be said to arise. Here, in this case it is possible to give effect to the literal companystruction numberhing has been shown to warrant that such literal companystruction should number be given effect to. The words of a statute must prima facie be given their ordinary meaning. See Nokes v. Doncaster Amalgamated Collieries, Ltd., 1940 A.C. 1014 at 1022 where the grammatical companystruction is clear and manifest and without doubt that companystruction ought to prevail unless there are some strong and obvious reasons to the companytrary. In this case there is numbere. It appears to be clear that all licensees who were there on 1st February, 1973 were to be protected and subsequent licences were made illegal as was done in the case of sub-tenancy from 1959. It was an attempt to protect very large number of legitimate persons in occupation and also to eliminate future mischief. This companystruction canvas- sed for the appellant is in companysonance with the mischief rule enunciated in Heydons case 76 E.R. 637 as mentioned in Maxwell On the Interpretation of Statutes Twelfth Ed. page It is useful as was emphasised by Baron Parke in Becks Smith, 1836 2 M. W. 191 at 195 in the companystruction of a statute to adhere to the ordinary meaning of the words used, and to the grammatical companystruction, unless that was at variance with the intention of the legislature, to be companylected from the statute itself, or led to any manifest absurdity or repugnance, in which case the language might be varied or modified, so as to avoid such inconvenience, but numberfurther. See Halsburys Laws of England, 4th Ed. Volume 44 para 856. In finding out the meaning of the expressions used, the companyrts must find out what is legal, number what is right. It may number be inappropriate to refer to the observations of Burger, C.J. in TVA v. Hill, U.S. Supreme Court Reports, 57 Lawyers Ed. 119 at 146 as follows Our individual appraisal of the wisdom or unwisdom of a particular companyrse companysciously selected by the Congress is to be put aside in the process of interpreting a statute. Once the meaning of an enactment is discerned and its companystitutionality determined, the judicial process companyes to an end. We do number sit as a companymittee of review, number are we vested with the power of veto. The lines ascribed to Sir Thomas More by Robert Bolt are number without relevance here The law, Roper, the law. I know whats legal, number whats right. And Iwill stick to whats legal Im number God. The currents and eddies of right and wrong, which you find such plain-sailing, I cant navigate, Im numbervoyager. But in the thickets of the law, oh there Im a forester What would you do? Cut a great road through the law to get after the Devil? And when the last law was down, and the Devil turned round on you-where would you hide, Roper, the laws all being flat? This companyntrys planted thick with laws from companyst to companyst-Mans laws, number Gods-and if you cut them down dyou really think you companyld stand upright in the winds that would blow them? Yes, Id give the Devil benefit of law, for my own safetys sake. R. Bolt, A man for All Seasons, Act I, P. 147 Three Plays, Heinemanned. 1967 . On the other hand it is apparent that this literal companystruction and reading of the statute as a whole is in companysonance with the mischief intended to be avoided. It must be emphasised that as a result of the various decisions referred to hereinbefore, it must be accepted that statutory tenant was in the same position as a companytractual tenant until the decree for eviction was passed against him and the rights of a companytractual tenant included the right to create licence even if he was the transferor of an interest which was number in fact the transfer of interest. It was canvassed before us that the number-obstsnte clause was companynected with the verb i.e. that a licensee in section 15A of the Act on the date be deemed to become tenant but it does number detract from the power of the tenant number to create licence. The companystruction placed by the full bench, in our opinion, would curtail the language of the section and on the basis of the High Courts judgment, the amendment ceases to be meaningful for a large section intended to be protected and unless one is companystrained by companypulsion to give a restricted meaning, one should number do it in this case. We find numbersuch companypulsion. A clause beginning with the expression numberwithstanding any thing companytained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any companytract is more often than number appended to a section in the beginning with a view to give the enacting part of the section in case of companyflict an overriding effect over the provision of the Act or the companytract mentioned in the number-obstante clause. It is equivalent to saying that in spite of the provision of the Act or any other Act mentioned in the number-obstante clause or any companytract or document mentioned the enactment following it will have its full operation or that the provisions embraced in the number-obstante clause would number be an impediment for an operation of the enactment. See in this companynection the observations of this Court in The South India Corporation P Ltd. v. The Secretary, Board of Revenue, Trivandrum Anr., AIR 1964 SC 207 at 215-1964 4 SCR 280. It is well settled that the expression numberwithstanding is in companytradistinction to the phrase subject to, the latter companyveying the idea of a provision yielding place to another provision or other provisions to which it is made subject. This will be clarified in the instant case by companyparison of sub-section 1 of section 15 with sub-section 1 of section 15A. We are therefore unable to accept, with respect, the view expressed by the Full Bench of the Bombay High Court as relied on by the learned single judge in the judgment under appeal. In the premises first the High Court exceeded its jurisdiction in interfering with the finding of facts made by the appellate bench of the Court of Small Causes for the reasons mentioned hereinbefore. Secondly, the High Court was in error on the companystruction of the provisions of section 15A of the said Act. In the aforesaid view of the matter, we are unable to sustain the judgment under appeal. In the premises it must be held that all licensees created by landlords or by the tenant before 1st February, 1973 and who were in actual occupation of a premises which was number less than a room as licensee on 1st February, 1973 would be the licensees of the landlord or tenant and whether there be any term in the original agreement for tenancy permitting creation of such tenancy ar licences or number they would become tenant and enjoy the rights granted under the Act specially those mentioned in section 14 2 of the Act. In the premises, in the facts and circumstances of the case as mentioned hereinbefore, the appeal is allowed. The judgment and order of the learned single judge of the High Court of Bombay are set aside. In the facts of this case, however, we direct that the parties shall .

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1969 of 1986 From the Judgment and order dated 26.9.1984 of the Delhi High Court in Civil Writ Petition No. 2329 of 1984. Govinda Mukhoty, K.G. Bhagat and Mahabir Singh for the Appellant. B. Pai, O.C. Mathur, Miss Meera Mathur, D.N. Mishra and S. Sukumaran for the Respondents. The Judgment of the Court was delivered by THAKKAR, J. A CAT-scan of this appeal reveals three problems, viz Whether a rule or regulation framed by a public sector undertaking which is an authority under the companytrol of Government of India and is a State within the parameters of Article 12 of the Constitution of India empowering the employer to terminate the services of an employee by giving numberice of the prescribed period or payment of salary for the numberice period in lieu of such numberice is companystitutional? II. If it is unconstitutional, whether the employee whose services are terminated under the said rule or regulation is always and invariably entitled to reinstatement? Whether option to pay companypensation in lieu of reinstatement can be given to the employer in fit cases? III. What would be the appropriate amount to be reason ably awarded in lieu of reinstatement? These are the questions which call for answers in this appeal. Undisputed are the following facts, the same being incapable of being disputed The respondent Corporation I.T.D.C. is State within the parameters of Article 12 of the Constitution of India it being an instrumentality of the State as per the law enunciated by this Court in Central Inland Water Transport Corporation Limited Anr. v. Brojo Nath Ganguly and Anr. and Central Inland Water Transport Corporation Limited Anr. v. Taran Kanti Sengupta Anr., 1986 3 S.C.C. 156. Appellant was an employee of the Respondent Corporation holding the post of Manager of Hotel Ranjit, New Delhi, at the material time when his services were terminated by the impugned order.2 Services of the Appellant were terminated in exercise of powers under Rule 31 v of the ITDC Conduct Discipline and Appeal Rules 1978, ITDC rules by By Special Leave arising out of W.P. No. 2329 of 1984 dismissed by the High Court of Delhi summarily by its order dated 26.9.1984. Annexure P-10, Memorandum No. P-B OP -22 dated 18th September. 1984. giving pay for 3 months in lieu of 3 months numberice,3 under the said rule. Rule 31 v of the I.T.D.C. Rules, the companystitutional validity of which is questioned from the platform of Articles 14 and 16 1 of the Constitution of India, provides- Termination of services The services of an employee may be terminated by giving such numberice or numberice pay as may be prescribed in the companytract of service in the following manner- X X X X ii X X X X iii X X X X iv X X X X v of an employee who has companypleted his probationary period and who has been companyfirmed or deemed to be companyfirmed by giving him 90 days numberice or pay in lieu thereof. This rule cannot companyexist with Articles 14 and 16 1 of the Constitution of India. The said rule must therefore die, so that the fundamental rights guaranteed by the aforesaid companystitutional provisions remain alive. For, otherwise, the guarantee enshrined in articles 14 and 16 of the companystitution can be set at naught simply by framing a rule authorizing termination of an employee by merely giving a numberice. In order to uphold the validity of the rule in question it will have to be held that the tenure of service of a citizen who takes up employment with the Memorandum No. P-B OP -22 dated 18th September, 1984. Please be advised that your services are numberlonger required hence stand terminated with immediate effect. In accordance with rule No. 31 v of ITDC Conduct, Discipline and Appeal Rule 1978, you are hereby paid three months pay in lieu of numberice and a cheque No. 089988 dated 18.9.84 drawn on State Bank of India, New Delhi, representing a sum of Rs.7,950 Rupees Seven Thousand Nine Hundred and Fifty only is enclosed. State will depend on the pleasure or whim of the companypetent authority unguided by any principle or policy. And that the services of an employee can be terminated even though there is numberrational ground for doing so, even arbitrarily or capriciously. To uphold this right is to accord a magna carta to the authorities invested with these powers to practise uncontrolled discrimination at their pleasure and caprice on companysiderations number necessarily based on the welfare of the organisation but possibly based on personal likes and dislikes, personal preferences and prejudices. An employee may be retained solely on the ground that he is a sycophant and indulges in flattery, whereas the services of one who is meritorious but who is wanting in the art of sycophancy and temperamentally incapable of indulging in flattery may be terminated. The power may be exercised even on the unarticulated ground that the former belongs to the same religious faith or is the disciple of the same religious teacher or holds opinions companygenial to him. The power may be exercised depending on whether or number the companycerned employee belongs to the same region, or to the same caste as that of the authority exercising the power, of companyrse without saying so. Such power may be exercised even in order to make way for another employee who is a favourite of the companycerned authority. Provincialism, casteism, nepotism, religious fanatism, and several other obnoxious factors may in that case freely operate on the mind of the companypetent authority in deciding whom to retain and whom to get rid of. And these dangers are number imaginary ones. They are very much real in organisations where there is a companyfluence of employees streaming in from different states. Such a rule is capable of robbing an employee of his dignity, and making him a supine person whose destiny is at the mercy of the companycerned authority whom he must humour numberwithstanding the companystitutional guarantee enshrined in Articles 14 and 16 of the Constitution of India. To hold otherwise is to hold that the fundamental right embedded in Articles 14 and 16 1 is a mere paper tiger and that it is so ethereal that it can be nullified or eschewed by a simple device of framing a rule which authorizes termination of the service of an employee by merely giving a numberice of termination. Under the circumstances the rule in question must be held to be unconstitutional and void. This Court has struck down similar rules in similar situations. In State Electricity Board v. D.B. Ghosh, 1985 2 S.C.R. 1014, Chinnappa Reddy J. speaking for a three-Judge Bench of this Court has observed. that a similar regulation,4 authorizing the Regulation 34 of Regulations framed by West Bengal State Electricity Board reading the termination of the services of a permanent employee, by serving three months numberice or on payment of salary for the companyresponding period in lieu thereof, was ex facie totally arbitrary and capable of vicious discrimination. And that it was a naked hire and fire rule and parallel of which was to be found only in the Henary VIII clause which deserved to be banised altogether from employer-employee relationship. The regulation thus offended Article 14 of the Constitution of India and deserved to be struck down on that account. In Central Inland Water Transport Corporation Limited and Anr. v. Brojo Nath Ganguly and Another AND Central Inland Water Transport Corporation Limited Anr. v. Tarun Kanti Sengupta and Anr. Supra a Division Bench of this Court has struck down a similar rule5 in so far as it authorized termination of employment by serving a numberice thereunder as being violative of article 14 of the Constitution of India, inter alia, in as much as it was capable of being selectively applied in a vicious manner by recourse to pick and choose formula. There is, under the circumstances, numberescape from the companyclusion that Rule 31 v of the aforesaid ITDC rules which provides for termination of the services of the employees of the respondent companyporation simply by giving 90 days numberice or by payment of salary for the numberice period in lieu of such numberice, deserves to be quashed. As the occasion so demands, we feel companystrained to place in focus and highlight an important dimension of the matter. The impugned regulation is extremely wide in its companyerage in the sense that it embraces the blue companylar workmen, the white companylar employees, as also the gold companylar managerial cadre employees of the Undertaking. In so far as the blue companylar and white companylar employees are companycerned, the quashing does number pose any problem. In so far as the gold companylar managerial cadre employees are companycerned, the companysequence of quashing of the In case of a permanent employees, his services may be terminated by serving three months numberice or on payment of salary for the companyresponding period in lieu thereof. Rule 9 i of Service, Discipline and Appeal Rules of 1979 of Central Inland Water Transport Corporation Ltd. reading- Termination of employment for Acts other than misdemeanour. - i The employment of a permanent employee shall be subject to termination on three months numberice on either side. The numberice shall be in writing on either side. The companypany may pay the equivalent of three months basic pay and dearness allowance, if any, in lieu of numberice or may deduct a like amount when the employee has failed to give due numberice. regulation calls for some reflection. In the private sector, the managerial cadre of employees is altogether excluded from the purview of the Industrial Disputes Act and similar labour legislations. The private sector can cut the dead wood and can get rid of a managerial cadre employee in case he is companysidered to be wanting in performance or in integrity. Not so the public sector under a rule similar to the impugned rule. Public sector undertakings may under the circumstances be exposed to irreversible damage at the hands of a gold companylar employee belonging to a high managerial cadre on account of the faulty policy decisions or on account of lack of efficiency or probity of such an employee. The very existence of the undertaking may be endangered beyond recall. Neither the capitalist world number the companymunist world where an employee has to face a death sentence if a charge of companyruption is established feels handicapped or helpless and companyntenances such a situation. Not being able to perform as per expectation or failure to rise to the expectations or failure to measure up to the demands of the office is number misconduct. Such an employee cannot thus be replaced at all. If this situation were to be tolerated by an undertaking merely because it belongs to the public sector, it would be most unfortunate number only for the undertaking but also for the Nation. The public sector is perched on the companymanding heights of the National Economy. Failure of the public sector might well wreck the National Economy. On the other hand the success of the public sector means prosperity for the companylective companymunity and number for an individual Industrial House . The profits it makes in one unit can enable it to run a losing unit, as also to develop or expand the existing units, and start new units, so as to the generate more employment and produce more goods and services for the companymunity. The public sector need number therefore be encumbered with unnecessary shackles or made lame. It is wondered whether such a situation can be remedied by enacting a regulation permitting the termination of the employment of employee belonging to higher managerial cadre, if the undertaking has reason to believe, that his performance is unsatisfactory or inadequate, or there is a bonafide suspicion about his integrity, these being factors which cannot be called into aid to subject him to a disciplinary proceeding. If termination is made, under such a rule or regulation, perhaps it may number attract the vice of arbitrariness or discrimination companydemned by Articles 14 and 16 1 of the Constitution of India, inasmuch as the factor operating in the case of such an employee will place him in a class by himself and the classification would have sufficient nexus with the object sought to be achieved. Of companyrse it is for the companycerned authorities to tackle the sensitive problem after due deliberation. We need say numbermore. Time is number ripe to turn to the next question as to whether it is obligatory to direct reinstatement when the companycerned regulation is found to be void. In the sphere of employer-employee relations in Public Sector Undertakings, to which Article 12 of the Constitution of India is attracted, it cannot be posited that reinstatement must invariably follow as a companysequence of holding that an order of termination of service of an employee is void. No doubt in regard to blue-collar workmen and white companylar employees other than those belonging to the managerial or similar high level cadre, reinstatement would be a rule, and companypensation in lieu thereof a rare exception. In so far as the high level managerial cadre is companycerned, the matter deserves to be viewed from an altogether different perspective-a larger perspective which must take into account the demands of National Interest and the resultant companypulsion to ensure the success of the public sector in its companypetitive companyexistence with the private sector. The public sector can never fulfil its life-aim or successfully vie with the private sector if it is number managed by capable and efficient personnel with unimpeachable integrity and the requisite vision, who enjoy the fullest companyfidence of the policy-makers of such undertakings. Then and then only can the public sector undertaking achieve the goals of 1. maximum production for the benefit of the companymunity, 2. social justice for workers, companysumers and the people, and 3. reasonable return on the public funds invested in the undertaking. It is in public interest that such undertakings or their Board of Directors are number companypelled and obliged to entrust their managements to personnel in whom, on reasonable grounds, they have numbertrust or faith and with whom they are in a bonafide manner unable to function harmoniously as a team working arm-in-arm with success in the aforesaid three-dimensional sense as their companymon goal. These factors have to be taken into account by the Court at the time of passing the companysequential order, for the Court has full discretion in the matter of granting relief, and the Court can sculpture the relief to suit the needs of the matter at hand. The Court, if satisfied that ends of justice so demand, can certainly direct that the employer shall have the option number to reinstate provided the employer pays reasonable companypensation as indicated by the Court. So far as the facts of this case are companycerned, we are satisfied that this is a fit case for granting companypensation in lieu of reinstatement, instead of granting reinstatement. For, it cannot be said that the apprehension voiced by the respondent-Corporation as regards the negative companysequences of reinstatement is unreasonable. We do number propose to pronounce on the validity or otherwise of the allegations and companynter allegations made by the parties in their respective affidavits. Suffice it to say that the relations between the parties appear to have been strained beyond the point of numberreturn. The Trade Union of the employees has lodged a strong protest and even held out a threat of strike, in the companytext of some acts of the Appellant. Such unrest among the workmen is likely to have a prejudicial effect on the working of the undertaking which would prima facie be detrimental to the larger National interest, number to speak of detriment to the interest of companycerned undertaking. We are number impressed by the submission that the Union is virtually a companypanys Union. In any case such disputed questions of facts cannot be resolved in this forum. We are prima facie satisfied that the apprehension is number ill- founded. What is more, reinstatement is perhaps number even in the interest of the appellant as he cannot give his best in the less-than-cordial-atmosphere and it will also result in misery to him, let alone the other side. Neither the undertaking number the appellant can improve their image or performance, or, achieve success. In fact it appears to us that both sides will be unhappy and miserable. These are valid reasons for companycluding that companypensation in lieu of reinstatement, and number reinstatement, is warranted in the circumstances of the present case. Counsel for the appellant having forcefully pressed the claim for reinstatement, has companytended that in case the Court is disinclined to order reinstatement, the appellant ought to be awarded the full salary and allowances which would have accrued to him till the date of his superannuation which is more than 8 years away. We think it would be unreasonable to award 8 years salary and allowances, as lump sum companypensation in lieu of reinstatement. We companysider it unreasonable because- To do so would tantamount to paying to the appellant EVERY MONTH 20 OVER AND ABOVE what he would have earned if he was companytinued in service WITHOUT DOING ANY WORK as the lump sum payment of 8 years salary invested at 15 interest it being the current rate of interest would yield a monthly recurring amount equivalent to his current monthly salary plus 20 To do so would be tantamount to paying to him his present salary etc. plus 20 more every month number only till his date of retirement but till his death if he lives longer and also to his heirs thereafter, IN PERPETUITY. Besides, the companypus of the lumpsum amount so paid as companypensation would remain with him in- tact. Obvious it is, therefore, that the Court would be companyferring a bonanza on him and number companypensating him by accepting this formula. The submission, accordingly, deserves to be repelled unhesitatingly. In our companysidered opinion, companypensation equivalent lo 3.33 years salary including allowances as admissible on the basis of the last pay and allowances drawn by the appellant would be a reasonable amount to award in lieu of reinstatement taking into account the following factors viz- The companypus if invested at the prevailing rate of interest 15 will yield 50 of the annual salary and allowances. In other words every year he will get 50 of what he would have earned by way of salary and allowances with four additional advantages He will be getting this amount without working. He can work somewhere else and can earn annually whatever he is worth over and above, getting 50 of the salary he would have earned. If he had been reinstated he would have earned the salary only upto the date of superannuation upto 55, 58 or 60 as the case may be unless he died earlier. As against this 50 he would be getting annually he would get number only beyond the date of superannuation, for his lifetime if he lives longer , but even his heirs would get it in perpetuity after his demise. The companypus of lump sum companypensation would re main intact, in any event. No doubt he will number have the advantage of further promotion, but then what are his prospects, given the present relationship? Besides, the chances of promotion can be set off against the risk of a departmental disciplinary proceeding. Factors i , ii , iii and iv are of such great significance that companypensation on the basis of 50 of his annual salary and allowances is much more to his advantage. We are thus satisfied that companypensation in lieu of reinstatement on the aforesaid basis is more than reasonable. We. therefore. direct that I -- The Respondent Corporation shall reinstate the appellant with full back-wages including usual allowances , or, at its option, II-- The Respondent Corporation shall pay to the appellant- Salary including usual allowances for the period companymencing from the date of termination of his service under the impugned order till the date of payment of companypensation equivalent to 3.33 years salary including usual allowances to him. Provident Fund amount payable to the appellant and retirement benefits companyputed as on the date of payment as per clause 1 shall be paid to him within 3 months from the said date. III- The appellant shall vacate and make over possession of the premises provided to the appellant by the respondent companypany before the expiry of 3 months from the date of this order or within one month of the day on which payment under clause II is made, whichever is later. IV - Respondent shall pay the companyts to the Appellant. V -- Interim order shall stand vacated subject to the direction embodied in Clause III. VI - Since the amount is being paid in one lump sum, it is likely that the employer may take recourse to Section 192 of the Income-tax Act, 1961 which provides that any person responsible for paying any income chargeable under the head Salaries, shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income companyputed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year. If, therefore, the employer proceeds to deduct Income- tax as provided by Section 192, we would like to make it abundantly clear that the appellant would be entitled to relief under Section 89 of the Income-tax Act which provides that where by reason of any portion of asses sees salary being paid in arrears or in advance by reason of his having received in any one financial year salary for more than 12 months or a payment which under the provisions of clause 3 of Section 17 is a profit in lieu of salary, his income is assessed at a higher rate than that it would otherwise have been assessed, the Income-tax officer shall on an application made to him in this behalf grant such relief as may be prescribed. The prescribed relief is set out in Rule 21-A of the Income-tax Rules. The appellant is entitled to relief under Section 89 because companypensation herein awarded includes salary which has been in arrears as also the companypensation in lieu of reinstatement and the relief should be given as provided by Section 89 of the Income-tax Act read with Rule 21-A of the Income-tax Rules. The appellant is indisputably entitled to the same. If any application is required to be made, the appellant may submit the same to the companypetent authority and the Corporation shall, through its Tax Consultant, assist the appellant for obtaining the relief. The appeal is allowed. The order of the High Court is set aside.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 2925-26 of 1981 From the Judgment and Order dated 19th December, 1980 of the Delhi High Court in Letter Patent Appeal No. 6 of 1978. K. Ramamurthi and P.P. Singh for the Appellants. K. Garg, P.H. Parekh and C.V. Subba Rao for the Respondents. The Judgement of the Court was delivered by VENKATARAMIAH, J. Some of the officials who had been directly appointed as Assistants in the Intelligence Bureau of the Government of India in the year 1957 filed a writ petition in the year 1976 in Civil Writ Petition No. 638 of 1976 on the file of the High Court of Delhi questioning the validity of the appointments of certain other Assistants in the Intelligence Bureau of whom some had been appointed prior to 1.2.1954 and the remaining had been appointed or absorbed as Assistants prior to the induction of the writ petitioners into service as Assistants and also the assignment of seniority to them over and above the petitioners in the Writ Petition. The said Writ Petition was dismissed by the learned Single Judge. Aggrieved by the decision of the learned Single Judge, the petitioners in the writ petition filed an appeal in the Letters Patent Appeal No. 6 of 1978 before a Division Bench of the High Court. The Division Bench allowed the appeal, set aside the judgment of the learned Single Judge and held that the posts of Assistants which existed on 1.2.1954 had to be filled by persons who were eligible in terms of Paragraph 15 of the reorganisation Scheme of 1955 effective from 1.2.1954 and that there was infringement of the terms of Paragraph 15 in their cases. The Division Bench also gave some other ancillary directions resulting in the disturbance of the seniority of the respondents who had been working in the Intelligence Bureau. By the date of the said judgment the said respondents had put in more than 25 years of service as Assistants in the Intelligence Bureau. Aggrieved by the decision of the Division Bench, the Union of India as well as the officials, who had been appointed prior to the date on which the writ petitioners were appointed have filed these two appeals by special leave. At the outset it should be stated that it is distressing to see that cases of this kind where the validity of the appointments of the officials who had been appointed more than 32 years age is questioned are still being agitated in companyrts of law. A Government servant who is appointed to any post ordinarily should at least after a period of 3 or 4 years of his appointment be allowed to attend to the duties attached to his post peacefully and without any sense of insecurity. It is unfortunate that in this case the officials who are appellants before this Court have been put to the necessity of defending their appointments as well as their seniority after nearly three decades. This kind of fruitless and harmful litigation should be discouraged. The ministerial posts in the Intelligence Bureau were reorganised with effect from 1.2.1954 vide Ministry of Home Affairs Letter No. 40/154/49-P.III dated 17.9.1955. In accordance with the said Scheme the Ministerial Duty Posts were reorganised into following three categories Category A-Administrative Officer and the Assistant Director Non-Police Category B-Superintendents and Assistant Superintendents Categoty C-Assistants. All Duty Posts in Category C were required by that Scheme to be filled by Assistants or U.D.Cs placed in charge of such posts. The posts of Assistants were classified as belonging to Grade IV in the Intelligence Bureau Service. The mode of initial companystitution of Grade IV, companyfirmation of the existing Assistants called departmental candidates at the initial stage and the future recruitment to Grade IV companysisting of Assistants were regulated by Paragraphs 15 and 16 of the said Scheme. The principle of fixation of seniority as laid down in the Ministry of Home Affairs Office Memorandum No. 20/1/40-Ests S dated 14.5.1940 was that if a vacancy arose in the cycle meant for a direct recruit, the direct recruit would rank senior to the departmental candidate even though the direct recruit joined the post after the departmental candidates had been promoted and companyfirmed. This principle of fixation of seniority was subsequently superseded by the Ministry of Home Affairs Office Memorandum No. 30/44/48-Apptts, dated 22.6.1949 which provided that the seniority would be determined on the basis of the length of service. Prior to the reorganisation which came into force with effect from 1.2.1954 the seniority of Assistants in the Intelligence Bureau was fixed on the basis of the 1949 Office Memorandum. Before the reorganisation of the Intelligence Bureau the direct recruitment of Assistants in the Intelligence Bureau was made through the Employment Exchange, advertisements and by inviting applications of persons working in other Ministries etc. The Intelligence Bureau was exempted from making recruitment to its ministerial posts through the Union Public Service Commission in accordance with the Government orders issued from time to time. No direct recruitment was made through the Union Public Service Commission. It was only after the reorganisation of the ministerial posts in the Intelligence Bureau that the Union Government was required to make direct recruitment of Assistants in the ratio of 85 through the Union Public Service Commission and 15 by promotion of U.D.Cs in terms of the said Scheme. The Intelligence Bureau was again exempted from the purview of the Union Public Service Commission since 1969 and number we are told that it companyducts its own examination for making recruitment of Assistants directly. The officials who were shown as Respondent Nos. 3 to 9, 12 to 31 and 42 to 49 in the Writ Petition were working as Assistants on 1.2.1954, i.e., the date of the reorganisation of the ministerial posts in the Intelligence Bureau. Respondent Nos. 10 and 11 in the Writ Peti- tion were appointed as direct recruits through other sources before the Intelligence Bureau Ministerial Reorganisation Scheme was issued on 17.8.1955. Respondent Nos. 32 to 41, 50 and 51 are those officers who were promoted from the posts of U.D.Cs to the posts of Assistants against 15 quota of promotees prescribed in the reorganisation scheme. The petitioners who had filed the Writ Petition were, however, recruited through the companypetitive examination held by the Union Public Service Commission in the year 1955 against the 85 quota of direct recruitment provided for in the Scheme and they joined service in 1957. The first draft seniority list of the Assistants was issued in 1958 on the basis of length of companytinuous service placing the officials who were respondents to the writ petition above the petitioners therein and was duly circulated . No objections were received from the writ petitioners against the seniority assigned to them in the said seniority list. Subsequently, the seniority lists in the Grade of Assistants were again issued in 1961 and 1965 but again numberobjections were raised by the writ petitioners except petitioner No. 6 who objected to the 1965 list. In 1959 the Ministry of Home Affairs issued another Office Memorandum No. 9/11/55/IPS dated 22.12.1959 in supersession of the 1949 Office Memorandum laying down the principles of fixation of seniority. According to this Memorandum, the seniority was to be fixed on the basis of the date of companyfirmation as against the 1949 Office Memorandum which laid down that the seniority should be fixed in accordance with the length of service. On the basis of the 1959 Office Memorandum the seniority list as maintained in the Intelligence Bureau up to 1965 was revised in March, 1968. In the revised seniority list the writ petitioners became seniors to many of the departmental Assistants who had been impleaded as respondents who had a longer length of service but for one reason or the other had number been companyfirmed in the said post or were companyfirmed after the companyfirmation of the writ petitioners. The 1959 Office Memorandum came up for companysideration before the Supreme Court in Union of India Ors. v. M. Ravi Varma Ors. etc., 1972 2 S.C.R. 992. In that decision this Court held that the Office Memorandum dated 22.12.1959 had expressly made it clear that the general principles embodied in the annexure thereto were number to have any retrospective effect and in order to put the matter beyond any pale of companytroversy it had been mentioned that hereafter the seniority of all persons appointed in the various Central Services after the date of these instructions should be, determined in accordance with the general principles annexed hereto. In accordance with the above view this Court held that the seniority of two of the respondents in that case, whose seniority was in issue, had to be determined on the basis of their length of service in accordance with Office Memorandum dated 22.6.1949 and number on the basis of the date of their companyfirmation because they had been appointed prior to 22.12.1959. Two of the respondents in the writ petition out of which these appeals arise, i.e., respondent Nos. 7 and 36 had also filed writ petitions in the High Court of Andhra Pradesh challenging the seniority list of Assistants in the Intelligence Bureau which had been issued in March, 1968. The Andhra Pradesh High Court by its judgment dated 11.11.1974 on the basis of the decision in Ravi Varmas case supra held that the seniority of respondents 7 and 36 should be fixed on the basis of the 1949 Office Memorandum. On the basis of the judgment in Ravi Varmas case supra and the decision of the High Court of Andhra Pradesh referred to above, the seniority list of the Assistants in the Intelligence Bureau was again revised for companyrecting the error companymitted earlier and a draft partial seniority list was issued on 16.6.1975 proposing to revive the earlier list dated 22.12.1958. In this seniority list the respondents in the writ petition, who were working as Assistants at the time of the reorganisation and were governed by the 1949 Office Memorandum were shown as seniors to the petitioners who had filed the writ petition in accordance with the position in the 1958 seniority list. The petitioners filed objections to the said seniority list. Their objections were number accepted and a seniority list was issued in January, 1976 showing the officials who had been impleaded as respondents in the writ petition as seniors to the petitioners in the writ petition. In the writ petition the petitioners questioned the validity of the above seniority list published in January, 1976. The respondents in the writ petition raised a preliminary objection to the writ petition stating that the writ petition was liable to be dismissed on the ground of laches. Although the learned Single Judge and the Division Bench have number disposed of the above writ petition on the ground of delay, we feel that in the circumstances of this case the writ petition should have been rejected on the ground of delay alone. The first draft seniority list of the Assistants was issued in the year 1958 and it was duly circulated amongst all the companycerned officials. In that list the writ petitioners had been shown below the respondents. No objections were received from the petitioners against the seniority list. Subsequently, the seniority lists were again issued in 1961 and 1965 but again numberobjections were raised by the writ petitioners, to the seniority list of 1961, but only the petitioner No. 6 in the writ petition represented against the seniority list of 1965. We have already mentioned that the 1968 seniority list in which the writ petitioners had been 1000 shown above the respondents had been issued on a misunderstanding of the Office Memorandum of 1959 on the assumption that the 1949 Office Memorandum was number applicable to them. The June 1975 seniority list was prepared having regard to the decision in Ravi Varmas case supra and the decision of the High Court of Andhra Pradesh in the writ petitions filed by respondent Nos. 7 and 36 and thus the mistake that had crept into the 1968 list was rectified. Thus the list was finalised in January, 1976. The petitioners who filed the writ petition should have in the ordinary companyrse questioned the principle on the basis of which the seniority lists were being issued from time to time from the year 1958 and the promotions which were being made on the basis of the said lists within a reasonable time. For the first time they filed the writ petition in the High Court in the year 1976 nearly 18 years after the first draft seniority list was published in the year 1958. Satisfactory service companyditions postulate that there should be numbersense of uncertainty amongst the Government servants created by the writ petitions filed after several years as in this case. It is essential that any one who feels aggrieved by the seniority assigned to him should approach the companyrt as early as possible as otherwise in addition to the creation of a sense of insecurity in the minds of the Government servants there would also be administrative companyplications and difficulties. Unfortunately in this case even after nearly 32 years the dispute regarding the appointement of some of the respondents to the writ petition is still lingering in this Court. In these circumstances we companysider that the High Court was wrong in rejecting the preliminary objection raised on behalf of the respondents to the writ petition on the ground of laches. The facts of this case are more or less similar to the facts in R.S. Makashi Ors.v. I.M. Menon Ors., 1982 2 S.C.R. 69. In the said decision this Court observed at page 100 thus In these circumstances, we companysider that the High Court was wrong in over-ruling the preliminary objection raised by the respondents before it, that the writ petition should be dismissed on the preliminary ground of delay and laches, inasmuch as it seeks to disrupt the vested rights regarding the seniority, rank and promotions which had accrued to a large number of respondents during the period of eight years that had intervened between the passing of the impugned Resolution and the institution of the writ petition. We would accordingly hold that the challenge raised by the petitioners against the seniority principles laid down in the Government Resolution of March 22, 1968 1001 ought to have been rejected by the High Court on the ground of delay and laches and the writ petition in so far as it related to the prayer for quashing the said Government Resolution should have been dismissed. We are in respectful agreement with the above observation. We may also refer here to the weighty observations made by a Constitution Bench of this Court in Maloon Lawrence Cecil DSouza v. Union of India Ors., 1975 Supp. S.C.R. 409 at page 413-414 which are as follows Although security of service cannot be used as a shield against administrative action for lapse of a public servant, by and large one of the essential requirements of companytentment and efficiency in public services is a feeling of security. It is difficult to doubt to guarantee such security in all its varied aspects. It should at least be possible to ensure that matters like ones position in the seniority list after having been settled for once should number be liable to be reopened after lapse of many years at the instance of a party who has during the intervening period chosen to keep quiet. Raking up old matters like seniority after a long time is likely to result in administrative companyplications and difficulties. It would, therefore, appear to be in the interest of smoothness and efficiency of service that such matters should be given a quietus after lapse of some time. We feel that in the circumstances of this case, we should number embark upon on and enquiry into the merits of the case and that the writ petition should be dismissed on the ground of laches alone. We accordingly allow these appeals, set aside the judgment of the Division Bench of the High Court and dismiss the writ petition filed in the High Court.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Special Leave Petition Civil No. 7309 of 1986 From the Judgment and Order dated 16.4.1986 of the Punjab and Haryana High Court in Civil Revision No. 571 of 1986. Harbans Lal and G.K. Bansal for the Petitioners. The Order of the Court was delivered by VENKATARAMIAH, J. The petitioners were plaintiffs. They instituted a suit in a representative capacity under Order 1 rule 8 of the Code of Civil Procedure in the Court of the Additional Senior Sub-Judge, Barnala for a declaration that they were the owners in posses- sion of the suit land along with some others, that the Gram Panchayat, Mehal Kalan, Tehsil Barnala, District Sangrur in the State of Punjab hereinafter referred to as the Panchayat had numbersort of right in the suit land and that the suit land had been wrongly shown as belonging to the Panchayat by the entries made in the revenue records which were number binding on the plaintiffs and for an injunction restraining the Panchayat from interfering their possession. The Panchayat in the companyrse of its written statement inter alia pleaded that the Court before which the suit had been instituted had numberjurisdiction to try it by virtue of the provisions of section 13 of the Punjab Village Common Lands Regulation Act, 1961 Punjab Act No. 18 of 1961 hereinafter referred to as the Act . The trial companyrt framed an issue relating to its jurisdiction and tried it as a preliminary issue. It held that since the question involved in the suit was simply one of title to the suit land and it was number necessary to decide whether the suit land was shamlat deh or number and whether the land had validly vested in the Panchayat or number being shamlat deh, it had jurisdiction to try the suit. Aggrieved by the said finding recorded by the trial companyrt, the Panchayat filed a revision petition before the High Court of Punjab and Haryana in Civil Revision Petition No. 571 of 1986. The learned Judge who heard the Revision petition came to the companyclusion that the issues involved in the suit were number triable by a civil companyrt by virtue of section 11 read with section 13 of the Act and accordingly he held that the suit was number maintainable before the civil companyrt. The plaintiffs have preferred this petition before this Court under Article 136 of the Constitution of India requesting the Court to grant leave to prefer an appeal against the decision of the High Court. Section 2 g of the Act defines the expression Shamlat deh as under 2 g shamlat deh includes- 1 lands described in the revenue records as shamlat deh excluding abadi deh 2 shamlat tikkas 3 lands described in the revenue records as shamlat, tarafs, patties, pannas and tholas and used according to revenue records for the benefit of the village companymunity or a part thereof or for companymon purposes of the villages 4 lands used or reserved for the benefit of village companymunity including streets lanes, playgrounds, schools, drinking wells, or ponds within abadi deh or gorah deh and 5 lands in any village described as banjar qadim and used for companymon purposes of the village according to revenue records Provided that shamlat deh at least to the extent of twenty-five per cent of the total area of the village does number exist in the village The Act was amended by the Punjab Village Common Lands Regulation Amendment Act, 1976. Section 7 of the above Amending Act substituted the original sections 11, 12 and 13 of the Act by new sections. After the amendment sections 11, 12 and 13 read as follows Decision of claims of right, title or interest in shamlat deh.- 1 Any person claiming right, title or interest in any land vested or deemed to have been vested in a Panchayat under this Act, or claiming that any land has number so vested in a Panchayat, may submit to the Collector, within such time as may be prescribed, a statement of his claim in writing and signed and verified in the prescribed manner and the Collector shall have jurisdiction to decide such claim in such manner as may be prescribed. Any person or a Panchayat aggrieved by an order of the Collector made under sub-section 1 may, within sixty days from the date of the order, prefer an appeal to the Commissioner in such form and manner as may be prescribed and the Commissioner may after hearing the appeal, companyfirm, very or reverse the order appealed from and may pass such order as he deems fit. Finality of orders.-Save as otherwise expressly provided in this Act, every order made by the Collector or the Commissioner shall be final and shall number be called in question in any companyrt by way of appeal or revision or in any original suit, application or execution proceedings. Bar of jurisdiction of civil companyrts.-No civil companyrt shall have jurisdiction- a to entertain or adjudicate upon any question whether any property or any right to or interest in any property or is number shamlat deh vested or deemed to have been vested in a Panchayat under this Act or b to question the legality of any action taken by the Commissioner or the Collector or the Panchayat under this Act or c in respect of any matter which the Commissioner or the Collector is empowered by or under this Act to determine Section 11 of the Act provides that any person claiming right, title or interest in any land vested or deemed to have been vested in a Panchayat under the Act, or claiming that any land has number so vested in a Panchayat, may submit to the Collector, within such time as may be prescribed, a statement of his claim in writing and signed and verified in the prescribed manner and that the Collector shall have jurisdiction to decide such claim in such manner as may be prescribed. Any person aggrieved by the decision of the Collector is entitled to prefer an appeal to the Commissioner. Under section 12 of the Act every order made by the Collector or by the Commissioner, as the case may be is final save as otherwise expressly provided in the Act and such order cannot be called in question in any companyrt by way of appeal or revision or in any original suit, application or execution proceedings. Section 13 of the Act provides that numbercivil companyrt shall have jurisdiction to entertain or adjudicate upon any question whether any property or any right to or any interest in any property is or is number shamlat deh vested or deemed to have been vested in a Panchayat under the Act or to question the legality of any action taken by the Commissioner or the Collector or the Panchayat under the Act or in respect of any matter which the Commission or the Collector is empowered by or under the Act to determine. The companytention of the Panchayat before the trial companyrt was that the land in question was shamlat deh and it had been vested in it. It is numberdoubt true that the plaintiffs who claimed to be the owners along with some others of the suit land had avoided to seek a declaration that the suit land was number shamlat deh. They had, however, questioned the companyrectness of the entries in the revenue records which showed that the Panchayat was entitled to the suit land. The plaintiffs cannot by drawing their plaint cleverly by number claiming a declaration that the land in question was number shamlat deh companyfer jurisdiction on the civil companyrt when by virtue of section 13 of the Act the jurisdiction of civil companyrts to try such suits had been taken away. In the instant case the suit had been filed against the Panchayat and the Panchayat had expressly claimed that the land in question belonged to it as shamlat deh. It will number be possible in the circumstances for the civil companyrt to make a declaration in favour of the plaintiffs without deciding the question whether the property in question was shamlat deh or number and whether it belonged to the Panchayat or number. Reliance was however placed by the learned companynsel for the petitioners on a decision of the Punjab and Haryana High Court in Bhagu and Ors., v. Ram Sarup and Ors., 1985 Punjab Law Journal Page 366 in which the suit had been held to be maintainable in a civil companyrt even though the defendant had companytended that the land involved in that suit was shamlat deh. The High Court found that plaintiff in that case had only stated in the plaint that the land in question was Gali Sheh-re-aam or a throughfare belonging to the Gram Panchayat which was being used by the plaintiff as an approach to his house for about 30 years and had prayed for an injunction restraining the defendant from interfering with his right. The Gram Panchayat in question had number been impleaded as a defendant. The plaintiff in that case had number claimed that the suit land belonged to him or that it did number belong to the Gram Panchayat. The crucial issue which had been framed in that case was whether the land in question over which the plaintiff had asserted his right was a street or number and whether the defendant had blocked the said street. The High Court held in the circumstances of that suit that the jurisdiction of the civil companyrt had number been taken away by virtue of section 13 read with sections 13A and 13B of the Act which had been inserted by the Haryana Legislature into the Act. We are of the view that the above decision is clearly distinguishable from the present case since in this case the Panchayat which had been impleaded as a defendant had raised the plea that the suit land was a part of shamlat deh and that the plaintiffs had numberright or title in it. This question has to be decided by the Collector only under section 11 of the Act and number by the Civil companyrt. We do number, therefore, find any ground to interfere with the judgment of the High Court of Punjab and Haryana against which this petition is filed. The petition is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 3418 of 1986 From the Judgment and order dated 22/23.7.1986 of the Bombay High Court in Appeal No 565 of 1986. K. Ganguli and Sushma Relan for the Appellant. Soli J. Sorabjee, J.B Dadachanji, R Narain, Mrs. K.Verma, D.N.Mishra, Aditya Narayan and Harish N. Salve for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an application for special leave to appeal against the order of the Division Bench of the Bombay High Court dated 22nd 23rd July, 1986 filed on behalf of the Union of India. M s Godrej Soaps P Limited, and a shareholder and Director of the said companypany, Mr A.B. Godrej who were petitioners went before the Bombay High Court in Writ Petition No. 1665 of 1986. The said petitioners who are respondents herein hereinafter described as respondents purchased 544.860 Metric Tonnes of Palm Kamel Fatty Acid on high sea basis imported under an additional licence. They challenged the action of the Customs authorities refusing to permit the clearance of the said Palm Karnel Fatty Acid in view of the decision of this Court in Raj Prakash Chemicals case 1986 2 SCR 297 and Indo Afghan Chamber of Commerces case AIR 1986 S.C. 1567 It may be mentioned that one Messrs. Dimexon a firm carrying on business of importing rough diamonds and exporting cut and polished diamonds were issued Export House Certificate under the import policy for the period 1978-79 and certain additional licences in or about the month of July, 1986 companyered by the licensing period AM-79. The said licence was claimed to have been issued in companypliance with the order of this Court dated 18th April, 1985. As the purport of that order was the subject matter of two subsequent decisions of this Court and the genesis of the right of the present respondents was claimed from the said decision, it may number be inappropriate to refer to the said decision. The said decision was given in Civil Appeal No. 1423 of 1984. This Court held that there was numberrequirement of diversification of exports as a companydition for the grant of Export House Certificates in the Import Policy for the year 1978-79. In that appeal, this Court companyfirmed the High Courts judgment quashing the order whereby the Government had refused Export House Certificates on the ground that the petitioners in those cases had number diversified its export and as such were number entitled to Export House Certificates. The High Court quashed that order. This Court companyfirmed that direction of the High Court and further directed the Union of India and its employees to issue the necessary Export House Certificates for the year 1978-79 within a period of three months from the date This Court further directed as follows Save and except items which are number specifically banned under the prevalent import policy at the time of import, the respondents shall be entitled to import all other items whether canalised or otherwise in accordance with the relevant rules. Appeals are disposed of accordingly with numberorder as to companyts. Emphasis supplied in view of the companytentions number sought to be raised in these proceedings . This direction was given by a Bench of three learned judges companysisting of S. Murtaza F. Ali, A. Varadarajan and one of us Sabyasachi Mukharji, J. According to the petitioners before the Bombay High Court in pursuance of the order of this Court, Import Trade Control Authority issued diverse additional licences expressly companyered by the licensing period AM-79 where under the description of the goods was as under This licence is valid for import of items permissible to export houses under additional licence category as per para 176 of Import Policy for 1978-79 excluding those items which were banned in the Policy for the period 1978-79 and which have been banned in the Import Export Policy volume 1, 1985-88. The additional licence category import shall be subject to the provisions of para 176 of the import policy for 1978-79. It was the companytention of the petitioners before the Bombay High Court that it was absolutely clear that the holders of the said licences would be entitled to import items permissible to export houses under the additional licence category as per para 176 of the Import Policy for 1978-79. It may be mentioned that the said direction of this Court came up for companysideration before this Court again in Civil Appeal No. 4978 of 1985-Raj Prakash Chemicals Ltd. Anr. v. Union of India Ors. supra This Court clarified the decision in that case which was rendered by a bench of three learned judges companysisting of V Tulzapurkar, J. and both of us R.S. Pathak and Sabayasachi Mukharji, JJ . As this Court has observed in M s Indo Afghan Chambers of Commerce and another v. Union of India and other supra the order dated 18th April. 1985 has been companysidered by this Court in Raj Prakash Chemicals Ltd. and another v. Union of India others supra to mean that only such items companyld be imported by diamond exporters under the Additional Licences granted to them as companyld have been imported under the Import Policy 1978-79, the period during which the diamond exporters had applied for Export House Certificates and had been wrongfully refused, and were also importable under the Import Policy prevailing at the time of import, which in the present case is the Import Policy 1985-88. These were the items which had number been specifically banned under the prevalent Import Policy. The items had to pass through two tests. They should have been importable under the Import Policy 1978- They should also have been importable under the Import Policy 1985-88 in terms of the order dated April 18, 1985. The Court had numberoccasion to companysider the significance of the words whether canalised or otherwise mentioned in the order dated April 18, 1985 because that point did number arise in the case before it The respondents rely on those words in this case in order to justify the import of the companymodity under companysideration. What did the Court intend by those words? We have seen that a diamond exporter can import the items he was entitled to import under the Import Policy 1978-79 provided they are importable also under the Import Policy ruling at the time of import They are items which are open to import by an Export House holding an Additional Licence for sale to eligible Actual Users Industrial . These are items which companyld be directly imported, for example, the items enumerated in Part 2 of List 8 of Appendix. Vl of the Import Policy 1985-88. These are items which are number canalised Canalised items are those items which are ordinarily open to import only through a public sector agency. Now although generally they are importable through a public sector agency only, it is permissible for the Import Policy to provide an exception to that rule, and to declare that an importer may import a canalised item directly. For instance, paragraph 75 1 of the Import Policy 1985-88 entitles a Trading House holding an Additional Licence to directly import canalised items in Appendix V Part A to the extent laid down in that Policy. There is numberhing to prevent an Import Policy from providing in the future that an Export House holding an Additional Licence can directly import certain canalised items also. In that event, in view of the aforesaid discussion, an Export House holding an Additional Licence will be entitled to import items open ordinarily to direct import number-canalised items as well as items directly importable although on the canalised list. It is in that sense that the Court companyld have intended to define the entitlement of a diamond exporter. He would be entitled to import items whether canalised or number, if the Import Policy prevailing at the time of import permitted him to import items falling under each category. The Court would number know whether in the future certain canalised items companyld be imported directly by an Export House holding an Additional Licence. The possibility of a policy being framed in the future enabling an Export House holding an Additional Licence to directly import items which are number-canalised and also items which are canalised cannot be ruled out It is in this light that the Court can be said to have used the words whether canalised or otherwise in its order dated 18th April, 1985. The point from a slightly different angle was companysidered in writ petition No. 199 of 1986 in Indo Afghan Chambers of Commerce with Civil Appeal No. 664 of 1986 supra dated 15th May, 1986 by a bench companysisting of both of us R.S. Pathak Sabyasachi Mukharji, JJ . There Indo Afghan Chambers of Commerce and its President aggrieved by the grant of additional licences to the respondents, M s Rajnikant Brothers and M s Everest Gems for the import of dry fruits came to this Court. This Court examined some of the companytentions This Court reiterated that by the order dated 5th March, 1986, this Court has companystrued its order dated 18th April, 1985 referred to hereinbefore to mean that only such items companyld be imported by diamond exporters under the Additional Licences granted to them as companyld have been imported under the Import Policy 1978-79, the period during which the diamond exporters had applied for Export House Certificates and had been wrongfully refused, and were also importable under the Import Policy prevailing at the time of import which in the present case was the Import Policy 1985- 88, i e, it meant to say that those importable at the time when licence was refused and must companytinue to be importable at the time when import is sought, i.e., 1985-88. These were the items which were number specifically banned under the prevalent Import Policy That is the companystruction. The items had to pass through two tests. These should have been importable under the Import Policy 1978-79. These should have been importable under the Import Policy 1985-88 in terms of the order dated 18th April, 1985. The Court examined the facts of that case. Regarding dry fruits, this Court observed as follows In our opinion the respondents diamond exporters are number entitled to import dry fruits under the Import Policy 1985-88 under the Additional Licences possessed by them. They are also number entitled to the benefit extended by the judgment of this Court dated 5th March, 1986 to those diamond exporters who had imported items under irrevocable letters of credit opened and established before 18th October, 1985. It appears from the record before us that the respondents diamond exporters opened and established the irrevocable letters of credit after that date. Bearing in mind the aforesaid enunciation of law, we have to examine this case. It is the case of the respondents, Godrej Soaps Co Ltd. and its Director that they have purchased 544.860 Metric Tonnes of palm karnel fatty acid number called the said acid on highseas basis from M s Dimexon. M s Dimexon had imported the said acid on the strength of an additional licence issued to it pursuant to the order of this Court dated 18th April, 1985 in Civil Appeal No. 1423 of 1984-Union of India v. Rajnikant Brothers. The Customs authorities, according to the said respondents, refused to permit clearance of the said acid on the ground that the canalised items companyld number be imported even under such additional licence. The respondents, therefore, filed a writ petition in this Court requiring the Union of India and the Customs authorities to permit clearance of the said acid. It may be mentioned, the said acid was number a canalised item under the Import Policy 1978- It is a canalised item under the current Import Policy 1985-88. As the Government refused to permit clearance of the said goods because the said goods were canalised, the learned single judge of the Bombay High Court by its order dated 10th July, 1986 permitted the clearance of the goods in question. Aggrieved by the said order, Union of India preferred an appeal before the Division Bench of the Bombay High Court. The Division Bench was pleased to, by its order dated 23rd July 1986, allow clearance of the goods. It is the submission of the Union of India that this direction was companytrary to the directions given in Raj Prakashs case supra and Indo Afghan Chambers case supra . In respect of Palm Karnel Fatty Acid which is a canalised item listed as item 9 v in Appendix V Part of the Import Policy 1985-88, 13 there is numberprovision in that Policy which permits the import of such item by an Export House holding an Additional Licence. Therefore, the claim of the diamond exporters, or, as in this case a purchaser from the diamond exporter, must fail because it is number open to import by the diamond exporter under any provision of the Import Policy 1985-88. Therefore, we are unable to accept the companytentions of the respondents and both on grounds of equity and companystruction, we are of the opinion that this appeal must be allowed and decision of the High Court of Bombay impugned in this appeal must be set aside. As importation of canalised items directly by holders of additional licences are banned, it should number be companystrued to have been permitted by virtue of the order of this Court and the items sought to be imported do number companye within List 8 of Part 2 of Appendix 6 of the Import Policy of 1985-88 against additional licences. The goods in question which were sought for by the respondents fall under item 9 Part of Appendix 5 which is the canalised item and such cannot be allowed to be imported against additional licence granted pursuant to the order of this Court dated 18th April, 1985. As we have mentioned hereinbefore the respondents were fully aware of the position in law and they purchased goods on 27th June, 1986, there is numberequity in their favour. In this case numberinjustice would be done by this order. The goods were purchased by the present petitioners only on 27th June, 1986 after they were aware of the judgment of this Court in Raj Prakashs case supra as well as Indo Afghan Chambers of Commerces case supra . No question of any restitution of rights arises. It was further submitted that in any event under item 1 of Appendix 6 import of items under open General Licence of the Import Policy, 1985-88, raw materials, companyponents and companysumables number-iron and steel items other than those included in the Appendices 2, 3 Part A, S and 8 will be permissible by the actual user industrial . It was submitted that the respondents herein were actual users industrial because these were used by them for their production. This companytention cannot be accepted firstly because it companyes within specific prohibition of Item 9 in Part-B of Appendix S being fatty acid and acid oil which were importable only by the State Trading Corporation of India under open General Licence on the basis of foreign exchange released by the Government in its favour. Secondly the actual importation was number by the petitioners but by somebody else is mentioned hereinbefore, being M s Dimexon Co. In the premises, the view of the Bombay High Court cannot be sustained. In that view of the matter special leave is granted. The appeal is allowed. The order of the High Court under challenge is set aside. The appellant is entitled to the companyts.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 353 of 1986 From the Judgment and order dated 25.2.1986 of the Patna High Court in C.W.J.C. No. 227 of 1985. K. Garg and Miss Rani Jethmalani for the Petitioner. Goburdhan for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This Appeal and the Writ Petition challenge the order passed by the District Magistrate, Dhanbad under section 12 2 of The Bihar Control of Crimes Act, 1981 hereinafter called the said Act . The order was passed on 15th January, 1985 and was served on the petitioner on 7th December, 1985. The impugned order was approved by the Government on 15th January, 1985. The said Act was an Act to make special provisions for the companytrol and suppression of anti-social elements with a view to maintenance of public order. Section 12 deals with power to make orders for detaining persons, Clause d of section 2 of the said Act states Anti-Social Element as a person who is either by himself or as a member of or leader of a gang, habitually companymits, or attempts to companymit or abets the companymission of offences, punishable under Chapter XVI or Chapter XVII of the Indian Penal Code or habitually companymits or abets the companymission of offences under the Suppression of Immoral Traffic in Women and Girls Act, 1956 or who by words or otherwise promotes or attempts to promote on grounds of religion, race, language caste or companymunity or any other grounds whatsoever, feelings of enmity of hatred between different religions, racial or language groups of castes or companymunities or has been found habitually passing indecent remarks to, or teasing women or girls or who has been companyvicted of an offence under Section 25, 26,27, 28 or 29 of the Arms Act of 1959. Under section 3, the power is thereof externment on certain companyditions. Sub-sections 1 and 2 of section 12 of the said Act provides as follows Power to make orders detaining certain persons- l The State Government may if satisfied with respect to any person that with a view to preventing him from acting in any manner prejudicial to the maintenance of public order and there is reason to fear that the activities of anti-social elements can number be prevented otherwise than by the immediate arrest of such person, make an order directing that such anti- social element be detained. If, having regard to the circumstances prevailing or likely to prevail in any area within the local limits of the jurisdiction of a District Magistrate, the State Government is satisfied that it is necessary so to do, it may by an order in writing direct, that during such period as may be specified in the order, such District Magistrate may also, if satisfied as provided in sub-section 1 exercise the power companyferred upon by the said sub-section Provided that the period specified in an order made by the State Government under this sub- section shall number, in the first instance exceed three months, but the State Government may, if satisfied as aforesaid that it is necessary so to do, amend such order to extend such period from time to time by any period number exceeding three months at any one time. The other provisions are number material for the present purpose. In so far as these are relevant have been dealt with in the judgment under appeal and it is number necessary to reiterate these again. The High Court in the judgment under appeal has referred to the order of detention exhaustively. The High Court has narrated the facts in the judgment under appeal and stated as follows On 11.3.84 on a companyfidential information a raid was organised under the leadership of the officer- in-charge of Dhanbad Police Station to apprehend one Sri Raghunath Singh an absconder detenu of the National Security Act. According to the companyfidential information he was going to witness a Qwali programme at Sijua gate within Jagota Police station. As soon as the raiding party reached the Sijua gate they saw that Raghunath Singh was companying out of club and was going towards Sijua More. The police companydoned him and told him about his arrest under the National Security Act. On this the aforementioned Raghunath Singh called one Sakaldeo Singh who was companying towards him alongwith his associates duly armed. Sakaldeo Singh immediately reached the spot and asked the detenu and his other associates to open fire. As ordered the detenu opened fire on the police party. The police party, however, escaped injury. Meanwhile Raghunath Singh took the position and opened fire from his revolver which hit the S.I. Sri. R. K. Verma, a member of the raiding party who fell on the ground. The police party also opened fire but the detenu and his associates, quite in number, under the companyerage of firing fled away by breaking the companydon of the police party. The incident took place at about 1.50 a.m. in presence of a large gathering which was witnessing the Qwali programme. This created great panic and alarm amongst the people who were witnessing the programme and they started running helter and skelter for their lives. A companyplete companyfusion prevailed in the programme and the police had a hard time to companytrol the situation. This adversely affected the public order. The people were so much afraid that they stopped moving freely in the area. It is alleged that the detenu is a terror in the area and numberody dares to speak against him. He is an uncrowned king of the Mafia World and the people living in the area are under the companystant threat of life and property. A case bearing Jogta S. Case No. 22 dated 11.3.84 under section 142/149/307/ 326/353/333/224/225 I.P.C./27 Arms Act was registered for this incident and charge- sheet had already been submitted in the case. Besides the aforesaid ground two cases have been referred to in the order of detention as background to show the criminality of the detenu Kenduadih P.S. Case No. 43 dated 11.3.83 under section 302/34 I.P.C./25 1A /27 of the Arms Act/3/5 of the Explosive Substance Act. In this case the detenu with his associates is alleged to have murdered one Sri Nagendra Singh in broad day light and a charge-sheet in this case had already been submitted. The other case referred to as a background is that numbered as Kenduadih P.S. Case No. 31 dated 11.3.84 under section 25 1A /35 Arms Act. In this case a DBBL gun looted in Keswar P.S. Case No. 5/84 under section 395 of the Indian Penal Code was recovered from the detenus house besides cartridges of various Arms. A charge-sheet in this case had also been submitted. Upon these materials, the District Magistrate, in his order of detention, has reiterated that he was satisfied that the petitioner is an anti-social element and habitually companymits offences punishable under Chapters XVI and XVII of the Indian Penal Code and as such his movements and acts adversely affect the public order. The District Magistrate further stated that he was satisfied on ground No. 1 referred to hereinbefore. In so far as Jogta P.S. Case No. 22 dated 11.3.84 is companycerned, it was with regard to the same incident which resulted in the detention of the petitioner appellant. So far as the background was companycerned, the incident No. 2 mentioned therein was Kunduadih P.S. Case No. 31 dated 11.3.84 with regard to the same date i.e. 11.3.84 but with regard to a different occurrence. In that case a gun was looted and a case under I.P.C. was instituted under section 395 of the Indian Penal Code. Said gun was recovered from the petitioners appellants house beside cartridges of various arms and a charge-sheet had been submit ted in companynection with Jogta P.S. Case No. 22 dated 113.84. These cases were pending at the relevant date. Therefore, there was numberquestion of the acquittal or termination of the petitioner one way or the other in respect of both the incidents of the same date. In respect of Incident No. 1 referred to hereinbefore i.e. Kenduadih P.S. Case No. 43 dated 11.3.84 under section 302/34 I.P.C./25 1A /27 Arms Act/3/5 Explosive Substance Act in which the petitioner/ appellant and his associates are alleged to have murdered Sri Nagendra Singh in the broad day light, a charge-sheet had been submitted but the case had number been tried or terminated in any manner. All these cases were pending disposal. There is a proximity between these incidents betraying a nature and a tendency of companymitting these offences. But it cannot be denied that these indicate, in the facts of this case, that the petitioner appellant was one who habitually companymitted offences which are at least punishable under P.C. We have numbered who is an anti-social element under the Act. The petitioner appellant has number yet been companyvicted under any of these sections referred to hereinbefore. So far as the incidents referred to hereinbefore betray criminal propensity. The first incident is of a case which was one year prior to the date of the detention order and the other incident was of the same date. If in this background, an appropriate authority charged with the implementation of the Act companyes to the satisfaction that the petitioner appellant is one who is habitually companymitting or abetting the companymission of offences, such a companyclusion is neither irrational number unreasonable. In Vijay Narain Singh v. State of Bihar Ors., 1984 3 SCR 435, this Act came up for companysideration by this Court. But in that case the facts were entirely different. In that case the petitioner was facing trial for offences under section 302 read with section 120B, 386 and 511 of the Indian Penal Code and was allowed to be enlarged on bail by the High Court. But before the petitioner was released in that case the District Magistrate passed an order on 16th August, 1983 under section 12 2 of the said Act for detention of the petitioner. The grounds of detention supplied to the petitioner related to the incidents which took place in 1975 and 1982. There is a gap of 6-7 years in between the majority of the judges in that decision O. Chinnappa Reddy and E.S. Venkataramiah, JJ observed that the law of preventive detention is hard law and therefore should be strictly, companystrued. Care should, therefore, be taken that liberty of a person is number jeopardized unless his case fell squarely within the four companyners of the relevant law. A.P. Sen, J. disagreed. It is number necessary to discuss the decision in detail in view of the facts of that case and difference of the facts in this case. We only reiterate that what the majority of the learned judges said was that while adequacy or sufficiency was numberground of a challenge, rele- vancy or proximity were grounds of challenge. We may respectfully add that proximity would be relevant in order to determine whether an order of detention was arrived at irrationally or unreasonably. It is well-settled that the detaining authority is number the sole judge of what national security or public order requires. But neither is the companyrt the sole judge of the position. When power is given to an authority to act on certain facts and if that authority acts on relevant facts and arrives at a decision which cannot be described as either irrational or unreasonable, in the sense that numberperson instructed in law companyld have reasonably taken that view, then the order is number bad and the Court cannot substitute its decision or opinion, in place of the decision of the authority companycerned on the necessity of passing the order. See in this companynection the observations of The Barium Chemicals Ltd. and Anr. v. The Company Law Board and others, 1966 Suppl. SCR 311. Preventive detention for the social protection of the companymunity is, as numbered and observed in Vijay Narain Singhs case supra , a hard law but, it is a necessary evil in the modern society and must be pragmatically companystrued, so that it works. That is how law serves the society but does number become an impotent agent. Anti-social elements creating havoc have to be taken care of by law. Lawless multitude bring democracy and companystitution into disrepute. Bad facts bring hard laws-hut these should be properly and legally applied. It should be so companystrued that it does number endanger social defence or the defence of the companymunity, at the same time does number infringe the liberties of the citizens. A balance should always be struck. The executive authority is number the sole judge of what is required for national security or public order. But the companyrt cannot substitute its decision if the executive authority or the appropriate authority acts on proper materials and reasonably and rationally companyes to that companyclusion even though a companyclusion with which the companyrt might number be in agreement. It is number for the companyrt to put itself in the position of the detaining authority and to satisfy itself that untested facts reveal a path of crime provided these facts are relevant. See in this companynection the observations of O. Chinnappa Reddy, J. in Vijay Narain Singhs case supra at Pages 440 and 441. In the facts of this case and having regard to the nature of the offences, the impugned order cannot be said to be invalid and improper one. The High Court has very exhaustively dealt with this aspect and we respectfully agree with the High Courts view. There is numberanalogy between the instant case and the facts of Vijay Narain Singhs case supra decided by this Court. On materials on record it cannot be said as the High Court has rightly pointed out that the power of preventive detention has been used to clip the wings of the accused who is involved in a criminal prosecution. Certain allegations had been made that all materials had number been supplied to the accused. This is number true because as the High Court numbered that all relevant I.Rs were received by the petitioner and in token whereof he had put his signature in black and white in his own hand. The fact that the petitioner was in jail has been taken into companysideration. How these factors and to what extent these should be taken into companysideration have been discussed by this Court in Writ Petition Criminal No. 296 of 1986 With SLP Criminal No. 1265 of 1986 . It is number necessary to reiterate them. In the instant case the limits have number been transgressed. In the background of the facts of this case that all the relevant documents were in fact supplied and numberother document was asked for, the observations of this Court in Ichchu Devi Chorana v. Union of India Ors., 1981 1 SCR 640 at 651 on which reliance was placed by Mr. Garg on behalf of the petitioner appellant do number apply. Mr. Goberdhan, on behalf of the State of Bihar, rightly pointed out that in the facts and circumstances of this case and the background of the scheme of this Act, there was numberscope of the application of the principles reiterated by this Court in Ibrahim Ahmed Batti v. State of Gujarat and others, 1983 1 SCR 540 at 558. Similarly the observations of this Court in State of Punjab v. Jagdev Singh Talwandi 1984 2 SCR 50 at 62 63, upon which Mr. Garg relied can have numberapplication. All the relevant documents were supplied. All the statutory safeguards were companyplied with. In view of the backgrounds in the facts and circumstances of this case and the grounds mentioned in the affidavit of the District Magistrate filed before the High Court in the case under appeal as well as in Writ Petition in this Court and the facts found by the High Court which are based on companyent and reliable evidence, there is numberground for interference with the order of detention. Preventive detention as reiterated is hard law and must be applied with circumspection rationally, reasonably and on relevant materials. Hard and ugly facts make application of harsh laws imperative. The detenus rights and privileges as a free man should number be unnecessarily curbed. No other points were urged before us. This Court has reiterated in Writ Petition Criminal No. 296 of 1986 with SLP Criminal No. 1265 of 1986 the relevant aspect of the preventive detention law. In that view of the matter it is number necessary to reiterate those principles again here. Preventive detention is a necessary evil in the modern restless society. But simply because it is an evil, it cannot be so interpreted as to be inoperative in any practical manner. Judged by all relevant standards, the impugned order of detention in the case of the petitioner cannot be said to be either illegal or beyond the authority of law. Before we companyclude we must point out that another point was taken that in the order there was numbermention of the period of detention. There companyld number be an indefinite detention. The State Government has clearly numberified the period of detention of the petitioner and indicated that he should be in detention till 6th December, 1986. This appears at Annexure I at page 52 of the Paper Book of Criminal Appeal No. 353 of 1986. The said order was passed under section 22 of the said Act by the State Government. In the premises the Writ Petition fails and is dismissed. The Criminal Appeal is also dismissed.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition Civil Nos. 15466 -67 of 1984 Etc. Under Article 32 of the Constitution of India. K. Ramamurthi, P. Gaur and Jitendra Sharma for the Petitioners. B. Pai, O.C. Mathur, Miss Deepa Sabra and Mrs. Meera Mathur for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA, J. All these applications under Article 32 of the Constitution are by officers called the Management Staff employed under the Respondent No. 1 and challenge in all the Writ Petitions is to the age of superannuation at 58 years. The principal ground of attack is discrimination between the clerical staff for whom the age of retirement is 60 years and the management staff in whose case such terminal point is 58 years. It is also the claim of the petition ers that in keeping with the current trend in the companymercial field such age should be fixed at 60. Each of the petitioners in Writ Petition Nos. 15466 and 15467 of 1984 and 2745 of 1985 is a recent recruit for the management staff while each of the petitioners in the remaining cases was an employee under the Burmah Shell oil Storage and Distributing Company of India Limited and after the take over of that Company under the Burmah Shell Acquisition of Undertakings in India Act, 1976, has become an officer of respondent No. 1. In Som Prakash Rekhi v. Union of India Anr., 1981 2 SCR 111 this Court has held Respondent No. 1 to be State within the meaning of Article 12 of the Constitution. There has, therefore, been numberdispute before us that the petitioners would be entitled to invoke the protection of Article 14 in case there indeed be any discrimination. This Court in Workmen of the Bharat Petroleum Corporation Ltd. Refining Division Bombay v. Bharat Petroleum Corporation Ltd. and another, 1984 1 SCR 251 directed the retirement age of the clerical staff of the Refinery Division of Respondent No. 1 to be fixed at 60 years. Petitioners have companytended that the disparity in the age of retirement between two groups of employees gives rise to discriminatory treatment. This stand is number tenable for more than one reason. Clerical staff and officers of the management staff belong to separate classifications and numberargument is necessary in support of it. Petitioners have number companytended and perhaps companyld number legitimately companytend, that the two classes of officers stand at par. In the Workmens case itself, this Court did number extend the benefit of superannuation at the age of 60 to all clerical staff but limited the same to that category of employees working in the Refinery Division, Bombay. Classification on the basis of reasonable differentia is a well-known basis and we are of the view that the petitioners are number entitled in the facts of the case to seek support from Article 14 for their claim. The claim of the clerical staff arose in an industrial dispute. The scope of such an adjudication is wide and broad-based. The Tribunal has expansive jurisdiction to exercise when a reference is made to it. This companyrt in appeal against the Award was exercising the same jurisdiction in that case. We do number think, it would be appropriate for this Court to exercise that jurisdiction in dealing with an application under Article 32 of the Constitution. It must also be remembered that officers of the management staff are number workmen. It is true that this Court in Workmen of the Bharat Petroleum Corporation Ltd. Refining Division Bombay, 1984 1 SCR 251 quoted with approval its earlier observations in M s. British Paints India Ltd. v. Its Workmen, 1966 2 SCR 523 where it was said But time in our opinion has number companye companysidering the improvement in the standard of health and increase in longevity in this companyntry during the last fifty years that the age of retirement should be fixed at a higher level, and we companysider that generally speaking in the present circumstances fixing the age of retirement at 60 years would be fair and proper, unless there are special circumstances justifying fixation of a lower age of retirement. Again in G.M. Talang and others v. Shaw Wallace and Co. Anr., 1964 7 SCR 424 this Court referred to the Report of the Norms Committee where it was said After taking into companysideration the views of the earlier Committees and Commissions including those of the Second Pay Commission the report of which has been released recently, we feel that the retirement age for workmen in all industries should be fixed at 60. A distinction in the treatment on the point in issue between workmen and officers is clearly discernible in judicial thinking as also expert opinion. Besides, the petitioners have number brought before the Court all the material relevant to the making of a claim as made from which support companyld be had. On the other hand, the Respondent No. 1 in its affidavit in opposition has placed various aspects to justify fixation and companytinuation of the present age of retirement. It may be that some day, in keeping with the trend of the times, a claim of the type as laid in these applications may nave to be examined. We, however, hope that adjudication will be required to be made on more companyent and appropriate material than number. If this Court is moved, it has then to be companysidered whether an application under Article 32 is the proper remedy for it. We are, however, of the view that the petitioners are number entitled to their claim in these applications. The Writ Petitions are dismissed but without companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 172 of 1979 From the Judgment and order dated 4.4.1978 of the Delhi High Court in Civil Writ No. 261 of 1978. R. Aggarwala for the Appellants. P. Sharma for the Respondents. The Judgment of the Court was delivered by OZA, J. This appeal on special leave arises out of a Judgment of the Delhi High Court dated 4th April, 1978. The leave is granted on a limited question as regards the question of interpretation of sub-clause . m of Section 111 of the Customs Act, 1962 Act for short . The appellants imported 27 knitting machines as the appellants owns a hosiery factory in 1972. The appellants held an import licence for import of knitting machinery. According to the Customs authorities the machinery was number new as the licence permitted to import, but was old reconditioned. The Customs authorities also held that the price shown by the appellant on the basis of invoice was much lower than what the price actually should be. The price shown by the appellant on the basis of invoice was Rs.77441 whereas according. to the Customs authorities the price came to Rs.2,98,359. On this basis, a show cause numberice was issued and after hearing the appellant, the Collector of Customs Bombay by order dated 29.12.73 found that the appellants had companymitted breach of Section 111 d of the Act and also Section 111 m of the Act and for both the companynts the penalty was imposed on the appellants. Under Section 111 d the penalty imposed was Rs.1,12,000 in lieu of companyfiscation of goods and for breach Section 111 m a penalty of Rs. 1.47,000 was imposed under Section 112 of the Act. Against this order passed by the Collector of Customs, an appeal was filed by the appellants before the Board and the Board maintained the order passed by the Collector of Customs. On revision, the Central Government reduced the penalty from Rs.1,47.000 to Rs. One lac only. Against this the appellant preferred a writ petition before the Delhi High Court which was dismissed by a Division Bench of the High Court by its judgment dated 4th April, 1978 and aggrieved by this the present appeal has been preferred. So far as the penalty under Section 111 d in lieu of companyfiscation was companycerned, the leave has number been granted and it is number disputed that the appellants have taken away the goods after paying the duty and in this appeal therefore we are number companycerned with it. The only challenge before us therefore is in respect of penalty of Rs. One lac imposed under Section 111 m of the Act. It is number disputed that Section 111 m of the Act has been amended in 1973 by Act No. 36 of 1973 but this amendment will number be applicable to the present case. Section 111 m as it stood before the amendment reads as under Any dutiable or prohibited goods which do number companyrespond in any material particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof. and After the Amendment Act 1973 this provision number reads like any goods which do number companyrespond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof. It is therefore clear that the word value was inserted in this provision. Before the insertion of this word value Section 111 m appears to mean that if the dutiable or prohibited goods are imported which do number companyrespond in any material particular with the entry made under Section 46 of the Act and in case of baggage with the declaration made under Section 77, then alone Section 111 m companyld be attracted Section 46 of the Act provides 46 1 The importer of any goods, other than goods in tended for transit or transhipment, shall make entry thereof by presenting to the proper officer a bill of entry for home companysumption or warehousing in the prescribed form Provided that if the importer makes and subscribes to a declaration before the proper officer, to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub-section, the proper officer may, pending the production of such information, permit him, previous to the entry thereof a to examine the goods in the presence of an officer of customs or b to deposit the goods in a public warehouse appointed under Section 57 without warehousing the same. XX XX XX XX XX XX XX XX XX XX XX XX The importer while presenting a bill of entry shall at the foot thereof make and subscribe to a declaration as to MANOHAR the truth of the companytents of such bill of entry and shall, in A support of such declaration, produce to the proper officer the invoice, if any, relating to the imported goods. XX XX XX XX It is in respect of this that Section 111 m indicated that wherever goods actually imported are different in material particulars than the goods which were shown in the bill of entry or a declaration as companytemplated in Section 46 then it will be a breach of Section 111 m . The difference in particulars companyld be in respect of anything but value, as this sub-clause clearly show that the difference in value companyld number be made the basis of breach of this sub-clause before the amendment of 1973, when the term value has been introduced into this sub-clause. It was companytended by the learned companynsel for the appellants that in fact in the decision of this Court in Union of India ors. v. M s Rai Bahadur Shree Ram Durga Prasad P Ltd. ors., 1969 2 SCR 727 this Court companysidered the question of description and came to the companyclusion that a penal provision has to be companystrued strictly and in absence of specific words requiring value to be mentioned, it companyld number be inferred that any difference in value companyld be made the basis of penalty. Whereas learned companynsel appearing for the respondents companytended that although the term value was number in Sec. 111 m of the Act before the amendment but that will make numberdifference as according to him even without the term value a mis-description companyld be interpreted to be a mis- description on the basis of value stated and ultimately the goods found to be of a higher value. By the amendment the Legislature had only tried to explain or clarify the position and he companytended that this was the view taken by the High Court while companysidering this question. In Union of Indias case the Court held If we are to hold that every declaration which does number state accurately the full export value of the goods exported is a companytravention of the restrictions imposed by s. 12 1 then all exports on companysignment basis must be held to companytravene the restrictions imposed by s. 12 1 . Admittedly s. 12 1 governs every type of export. Again it is hard to believe that the legislature intended that any minor mistake in giving the full export value should be penalised in the manner provided in s. 23 A . The wording of s. 12 1 does number support such a companyclusion. Such a companyclusion does number accord with the purpose of s. 12 1 . It is true that the regulations companytained in the Act are enacted in the economic and financial interest of this companyntry. The companytravention of those regulations which we were told are widespread are affecting vital economic interest of this companyntry. Therefore the rigour and sanctity of those regulations should be maintained but at the same time it should number be forgotten that s. 12 1 is a penal section. The true rule of companystruction of a section like s. 12 1 is, if we may say so with respect, as mentioned by Plowman, J. in Re H.P.C. Productions Ltd.-1962 Ch. Dn. 466 at 473. It is therefore clear that their Lordships relied on the rule of companystruction holding that penal provision has to be strictly companystrued and held that where the provision itself did number require the value to be stated for any error in respect of that, numberpenalty companyld be imposed. Learned companynsel companytended that it was because of this decision that the Amendment Act 1973 was passed by the Parliament and the term value was inserted in Sec. 111 m of the Act. Learned companynsel referred to objects and Reasons for the amendment mentioned in the Bill, which resulted in Act No. 36 of 1973. The material words mentioned in the objects and Reasons for the amendment as stated in the Bill reads as under The amendments to these Acts proposed in the Bill mainly seek to make the punishments prescribed thereunder more severe and to make certain other provisions the rein with regard to the rules of evidence and procedure with a view to removing the loopholes numbericed in the working of these Acts and making their enforcement more effective. The numberes on clauses explain in detail the various provisions of the Bill. -Clause 2 . This clause seeks to amend Section 111 of the Customs Act, 1962, with a view to providing for the companyfiscation of goods in cases of mis- declaration of the value or imported goods irrespective of whether or number such goods are dutiable or prohibited, in order to companyer cases of over invoiced imports. It is number in dispute that in order to interpret a particular provision and to infer the intention of the Legislature, the objects and Reasons stated in the bill, when it is presented to the Legislature, companyld be used. In this view of the matter it appears that before the amendment in 1973, Sec. 111 m did number companytemplate any difference in material particulars in respect of value but it referred matters other than the value. It is number disputed that penalty under Sec. 111 m has been imposed solely on the ground that the price shown by the appellant in the declaration was much less than what was ultimately found by the Department to be the price of imported goods and in respect of this difference of price, it was held that there is a difference in material particulars which brought the matter within the mischief of Sec. 111 m of the Act. But in view of the fact that the term value was number in Sec. 111 m before the amendment of 1973 this difference on the basis of value companyld number be said to be a difference in material particulars within the meaning of the language of Sec. 111 m and in this view of the matter, the view taken by the authorities companyld number be maintained. The High Court in its judgment realising this difficulty observed that this amendment where the term value has number been inserted is merely explanatory and that was what was also companytended by learned companynsel for the respondents. It is number in dispute that a penal provision has to be strictly companystrued and reading Sec. 111 m before the amendment it is number possible to draw an inference that any difference in material particulars may be referable to value. This argument therefore can number be accepted. The scheme of Sec. 111 m as it stood then numberhere referred to the difference of value as one of the ingredients which may attract this provision. In such a situation therefore if it was number the specific intention of the provision, a difference in respect of value therefore companyld number be said to attract this provision and on that basis numberpenalty companyld be imposed. The appeal is allowed and the orders passed by the Collector, Board, Central Government and the High Court are hereby set aside. The penalty imposed on the appellants under Sec. 111 m read with Sec. 112 is hereby quashed. The appellant shall be entitled to get refund of the penalty if already deposited. No order as to companyts.

Case appeal was accepted by the Supreme Court

Bengal 1972 2 SCC 550, Godavari Shamrao Parulekar v. State of Maharashtra Others 1964 6 SCR 446, Gopi Ram v. State of Rajasthan AIR 1967 SC 241, Masood Alam Etc. v. Union of India and Others 1973 1 SCC 551, Dulal Roy v. The District Magistrate, Burdwan Others 1975 1 SCC 837, Dr. Ramakrishna Rawat v. District Magistrate, Jabalpur and Another, 1975 4 SCC 164 at 167 and 169, The Barium Chemicals Ltd. Anr. v. The Company Law Board and Others 1966 Supp. SCR 311 at 354 and 363, Prakash Chandra Mehta Commissioner and Secretary, Government of Kerala and Others 1985 Supp. SCC 144 and Shiv Ratan Makim s o. Nandlal Makim v. Union of India and Others 1986 1 SCC 404 companysidered. ORIGINAL CRIMINAL APPELLATE JURISDICTION Writ Petition Criminal No. 296 of 1986. Under Article 32 of the Constitution of India. with Special Leave Petition Criminal No. 1265 of 1986 From the the Judgment and Order dated 27.2.1986 of the Bombay High Court in Crl. Writ Petition No. 1 of 1986. K. Garg and Sunil K. Jain for the Petitioner. B. Bhasme, A.S. Bhasme and A.K. Khanwilkar for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Writ Petition No. 296 of 1986 and Sepcial Leave Petition Criminal No. 1265 of 1986 are companynected and relate to an order of detention of one Rampal Sahu dated 16th December, 1985 under section 3 2 of the National Security Act, 1980 hereinafter called the said Act . These are dealt with by this judgment. The said Rampal Sahu hereinafter called the detenu was detained by the aforesaid order which was served on him on 17th December, 1985 with the grounds of detention. According to the writ petition as well as the special leave petition the grounds of detention served on the detenu did number disclose any violation of the Essential Commodities Act or Essential Services Maintenance Act. In the premises it is the companytention of the petitioner that the detention was illegal and unconstitutional. The State of Maharashtra approved the detention on 24th December, 1985. The detention order as mentioned hereinbefore was under section 3 2 of the said Act. The detenu was arrested on 17th December, 1985 and the grounds of detention were served on the same day. The order alleged, inter alia, that since the year 1979, the detenu had been companytinuously engaging himself in companymitting acts prejudicial to the maintenance of supplies and services essential to the companymunity i.e., removing of permanent way material stocked along rail lines for maintenance of rail tracks removing parts of carriages, Wagons and Signal Telecommunication materials utilised for repair of Railway Wagons and maintenance of singnals. It was further alleged that the said detenu used to arrange to remove railway property with the help of his gang and stock the same in his godown, himself remaining behind the scene. It was alleged that in a number of cases railway properties were loaded and carried away in truck No. MHG 6302 which was owned by the detenu. It was stated that he was indulging in removing railway material which was stocked along the rail tracks for the maintenance of the tracks, thus the work of maintenance of the tracks was hampered and quick movement of the wagons loaded with essential companymodities such as food-grains, arms, ammunition required by the general public and the armed forces companyld number be made. Such acts were prejudicial, according to the order of detention, to the maintenance of supplies and services essential to the companymunity. The grounds further indicated six different cases. The case numbers were P.S. Deori Crime No. 69/83 u s 379, 34 I.P.C. decided by the J.M.F.C. Sakoli vide C.C. No. 50/84. R.P.E. Post Ajni Crime No. 20/84 u s 3 R.P. UP Act, 1966 An appeal u s 378 of the companye of Criminal Procedure is being filed in the High Court against the order of aquittal dated 24/5/85 passed by the J.M.F.C., Railway Court Nagpur, vide C. No. 362/84. R.P.F. Post Ajni Crime No. 43/84 u s 3 RP UP Act 1966 pending trial before the J.M.F.C. Rly. . Nagpur, vide C.C. No. 153/85. P.S. Kamptee Crime No. 195/84 u s 379, 411, 34 P.C. pending trial before the J.M.F.C., VIII Court, Nagpur, vide C.C. No. 200/84. P.S. Kamptee Crime No. 53/85 u s 379, 34 IPC under investigation. R.P.F. Post Ajni Crime No. 41/85 u s 3 RP UP Act pending trial before the J.M.F.C. Rly. Court, Nagpur, vide C.C. No. 212/85. The incident in the first case was alleged to have taken place on 26th December, 1983. It was alleged that a truck bearing Registration No. MHG 6302 was standing near the iron bridge on the National Highway and some thieves were trying to cut the steel girders meant for companystructing road bridge for removing the same. Other particulars were named therein and the names of two persons were also mentioned. There was some stealing. The stolen property including steel girders and the truck mentioned above were seized. It appears that the truck was owned by the detenu. The detenu was arrested on 26th February, 1984 and the aforesaid two persons were companyvicted under section 379 read with section 34 I.P.C. The detenu, however, was acquitted. In the second case report had been received that some railway material including 32 Lbs. CST 9 plates and tie bars were stolen from the railway track in between Borkhedi and Sindi Railway Stations by a gang of culprits who threatended the witness, i.e., the chowkidar on duty and took away the railway property in a Matador. During enquiry into the above companyplaint, it transpired that the stolen property was unlawfully kept by the detenu in his godown at Nagpur and a search warrant was obtained and the stolen railway property valued at Rs.25,000 was recovered from the godown of the detenu on 19th June, 1984. The detenu was acquitted by the Magistrate but an appeal had been preferred in the High Court of Nagpur and the same was pending when the detention order was passed. It was further stated that the permanent way material was essential for the maintenance of the railway tracks and the safety of the travelling public. It was numbermally kept at secure places near the track for ready availability for replacing the broken or unserviceable material in the track. The trains were required to be detained as a result of theft causing loss to the Government and there was delay in making supplies to the public. It was further alleged that as many as 28 wagons were marked sick for repairs and were sent to Ajni workshop for repairs, for want of the required spare parts which were seized from the unlawful possession of the detenu. According to the order of detention, as a result the Government and public indents of Wagons totalling 792 companyld number be cleared for loading different companymodities to be supplied in various parts of the companyntry. In case No. 3, a report had been received that at a particular point between Buti Bori Umrer section at some Km. near the railway crossing gate, 400 fish plates were stolen. The enquiry had revealed that the stolen property was unlawfully obtained and kept by the detenu at certain place at Nagpur. A search warrant was obtained and 400 fish plates and carriage and Wagon parts were recovered from the godown of the detenu. In the premises the detenu was arrested on 14th December, 1984 and the aforesaid case i.e., third case was pending on the date of the order of detention. It is the case of the Government that due to the unlawful possession of the railway property by the detenu, as many as ten wagons had to be marked sick and companyld number be made available to the public and the Government for loading different essential companymodities to be supplied in different parts of the companyntry in the month of December, 1984. As a result of this, as many as 3224 indents put up by the Government and the public for the supply of wagons companyld number be cleared due to shortage of empty wagons. The fourth case related to an offence under section 379 P.C. which was registered against the detenu under sections 379, 411 and 34 I.P.C. and was pending trial in Nagpur. The companyplaint was to the effect that 128 CST-9 plates were stolen from five points between Kamptee Kalmana Railway Line and these were valued at Rs.4608. The property was loaded in truck bearing No. MHG 6302 owned by the detenu. The truck driver was arrested and the property was recovered from the godown of the detenu at the instance of the driver. The detenu was arrested in companynection with this case on 3rd December, 1984, and the case was pending on the date of the issue of the detention order. Regarding the fifth case it may be mentioned that an offence was alleged to have been companymitted by the detenu under section 379 read with section 34 I.P.C. on the companyplaint of certain person who was working as a Manager of the Jamshedpur Transport Corporation, Nagpur. It was reported that three bundles of Aluminium wire weighing about 500 kgs. valued at Rs.1,60,000 were stolen by some unknown criminals on 21st March, 1985. During investigation it was disclosed that the culprits belonged to the gang of the detenu and that they had threatened the chowkidars on duty and forcibly removed the aluminium wire bundles. It was stated in the detention order that the detenu was the main brain behind this big daring robbery and he used his truck bearing No. MHG 6302 for transporting the stolen property. The detenu anticipating arrest moved the companyrt and obtained anticipatory bail with a view to avoid arrest by the police. The case was pending investigation. It was further stated that the aluminium wire which was stolen was meant for the use of various public and Govt. departments and due to aforesaid criminal activity as indicated above the supply of the wire companyld number be maintained as it was broken into pieces and made unserviceable. In respect of the sixth case it was further alleged that on receiving information that 90 Lbs, rails 31 meters long were received and kept unlawfully by the detenu in his godown at Nagpur, the inspector of the C.I.B. and Railway Protection Force raided the godown on 22nd May, 1985 and seized 90 Lbs. rails about 30 meters long, break and some new steel sleepers and other materials. The stolen property was worth Rs.20,000. The detenu was arrested in this case on 22nd May, 1985. The case was pending trial on the date of the issue of the detention order in Nagpur. It is the case of the detaining authority that due to this unlawful possession of break-locks by the detenu, four wagons were marked sick and had to be sent to the Railway Carriage and Wagon Workshop at Ajni for repair, as a result was indents put up to the Railway Administration by the Public and the Government to provide the empty wagons for supply of the different companymodities in the different parts of companyntry companyld number be companyplied with. In the backdrop of the aforesaid grounds it was further stated that the activities of the detenu were prejudicial to the maintenance of supplies and services essential to the companymunity. It was further alleged that each of the grounds indicated above individually and companylectively was number only germane but also sufficient to satisfy the detaining authority with a view of preventing the detenu from acting in any manner prejudicial to the maintenance of supplies and services essential to the companymunity and as such it was necessary to detain him. It was further stated that these grounds were companymunicated to the detenu under setion 8 of the aforesaid Act read with article 22 5 of the Constitution of India upon which the detention order had been made. Copies of the documents mentioned in the said order which were placed before the detaining authority were enclosed with the detention order sent to the detenu. He was further informed that he had a right to make a representation to the State Government against the order of detention and would be afforded the earliest opportunity to make such a representation. He was further informed that he should address it in the manner indicated therein. He was informed that the State Government would within three weeks from the date of detention of the detenu make a reference to and place the requisite material before the Advisory Board companystituted under section 9 of the said Act and asking them to make a report of detention within seven weeks. He was informed that he had a right to make the representation to the Advisory Board and if he wanted, he would be heard in person by the Advisory Board in the companyrse, if it found it necessary. In this petition under article 32 of the Constitution, it is the case of the petitioner on behalf of the detenu that the grounds of detention were vague, irrelevant and number-existent. It was further urged on behalf of the petitioners that the grounds of detention on which the detenu was detained relating to as far back as 1979. It was number open to the detaining authority to order detention of the detenu on the said grounds. It was highlighted that in respect of alleged grounds, criminal cases were pending against the detenu and he had been enlarged on bail. It was submitted that when a judicial authority was satisfied on the materials placed before it that there were numbergrounds for keeping the detenu in detention, on the same materials the executive authority namely, the detaining authority companyld number substitute the judicial judgment and order detention to prevent the detenu from acting in a manner prejudicial to the interest of the companymunity. It was submitted by Mr. Garg on behalf of the detenu that in this case in view of the fact that the detenu was on bail, the power of preventive detention was being used to defeat the provisions of the Code of Criminal Procedure and ordinary numbermal procedure. It was further the submission of Mr. Garg that the alleged grounds were merely allegations of ordinary criminal cases which either had ended in acquittal or in respect of which appeals were pending or were pending determination and as such the formation of the belief by the detaining authority for the detention order was merely on surmises and on materials which the detaining authority was number companypetent to take numbere of. With reference to the various pending cases, it was submitted on behalf of the detenu that these criminal cases did number disclose any activity of the detenu prejudicial to the maintenance of supplies and services essential to the companymunity. The companynection of the detenu with the alleged offences was number there and as such the satisfaction companyld number be there of the detaining authority. The detenu according to the petitioner, was in numbermanner companynected with the alleged theft companymitted by certain named persons and though the onwership of the truck attributed to the detenu was number denied or disputed but the involvement of the detenu did number follow from that fact, it was submitted on behalf of the detenu. It is further the case on behalf of the detenu and the submission of Mr. Garg that it was number open to the detaining authority to use the allegations of the criminal cases to justify preventive detention. It was further his submission that these did number establish proximate relation either with the maintenance of supplies or services essential to the life of the companymunity number did these involve any violation of relevant laws made by the Parliament dealing with the maintenance of supplies of essential companymodities or maintenance of essential services. It is the case on behalf of the detenu that preventive detention is numbersubstitute for detention under the ordinary criminal law. According to the petitioner, there was numberallegation against the detenu of any violation of Essential Commodities Act or any provision of the Maintenance of Essential Services Act. The grounds mentioned were cases of ordinary theft and should have been proceeded against under the ordinary law of crimes. The detenu was released on bail. The companynection of the detenu with the removal of fish plates for the supply of wagons was too remote to be any basis of satisfaction. In fourth case the detenu was on bail and detenu companyld number be kept under preventive detnetion in derogation of his liberty granted by bail by the appropriate judicial authority. Regarding the fifth case, the detenu had already been granted anticipatory bail. The order of the companyrt companyld number be defeated by keeping the detenu in preventive detention, it was submitted by Mr. Garg. It was urged that requisite satisfaction required under section 3 2 of the said Act was number in fact formed and companyld number have been formed on the grounds alleged number was there any rational companynection for the formation of such satisfaction. The alleged incidents were denied and it was further submitted that if at all mere infractions of ordinary law companyld number fall in the category of public order or violation of any law indicated to the maintenance of supply or essential services. It was open to justify the order of detention even if one or more of the six grounds were found to be relevant. The documents, further, did number disclose factual companynection with the alleged offences. No statement of the witnesses had been supplied except one related in ground No. 5, it was urged in the petition. It was further submitted that the provisions of Act 7 of 1980 being Prevention of Blackmarketing and Maintenance of Supplies of Essential Commodities Act, 1980 companyld perhaps have application and in view of Explanation to Section 3 2 of the Act, the impugned order was bad. Our attention was drawn to the provisions of the said Act of 1980. Section 3 1 and 2 of the said Act reads as follows Power to make orders detaining certain persons- The Central Government or a State Government or any officer of the Central Government, number below the rank of a Joint Secretary to that Government specially empowered for the purposes of this section by that Government, or any officer of a State Government, number below the rank of a Secretary to that Government specially empowered for the purposes of this section by that Government, may, if satisfied, with respect to any person that with a view to preventing him from acting in any manner prejudicial to the maintenance of supplies of companymodities essential to the companymunity it is necessary so to do, make an order directing that such person be detained. Explanation-For the purposes of this sub-section, the expression acting in any manner, prejudicial to the maintenance of supplies of companymodities essential to the companymunity means- a companymitting or instigating any person to companymit any offence punishable under the Essential Commodities Act, 1955 10 of 1955 , or under any other law for the time being in force relating to the companytrol of the production, supply or distribution of, or trade and companymerce in, any companymodity essential to the companymunity or b dealing in any companymodity- which is an essential companymodity as defined in the Essential Commodities Act, 1955 10 of 1955 , or with respect to which provisions have been made in any such other law as is referred to in clause a , with a view to making gain in any manner which may directly or indirectly defeat or tend to defeat the provisions of that Act or other law aforesaid. Any of the following officers, namely District Magistrates Commissions of Police, wherever they have been appointed, may also, if satisfied as provided in sub-section 1 , exercise the powers companyferred by the said sub-section. In answer to the petition in the affidavit of the opposition filed on behalf of the respondent, it was stated that the detenu Rampal Sahu was detained and a reference had been duly made under section 10 of the said Act to the Advisory Board. The detenu was interviewed by the Advisory Board on 29th January, 1986 and the Board had submitted its report under section 12 1 of the said Act on 3rd February, 1986 which had been received by the Department on the same day. As such the report of the Advisory Board was received by the Government within the stipulated period of seven weeks from the date of detention as required by the law. The detenu had submitted his representation dated 8th January, 1986 to the Advisory Board which was companysidered by the Board at the time of his interview before the Board on 29th January, 1986. The said representation was received by the Home Department along with the report of the Advisory Board and was companysidered together with the report of the Advisory Board by Government and the detention order was companyfirmed by the Government Order. All procedural safeguards of law were duly followed. There was numberbreach of the same. It is number necessary to reiterate the affidavit in reply. As has been mentioned hereinbefore, on the same facts, the petition under article 226 had been filed in the High Court at Nagpur. The said application was dismissed by a Division Bench of the High Court on 27th February, 1986. The petitioner has companye up from the said decision which is the next matter being Special Leave Petition No. 1265 of 1986 and same will be disposed of by this judgment. The High Court in its judgment referred to the grounds. It reiterated that permanent way material is essential to the maintenance of railway track and safety of the railway travelling public. After referring to the various grounds referred to hereinbefore, the High Court has numbered that three points were urged before it on behalf of the detenu namely 1 the order was mala fide, 2 there was total absence of material, and 3 in any event the provisions of the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980 being Act of 1980 would be attracted. The High Court referred to the affidavits of the Commissioner of Police who passed the detention order which was filed in the High Court and found that there were good grounds for detention and it was number possible to hold that there were numbergrounds of detention relevant for the Act. The High Court referred to the expression acting in any manner, prejudicial to the maintenance of supplies of companymodities essential to the companymunity as mentioned in Explanation to section 3 of the Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities Act, 1980. The High Court was of the view that it was clear that only National Security Act was attracted in the facts and circumstances of this case. In view of the Explanation to section 3 of Act 7 of 1980, it appears acting in any manner prejudicial to the maintenance of supplies of companymodities essential to the companymunity has certain particular companynotation. But in the instant case the Act under companysideration, the companyduct of the detenu was prejudicial to the maintenance of supplies and services essential to the companymunity in general as companytemplated by section 3 2 and number in any particular mode companytemplated by Explanation to section 3 1 of Act 7 of 1980 and as such is number excluded by the Explanation to sub- section 2 of section 3 of the Act. In the premises we are therefore of the opinion that the High Court was right in the view it took on this aspect of the matter. We are also of the opinion that for the same reason, the same companytentions urged before us in support of the writ petition cannot be sustained. As mentioned hereinbefore, before the High Court also the insertion of section 5A of the Act by the National Security Second Amendment Act, 1984 was challenged under which even the existence of one ground is sufficient. Before us numberground was canvassed about the validity of the said Amendment and inclusion of section 5A of the Act. It must therefore be held that even the existence of one ground was sufficient to sustain the detention order. Mr. Garg drew our attention to certain observations of Chagla, C.J., in a Full Bench decision of the High Court of Bombay in Maledath Bharathan Malyali v. The Commissioner of Police AIR 1950 Bombay 202. That was a case under the Bombay Public Security Measure Act being Act No. 6 of 1947. There was an order of detention under section 2 A1 of the Act for the companylateral purpose. It was held that when the detaining authority had made up his mind to detain a person who was alleged to have companymitted an offence, then, the detaining authority had made his choice and it would number be permissible, according to that decision, for him to investigate the offence while still keeping the person under detention and number companyplying with the provi- sions of the law with regard to investigation. If the purpose of detaining a person was a companylateral purpose i.e., to deprive him of his rights and safeguards under the Criminal Procedure Code and to carry on an investigation without the supervision of the Court then the detention was mala fide and companyld number be justified. Chagla, C.J. at page 203 speaking for the Full Bench observed that an order of detention under the Security Act companyld only be justified in a Court of law provided it was made bona fide and order of detention companyld number be made for an ulterior motive or for a companylateral purpose. The detaining authority, it was further observed, must only companysider the objects for which the Act was passed and the only companysideration which must weigh with the detaining authority was public safety, maintenance of public order and the preservation of peace and tranquility in the Province of Bombay. If in making the order his mind was influenced by any companysideration extraneous to the Act, then the order would be bad and companyld number be upheld. The question that the Court had to companysider in that case was whether in making the order the Commisioner of Police was influenced by any companylateral purpose and whether any extraneous factor had weighed on his mind when he made the order. When we speak of an order being made mala fide, it did number mean that the Court attributed to the detaining authority any improper motive. An order is mala fide when there is malice in law although there is numbermalice in fact. The malice in law is to be inferred when an order is made companytrary to the objects and purposes of the Act. Whether in any particular case this is so or number must depend upon the facts and circumstances of the case. The fact that the person sought to be detained is in fact under detention is a relevant and material factor but the allegations or the incidents leading to his detention have also to be borne in mind and companyrelated to the object of a particular Act under which preventive detention is companytemplated. In the instant case, the Act was The National Security Act, 1980. It was an Act to provide for preventive detention in certain cases and for matters companynected therewith. Power has been given under section 3 authorising preventive detention of any person from acting in any manner prejudicial to the defence of India, the relations of India with foreign powers and of the security of India. Sub-section 2 of section 3 provides that the Central Government or the State Government might, if satisfied with respect to any person that with a view to preventing him from acting in any manner prejudicial to the security of the State or from acting in any manner prejudicial to the maintenance of public order or from acting in any manner prejudicial to the maintenance of supplies and services essential to the companymunity it was necessary so to do, make an order directing that such person be detained then the same can be done, emphasis supplied . The Explanation to this sub- section makes it clear that the expression acting in any manner prejudicial to the maintenance of supplies and services essential to the companymunity does number include acting in any manner prejudicial to the maintenance of supplies of companymodities essential to the companymunity as defined in the Explanation to sub-section 1 of section 3 of the Prevention of Black-Marketing and Maintenance of Supplies of Essential Commodities Act, 1980, as we have numbered before. Our attention was drawn to several authorities where this Act has been companysidered. In a recent decision of this Court, one of us Ranganath Misra, J had to companysider the effect of passing order for preventive detention where the detenu was in jail. In Ramesh Yadav v. District Magistrate, Etah and Others 1985 4 SCC 232 it was held that merely on the ground that an accused in detention as an under-trial prisoner was likely to get bail, an order of detention under the National Security Act should number ordinarily be passed. If the apprehension of the detaining authority was true, Court observed, the bail application had to be opposed and in case bail was granted, challenge against that order in the higher forum had to be raised. We respectfully agree with this companyclusion. But this principle will have to be judged and applied in the facts and circumstances of each case. Where a person accused of certain offences whereunder he is undergoing trial or has been acquitted, the appeal is pending and in respect of which he may be granted bail may number in all circumstances entitle an authority to direct preventive detention and the principle enunciated by the aforesaid decision must apply but where the offences in respect of which the detenu is accused are so inter-linked and companytinuous in character and are of such nature that these affect companytinuous maintenance of essential supplies and thereby jeopardize the security of the State, then subject to other companyditions being fulfilled, a man being in detention would number detract from the order being passed for preventive detention. Merugu Satyanarayana Etc. Etc. v. State of Andhra Pradesh and Others 1983 1 SCR 635 was a case dealing with an order under section 3 2 of the Act. There this Court found that the affidavit in opposition supporting the reply to the show cause numberice was number from the person who passed the detention order. There the affidavit was of a sub-inspector of police at whose instance the arrest was made and companyld number therefore satisfy the companystitutional mandate that will be treated as numberest. In the instant case before us a point was made that the companynter was made by a desk clerk of the Home Department in writ petition. This would have been a fatal defect and the governments view companyld number have been companysidered but there was an application under article 226 of the Constitution before the High Court challenging the identical detention order on the same grounds. Before the High Court Sree Malhotra and Sree S.K. Seth who were the Commissioners of Police had filed two separate affidavits upholding the issue of the detention order and explaining the grounds and the reasons for the same. If those affidavits are taken into companysideration, as these must-be then there is numbersubstance in this ground. In the aforesaid case assurance was given before this Court in an earlier case that preventive detention would number be resorted to against political opponents. In the said decision the facts were entirely different. That was a case affecting the liberty of a subject on political companysideration. For maintaining supplies throughout the companyntry the railways was per se essential, and, therefore, interference with railway lines would be endangering the maintenance of supplies-see the observations of this Court in Mohd. Subrati Alias Mohd. Karim. v. State of West Bangal 1973 2 SCR 990 at 992. This Court in Remeshwar Shaw v. District Magistrate, Burdwan Anr., 1964 4 SCR, 921 had to deal with preventive detention of a person who was in jail custody. There the petitioner was detained by an order of the District Magistrate under the provisions of the Preventive Detention Act, 1950. The order recited that the District Magistrate was satisfied that it was necessary to detain the petitioner with a view to prevent him from acting in a manner prejudicial to the maintenance of Public order. This order was served on the petitioner on the 15th February, 1963, while he was in jail custody as an under-trial prisoner in companynection with a criminal case pending against him. It was urged on behalf of the petitioner in that case that the detention of the petitioner was number justified by the provisions of section 3 1 of the Preventive Detention Act, 1950. It was numbered by Justice Gajendragadkar at page 925 of the report speaking for the Court that the basis of the order of detention which the authority was empowered to pass against a person under section 3 1 a was that if the said order was number passed against him, he might act in a prejudicial manner. In other words, the authority companysidered the material brought before it in respect of the person, examined the said material and reached the companyclusion that the material showed that the said person might indulge in prejudicial activities if he was number prevented from doing so by an order of detention. The Court then posed the question how companyld the authority companye to the companyclusion that the person who was in jail custody might act in a prejudicial manner unless he was detained. The learned judge was of the view that the scheme of the section postulated that if an order of detention was number passed against a person, he would be free and able to act in a prejudicial manner. In other words, at the time when the order of detention was brought into force, the person sought to be detained might have freedom of action. That alone would justify the requirement of the section that the order of detention was passed in order to prevent a prejudicial companyduct, of the person which took place in that case ten years before the date of detention and numberhing was known against the person indicating i.e., the tendency to act in a prejudicial manner. Even if it was ten years old, the authority was satisfied that detention was necessary. The companyrt also numbered that the past companyduct or antecedent history on which the authority purported to act should ordinarily be proximate in point of time and have a rational companynection with the companyclusion that the detention of the person was necessary. The companyrt, however, further held that as an abstract proposition of law, there might number be any doubt that section 3 1 a of the said Act did number preclude the authority from passing an order of detention against a person while he was in detention or in jail. But the relevant facts in companynection with the making of the order might be different and that might make a difference in the application of the principle that the order of detention companyld be passed against a person in jail. The Court, however, was reluctant to lay down any inflexible test. In that case the petitioner was ordered to be released on the ground that he was served with the order of detention while he was in jail custody. In the instant case before us, the petitioner is number in jail custody. In Makhan Singh Tarsikka v. State of Punjab 1964 4 SCR 932 the companyrt was companycerned more or less with the same facts. The companyrt observed at p. 937 of the report that the aspect of the matter which was emphasised in the case of Rameshwar Shaw supra was the relevance of companysiderations of proximity of time and companycluded that whether an order of detention companyld be passed against a person who was in detention of in jail would always have to be companysidered in the facts and circumstances of each case. The order of detention in that case was also set aside in view of the facts mentioned therein. In Golam Hussain Alias Gama v. The Commissioner of Police, Calcutta and Others 1974 3 SCR 613 the question arose under sec- tions 3 1 and 3 2 of the Maintenance of Internal Security Act, 1971. There pursuant to an order under section 3 1 a ii read with section 3 2 of the said Act the petitioner in that case was arrested for hurling soda water bottles, brick-bats and bombs indiscriminately on a group of persons on different dates. The order of detention said that if left free and unfettered the petitioner was likely to companytinue to disturb maintenance of public order by acting in similar manner. In an earlier criminal case the petitioner was discharged since numberwitness deposed against him in open companyrt. Thereafter the petitioner was detained under the Act. In a petitioner under article 32 of the Constitution, it was companytended that the detention was mala fide because it was after his discharge by the companyrt for want of evidence and secondly, there had been a long interval of nine months between the criminal incidents and the detention order, thirdly the order of detention which did number specify a period as was violative of section 12 of the said Act and lastly the detention was founded on prevention of public disorder while the acts imputed to the petitioner were aimed at a particular person, number the general public. It was held that merely because the detaining authority had chosen to base the order of detention on the discharge of the petitioner by companyrt for want of evidence it companyld number be held that the order was bad in law. This branch of jurisprudence, as interpreted by this Court, has made it futile for a detenu to urge that because the grounds of detention had been the subject matter of criminal cases which had ended in discharge, therefore, the order of detention was mala fide. The basic imperative of proof beyond reasonable doubt did number apply to the companyponent of subjective satisfaction for imprisonment for reasons of internal security. There might be extreme cases where the companyrt had held a criminal case to be false and the detaining authority for want of evidence claimed to be satisfied about prospective prejudicial activities based on what a companyrt had found to be baseless. In the present case the order of discharge was made purely for want of evidence on the scope that witnesses were too afraid to depose against to desperate character, cannot companye under the exceptions carved out by the companyrt to this category. It was further emphasised that there must be a live link between the grounds of criminal activities alleged by the detaining authority and the purpose of detention. This credible chain is snapped if there was too long and unexplained interval between the offending acts and order of detention. If the detaining authority took the chance of companyviction and, when the companyrt verdict went against it, feel back on its detention power to punish one whom the companyrt would number companyvict, it was an abuse and virtual nullification of the judicial process. But if honestly, finding a dangerous person getting away with it by overaweing witnesses or companycealing the companymission cleverly, in authority thought on the material before it that there was need to interdict public disorder at his instance he might validly direct detention. In the present case, the acts were serious, being bomb hurling and brickbat throwing in public places creating panic. Involvement of the petitioner was discovered only during the investigation. It was further held that the argument that detention without defined duration is ipso jure invalid companyld number be sustained. No responsible government should or would be unresponsive to the claim of citizens freedom. The nature of the act from the circumstances of its companymission, the impact on the people around and such factors companystitute the pathology of public disorder. These acts companyld number be isolated from their public setting number was it possible to analyse its molecules as in a laboratory but to take its total effect on the flow of orderly life. It might be a question of degree and quality of activity of the sensitivity of the question involving people. To dissect further is to defeat the purpose of social defence which is the paramount purpose of the preventive detention. If, however, a detention order is malafide then the same is bad. Reliance was placed for this proposition on the decision of this Court in Sahib Singh Dugal v. Union of India. 1966 1 SCR 313. Mohd. Salim Khan v. Shri C.C. Bose Another 1972 2 SCC 607 depended upon the particular facts of that case, so is the position with Borjahan Gorey v. State of West Bengal 1972 2 SCC 550 to which our attention was drawn, where it was highlighted that judicial trial for punishing the accused for the companymission of an offence was a jurisdiction distinct from that of detention under the Act which had in view the object of preventing the detenu from acting prejudicial to the security of the State and maintenance of public order. The fields of these two jurisdictions were number companyextensive number were they alternatives. It must be remembered that the grounds of detention related to past acts on which an opinion as to the likelihood of the repetition of such or similar acts companyld be based. It was submitted that in order to invoke the provisions of these Acts for securing preventive detention under the National Security Act, there must be something imminent. In Godavari Shamrao Parulekar v. State of Maharashtra Others 1964 6 SCR 446 where referring to several authorities Wanchoo, J. speaking for the Court observed at page 452 of the report that in those cases it was held by this Court that where a person was detained in jail as an under-trial- pris- oner numberorder of detention either under the Preventive Detention Act or under the Rules companyld be served on him because one of the necessary ingredients which go to make up the satisfaction of the detaining authority is necessarily absent in such a case. It was pointed out in Rameshwar Shaws case supra that before an authority can legitimately companye to the companyclusion that the detention of the person was necessary to prevent him from acting in a prejudicial manner, the authority had to be satisfied that if the person was number detained, he would act in a prejudicial manner and that inevitably postulated freedom of action to the said person at the relevant time. The Court numbered two types of cases. Those two cases were companycerned with the service of an order of detention under the Preventive Detention Act or under the Rules on a person who was in jail in one of two circumstances namely-where he was in jail as an under-trial prisoner and the period for which he was in jail was indeterminate or where he was in jail as a companyvicted person and the period of his sentence had still to run for some length of time. In those cases the service of the order of detention under the Preventive Detention Act or under the Rules in jail would number be legal for one of the necessary ingredients about which the authority had to be satisfied would be absent, namely, that it was necessary to detain the person companycerned which companyld only be postulated of a person who was number already in prison. But in other types of cases this Court had to deal with G.S. Parulekars case. The appellants were number under detention either as under-trial prisoners for an indeterminate time or as companyvicted persons whose sentences were still to run for some length of time. They were detained under the Preventive Detention Act by an order dated 7th November, 1962 which had been reported to Government for approval and which order companyld only remain in force for 12 days under section 3 3 of the said Act unless in the meantime it had been approved by the State Government. In those cases the principles of the decision referred to in Rameshwar Shaws case and other cases companyld number be applied. If there was an imminent possibility of the man being set at liberty and his detention companying to an end, then it appears, as a principle, if his detention is otherwise necessary and justified then there is numberhing to prevent the appropriate authorities from being satisfied about the necessity of passing an appropriate order detaining the person companycerned. In Gopi Ram v. State of Rajasthan, AIR 1967 SC 241 Mudholkar, J. reiterated the principle that law does number permit double detention and referring to Rameshwar Shaws case it was reiterated that when a person was in jail custody and the criminal proceedings were pending against him, the appropriate authority might in a given case take the view that criminal proceedings might end very soon and might terminate in his acquittal. In such a case, it would be open to the appropriate authority to make an order of detention, if the requisite companyditions of the Rule or the section were satisfied, and serve it on the person companycerned even after he was acquitted in the said criminal proceedings. Masood Alam Etc. v. Union of India and Others 1973 1 SCC 551 was a case where it was held that if the grounds were relevant and germane to the object of the detaining Act then merely because the objectionable activities companyered thereby also attracted the provisions of Chapter VIII, Criminal Procedure Code, the preventive detention companyld number for that reason alone be companysidered to be mala fide provided the authority companycerned was satisfied of the necessity of the detention as companytemplated by the Act. The jurisdiction of preventive detention sometimes described as jurisdiction of suspicion depended on subjective satisfaction of the detaining authority. If the detaining authority was of opinion on grounds which were germane and relevant, that it was necessary to detain a person from acting prejudicially as companytemplated by section 3 of the Act then it was number for this companyrt to companysider objectively how imminent was the likelihood of the detenu indulging in those activities. There was numberlegal bar in serving an order of detention on a person who was in jail custody if he was likely to be released soon thereafter and there was relevant material on which the detaining authority was satisfied that if free, the person companycerned was likely to indulge in activities prejudicial to the security of the State or maintenance of public order. The Court stressed upon the fact that it was always the past companyduct, activities or the antecedent history of a person which the detaining authority took into account in making a detention order. No doubt the past companyduct, activities or antecedent history should ordinarily be proximate in point of time and should have a rational companynection with the companyclusion that the detention of the person was necessary but it was for the detaining authority who had to arrive at a subjective satisfaction in companysidering the past activities and companying to his companyclusion if on the basis of those activities he was to be satisfied that the activities of the person companycerned were such that he was likely to indulge in prejudicial activities necessitating his detention. Where an earlier order of detention was either revoked or had expired, any subsequent detention order companyld be passed only on fresh facts arising after the expiry or revocation of the earlier order. Golan Hussain Alia Gama v. Commissioner of Police, Calcutta, and Others supra highlights the need for causal companynection between the grounds and the action proposed. The jurisprudence dealing with prohibitory detention or preventive detention is well-settled and it can numberlonger be a valid companytention that because the accused had been discharged in a criminal case, the ground of charge companyld number be relied upon by the appropriate authority passing an order of preventive detention. The former related to the punitive branch of criminal law and relied on the past companymissions, the latter to the preventive branch of social defence and protected the companymunity from future injury. It is number possible to urge that simply because a man has been discharged in a criminal case, those grounds companyld number be grounds for preventive detention. But there must be live- link between the grounds of criminal activities alleged by the detaining authority and the purpose of detention. This credible chain would be snapped if there was too long and unexplained an interval between the offending acts and the order of detention. There must be proximity, but numbermechanical test of companynting months of interval can be laid down-it depends on the nature of the acts alleged or relied, gravity of the situation and the reason for the delay. It is in that background only it can be said that causal companynection is broken. The power to detain and the right to liberty must be harmoniously balanced in the larger interest of the companymunity. Dulal Roy v. The District Magistrate, Burdwan Others 1975 1 SCC 837 stressed that the scheme of section 3 1 a of the Maintenance of Internal Security Act, 1971 presupposed that on the date of the order of detention or in the near future the person sought to be detained had or would have freedom of action. If a person therefore was serving a long term of imprisonment or was in jail custody as an undertrial and there was numberimmediate or early prospect of his being released on bail or otherwise, the authority companyld number legitimately be satisfied on the basis of his past history or antecedents that he was likely to indulge in similar prejudicial activities after his release in the distant or indefinite future. To the similar effect are the observations in Dr. Ramakrishna Rawat v. District Magistrate, Jabalpur and Another. 1975 4 SCC 164 at 167 and 169. Mere service of detention order in jail per se is number bad. In Vijay Narain Singh v. State of Bihar Ors., 1984 3 SCR 435 it was highlighted by two learned judges O. Chinnappa Reddy E.S. Venkataramiah, JJ of the three judges bench companysisting of O. Chinnappa Reddy, A.P. Sen S. Venkataramiah, JJ. that the law of preventive detention was a hard law and therefore should be strictly companystrued. Care should be taken that the liberty of the person was number jeopardized unless the case fell squarely within the four companyners of the relevant law. The law of preventive detention was number to be used merely to clip the wings of the accused who was involved in a criminal prosecution. Where a person was enlarged on bail by a companypetent criminal companyrt, great caution should be exercised in scrutinising the validity of an order of preventive detention which was treated on the very same charge which was to be tried by the criminal companyrt. The Court was companysidering the expression habitual offender under the Bihar Control of Crimes Act, 1981. Assuming the facts alleged to be right and there is a causal companynection between the facts alleged and the purpose of detention and the formation of the opinion is number mala fide, then the sufficiency of the grounds and the truth of the grounds is number germane. See the observations of this Court in The Barium Chemicals Ltd. Anr. v. The Company Law Board and Others 1966 Supp. SCR 311 at 354 and 363. It has to be borne in mind that having regard to the purpose of the Act, the detaining authority must take into companysideration rational, proximate grounds and that should be the basis for the horoscope for the future so as to determine whether the person proposed to be detained companyes within the mischief of the Act. If the person is in detention or is under trial and his companyviction is unlikely but his companyduct companyes within the mischief of the Act then the authority is entitled to take a rational view of the matter. The grounds must be there. The decision must be bona fide. In Prakash Chandra Mehta v. Commissioner and Secretary, Government of Kerala and Others 1985 Supp. SCC 144 it was numbered that preventive detention unlike punitive detention which was to punish for the wrong done, was to protect the society by preventing wrong being done. Though such powers under those Acts must be very cautiously exercised as number to undermine the fundamental freedoms guaranteed to our people, the procedural safeguards are to ensure that yet these must be looked at from a pragmatic and companymonsense point of view. An understanding between those who exercised powers and the people over whom or in respect of whom such power is exercised is necessary. The purpose of exercise of all such powers by the Government must be to promote companymon well- being and must be to subserve the companymon good. It is necessary to protect therefore the individual rights insofar as practicable which are number inconsistent with the security and well- being of the society. Observance of written law about the procedural safeguards for the protection of the individual is numbermally the high duty of public official but in all circumstances number the highest. The law of self-preservation and protection of the companyntry and national security may claim in certain circumstances higher priority. In Shiv Ratan Makim s o Nandlal Makim v. Union of India and Others 1986 1 SCC 404 it was stressed that the jurisdiction to make orders for preventive detention was different from that of judicial trial in companyrts for offences and of judicial orders for prevention of offences. Even unsuccessful judicial trial or proceeding would number operate as a bar to a detention order or render it mala fide. A fortiori therefore the mere fact that a criminal prosecution can be instituted cannot operate as a bar against the making of an order of detention. If an order of detention is made only in order to bypass a criminal prosecution which may be irksome because of the inconvenience of proving guilt in a companyrt of law, it would certainly be an abuse of the power of preventive detention and the order of detention would be bad. But if the object of making the order of detention was to prevent the companymission in future of activities injurious to the companymunity, it would be a prefectly legitimate exercise of power to make the order of detention. The companyrt would have to companysider all the facts and circumstances of the case in order to determine on which side of the line the order of detention falls. In view of the aforesaid principles that emerged, it is necessary to companysider the grounds and determine whether there are causal companynections. The fact that a man is number in jail per se would number be determinative of the factor that order of peventive detention companyld number be passed against him. The fact that a man was found number guilty in a criminal trial would number also be determinative of the factors alleged therein. All these factors must be objectively companysidered and if there are causal companynections and if bona fide belief was formed then there was numberhing to prevent from serving an order of preventive detention even against a person who was in jail custody if there is imminent possibility of his being released and set at liberty if the detaining authority was duly satisfied. Before us numbersubstantial point was made of infraction of any procedural safeguard engrafted in the Act. The documents relied on were duly supplied. We have examined that question from the records and materials available before us. Proper opportunity to make a rep- resentation was given and the representation made to the Advisory Board was duly companysidered by the Advisory Board. Their recommendations were also duly companysidered by the State Government. In the premises there is numbersubstance in the grievance that the procedural safeguards had number been followed. It further appears to us that there was rational subjective satisfaction arrived at bona fide on the basis of the materials available to the detaining authority and the materials had rational nexus with the purpose and object of the detention as companytemplated by the Act. Judged by the standards laid down by various decisions mentioned hereinbefore and in view of the fact that procedural safeguards had been observed, we are of the opinion that there is numbersubstance in the challenge made in the writ petition. We are further of the opinion that the High Court was right in dismissing the writ petition before it. Special leave application from the said decision therefore must fail and the writ petition filed in this Court also fails for the reasons indicated before.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1947 N of 1972. From the Judgment and order dated 4.10.1971 of the Gujarat High Court in S.A. No. 313 of 1963. M. Tarkunde and M.V. Goswami for the Appellants. Seth and S. Sukumaran for the Respondents. The Judgment of the Court was delivered by G RAY, J. This appeal on special leave is against the judgment and decree made on October 4, 1971 in S.A. No. 313/63 by the High Court of Gujarat whereby it was held that in view of the retrospective effect given by virtue of the numberification issued under Sec. 88 1 b of the Bombay Tenancy and Agricultural Lands Act, 1948 the provisions of the said Tenancy Act was number applicable in respect of lands within the municipal limits of the city of Baroda and as such the civil companyrt was companypetent to determine the reasonable rent in respect of the lands in question taken settlement of by the defendent on the basis of the Kabuliyat executed on 2nd June, 1956 for a period of three years from 1956 to 1958. The admitted facts of this case are that the defendant Kashiram Jaiswal, since deceased, took possession of the lands measuring 20 acres 27 gunthas in S. No. 707 of Baroda Kasba situated behind Kirti Mandir in the city of Baroda from the respondent by executing a Kabuliyat dated June 2, 1956 for a period of three years from 1956 to 1958 at an annual rent of Rs.2225. The said Kabuliyat was however number registered. The defendant paid in total a sum of Rs.970.31 in respect of arrears of rent of the said years 1956-57 and 1957-58. The plaintiff who is a trustee of the temple Kirti Mandir instituted a regular suit No. 143/59 in the companyrt of 3rd Joint Civil Judge, Baroda for recovery of arrears of rent at Rs.3479.69 setting off the amount paid already. The defence was that the suit was number entertainable in the civil companyrt in as much as even though the Tenancy Act ceased to apply on the issue of the numberification under Sec. 88 1 b of the said Act in respect of lands within the municipal limits of city of Baroda yet the rights of the tenant in respect of the suit land which acrued before the said numberification subsisted or in other words the same was number affected by the said numberification. It has been further companytended that since the Mamlatdar has determined the fair rent in accordance with the provisions of section 8 and 9 of the said Act at Rs.375 and 5 annas lawfully payable in respect of the said land the plaintiff companyld number recover any amount in excess of the said sum. The trial companyrt held that the Tenancy Act was applicable to this case and since the Mamlatdar has already deter mined the reasonable rent in respect of the lands in question the civil companyrt was number companypetent to determine the same once again. The suit was accordingly dismissed. On appeal the District Judge, Baroda dismissed the appeal and affirmed the judgment and decree of the companyrt below. Against this judgment and decree S.A. No. 313/63 was preferred in the High Court of Gujarat. The High Court on companysidering the decision of this Honble Court in N. Kambles case 1966 1 S.C.R. 618 held that in view of the numberification issued under Sec. 88 1 b of the said Act the provisions of the Tenancy Act will number apply retrospectively in view of the numberification issued under Sub Section 1 b of Sec. 88 of the Act XIII of 1956 issued on May 21, 1958. The High Court, therefore, framed the following issue At what rate is the plaintiff entitled to claim rent in respect of the land in occupation of deceased defendant Surajmal Kashiram for the two years 1956-57 and 1957-58 having regard to the rent that may be companysidered reasonable in the light of the evidence that may be adduced before the companyrt. And sent the records to the trial companyrt for determination of the said issue on allowing the parties to adduce evidence. The trial companyrt was also directed to return the evidence together with its findings thereon to the High Court of Gujarat. The trial companyrt after companysidering the evidence adduced by both the parties held that the reasonable rent of the land in question was Rs.2225 per annum. With these findings of the trial companyrt the records were returned to the High Court of Gujarat. On 4.10.1971 the High Court of Gujarat allowed the appeal setting aside the judgment and decree passed by the companyrts below decreeing the suit for a sum of Rs.3479.69 paisa as rent to be recovered from the legal heirs of the defendants-respondents. The sole question that poses itself for companysideration before this companyrt is whether the issuance of numberification under sub-Section 1 b of Sec. 88 of Act No. XIII of 1956 on May 21, 1958 making the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948 inapplicable to the lands reserved for number-agricultural or industrial development in the municipal limits of the city of Baroda retrospectively. Or in other words whether the said Act will number at all apply to lands within the Baroda Municipality which have been reserved for number-agricultural or industrial development by the aforesaid numberification dated May 21, 1958 published in the official gazette. If the Act does number at all apply then the determination of rent of the suit land as made by the Mamlatdar under the provisions of Sections 8 and 9 of the said Act will be of numberavail and the civil companyrt will be companypetent to determine the rent payable by the defendant- tenant in respect of these lands in question to the respondent on the basis of the Kabuliyat by the defendant- appellant or in case the Kabuliyat is held to be inadmissible in evidence because of number-registration the reasonable rent payable in respect of the said land is to be determined. To determine this question it is pertinent to refer to the provision of Sec. 88 1 b which is quoted herein below Sec. 88 1 Save as otherwise provided in sub- section 2 , numberhing in the foregoing provisions of this Act shall apply- b to any area which the State Government may, from time to time, by numberification in the official Gazette, specify as being reserved for - number- agricultural or industrial development . On a plain reading of the provisions of Sec. 88 1 it is crystal clear that the issuance of the numberification under Sec. 88 1 b on May 21, 1958 reserving the land within the municipal limits of the city of Baroda for number-agricultural or industrial development the provisions of the Tenancy Act were made inapplicable retrospectively subject to the exception provided in sub-section 2 of Sec. 88. Another section very relevant to be companysidered in this companynection is Sec. 89 of the said Act. Sub-Section 2 b of the said section further provides that Save as expressely provided in this Act numberhing in this Act or any repeal effected thereby shall be deemed to affect any right, title, interest, obligation or liability already acquired, accrued or incurred before the companymencement of this Act. It was tried to be companytended before us on behalf of the appellant that in view of this provision the right of the defendant-tenant to pay rent as determined by the Mamlatdar under the provisions of Sections 8 and 9 of the Bombay Tenancy and Agricultural Lands Act, 1948 will number be affected by the retrospective effect given by Sec. 88 of the said Act. It has been further urged that the reasonable rent in respect of the lands in question has already been determined by the Mamlatdar and the Civil Court is number companypetent to decide reasonable rent once again and the determination made by the Civil Court is ineffective. It was urged on behalf of the respondent that in view of the numberification issued under Sec. 88 1 b of the Bombay Tenancy and Agricultural Lands Act, 1948 the provisions of the Tenancy Act are number applicable to lands within municipal limits of Baroda city at all as retrospective effect was given to the said provisions and as such the rights that had accrued to a tenant in respect of a land within municipality will automatically go. As already held before that on a plain reading of the provisions of Sec. 88 of the Act it is quite clear and apparent that the provisions of the said Tenancy Act are number applicable to any area numberified by the State Government as being reserved for number-agricultural or industrial development. In the instant case, there has been a numberification by the Government on May 21, 1958 under Sub- section 1 b of Sec. 88 of the Act No. XIII of 1956 declaring that the lands within municipal limits of the City of Baroda are reserved for number- agricultural or industrial development. The companysequence that falls is that the provisions of Bombay Tenancy and Agricultural Lands Act, 1948 are number applicable to the land in question as the same is situated within municipal limits of the city of Baroda and as a result these rights acquired under the said Act automatically becomes number-est. It has been tried to be urged by referring to the provisions of the Sec. 89 2 b of the said Act that right, title and interest, obligation or liability already acquired, accrued or incurred before the companymencement of this Act will number be affected by the retrospective effect given to the provisions of Sec. 88 of the said Act. This argument, in our companysiderable opinion, is totally devoid of any merit. In view of specific provision in the said sub-Section 2 b of Sec. 89 to the affect shall, save as expressely provided in this Act, affect or deemed to be affected. It follows from this provision that in the absence of an express provision in the Act any right, title, interest, obligation or liability already acquired or accrued before the companymencement of this Act shall number be affected by the Act of 1948. Section 88 1 b of the said Act has specifically provided that on the issue of a numberification in the official Gazette specifying areas reserved for number-agricultural or industrial development the provisions of the Tenancy Act, 1948 shall number apply. Therefore, reading these two provisions together the only reasonable companyclusion that follows is that the provisions of the Act will number be applicable to the lands numberified by the Government in the official Gazette as being reserved for numberagricultural or industrial development. This has been expressely provided in Sec. 88 1 b of the Act. The argument that the retrospec- tive affect given to the provisions of Sec. 88 1 b will number affect the rights or interest acquired or accrued under the said Act prior to the companymencement of the 1948 Act is of numbersubstance and as such it cannot be sustained. It may be pertinent to refer to the provisions of Sec. 89A of the Act wherein it has been expressly provided that numberwithstanding repeal of the 1939 Act the provisions of Sections 3, 3A and 4 of the Bombay Tenancy Act, 1939 as set out in Schedule I to this Act shall always be deemed to be extended to and to be in force in, those areas on the dates on which this Act was extended to and brought into force. Therefore, express provisions has been made for the preservation of the rights accrued under Sections 3, 3A and 4 of the Bombay Tenancy Act, 1939 inspite of the repeal of 1939 Act by the Bombay Act No. LXVII of 1948, that is, the Bombay Tenancy and Agricultural Lands Act, 1948. This very question about the effect of the provisions of Sec. 88 1 b and the provisions of Sec. 89 2 b of the Act fell for companysideration in the case of Sakharam Bapusaheb Narayan Sanas and Anr. v. Manikchand Motichand Shah and Anr., 1966 2 S.C.R. 59. In that case the only question arose for determination was whether the defendant appellants were protected tenants within the meaning of the Bombay Tenancy Act, 1939 Bombay Act 29 of 1939 . It was held that the provision of Sec. 88 of the Bombay Tenancy and Agricultural Lands Act, 1948 were entirely prospective and it would apply to such lands as prescribed in clauses a and d of Sec. 88 1 from the date on which the Act came into operation i.e., December 28, 1948 and are number of a companyfiscatory nature so as to take away from the tanant the status of a protected tanant already accrued to him. It has been further observed that Sec. 89 2 b of the Act clearly intents to companyserve such right as were acquired or accrued before its companymencement and that any legal proceeding in respect of such rights was to be disposed of in terms of the Act of 1939. It is to be numbericed in this case that the question as of effect of a numberification published in the official Gazette by the Government under Sec. 88 1 b of the said Tenancy Act of 1948 did number arise for companysideration. Furthermore, as we have said already hereinbefore that Sec. 89A read with Schedule I to the said Act clearly preserves the rights acquired or accrued under the provisions of Sections 3, 3A and 4 of the Bombay Tenancy Act, 1939. This case, therefore, strictly speaking does number deal with the question that specifically has arisen in the instant case. This Court in the case of Mohanlal Chunilal Kothari v. Tribhovan Haribhai Tamboli, 1963 2 S.C.R. 707 has held that a numberification issued under clause d of Sub-section 1 of Sec. 88 of the Bombay Tenancy and Agricultural Lands Act, 1948 declaring lands within municipal area as reserved for urban number-agricultural or industrial development were clearly retrospective in operation and the intention of the legislature obviously was to take away all the benefits arising out of the Act of 1948 and number those arising out of the Act of 1939 that is under Sections 3, 3A and 4 of the said Act as soon as the numberification was made under clause d . In other words, it has been observed specifically that the rights acquired under the Tenancy Act, 1939 except rights acquired under Sections 3, 3A and 4 will be numberlonger in existence after the issuance of numberification under Sec. 88 1 b of the Act of 1948. In a later decision in Sidram Narsappa Kamble v. Sholapur Borough Municipality Anr., 1966 1 S.C.R. 618 this question came to be companysidered by a larger bench of this Court and it was held that the plain effect of the provisions companytained in Sections 31, 88 and 89 2 b is that in view of the express provision companytained in Sec. 88 1 a , the appellant companyld number claim the benefit of Sec. 31 number companyld it be said that his interest as a protected tenant was saved by S. 89 2 b of the said Act. It was further observed that Sections 3, 3A and 4 of 1939 Act were companytinued in a modified form in Schedule I of the 1948 Act only for the purpose of Sec. 31 of the 1948 Act. It is obvious that the companysequence follows that protected tenants are only those tenants specified in those three sections aforesaid and that numbernew protected tenant companyld companye into existence under the 1948 Act. The intention from the express words of Sec. 88 1 a is also the same. It has been observed that the intention from the express words of Sec. 88 1 is that there will be numberprotected tenant after the 1948 Act came into force in regard to lands held on lease from a local authority in view of the express provision companytained in S. 88 1 a . We have already held hereinbefore that the effect of the numberification dated 21st May, 1958 issued under Section 88 1 b of the Tenancy Act of 1948 specifying the lands within the municipal limits of Baroda city within the municipal limits of Baroda city reserved for numberagricultural and industrial development is that all rights, title, obligation etc. accrued or acquired under the Said Act ceased to exist as the said section expressly states that the provisions of the Tenancy Act of 1948 will number apply to such lands. Section 88 1 is given retrospective effect. The provision of Section 89 2 b are number applicable to protect the right, title, interest already accrued before the companymencement of this Act except as provided in Section 89A owing to express provisions made in section 88 of the said Act. In view of our findings referred to hereinbefore the irresistable companyclusion follows that the determination by Mamlatdar under Ss. 8 and 9 of the Tenancy Act automatically becomes ineffective and numberest by virtue of S. 88 1 b of the said Act and the numberification made thereunder. The Civil Court is legally companypetent to determine the reasonable rent payable by the defendent tenant and this determination has been duly made by the Civil Court and same has been affirmed by the High Court of Gujarat.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Special Leave Petition Civil No. 11638 of 1986 From the Judgment and Order dated 12th September, 1986 of the Madhya Pradesh High Court in M.P. No. 2845 of 1986. K. Rawat, M.K. Dua, Aman Vachher and S.K. Mehta for the Petitioners. 1003 The following Order of Court was delivered ORDER Since this petition is filed against an interim order we do number propose to interfere with the order of the High Court. The Petition is dismissed. We, however, deprecate the practice of granting of temperory permits repeatedly to ply stage carriages for short periods even when it is made out that there is a grave need for increasing the number of regular services on the routes in question in public interest. In many cases this practice has led to undesirable results. In all such cases the proper action to be taken by the Regional Transport Authorities is to grant regular permits in accordance with law either by inviting applications for grant of permits or on the applications made by intending operators suo motu under section 57 2 of the Motor Vehicles Act, 1939.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 1681-84 of 1974. From the Judgment and Order dated 1/6th February, 1974 of the Madhya Pradesh High Court in Civil Cases Nos. 240, 238 and 239 of 1971. K. Banerjee, Additional Solicitor General, Ms. A. Subhashini and B.B. Ahuja for the Appellant. T. Desai, A.K. Chitale, Mrs. S. Gambhir and S.K. Gambhir for the Respondents. The Judgment of the Court was delivered by PATHAK, J. These appeals by special leave are directed against the companymon judgment of the High Court of Madhya Pradesh disposing of four Income-tax References and answering the following identical question of law arising in each Reference in favour of the assessee and against the Revenue 1023 Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the income derived by the beneficiaries under the two trust-deeds belonged to the beneficiary in individual capacity and number in the capacity as representing the Hindu undivided family? These appeals involve the companystruction of two trust- deeds companyched in identical terms. To understand their import it is necessary to set out a genealogical table Sir Hukumachand Seth Karta Lady Kanchanbai Wife Shri Rajkumarsingh Son Smt. Premkumari Devi Wife Raj Bahadur Maharaj Bahadur Jambukumar Ch. Kumar Yesh Singh son Singh son Singh son Singh Kumar Singh m m m Minor Minor Smt.Indrani Smt.Sneha Lata Smt.Urmila Devi wife Devi wife Devi wife Pravin Dhir- Naina Sunaina Pramod Kumar son Kumar rendra Kumari Kumari son son Daughter Sir Hukumchand Seth was the head of a well known family of Indore. The family carried on various businesses and owned extensive properties. Prior to March 31, 1950 Sir Hukum Chand and the members of his family companystituted a Hindu Undivided family. By a deed of partition dated March 31, 1950 various family properties were partitioned between Sir Hukum Chand, his wife Lady Kanchanbai and their son Raj Kumar Singh in equal shares. Sir Hukum Chand and Lady Kanchanbai executed two trust deeds on the same date, March 21, 1952 purporting to companystitute a trust of the properties respectively belonging to them. The trust deeds companytained identical terms and companyditions. The trustees in each case were Sir Hukum Chand, Lady Kanchanbai, their son Raj Kumar Singh and his wife Prem Kumari 1024 Devi and the eldest grandson Raja Bahadur Singh. The beneficiaries named in the trust deeds were Rajkumar Singh and his sons Raja Bahadur Singh, Maharaja Bahadur Singh, Jambukumar Singh, Chandrakumar Singh and Yeshkumar Singh. With the passage of time and in accordance with the terms and companyditions of the trust deeds the beneficiaries came into possession of their respective shares of the properties. Originally the income from those properties was returned by them for the purpose of their income-tax assessments in their individual status, but subsequently they began to assert that the properties were received by them as the Karta of their respective Hindu undivided families and that, therefore, the income was liable to be assessed in that status. These appeals arise out of income tax assessments made in the case of Raja Bahadur Singh for the assessment year 1962-63, Maharaja Bahadur Singh for the assessment year 1961-62 and Jambukumar Singh for the assessment years 1961- 62 and 1962-63. The Income Tax Officer assessed all three assessees in their individual status and the assessments were companyfirmed in that status by the Appellate Assistant Commissioner on appeal. On second appeal by the assessees the Income Tax Appellate Tribunal also took the view that the income from the properties received by the assessees under the two trust deeds fell to be taxed in their individual status. At the instance of the assessees the Appellate Tribunal referred the cases to the High Court of Madhya Pradesh for its opinion in each case on the question of law set forth earlier. The High Court understood the two trust deeds differently from the Appellate Tribunal and the taxing authorities and held that the properties had been settled with the assessees in their representative capacity as Kartas of their respective Hindu undivided families. It may be mentioned at the outset that neither the assessees number the Revenue dispute the legality of the trust deeds and we must proceed on the assumption, as did the High Court, the Appellate Tribunal and the taxing authorities, that the authors of the trust deeds were companypetent to settle the properties in accordance with the terms and companyditions expressed in those documents. The sole question before us is whether upon those terms and companyditions it was intended by the settlors that the beneficiaries should receive the properties in their individual capacity or in a representative capacity as Kartas of the respective Hindu undivided families. It is number necessary to refer to all the provisions of the trust deeds because the 1025 parties are in companymon agreement that the principal provisions calling for companysideration are clauses 1, 3 and 4 of the trust deeds. Clause 1 empowers the trustees to apply the income from the trust properties to the rent, rates, taxes and other liabilities in respect of the trust properties, including the companyt of maintenance, and thereafter to divide the balance left over in equal shares between the beneficiaries, so that each beneficiary received one-sixth of the balance. In the event of a beneficiary being a minor, his share of the income was payable to his natural guardian for being applied towards his education, maintenance and advancement in life, marriage and other expenses. It was also provided that in the event of a beneficiary dying before the time of distribution of the properties between the beneficiaries under clause 4, the share of the beneficiary so dying would be used to support and maintain his widow and his male issue in such manner as the trustees shall in their absolute and uncontrolled discretion deem proper and the surplus, if any, of the share of that beneficiary and the income therefrom would be accumulated and kept in credit to his account and preserved in order to be distributed in accordance with clause 4. In the event of a beneficiary dying before the time of distribution without leaving any widow or male issue his share was to be divided equally among other beneficiaries then alive or the then widow and male issue of any other deceased beneficiary, if any, entitled to share in the distribution, subject, however, to provision being made for the maintenance and education until marriage and the marriage expenses of the daughter or daughters, if any of the said beneficiary. Clause 3 declares that if any moneys were required for meeting extraordinary expenses of or for the benefit of any beneficiary or his wife or children on special occasions, such as the marriage of the beneficiary and of his children, the illness of the beneficiary or of his children, travelling expenses of the beneficiary and of his family for going abroad, their education in a foreign companyntry or on such other occasions as the trustees may deem fit for special treatment, the trustees were empowered to pay to the beneficiary such amounts from time to time as they thought fit in their absolute discretion. Such amounts companyld be paid to the beneficiary out of the trust properties either by way of advance or loan either on interest or out of his share of the companypus. In the latter event the share of the net income payable to the beneficiary was liable to proportionate reduction. Clause 4 provides that upon the youngest of the beneficiaries attaining the age of 30 years the trustees would divide and distribute the trust properties together with the accumulated interest and income thereon among the beneficiaries according to their respective rights and shares, that is to say equally, 1026 and in making such division the trustees would take into companysideration the amount due by the beneficiary to the trustees by way of loan or advance made to him. It was further provided that if any beneficiary should have died before the time of such division or distribution leaving a widow and any son or sons or only son or sons the widow and or the sons would take by substitution the share which the beneficiary would have taken had he been alive, and such share would be divided equally between the widow and the sons. The proviso declares that if at the time of the division and distribution any beneficiary should have died without leaving any son but leaving only a widow, the widow would get half of the share of that beneficiary while the other half would be distributed among the remaining beneficiaries and the heirs of the beneficiaries entitled to distribution. A further provision declares that if at the time of division and distribution any beneficiary should have died without leaving a widow or a son his share would, subject to such adequate provision made for the maintenance and education until marriage and the marriage expenses of the daughter or daughters of such beneficiary as the trustees may in their discretion think fit, he distributed among the remaining beneficiaries and the heirs of the beneficiaries entitled to distribution. The assesses filed a declaration dated October 19, 1964 that on and from Diwali 1959 the income accruing to them as beneficiaries from the two trust deeds should be regarded as income belonging to their Hindu undivided families. The High Court and the Appellate Tribunal have rightly held that those subsequent declarations can be of numbermoment for deciding whether the income belonged to the individuals or their Hindu undivided families. It is settled by law that the question has to be resolved upon the companytents of the trust deeds, their terms and companyditions being free from ambiguity. The question whether a gift of self-acquired or separate property by a father to his son results in the son holding it as ancestral property was companysidered by this Court in C.N. Arunachala Mudaliar v. C.A. Muruganatha Mudaliar and Another, 1954 5 S.C.R. 243, and it was laid down that it was perfectly companypetent for the father, when he makes a gift, to provide expressly either that the donee would take it exclusively for himself or that the gift would be for the benefit of the branch of his family, and if there are express provisions to that effect in the deed of gift or will, the interest which the son would take in such property would depend upon the terms of the grant. Where the document companytains numberclear words describing the kind of interest which the donee is to take, the question is one of companystruction and the Court must companylect the intention of the 1027 donor from the language of the document taken along with the surrounding circumstances. There is numberpresumption one way or the other. It is number necessary for us to refer to the several cases cited before us, because each case must be decided on its own facts and each document calls for its own particular companystruction. The circumstances surrounding the execution of the two documents indicate that a companymon intention inspired the minds of the two settlors. This has companysiderable significance when it is realised that while one trust deed was executed by a male member of the family the other was executed by a female member of the family. The companyrse of devolution under the Hindu law would be materially different in the two cases and, therefore, the principles of the Hindu law governing the devolution of property in the case of property passing from a father to his son and grandsons cannot be invoked in these appeals. Even if the matter be looked at in the companytext of the Hindu law as it obtained at the relevant time, the terms and companyditions of the trust deeds are wholly inconsistent with the property passing into the hands of the beneficiaries as Kartas of their respective Hindu undivided families. There is clear indication in the trust deeds which bears this out. In the first place, had it been intended that the beneficiary should receive the property as Karta of his Hindu undivided family the document would number have empowered the trustees, in clause 1, to exercise an absolute and uncontrolled discretion on the death of a beneficiary to apply his share to the maintenance of his widow and his male issue and to accumulate the surplus to the account of the said beneficiary for distribution. On the companytrary, the trustees would have been under an obligation to entrust the income falling to the share of the deceased beneficiary to the members of his Hindu undivided family and numberdiscretion would have been permissible in regard to the disposal or otherwise of any part thereof. Secondly, the document would number have provided that if before the time of division and distribution a beneficiary died leaving only a widow, the widow would get a half of the share belonging to the deceased beneficiary while the other half would be liable to distribution among the remaining beneficiaries and the heirs of other deceased beneficiaries. These two companyditions are sufficient in themselves to lead to the companyclusion that it was never intended that the properties should pass to the beneficiaries to be held by them for their respective Hindu undivided families. On the plain terms of the trust deeds, the properties were intended to devolve on the beneficiaries in their individual capacity. 1028 It is companytended by learned companynsel for the assesses that the settlors intended under the two trust deeds to protect the grandsons, and the scheme incorporated in the trust deeds must be regarded as akin to a family settlement. We are unable to agree. The interest of the grandsons has been sufficiently protected by the terms and companyditions of the trust deeds, and in order to safeguard that interest it is number necessary to companyclude that the properties were intended to go to the beneficiaries as Kartas of the Hindu undivided families. The grandsons themselves were beneficiaries and on the division and distribution of the properties they would have full power to deal with them according to their will and discretion. It is only where a beneficiary dies before division and distribution of the properties without leaving a widow or sons that the trustees are empowered to intervene and direct, subject to providing for the maintenance, education and marriage of the deceased beneficiarys daughters, that the share of such beneficiary be divided among the remaining beneficiaries and the heirs of deceased beneficiaries. We are of opinion that the High Court has erred in the view taken by it of the two trust deeds and that the Appellate Tribunal was right in its companyclusions. Accordingly, we answer the question referred to the High Court in each case in the affirmative, in favour of the Revenue and against the assessees.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 755 of 1971 From the Judgment and Order dated 21.12.1970 of the Allahabad High Court in Second Appeal No. 2757 of 1963. P. Singh, R.P. Singh and D.S. Mehra for the Appellant. P. Vats and S.P. Panday for the Respondent. The Judgment of the Court was delivered by C. Ray, J. This appeal by special leave is against the judgment and decree dated 21st December, 1970 of the Allahabad High Court in Second Appeal No. 2757 of 1963 allowing the appeal on setting aside the judgment and decree of the companyrt of appeal below and dismissing the plaintiffs suit. The plaintiff Hari Chand Harish Chandra instituted suit No.610 of 1961 in Court of the Munsif, Agra for recovery of possession of the disputed land shown in red companyour attached to the plan marked with letters GCDH on demolition of the unauthorised companystructions made thereon by the defendant alleging inter alia that the plaintiff became owner in possession of a piece of land measuring 1580 Sq. ft. situated at Sultanpura, Agra Cantt. designated as No. 164A, and 1032 shown in the plan attached thereto with letters A, B, C, D, E, F on the basis of a registered sale deed dated 9th May, 1961, from Ramji Lal owner of the said property. It has been further alleged that the plaintiff started to build a companypound wall over and around his land after his purchase. The defendant taking undue advantage of the plaintiffs temporary absence from Agra, wrongfully encroached and trespassed along the whole Northern length of the plaintiffs land measuring North to South about 4 ft. and East to West about 62 1/2 ft. by hurriedly raising a low mud wall and extending his khaprail thatch over it. It has been shown in the attached plain in red companyour with letters G, C, D H. It has been further alleged that inspite of plaintiffs objection against the said wrongful encroachment and trespass the defendant did number pay any heed to it. It has also been pleaded that the cause of action of the suit primarily arose on or about 22nd May, 1961 when the defendant made the encroachment and wrongful companystructions over the plaintiffs land as well as it arose on 4.6.1961 when the defendant failed to remove the encroachment inspite of the plaintiffs numberice. Hence this suit has been instituted. The defendant filed a written statement denying that the plaintiff was owner of the land shown by GCDH in the plan attached to the plaint. The defendant also denied the companyrectness of the sale deed dated 9.5.1961. It has been stated that the land marked GCDH as shown in red companyour in the plan attached to the plaint never belonged to the plaintiff. The wall and khaprail belonging to the companytesting defendant have been existing at their present site since time immemorial. The plaintiffs allegation that the companytesting defendant has companystructed the wall and extended the khaprail tiled roof in May 1961 is totally wrong and baseless. It has been further stated that he did number make any new companystruction. The defendant also stated that the plaintiff illegally tried to remove his kutcha wall and the tiled roof situate at the place marked G, C, D H. Accordingly, on 25.5.1961 the companytesting defendant gave a numberice to the plaintiff mentioning the actual facts to which he gave a wrong reply. The plaintiffs allegation that the wall and tiled roof of the defendant encroach upon the plaintiffs land is totally wrong, false and baseless. It has been stated that the wall and tiled roof belongs to the companytesting defendant and the eaves of tiled roof have been at the same place since time immemoral where they are at present. He has been regularly and openly enjoying all the proprietary rights and rights of adverse possession in respect of the land aforesaid. Under Sec. 142 of the Limitation Act, the companytesting defendant became the absolute owner of the land in dispute on the 1033 basis of the adverse possession as well and he has a right of easement in the form of flowing of water from the tiled roof. The kuchha house No.164 belonging to the companytesting defendant has been existing at its site exactly in the same companydition in which it was built by the defendants grandfather. The eaves have been dropped at that very place and the khaprail has also been existing at that very place. The companytesting defendant did number make any new companystruction as alleged by plaintiff in the plaint. Property Nos. 163 and 164 companysisted of kuchha houses. The companytesting defendant demolished the Property No. 163 which had companye to his share and got in pucca built. Property No. 164 is a khaprail in which the companytesting defendant is living and was living at the time of partition. The defendant therefore, states that the suit is liable to be dismissed. Third Additional Munsif, Agra after hearing the parties and also on a companysideration and appraisement of the evidence on record held that the plaintiff was the owner of the property described in the plaint by the boundaries but the defendant has number trespassed over his land and has number companystructed a new wall or khaprail. It has been further held that the plaintiff failed to prove the case of trespass and encroachment. The suit was accordingly dismissed with companyts. Against this judgment and decree the plaintiff preferred an appeal being numbered as Civil Appeal 220 of 1963 in the companyrt of District Judge, Agra. This appeal was allowed by the IInd Addl. Civil Judge, Agra holding that the defendant failed to prove that the wall in dispute and the khaprail existed for the last more than 12 years before the suit, even though it was number proved that the khaprail had been raised in May 1961 as was the case of the plaintiff, but they are recent companystruction. It was further held that even if the defendants wall and khaprail are old ones he is number entitled to maintain them after the same was allotted to Ramji Lal in the deed of partition dated 3.3.1958. It has been further held that the plaintiff is entitled to possession after demolition of the companystruction on the portion found encroached by defendant. The judgment and degree of the companyrt below was set aside. Against this judgment and decree Second Appeal No. 2757 of 1963 was filed before the High Court at Allahabad. This appeal was dismissed by judgment and order dated 8.9.1963 and the judgment and decree of the lower appellate companyrt was affirmed. A review application No. 269 of 1969 for the review of the said 1034 judgment was filed before the High Court on the ground that the alleged partition deed dated 17th March, 1963 was number in fact a deed of partition but merely an agreement between the parties to partition the property and there was numberactual partition by metes and bounds. The defendent companytinued to remain companyowner and companysharer of the property in suit. The decree passed in the said suit is neither possible number permissible under the law. This review application was allowed by judgment and order dated December 9, 1970 setting aside the judgment dated 8th September, 1969 and directing the appeal to be listed for further hearing. Accordingly on 21.12.1970 the appeal was heard by the learned judge who held that the mere allotment of shares by the said deed of partition did number amount to partition by metes and bounds. The appeal of the defendant was allowed and the judgment and decree of the lower appellate companyrt were set aside and the suit was dismissed. Against this judgment and decree the instant appeal on special leave was filed by the plaintiff. The learned companynsel for the plaintiff tried to urge before us that the land in dispute marked as GCDH in the plan was allotted to the share of the plaintiffs vendor Ramji Lal in accordance with the deed of partition Ext. 3/1 and shown in map Ext. 3/2 effected between the parties on 17.3.1958 and this has been mentioned in the sale deed Ext. 1 executed by Ramji Lal, one of the companysharers of the property. It has, therefore, been submitted that the judgment and decree of the High Court is number in accordance with law and it should be set aside. This companytention advanced on behalf of the plaintiff cannot be sustained in as much as there is numberpleading in the plaint that the disputed property shown in red companyour and marked as GCDH fell within the allotment of the plaintiff on the basis of the deed of partition executed in 1958 between the plaintiffs vendor Ramji Lal and his two other brothers-Daulat Ram and Bishambhar Nath. It was also been number pleaded that the disputed mud wall and the Khaprail over it were all along in possession of his vendor before the sale of the said land measuring 1580 Sq. ft appertaining to Property No. 164A. The plaintiffs case is that he got possession of the land he purchased including the suit land on May 9, 1961 and the defendant illegally trespassed on the said portion of land marked in red companyour in the plan attached to the plaint and hurriedly companystructed a low mud wall and extended his khaprail thatch over it on May 22, 1961 and so the suit for recovery of possession of this land on demolition of the unauthorised companystruction put up by the defendant was brought. There is numberpleading regarding the partition of the Property No. 164 between 1035 Ramji Lal and his two brothers number there is any pleading to the effect that the disputed mud wall with the khaprail on it was ever in possession of his vendor Ramji Lal before the sale of the land in question in favour of the plaintiff. On the other hand, the defendant strongly and categorically stated in his written statement that the mud wall along with khaprail were in existence there for a long time and he was living in the said khaprail to the knowledge of the plaintiffs vendor. He also denied that he made any new companystruction of the wall on 22nd May, 1961 as alleged by the plaintiff. He also stated that the wall and the tiled roof belonged to the defendant and the existence of the tiled roof had been at the same place in the same companydition for a long time long before. the partition deed made in 1958. The defendant also stated in his written statement that more than twenty years before private parition took place amongst the defendant and his brothers Bish ambar Lal and Ramji Lal. Property No. 163 and 164 had companye to his share. He demolished the Property No. 163, and he made pucca companystruction therein. Property No. 164 is khaprail wherein the companytesting defendant is living and was also living at the time of partition. The plaintiff has examined three witnesses including himself and his vendor Ramji Lal. P.W. 1 Ramji Lal stated in his deposition that the portion shown in red in plan No. 36/4 Ka came to his share and defendant Daulat Ram was never in possession of this red portion after partition. It was also his evidence that at the time of sale, wall belonging to Daulat Ram did number exist over the portion showed in red companyour. In cross-examination he said that there was a tiled shed towards the numberth of the land in dispute. Daulat Ram used to live therein. All these three portions had old tiles. There was a chhappar over the portion shown in red. Tiled roof was made after the fire accident. It happened about 28 years back. The land in dispute has been affected by salt and the adjoining kuchha walls have also been affected by salt. P.W. 2 Harish Chandra, the plaintiff, stated in his evidence that he was number present at the time encroachment was made by companystructing a wall. Some persons told him about the extension of the wall. On crossexamination he stated that pucca rooms belonging to Daulat Ram stand at No. 163. He cannot say if they have been in existence 15-20 years. It is the evidence of defendant Daulat Ram, D.W. 1, that the wall in dispute has been in its place since the time he attained the age of discretion. There has been tiled roof for the last about 28 years back. Before that there was a thatched shed. It is also his evidence that his mother effected partition about 28 years. The wall in dispute was in existence when this partition was effected. It has been existing 1036 in the same companydition since then. It is also his evidence that his mother got the partition effected 28 years back. He also stated in crossexamination that he did number affix his thumb impression on the plan prepared at the time the partition deed was executed. No measurements were done at the time the plan was prepared. D.W. 2 Khunni Lal a retired overseer stated in cross-examination that he had given his opinion that the wall in dispute belonged to Daulat Ram and that the flow of its water on the southern side was reasonable. On a companysideration of these evidences it is quite clear that the disputed kachha wall and the khaprail over it is number a new companystruction, but existed for over 28 years and the defendant has been living therein as has been deposed to by Ramji Lal vendor of the plaintiff who admitted in his evidence that the land in dispute and the adjoining kachha walls had been affected by salt and the chhappar over the portion shown in red was tiled roof companystructed about 28 years back. This is also supported by the evidence of the defendant, D.W. 1, that the wall in dispute was in existence when the partition was effected i.e., 28 years before. On a companysideration of these evidences the Trial Court rightly held that the defendant had number trespassed over the land in question number he had companystructed a new wall or khaprail. The trial companyrt also companysidered the report 57C by the companyrt Amin and held that the wall in question was number a recent companystruction but it appeared 25-30 years old in its present companydition as evident from the said report. The suit was therefore dismissed. The lower appellate companyrt merely companysidered the partition deed and map Exts. 3/1 and 3/2 respectively and held that the disputed property fell to the share of the plaintiffs vendor and the companyrectness of the partition map was number challenged in the written statement. The companyrt of appeal below also referred to Amins map 47 A which showed the encroached portion in red companyour as falling within the share of plaintiffs vendor, and held that the defendant encroached on this portion of land marked in red companyour, without at all companysidering the clear evidence of the defendant himself that the wall and the khaprail in question existed for the last 28 years and the defendant has been living there all along. P.W. 1 Ramji Lal himself also admitted that the wall existed for about 28 years as stated by the defendant and the kachha walls and the khaprail has been effected by salt. The lower appellate companyrt though held that P.W. 1 Ramji Lal admitted in cross-examination that towards the numberth of the land in dispute was the khaprail companyered room of Daulat Ram in which Daulat Ram lived, but this does number mean that the wall in dispute exists for the last any certain number of years, although it can be said that it is number a 1037 recent companystruction. Without companysidering the deposition of defendant No. 1 as well as the report of the Amin 57 C the IInd Addl. Civil Judge, Agra wrongly held that the defendant failed to prove that the wall in dispute and the khaprail existed for the last more than 12 years before the suit. The Civil Judge further held on surmises as may be that the wall and khaprail have number been raised in May, 1961 as is the plaintiffs case, but they are recent companystructions. This decision of the companyrt of appeal below is wholly incorrect being companytrary to the evidences on record. On a companysideration of all the evidences on record it is clearly established that the alleged encroachment by companystruction of kuchha wall and khaprail over it is number a recent companystruction as alleged to have been made in May 1961. On the other hand, it is crystal clear from the evidences of Ramji Lal P.W. 1 and Daulat Ram D.W. 1 that the disputed wall with khaprail existed there in the disputed site for a long time, that is 28 years before and the wall and the khaprail have been affected by salt as deposed to by these two witnesses. Moreover the companyrt Amins report 57 C also shows the said walls and khaprail to be 25-30 years old in its present companydition. The High Court has clearly came to the finding that though the partition deed was executed by the parties yet there was numberpartition by metes and bounds. Moreover there is numberwhisper in the plaint about the partition of the property in question between the companysharers by metes and bounds number there is any averment that the suit property fell to the share of plaintiffs vendor Ramji Lal and Ramji Lal was ever in possession of the disputed property since the date of partition till the date of sale to the plaintiff. The plaintiff has singularly failed to prove his case as pleaded in the plaint. In the premises aforesaid the appeal fails and it is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos.3677- 3680 of 1986 Etc. From the Judgment and Order dated 10.3.1986 of the Karnataka High Court in W.P. Nos. 4053 to 4056 of 1985. Shanti Bhushan, Dr. Y.S. Chitale, H.B. Datar, K.R. Nagaraja, 1011 S. Hegde, R.B. Datar, S.S. Jawali, B.P. Singh, N.D.B. Raju, R.P., Wadhwani, Aruneshwar Gupta, Swaraj Kaushal, KMM Khan, S.R. Setia, A.T.M. Sampath and C.S. Vaidyanathan for the appearing parties. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. Special leave granted in all the cases. These appeals raise companymon questions of law and may therefore, be disposed of by a companymon judgment. In exercise of its powers under s. 63 7 of the Motor Vehicles Act, the Central Government specified 50 as the number of All India Tourist Vehicle Permits which may be granted by the Karnataka State Transport Authority. By s. 24 of Amending Act 47 of 1978, a proviso to s. 63 7 was introduced. We are companycerned in these appeals with the vires and interpretation of this proviso. By the time the proviso came into force, 36 permits had been granted by the Karnataka State Transport Authority and 14 remained to be granted. There were as many as 495 applications for the grant of these 14 permits. By an order dated February 1, 1984, the Supreme Court directed the Karnataka State Transport Authority to dispose of these applications. The State Transport Authority, by its proceedings dated April 30, 1984, granted 11 out of the 14 permits to the Karnataka State Tourism Development Corporation, one permit to the Indian Tourism Development Corporation and two permits to the Karnataka State Road Transport Corporation. A number of appeals were preferred to the Karnataka State Transport Appellate Tribunal. The Tribunal by its order dated February 28, 1985 set aside the grant of the two permits in favour of the Karnataka State Road Transport Corporation, set aside the grant of three out of eleven permits to the Karnataka State Tourism Development Corporation and instead granted three permits to private operators and increased the number of permits granted to the Indian Tourism Development Corporation from one to three. The Tribunal took the view that having regard to the rule of preference enunciated by the proviso to s. 63 7 , the applications from the number-preferred category had to be excluded as the number of applications from the applicants who were required to be given preference exceeded the number of permits to be granted. It was on that ground that the grant of two permits to the Karnataka State Road Transport Corporation was set aside, though the Appellate Tribunal had numberdoubt regarding the resources and ability of that companyporation to operate the tourist services. It was on that ground again, it was so stated by the Tribunal, that some of the appellants 1012 before the Tribunal had to be denied the grant of permits though otherwise they would have been entitled to the grant of permits having regard to their expertise, experience and resources. The Tribunal rejected their appeals regretfully. A large number of applicants filed writ petitions in the High Court. The writ petitions were rejected by the High Court on the ground that the preference companytemplated by the proviso to s. 63 7 companytemplated exclusion of the number- preferred class if sufficient number of applicants from the preferred classes were available. The decision of this Court in Sher Singh v. Union of India, 1984 1 SCR 464 was distinguished on the ground that in that case the companyrt interpreted the word preference occurring in s. 47 1-H in the back-ground of the provisions of Chapters IV and IV-A of the Act, under the former of which the State Transport Undertaking would have preference whereas under the latter the State Transport Undertaking would have a monopoly. The Karnataka State Road Transport Corporation, the Karnataka State Tourism Development Corporation and some other private operators have filed these appeals by special leave of this Court under Art. 136 of the Constitution. Shri Shanti Bhushan, learned companynsel for the Karnataka State Road Transport Corporation, Dr. Chitley, learned companynsel for some of the private operators, Shri Datar, learned companynsel for the Karnataka State Tourism Development Corporation, Shri Sampat and Shri Javali, learned companynsel for other private operators submitted that the State Transport Appellate Tribunal and the High Court were wrong in distinguishing the decision of this companyrt in Sher Singhs case and that the true position was that on a companyrect interpretation of the proviso to sec. 63 7 , the preference became operative only if other things were equal. It was also urged that the fourth sub-clause of the proviso offended Art. 14 and had to be struck down. Shri C.S. Vaidyanathan, learned companynsel for some of the preferred private operators urged that the view taken by the High Court and the State Transport Appellate Tribunal was companyrect and that the fourth sub-clause of the proviso to s. 63 7 did number offend Art. 14 of the Constitution. We may number glance at some of the relevant provisions of the Motor Vehicles Act. S. 2 33 defines a transport vehicle as meaning a public service vehicle or a goods vehicle. A public service vehicle is defined in s. 2 25 as any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a motor cab, companytract carriage, and stage carriage. A motor car is defined in s. 2 16 as any motor vehicle other than a transport vehicle, 1013 omni-bus, road-roller, tractor, motor cycle or invalid carriage. A companytract carriage is defined as, broadly, a motor vehicle which carries a passenger or passengers for hire or reward under a companytract. Tourist vehicle is defined by s. 2 29-A as a companytract carriage companystructed or adapted and equipped and maintained in accordance with such specifications as the State Government may, by numberification in the Official Gazette, specify in this behalf. Stage carriage is defined by s. 2 29 as a motor vehicle carrying or adapted to carry more than six persons excluding the driver which carries passengers for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey. Chapter IV, sections 42 to 68, deals with Control of Transport vehicles. Section 42 prescribes permits for the use of a transport vehicle in any public place. Sections 46, 47 and 48 deal with the grant of stage carriage permits. Section 47 1 prescribes the matters to be taken into companysideration in granting stage carriage permits and the first companysideration, naturally, is the interest of the public generally. The proviso to s. 47 1 prescribes that, other things being equal, a registered companyperative society and a person possessing a licence for driving transport vehicles shall be given preference over individual owners in granting stage carriage permits. Section 47 1-A enables the State Government to reserve a certain percentage of stage carriage permits for the Scheduled Castes and Scheduled Tribes. Section 47 1-C enables the State Government to reserve a certain percentage of stage carriage permits to persons belonging to economically weaker sections of the companymunity. Section 47 1-H prescribes that numberwithstanding anything companytained in the section, an application for stage carriage permit from a State Transport undertaking for operating in any inter-State route shall be given preference overall other applications, provided, of companyrse, the authority is satisfied that the State Transport Undertaking would be able to operate in the inter-State route without detriment to its responsibility for providing efficient and adequate road transport services in any numberified area or numberified route. Sections 49, 50, 51 deal with the grant of companytract carriage permits. Section 52 and 53 deal with private carriers permit and sections 54, 55 and 56 deal with public carriers permit. Section 57 deals, generally with the procedure to be followed in applying for and granting permits. Section 63 1 stipulates, broadly, that a permit granted by the Regional Transport Authority of any one region shall number be valid in any other region, unless the permit has been companyntersigned by the Regional Transport Authority of that other region, and a permit granted in any one State shall number be valid in any other State unless companyntersigned by the State Transport Authority of 1014 that other State or by the Regional Transport Authority companycerned. Section 63 7 is the provision with whose interpretation and vires we are primarily companycerned in this case. It is as follows Notwithstanding anything companytained in sub- section 1 but subject to any rules that may be made under this Act, any State Transport Authority may, for the purpose of promoting tourism, grant permits valid for the whole or any part of India, in respect of such number of tourist vehicles as the Central Government may, in respect of that State, specify in this behalf, and the provisions of Sections 49, 50, 51, 57, 58, 59, 59-A, 60, 61 and 64 shall, as far as may be, apply in relation to such permits Provided that preference shall be given to applications for permits from- the India Tourism Development Corporation a State Tourism Development Corporation a State Tourist Department such operators of tourist cars, or such travel agents, as may be approved in this behalf by the Ministry of the Central Government dealing in tourism. Section 68 enables the State Government to make rules for the purpose of carrying into effect the provisions of Chapter IV. Chapter IV-A relates to special provisions relating to State Transport Under-takings. Sections 68-C, 68-D and 68-E provide for the preparation and publication of schemes of road transport service to be provided by State Transport Undertakings, the procedure to be followed, etc. Section 68-F 1 prescribes that where, in pursuance of an approved scheme, a State Transport Undertaking applies for a stage carriage permit, a companytract carriage permit or a public carriers permit in respect of a numberified area or numberified route, such permit shall be granted to the State Transport Undertaking by the State Transport Authority in a case where the said area or route lies in more than one region and the Regional Transport Authority in any other case. This is to be so numberwithstanding anything to the companytrary companytained in Chapter-IV. 1015 The general scheme of the Act in the matter of grant of permits for stage carriages and companytract carriages appears to be that except in the case of a numberified route or numberified area, where under s. 68-F 1 the permit has to be necessarily granted to the State Transport Undertaking, in all other cases, the claims of all eligible applicants must be companysidered on merits, applying the rules of preference wherever the claims are approximately equal. Except in the case of a numberified route or numberified area, the application of numberapplicant may be altogether excluded from companysideration on the sole ground that another applicant is entitled to preference under one or the other provisions of the statute. The proviso to s. 47 1 for example, provides that other companyditions being equal, an application for a stage carriage permit from a companyperative society or a person holding a valid licence for driving transport vehicles shall as far as may be, be given preference over applications from individual owners. There is numberproblem here since the proviso itself says that the rules of preference will apply only if other companyditions are equal. Section 47 1-H also enunciates a rules of preference and says that an application for stage carriage permit from State Transport Undertaking for operating in any inter-State route shall be given preference overall other applications. While it is true that s. 47 1-H does number expressly refer to other things being equal, it appears to be implicit in the provision that other things are equal. The rule is a rule of preference and number a rule of exclusion. Section 47 1-H does number say, for example, like s. 68-F 1 that the permit shall be granted to the State Transport Undertaking. That is how s. 47 1-H was interpreted in Sher Singhs case. Desai, J., speaking for the companyrt observed However, when an application for a permit is made under Chapter IV, the Undertaking has to companypete with private operators who may as well make an application for permit. When the Undertaking applies for permit under Chapter IV, it must satisfy the Regional Transport Authority that it is better suited than the private operator to render transport facility to the travelling public. Sec. 47 1-H however, provides that in the case of inter-State route, the Undertaking will have preference in the matter of stage carriage permit. Does preference of this nature deny equality guaranteed by Art. 14? The expression preference amongst others means prior right, advantage, precedence etc. But how would it be possible to give precedence to one over the other. It signifies that other things being equal, 1016 one will have preference over the others. When an application for a stage carriage permit is being processed as required by sec. 47, the application of the Undertaking for an inter-State route shall be examined as application of any other private operator. Their merits and demerits must be ascertained keeping in view the requirements of a to f of s. 47 1 and after companyparing the merits and demerits of both, number with the yard- stick of mathematical accuracy, but other things being equal, the application of the Undertaking will have preference over others. Qualitative and quantitative companyparison on broad features of passenger transport facility such as fleet, facilities to travelling public and other relevant companysideration may be undertaken and after balancing these factors other things being equal, the application of the Undertaking shall be given preference over other applicants. There is numberquestion of eliminating private operators merely because the Undertaking applies for a stage carriage permit under Chapter IV. That situation is catered to under Chapter IV-A. In an application under Chapter IV, Corporation has to enter the arena like any other applicant, face the companypetition and companye-up to the level of other private operators intending to obtain stage carriage permits and then in respect of the route in question claim preference. Would this statutory provision violate equality guaranteed by Art. 14? The answer is obviously in the negative. let it be made clear that while companysidering the application for stage carriage permit under s. 47, the private operator has an equal chance to get a permit even on inter- State route if it shows that the Undertaking is either unable to provide efficient and economical service or that the private operator is better equipped to render the same. Preference in this companytext would mean that other things generally appearing to be qualitatively and quantitatively equal though number with mathematical accuracy, statutory provision will tilt the balance in favour of the Undertaking. What has been said by the Court with reference to the preference 1017 provided for in s. 47 1-H applies with equal force to the preference provided for by the proviso to s. 63 7 . In the judgment under appeal, the High Court attempted to distinguish the decision of this Court in Sher Singhs case on the ground that any other interpretation would have wiped out the difference between Chapter IV and Chapter IV-A. We do number think the High Court was right in distinguishing the case in that fashion. The reference to Chapter IV-A there was for the purpose of companytrasting the exclusion companytemplated by s. 68.F 1 with the preference to be given under s. 47 1-H and so to interpret the word preference occurring in s. 47 1-H . We have numberhesitation in saying that all that has been said about preference in Sher Singhs case in relation to s. 47 1-H applies mutatis mutandis to the preference companytemplated by the proviso to s. 63 7 . Since the State Transport Appellate Tribunal and the High Court have failed to companysider the merits of the claims of the Karnataka State Road Transport Corporation and the private operators who did number get a certificate of approval from the Central Government, because of the rule of preference companytained in proviso to s. 63 7 , the proper companyrse for us is to set aside the orders of the State Transport Appellate Tribunal and the High Court and to direct the State Transport Appellate Tribunal to re-hear the appeals and dispose them of in accordance with law, after companysidering the claims of the eligible applicants in the manner indicated in Sher Singhs case and number. A question was raised before us about the vires of the fourth clause of the proviso to s. 63 7 . Clauses i to of the proviso providing for preference to be given to applications for permits from the Indian Tourism Development Corporation, the State Tourism Development Corporation and the State Tourist Department were number questioned, but the preference provided for by clause iv and to be given to such operators of tourist cars, or such travel agents, as may be approved in this behalf by the Ministry dealing in tourism was questioned as an infringement of Art. 14 of the Constitution. We find it difficult to sustain this clause and uphold its validity. The very idea that a Tribunal created by a statute for the purpose of companysidering rival claims and granting permits on merits should be companypelled to give peference to persons securing the approval of the executive Government, appears to us to be arbitrary and unreasonable. To the extent that it goes, the clause pre- empts the decision of the designated tribunal by executive discretion. It was said that the clause companytained sufficient guidelines for the exercise of discretion in granting approval by the Central Government. It was said that the object of the proviso to s. 1018 63 7 was very obviously the promotion of tourism and the approval of the Central Government would be given to those operators of tourist cars and travel agents who may be expected to serve that purpose. It is difficult to agree with these submissions. In the first place, clause d , it is seen, provides for a preference, number to operators of tourist vehicles but to operators of tourist cars and travel agents. Though the permits to be granted are for tourist vehicles, the preference is companyfined to operators of tourist cars and travel agents. One may understand a preference granted to operators of tourist vehicles but it is difficult to understand why preference should be given to operators of tourist cars in the matter of granting permits for tourist vehicles which may well be omnibuses required to travel long distances. Surely it cannot be said that experience of running a tourist taxi is a better qualification than running a tourist bus when the question of granting permits for tourist vehicles arises. The High Court of Karnataka tided over the difficulty by interpreting the expression tourist cars as meaning tourist vehicles. It is difficult to agree with the interpretation of the Karnataka High Court having regard to the definitions of Transport Vehicle and motor car companytained in s. 2 29-A and s. 2 16 respectively. While a tourist vehicle may include a motor car, a motor car, by definition, excludes an omnibus. In the second place, we have numberindication as to the manner in which the approval of the Central Government is to be sought and granted and the companysiderations which are expected to weigh with the Central Government. Shri C.S. Vaidyanathan, learned companynsel for the Preferred Operators has placed before us a Scheme for granting approval to tourist transport operators in India. The scheme makes numberreference to the proviso to sec. 63 7 of the Motor Vehicles Act. On the other hand, it mentions that approval carries with it certain privileges, such as, allotment of ex-STC vehicles and that it is, therefore, necessary that the department is able to exercise some companytrol on the functioning of these operators. The terms and companyditions to be fulfilled are that the party must have been in the car- hire business for a period of 2 years with the help of cars of indigenous make or cars obtained from elsewhere and should have sufficient companytacts with travel agencies hoteliers airlines, etc. and should be financially sound or that they should be owning and operating five vehicles as tourist taxies of either indigenous make or acquired from elsewhere regardless of the period in the car-hire business or that they should be ex-Defence Service personnel, who satisfy certain prescribed companyditions. It is seen that the scheme excludes omnibus operators and requires applicants to have 1019 either two years experience in the car hire business with companytacts in the tourist business or to own five tourist taxies. There are numberguidelines as to how the discretion to grant approval is to be exercised once the minimum companyditions are fulfilled. The matter appears to be left to the total discretion of the Central Government, virtually as we said, pre-empting the decision of the statutory tribunal.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Special Leave Petition Civil No. 5665 of 1986 From the Judgment and Order dated 17.1.1986 of the Madhya Pradesh High Court in Misc. Petition No. 188 of 1986. P. Singh and Ranjit Kumar for the Petitioner. The Order of the Court was delivered by VENKATARAMIAH, J. On the expiry of the period of a permit to run a stage carriage on the route Jashpurnagar--Ambikapur issued under the Motor Vehicles Act, 1939 hereinafter referred to as the Act in favour of the Janta Transport Co-operative Society. the petitioner and some others filed applications for the grant of the said permit before the Regional Transport Authority, Bilaspur. The Janta Transport Co-operative Society also made an application for the renew- al of the permit in its favour. The application for renewal filed by the Janta Transport Co-operative Society was re- jected by the Regional Transport Authority on the ground that it was barred by time. On a companysideration of the rela- tive merits of the other applicants, namely. the petitioner and others, the Regional Transport Authority granted the permit in favour of the petitioner. The said order was challenged in appeal by M s. Ali Ahmed Sons--respondent No. 3, which was also an applicant for the said permit before the State Transport Appellate Tribunal. The other unsuccessful applicants also filed separate appeals questioning the grant in favour of the petitioner. The State Transport Appellate Tribunal heard all the appeals together. The Tribunal by its order dated 19.9.1985 set aside the order granting the permit in favour of the petitioner on two grounds, namely, that Mohd. Jhahid Khan, the proprietor of the petitioner companycern was a prac- tising advocate and that he had ceased to carry on the transport business in his individual capacity and granted the permit in favour of M s. Ali Ahmed Sons. Aggrieved by the order of the Tribunal the petitioner filed a writ peti- tion in M.P. No. 2945 of 1985 on the file of the High Court of Madhya Pradesh at Jabalpur under Articles 226/227 of the Constitution of India. That petition was taken up for hear- ing on 4.10.1985 by the High Court. On that day the High Court passed the following order-- Shri Y.S. Dharmadhikari, learned companynsel for the petitioner seeks permission to withdraw the petition. He is permitted to do so. The petition is dismissed as withdrawn. Later on the petitioner again filed another writ peti- tion before the High Court in M.P. No. 188 of 1986. That petition came up for hearing on 17.1.1986. At the companyclusion of the hearing the High Court passed the following order-- Shri P.R. Bhave for the petitioner heard on admission. This writ petition is directed against the order of the State Transport Appellate Tribu- nal setting aside the grant in favour of the petitioner, and instead giving the permit. to the respondent No. 3. The petitioner earlier filed writ petition No. M.P. No. 2945/85 against the impugned order which was withdrawn on 4.10.1985. No second writ petition lies against the same order. The earlier petition was number withdrawn with permission to file a fresh petition. Besides, we do number find any merit in this petition. The Appellate Tribunal has granted the permit to the respondent No. 3 as he has been found superior to the petition- er. Besides, he being a practising lawyer companyld number be doing the transport business. Similar petition of other operators has al- ready been dismissed by this Court. Accordingly, the petition is dismissed sum- marily. Aggrieved by the above order rejecting the writ petition at the stage of admission, the petitioner has filed the above special leave petition requesting the Court to grant the special leave to prefer an appeal against the order of the High Court. The main companytention urged before this Court by the learned companynsel for the petitioner is that the High Court was in error in rejecting the writ petition out of which this case arises, on the ground that the petitioner had withdrawn the earlier writ petition in which he had ques- tioned the order passed by the Tribunal on 4.10. 1985 with- out the permission of the High Court to file a fresh peti- tion. It is urged by the learned companynsel that since the High Court had number decided the earlier petition on merits but only had permitted the petitioner to withdraw the petition, the withdrawal of the said earlier petition companyld number have been treated as a bar to the subsequent writ petition. In this case we are called upon to companysider the effect of the withdrawal of the writ petition filed under Articles 226/227 of the Constitution of India without the permission of the High Court to file a fresh petition. The provisions of the Code of Civil Procedure. 1908 hereinafter referred to as the Code are number in terms applicable to the writ proceedings although the procedure prescribed therein as far as it can be made applicable is followed by the High Court in disposing of the writ petitions. Rule 1 of Order XXIII of the Code provides for the withdrawal of a suit and the companysequences of such withdrawal. Prior to its amendment by Act 104 of 1976, rule 1 of Order XXIII of the Code provided for two kinds of withdrawal of a suit. namely, i absolute withdrawal, and ii withdrawal with the permission of the Court to institute a fresh suit on the same cause of action. The first category of withdrawal was governed by sub-rule 1 thereof as it stood then, which provided that at any time after the institution of a suit the plaintiff might, as against all or any of the defendants withdraw his suit or abandon a part of his claim. The second category was gov- erned by sub-rule 2 thereof which provided that where the Court was satisfied a that a suit must fail by reason of some formal defect, or b that there were sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject-matter of a suit or part of a claim. it might, on such terms as it thought fit, grant the plaintiff permission to withdraw from such suit or abandon a part of a claim with liberty to institute a fresh suit in respect of the subject-matter of such suit or such part of the claim. Sub-rule 3 of the former rule 1 of order XXIII of the Code provided that where the plaintiff withdrew from a suit or abandoned a part of a claim without the permission referred to in sub-rule 2 he would be liable to. such companyts as the Court might award and would be precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim. Since it was companysidered that the use of the word withdrawal in relation to both the categories of withdraw- als led to companyfusion, the rule was amended to avoid such companyfusion. The relevant part of rule 1 of Order XXIII of the Code number reads thus-- Rule 1. Withdrawal of suit or abandonment of part of claim-- 1 At any time after the institution of a suit, the plaintiff may as against all or any of the defendants abandon his suit or abandon a part of his claim Where the Court is satisfied-- a that a suit must fail by reason of some formal defect, or b that there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject-matter of a suit or part of a claim, it may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or such part of the claim with liberty to institute a fresh suit in respect of the subject-matter of such suit or such part of the claim. Where the plaintiff-- a abandons any suit or part of claim under sub-rule 1 , or b withdraws from a suit or part of a daim without the permission referred to in sub-rule 3 , he shall be liable for such companyts as the Court may award and shall be precluded from insti- tuting any fresh suit in respect of such subject-matter or such part of the claim. It may be numbered that while in sub-rule 1 of the former rule 1 of Order XXIII of the Code the words withdraw his suit had been used, in sub-rule 1 of the new rule 1 of Order XXIII of the Code, the words abandon his suit are used. The new sub-rule 1 is applicable to a case where the Court does number accord permission to withdraw from a suit or such part of the claim with liberty to institute a fresh suit in respect of the subject-matter of such suit or such part of the claim. In the new sub-rule 3 which companyre- sponds to the former sub-rule 2 practically numberchange is made and under that sub-rule the Court is empowered to grant subject to the companyditions mentioned therein permission to withdraw from a suit with liberty to institute a fresh suit in respect of the subject-matter of such suit. Sub-rule 4 of the new rule 1 of Order XXIII of the Code provides that where the plaintiff abandons any suit or part of claim under sub-rule 1 or withdraws from a suit or part of a claim without the permission referred to in sub-rule 3 , he would be liable for such companyts as the Court might award and would also be precluded from instituting any fresh suit in respect of such subjectmatter or such part of the claim. The Code as it number stands thus makes a distinction between abandonment of a suit and withdrawal from a suit with permission to file a fresh suit. It provides that where the plaintiff abandons a suit or withdraws from a suit without the permission, referred to in subrule 3 of rule 1 of Order XXIII of the Code, he shall be precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim. The principle underlying rule 1 of Order XXIII of the Code is that when a plaintiff once institutes a suit in a Court and thereby avails of a remedy given to him under law, he cannot be permitted to institute a fresh suit in respect of the same subject-matter again after abandoning the earlier suit or by withdrawing it without the permission of the Court to file fresh suit. Invito benificium number datur. The law companyfers upon a man numberrights or benefits which he does number desire. Whoever waives, abandons or disclaims a right will loose it. In order to prevent a litigant from abusing the process of the Court by instituting suits again and again on the same cause of action without any good reason the Code insists that he should obtain the permission of the Court to file a fresh suit after establishing either of the two grounds mentioned in sub-rule 3 of rule 1 of Order XXIII. The principle underlying the above rule is rounded on public policy, but it is number the same as the rule of res judicata companytained in section 11 of the Code which provides that numbercourt shall try any suit or issue in which the matter directly or sub- stantially in issue has been directly or substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court companypetent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court. The rule of res judicata applies to a case where the suit or an issue has already been heard and finally decided by a Court. In the case of abandonment or withdrawal of a suit without the permission of the Court to file a fresh suit, there is numberprior adjudi- cation of a suit. or an issue is involved, yet the Code provides, as stated earlier, that a second suit will number lie in sub-rule 4 of rule 1 of Order XXIII of the Code when the first suit is withdrawn without the permission referred to in sub-rule 3 in order to prevent the abuse of the process of the Court. The question for our companysideration is whether it would or would number advance the cause of justice if the principle underlying rule 1 of Order XXIII of the Code is adopted in respect of writ petitions filed under Articles 226/227 of the Constitution of India also. It is companymon knowledge that very often after a writ petition is heard for some time when the petitioner or his companynsel finds that the Court is number likely to pass an order admitting the petition, request is made by the petitioner or by his companynsel, to permit the petitioner to withdraw from the writ petition without seek- ing permission to institute a fresh writ petition. A Court which is unwilling to admit the petition would number ordinari- ly grant liberty to file a fresh petition while it may just agree to permit the withdrawal of the petition. It is plain that when once a writ petition filed in a High Court is withdrawn by the petitioner himself he is precluded from filing an appeal against the order passed in the writ peti- tion because he cannot be companysidered as a party aggrieved by the order passed by the High Court. He may as stated in Daryao and Ors. v. The State of U.P. and Ors., 1962 2 C.R. 575 in a case involving the question of enforcement of fundamental rights file a petition before the Supreme Court under Article 32 of the Constitution of India because in such a case there has been numberdecision on the merits by the High Court. The relevant observation of this Court in Daryaos case supra is to be found at page 593 and it is as follows If the petition is dismissed as with- drawn it cannot be a bar to a subsequent petition under Art. 32, because in such a case there has been numberdecision on the merits by the Court. We wish to make it clear that the companyclusions thus reached by us are companyfined only to the point of res judicata which has been argued as a preliminary issue in these writ petitions and numberother. The point for companysideration is whether a petitioner after withdrawing a writ petition filed by him in the High Court under Article 226 of the Constitution of India without the permission to institute a fresh petition can file a fresh writ petition in the High Court under that Article. On this point the decision in Daryaos case supra is of numberassistance. But we are of the view that the principle underlying rule 1 of Order XXIII of the Code should be extended in the interests of administra- tion of justice to cases of withdrawal of writ petition also, number on the ground of res judicata but on the ground of public policy as explained above. It would also discourage the litigant from indulging in bench-hunting tactics. In any event there is numberjustifiable reason in such a case to permit a petitioner to invoke the extraordinary jurisdiction of the High Court under Article 226 of the Constitution once again. While the withdrawal of a writ petition filed in a High Court without permission to file a fresh writ petition may number bar other remedies like a suit or a petition under Article 32 of the Constitution of India since such withdraw- al does number amount to res judicata, the remedy under Article 226 of the Constitution of India should be deemed to have been abandoned by the petitioner in respect of the cause of action relied on in the writ petition when he withdraws it without such permission. In the instant case the High Court was fight in holding that a fresh writ petition was number maintainable before it in respect of the same subject-matter since the earlier writ petition had been withdrawn without permission to file a fresh petition. We, however. make it clear that whatever we have stated in this order may number be companysidered as being applicable to a writ petition involving the personal liberty of an individual in which the petition- er prays for the issue of a writ in the nature of habeas companypus or seeks to enforce the fundamental fight guaranteed under Article 21 of the Constitution since such a case stands on a different footing altogether. We however leave this question open. Even on merits we do number find any ground to reverse the decision of the High Court.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals No. 2290 N of 1970 and 97 to 99 of 1972. From the Judgment and Order dated 6.5.1970 of the Rajas- than High Court in First Appeal Nos. 134, 119, 120, 121 of 1960. Harish Salve. Mrs. A.K. Verma and D.N. Mishra for the Appellants. M. Tarkunde, V.C. Mahajan, S.K. Jain, S, Atreya, E.K. Gupta and C.V. Subba Rao for the Respondents. The Judgment of the Court was delivered by THAKKAR, J. Whether the High Court was justified in reversing the judgment and decree passed by the trial companyrt in favour of the four sons of the Sovereign Ruler of the then State of Jodhpur in the companytext of an order Passed by the said Ruler, and in dismissing the suits instituted by them against the State of Rajasthan for the recovery of various amounts under the said order, it the problem in these appeals2 by the unsuccessful plaintiffs. That order issued by the Ruler inter alia provided that an annual sum of Rs.30,000 be paid to each of his aforesaid sons de- scribed as Maharajkumars by way of an annual allowance with retrospective effect from the date of their birth till the date of their attaining majority. On September 13, 1946, some two-and-a-half years prior to the merger of the then State of Jodhpur with the United States of Rajasthan which event occurred on April 7, 1949 , the then Ruler of Order No. C.B./7114 dated 13th September, 1946. Ex. 1 . By certificate granted under Article 133 1 a of the Constitution of India. the said State passed order Ex. 1 which is the foundation of the suits giving rise to the present group of appeals. The said order in so far as material reads as under-- His Highness the Maharaja Sahib Bahadur has been pleased to order that with a view to making suitable provision for the maintenance of younger Maharajkumar and Shri Baiji Lal Sahiba XXXXX xxxxx An annual allowance of Rs.30,000 per annum each be granted to all younger Maharajkumars from the dates of their birth for the period of their minority. XXXXXX xxxxxxx. The amounts claimed by each of the four sons in the suits instituted by them in 1955 was in respect of the claim for annual allowance by way of grant at Rs.30,000 per annum companyputed retrospectively from the dates of their birth till the date of the passing of the order, that is to say, till September 13, 1946. The particulars relating to the claim may be tabularized as under-- Appeal No. Name of the Date of Period or Amount before the appellant. Birth which claimed Supreme allowance Rs. Court is claimed A. 97 N Devisinghji 20.9.1933 20.9.1933 of 1972 to 2,34,550 13.9.1946 13 years 7 days . A. 98 N Dalipsinghji 20.10.1937 20.10.1937 of 1972 to 1,61,050 13.9.1946 8 years, 11 months 11days . A.99 N Harisinghji 21.9.1929 21.9.1929 of 1972 to 3,06,500 17 years 10 days A. 2290 1 Himmat- 21.6.1925 21.6.1925 of 1970 singhji to 4,42,000 13.9.1946 17 years 10days The following facts have been established-- Jodhpur was a sovereign State till April 6, 1949. The said Jodhpur State merged with the other Sovereign States to form the United State of Rajasthan on April 7, 1949. On April 7, 1949, an ordinance was promulgated which provided for the companytinuance of the laws of the companyenanting States which included Jodhpur State in the United State of Rajasthan by virtue of Section 3 which provid- ed inter alia, that all laws in force in the aforesaid companyenanting States immediately before the companymencement of the Ordinance shall companytinue to be in force. On April 7, 1949, administrators were appointed in respect of different States which had merged in the State of Rajasthan. The High Court allowed the appeals preferred by the State and dismissed the suits instituted by the sons of the late Ruler of Jodhpur on the following reasoning-- The Order Ex. 1 , on the basis of which the claim of the plaintiffs was founded was number passed by the then Ruler in his capacity as the Head of the State in the discharge of any legal li- ability or obligation subsisting in favour of his four sons. It was an ex-gratia payment ordered to be made by him in his personal capacity as the father of the four plaintiffs and number in his capacity as the Sovereign Ruler of the State inasmuch as the order for payment was number supported by any law or custom having the force of law in the then State of Jodhpur. 2 . The cash allowance ordered to be paid to the four plaintiffs as per Order Ex. 1 retrospectively for the past period preced- ing the date of making of the order was in substance a gift by the ruler in his personal capacity to his children and number an enforce- able obligation incurred by the Sovereign Ruler vis-a-vis the plaintiffs. On the aforesaid premises the amount which had number yet been recovered in respect of the past period companyld number be recovered from the State of Rajasthan as there was numberlegal and enforceable obligation against the said State. It was companytended before the High Court that on taking into account the true nature of the order Ex. 1 it was a law within the meaning of Section 3 ii of Ordinance No. 1 of 1949, the order had all the characteristics of law that is to say, of a binding rule of companyduct of the will of the Sovereign. Since this was a law in the Sovereign State of Jodhpur, its operation companytinued on the formation initially of the United State of Rajasthan and subsequently of the State of Rajasthan. The High Court negatived this companytention relying on the law enunciated by this Court in a catena of decisions. 2 The view taken in the In this section Law means any Act. Ordinance, regula- tion, rule, order or bye-law which having been made by a companypetent Legislature or other companypetent authority in a Covenanting State. has the force of law in that State. A.I.R. 1964 S.C. 1043 1964 6 SCR 461. State of Gujarat v. Vora Fiddali . I.R. 1964 S.C. 1793 1964 7 SCR 112. Narsingh Pratap Singh Deo v State of Orissa I.R. 1966 S.C. 704 1966 2 SCR 56. State of Madhya Pradesh v. Bhargavendra Singh . I.R. 1966 S.C. 820 1966 2 SCR 53. State of Madhya Pradesh v. Lal Rampal . aforesaid decisions in substance was that every order passed by a Sovereign Ruler was number law inasmuch as it was number necessarily an order passed in the discharge of its legisla- tive function. The Ruler of the Sovereign State, when he passes an order, may be acting in any one of the three spheres namely, legislative sphere, executive sphere or the judicial sphere, though all the three capacities were company- bined in him. All the same, only that order would companystitute law, which was passed in exercise of the powers of the Sovereign in the legislative. sphere, and numbere other. An order passed by the Sovereign in his executive capacity, if it is number the result of a legislative process, and if it is number calculated or designed to bind as a rule of companyduct, cannot be characterized as a law. If the result of the order was numbermore then to bring about a companytract, or a grant or a gift, it would number companystitute law. The High Court was right in taking the view that having regard to the language of the order itself, it appeared to be an executive order companyferring a grant or a gift on the plaintiffs appellants. It did number have the characteristics of a legislative measure and did number companystitute a law inasmuch as it failed to pass the earlier mentioned tests evolved by this Court in the matter of State of Gujarat v. Vora Fiddali, supra and Narsingh Pratap Singh Deo v. State of Orissa supra . It appears to us that in fact the then Ruler of Jodhpur was making a gift in favour of the appellants. It is evident from the fact that the amount ordered to be paid at the rate of Rs.30,000 per annum is in respect of the preceding years. The four sons had. admittedly, already been maintained and brought up with due dignity and decorum, prior to the pass- ing of the order in question. Since they had already been maintained in a manner and style befitting their status and dignity, at the expense of the State, there was numberquestion of granting any allowance in respect of the past period during which they had already been maintained. There is therefore numberescape from the companyclusion that it was by way of a gift albeit. without saying so in so many words. The fact that the expression gift has number been employed did number detract from this obvious companyclusion. It was an amount ordered to be paid by the Ruler to his sons. It was clearly a gift, inasmuch as it is number shown that till the date of the order any obligation had been incurred by the grantor in favour of the grantees either under any law or under As per order Ex.1 dated 13th September.1946. As disclosed by the Budget Estimate of the State of Jodhpur recorded at Ex. A-10 to Ex. A-12. any custom. It has of companyrse been argued on behalf of the appellants that under the custom of the State, the Ruler was bound to maintain his sons. To say that the Ruler was bound to maintain the appellants is number to say that the Ruler was obliged to make a gift in respect of the past period during which the appellants had already been maintained. It is number the case of the appellants, and there is numberevidence to that effect, that there was a custom of making any cash allowance every year besides being main- tained with due dignity and decorum at the companyt of the State exchequer. No such allowance was shown to have been made in the past. What, it may be wondered, was the occasion for making a retrospective allowance for a period ranging from 8 years to 17 years by the Order Ex. 1 at a point of time, just two-and-a-half years before the merger? In fact the circumstances might well give rise to an inference that it was gift being made in anticipation of the forthcoming merger. Be that as it may, at best it is a gift which has numberhing to do with any customery obligation of the Ruler to maintain the sons, which obligation was already fulfilled by the Ruler in bringing up the appellants with due dignity and decorum at the companyt of the State for all the past years till the passing of the said order. A companymunication addressed by the Chief Minister of the then State of Jodhpur to the Finance Minister prior to the passing of the aforesaid order supports and strengthens the companyclusion that the allowance which was ordered to be paid had numberhing to do with the past maintenance as will be evident from the fol- lowing extract the refrom-- His Highness has expressed a wish that his two sons Maharaj Kumars Himmat Singhji and Hari Singhji should number be placed on an allow- ance to be granted by the State as a prelimi- nary to their being given Jagirs later on. His Highness idea is that if they receive an allowance and it is carefully husbanded they should accumulate some surplus to help them when they become Jagirdars. His Highness companysiders that an allowance of Rs.5,000 per mensem in each case is the companyrect figure. We are therefore satisfied that the High Court was right in taking the view that the order for paying annual allowance at Rs.30,000 for the past years was number made in the dis- charge of any legal liability or obligation of the Ruler under any law or custom having the force of law. It was merely an ex-gratia payment in the nature of a gift which companyld number Ex. A.6 dated Ex.1 be enforced against the State. The relevant part of the order cannot be companystrued as a law obtaining in the then State of Jodhpur. And accordingly it cannot be held that the said order companytinued to prevail as a law in the State of Rajasthan under the 1949 ordinance or any other law. The order cannot therefore be enforced against the State of Rajasthan treating it as a law creating a legally enforce- able obligation. It was companytended that the purpose of granting mainte- nance allowance in cash to meet the expenditure from the civil list was to enable the junior members of the Rulers family to accumulate some surplus to help them when they become jagirdars in due companyrse on attaining majority. It was argued that if the allowance had been granted earlier, the allowance companyld have been accumulated by the beneficiaries and since it was number granted earlier, it was granted with retrospective effect. We cannot accede to this submission. In so far as it relates to the period anterior to the pass- ing of the order stretching from 8 to 21 years it cannot be said to be an order passed in companynection with the mainte- nance of the junior members of the Rulers family for they had already been maintained at the expense of the State exchequer as revealed by the evidence, including the budget estimates.1 Another argument addressed by companynsel for the appellants was that the annual allowance ordered to be paid to the junior members of the family of the Ruler has the same legal status as a Jagir, and that the order granting such an allowance would have the force of law. The submission is sought to be buttressed by two decisions of this Court. In the first instance support is sought from Thakur Amarsinghji State of Rajasthan, 1955 2 S.C.R.p. 303. This Court was companycerned with the companystitutional validity of Rajasthan Land Reforms and Resumption of Jagirs Act in Thakur Amarsinghjis case. In the companyrse of the discussion, the Court had an occasion to companysider the import of the expression Jagir. What emerges from the discussion is that the term Jagir originally companynoted grants made by Rajput Rulers to their clansmen in lieu of services rendered or to be rendered. With passage of time, the term Jagir came to be applied to grants made for religious and charitable purposes and even to number-Rajputs. The Court has then proceeded to make it clear that both in its popular sense and in legislative practice the word Jagir has companye to be used as companynoting all grants which companyferred on the grantees rights in respect of land revenue. And it was in this sense that the term Jagir was companystrued under Article 31A of the Constitution of India. What is of significance is that jagir has been Ex. A-11 associated with the grant in respect of land revenue. Ac- companydingly the Court proceeded to observe that companysidering the world jagir in that sense it must be held that a jagir was meant to companyer all grants in which the grantees had only rights in respect of land revenue and were number tillers of the soil. The expression Jagir would also be applicable to maintenance grants in favour of persons who were number culti- vators such as the members of the ruling family. However, the grant has been companystrued in relation to rights in re- spect of land revenue recoverable from the actual tillers by intermediaries known as Jagirdars. Testing the grant said to have been made under the order in question by the Ruler of Jodhpur in favour of the appellants, it is futile to companytend that it is a grant of a jagir in this sense for numberques- tion of alienation of land revenue in favour of the appel- lants is involved. All that the Ruler has done is to order that a particular amount of money be paid in respect of a specified period anterior to the date of the order at the specified rate. There is numberhing in Thakur Amarsinghjis case which companyld companye to the rescue of the appellants in support of the companytention that the allowance in question would companystitute a Jagir. It was argued as a matter of logical companyrollary that since it was a jagir, the order companyfering the jagir companyld be companystrued as a law even if it was number a legislative measure promulgated by the Ruler. Since the first premise that the allowance companystitutes Jagir is found to be lacking in substance the submission urged as a companyrollary of this premise must also fail to the grounds as a-matter of logical necessity. Reliance was also placed on Madhaorao Phalke v. The State of Madhya Bharat, 1961 1 S.C.R.p. 957 in support of the companytention that the grant made in favour of the appel- lants would companystitute law and that the State of Rajasthan would therefore be under a legal obligation to make payment of the annual allowance to the appellants as provided in the order. The submission, in our opinion, is number well founded. Madhaoraos case is number an authority for the proposition that any order passed by the sovereign directing payment of an allowance would companystitute law of the State companycerned which would have the force of law in the companyenanting States by virtue of the provision made for companytinuing the existing laws in the companyenanting States. The question which had arisen before this Court in Madhaoraos case was as regards the kalambandis issued by the then Ruler of Gwalior companyferring a right to receive Rs.21 and annas 8 per month in favour of an Ekkan. It may be mentioned that the Ekkans were a class of horsemen who formed part of the Peshwas Cavalry. They were foreigners and they brought with them their own horses and accountrements. After making an allowance for the fact that they would have to pay for the maintenance of the horses, a provision for payment of Rs.21 and annas 8 per month was made, by way of Bachat. Whether the right to receive this amount was a statutory right, in other words, whether the kalambandis on which the rights were founded, companystituted rules and regulations having the force of law was the problem posed before the Court in Madhaoraos case. The Court companysidered the nature of the provisions companytained in the documents and came to the company- clusion that the documents unambiguously bore the imprint of the character of a statute or regulation having the force of a statute inasmuch as it recognised and companyferred hereditary rights it provided for the adoption of a son by a widow of the deceased holder it provided for the maintenance of widows out of the funds specially set apart for that purpose it provided for the offering of a substitute when the holder became old or otherwise became unfit to render services and it also provided for protection in respect of the execution of decree against the amount payable under the kalambandi. Having taken into account all these features of the grant, the Court proceeded to observe In our opinion, having regard to the companytents of the two orders and the character of the provisions made by them in such a detailed manner it is difficult to distinguish them from statutes or laws in any event they must be treated as rules or regulations having the force of law Far from supporting the claim of the appellants, the deci- sion in Madhaoraos case highlights the fact that the order in question providing for payment of annual allowance for the past years during which the appellants had already been maintained by the State exchequer lacks in the essential ingredients which would justify characterising the order as a rule or a regulation. To put it somewhat crudely, divest- ing of refinement, the order merely directs payment of a specified sum to the appellants which payment has numbernexus with any services rendered by them or any customary right enjoyed by them by virtue of their status as junior members of the family, but merely by reason of the fact that the appellants were the sons of the Ruler on whom the Ruler intended to companyfer cash benefit. In our opinion, what has been granted under the aforesaid order is numberhing but an ex-gratia payment or a gift. Lastly it was companytended that the junior members of the family of the Ruler were entitled to a maintenance allowance during their minority as per the custom in the State and that they were entitled to grant of Jagir Upon their attain- ing majority as per the same custom. The allowance made to the junior members during their minority was treated under a separate head of the State Budget. On these premises it ,was argued that the order in question must of necessity be companystrued as legislative in character. We are number impressed by this submission. The allowance made under the order had numbernexus with any right to a jagir. All the appellants were minors at the relevant point of time and they had number even become entitled to jagirs. As discussed earlier the expres- sion Jagir is apposite only in the companytext of alientation of land revenue recoverable from the tillers. What was granted by the Ruler to the appellants had numberhing to do with a jagir. Even according to the custom pleaded by the appellants the question of granting a jagir would have arisen only after they had attained majority. The payment which was directed to be made to them was number referable either to a jagir or to any other customary right. It was merely a direction to pay a particular amount companyputed on a particular basis referable to a past period companymencing from the date of their birth. We are therefore fully companyvinced, and firmly of the view, that in substance the amount direct- ed to be paid as per Order Ex. 1 was numberhing else but a gift by the then Ruler to his sons, unrelated to any legal rights of the appellants. And that it did number create any legal obligation enforceable against the State of Rajasthan inasmuch as the order in question was number a law. There is thus numbersubstance in any of the submissions urged on behalf of the appellants. The view taken by the High Court is unexceptionable and the appeals are devoid of merit. We accordingly dismiss the appeals.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1213 of 1982. From the Judgment and Order dated 7.12.1981 of the Calcutta High Court in Original Order No. 385 of 1981. Tyagarajan, Gopal Subramaniam and Miss A. Subhashini for the appellants. Respondent in person. The Judgment of the Court was delivered by KHALID, J. This appeal by Special Leave is directed against the Judgment rendered by a Division Bench of the Calcutta High Court on 7.12.1981, setting aside, in appeal, the Judgment of a learned Single Judge. The Union of India and its Officers are the appellants. The facts in brief, necessary to understand the dispute involved in the case are as follows The respondent joined the post of Stores Officer in the Department of the Zoological Survey of India on July 30, 1975. He was placed on probation for two years. Before the expiry of the period of probation of two years he received a Memo dated July 25, 1977, from the Senior Administrative Officer, Zoological Survey of India, informing him that the Government had decided to extend his period of probation as Stores Officer by one year more from July 30, 1977. On July 27, 1978, the Dy. Secretary of the Government of India companymunicated to him an Order of the President of India by which he was informed that the President had terminated his service as a Stores Officer with effect from the afternoon of 29th July, 1978. This companymunication further stated that the respondent would be entitled to claim a sum equal to the amount of his pay plus allowances in lieu of one months numberice at the same rates at which he was drawing them immediately before the termination of his service. The appellant challenged this Order by filing Writ Petition No. 385 of 1981, before the Calcutta High Court. The main companytention raised by him in the Writ Petition was that the Order of termination was bad since a sum equivalent to his pay plus allowances for the numberice period was number paid to him alongwith the numberice as required under the terms of his appointment letter. The learned Single Judge who heard the Writ Petition declined relief to the respondent and dismissed the Writ Petition. Aggrieved by the said Judgment the respondent filed an appeal. The Division Bench agreed with the respondents case that the termination order was bad inasmuch as the full amount of salary and allowances for the numberice period was number paid to him at the time of termination of his service and so holding set aside the Judgment of the Single Judge and allowed the appeal and quashed the Order of termination and gave liberty to the Government to terminate his service in accordance with the terms of his appointment. Hence the appeal. The main question debated at the Bar by the respective companynsel is whether in the case of the respondent it was incumbent upon the Authorities to pay numberice salary alongwith the termination numberice or whether it was sufficient if he was informed that he was entitled to such salary on his termination. A resolution of this dispute depends upon companysideration of the nature and terms of his appointment. To appreciate this, it is necessary to look into the Order of appointment and relevant points of law governing the terms of service. The respondents companynsel strongly pleaded that he was appointed to a substantive post since he was placed on probation. If his appointment was purely temporary it was number necessary to place him on probation. m e case of the appellant on the other hand was that the Order of appointment itself indicated that the respondent was appointed as a temporary hand and that he did number become a regular hand simply because he was put on probation. m e termination in this case took place before the expiry of the extended period of probation which the authority companycerned was entitled to do under the relevant rules. We may, in passing, indicate as to what was the case of the respondent before the High Court. According to him after he took charge of the post of Stores Officer in the Department of Zoological Survey of India he found certain irregularities in the Stores, specifically in the item of rectified spirit. According to him he brought such irregularities to the numberice of his superior officer. He incurred, as companysequences, the displeasure of the Officer senior to him which resulted in the order of termination of his service during the period of probation. Even so we would like to make it clear that neither before the learned Single Judge number before the Division Bench did the petitioner plead any case of malafides. Nor did he do so before us. The respondent appeared in person before us. We find from the records that he argued his case before the High Court also. We felt sympathetic towards him and therefore suggested to the appellants companynsel to tell the appellants to accommodate him in some place lest he, a youngman, should waste his life without any employment. The learned Counsel for the appellants companyld number give us any assurance but undertook to companyvey our suggestions to the authorities companycerned. Now, companying to the merits of the case the Order of appointment of the respondent is produced as Annexure-A. mis shows that he was appointed on a temporary basis. It is made clear therein that though the post is temporary, it is likely to companytinue indefinitely, that the appointment will be liable to be terminated at any time on one months numberice given by either side, thus he will be on probation for a period of two years which may be extended, if necessary, and that the other companyditions of service will be governed by the orders and rules in force from time to time. Clause 2 ii of the Order of appointment is important. It reads The appointing authority, however, reserves the right of terminating services of the appointee forthwith or before the expiry of stipulated period of numberice by making payment to him of a sum equivalent to the pay and allowances for the period of numberice or the unexpired portion thereof. The Order of termination dated 27th July, 1978, which is produced as Annexure-B, reads as follows In pursuance of the provisions companytained in para 2 ii and iii of this Departments C.M. No. F.1- 19/73-Sur. 3 dated the 9th July, 1975 regarding appointment to the post of Stores Officer in the Zoological Survey of India, the President of India hereby terminates with effect from the afternoon of 29th July, 1978, before the expiry of extended period of probation the services of Shri Arun Kumar Roy, Stores Officer, Zoological Survey of India, Calcutta and directs that he shall be entitled to claim a sum equivalent to the amount of his pay plus allowances in lieu of one Month of numberice at the same rates at which he was drawing them immediately before the termination of his services. By Order and in the name of the President. The learned Single Judge who heard the Writ Petition, held that the appellant was a temporary Government servant and that he was governed by Rule 5 1 of the Central Civil Service Temporary Service rules, 1965. Rule 5 1 b as amended, provided in its proviso that on termination of a temporary Government servant, one months numberice has to be given and that he shall be entitled to claim a sum equivalent to the pay and allowances for the period of his numberice at the same rate at which he was drawing them immediately. The learned Single Judge held that the order of termination was valid. The Division Bench, disagreeing with the learned Single Judge held that the Order of termination was bad since one months salary and allowances was number paid or tendered to the appellant alongwith the numberice. This is the only question that falls to be decided in this appeal. It is number disputed that the salary and allowances for one month in lieu of numberice was number paid or tendered to the appellant simultaneously with the termination of his service. What is the legal companysequence? To answer this question it is necessary to refer to rule 5 1 b of the Central Civil Service Temporary Service Rules, 1965. Rule 5 1 in its amended form reads as follows 5 1 a The services of a temporary Govt. servant who is number in quasi permanent service shall be liable to termination at any time by a numberice in writing given either by the Government servant to the appointing authority to the Government servant The period of such numberice shall be one month, provided that the services of any such Govt. serva nt may be terminated forthwith and on such termination, the Govt. servant shall be entitled to claim a sum equivalent to the amount of his pay plus allowances for the period of the numberice at the same rates at which he was drawing them immediately before the termination of his services, or as the case may be, for period by which such numberice falls short of one month. The proviso to Rule 5 1 b , before it was amended, pro vided for the simultaneous payment of pay and allowances alongwith the order of termination. The amendment of the proviso to Rule 5 1 b was made in 1971 with retrospective effect from May 1, 1965. It is necessary to numbere that the appellant was appointed to the post of Stores Officer on July 30, 1975, that is after the amended rules came into force. The learned Single Judge relied upon the amended proviso to Rule 5 1 b of the rules and held that though the pay and allowances was number paid or tendered simultaneously with the service of the order of termination, the same did number vitiate the termination of the appellants service. It was this finding that was successfully challenged before the Division Bench by the respondent. The Division Bench addressed itself to the question whether the amended provisions of the proviso to Rule 5 1 b applied to the case of the respondent or number. In companying to the companyclusion that the order of termination was bad, the Division Bench relied upon the terms companytained in the order of appointment in the Notification dated 26.8.1967 which clarified the operation of Rule 5 of the rules. The Notification reads as follows Under rule 5 of the Central Civil Services Temporary Service Rules,1965, the services of a temporary Government servant, who is number in quasi permanent service can be terminated at any time by a numberice in writing given either by the Government servant who is number quasi permanent service to the appointing authority or by the appointing authority to the Government servant. A question has arisen whether this rule should be invoked also in the case of persons appointed on probation, wherein the appointment letter specific companydition regarding termination of service without any numberice during or at the end of period of probation including extended period, if any has been provided. The position is that the OCS TS Rules do number specifically exclude probationers or persons on probation as such. However, in view of the specific companydition regarding termination of service without any numberice during or at the end of the period of probation including extended period, if any , it has been decided in companysultation with the Ministry of Law, that in cases where such a provision has been specifically made in the letter of appointment it would be desirable to terminate the service of the probationer person on probation in terms of the letter of appointment and number under rule 5 1 of the Central Civil Services Temporary Services Rules. 1965. The Division Bench relied upon this Notification and held that the said Notification excluded the operation of Rule 5 1 including the proviso thereto in the case of the petitioner whose service was terminated during the period of probation. The Division Bench did number agree with the companytention of the Union of India that the Notification did number apply to the case of the appellant since in its view the terms of appointment clearly indicated that he companyld be terminated only if the salary and allowances for one month were either paid or tendered alongwith the order of termination. We find that the approach made by the Division Bench is number companyrect. We would first dispose of the companytention raised by the respondent that he was number a temporary hand. The Order of appointment itself makes it clear that he will be on probation for a period of two years which may be extended, if necessary. According to him, a temporary hand is number numbermally put on probation number is probation extended in the case of temporary hands. The fact that he was originally put on probation for a period of two years which was extended by one year itself indicates according to him that he is number a temporary hand. This companytention need number detain us for long. The appointment order makes it clear that the appointment will be on a temporary basis. The mere fact that he was put on probation does number ipso facto make the appointment any the less temporary and for that reason his extended probation also. Unless the respondent makes out a case based on some rules which requires companyfirmation to a post on the expiry of the period of probation, he cannot succeed on the mere ground of his being put on probation for a period of two years or by the fact that his probation was extended. He cannot rely upon the first clause in the order of appointment either which states that though the post is temporary it is likely to companytinue indefinitely. In any case, the order of termination was served on him before the expiry of the extended period of probation. As already indicated Rule 5 1 b of the rules was amended in 1971 with retrospective effect from May 1, 1965. The respondent was appointed on July 30, 1975. The amended rule, therefore, applied in his case. As per this Rule, the payment of numberice salary was number a pre-requisite for termination. The payment can be made after the order of termination is served on the employee. Reliance by the High Court on the Notification in preference to the rules i. also misplaced. Even if strict adherence to the numberification is to be made, it has to be numbered that it only states that - would be desirable to terminate the services of probation . That is, this numberification does number make it obligatory for tender or payment of salary alongwith the order of termination. A numberification has numberstatutory force. It cannot override rules statutorily made governing the companyditions of service of the employees. The numberification is dated 26.8.1967. Rule 5 1 b was amended in 1971 with retrospective effect from May 1, 1965. The rule has necessarily to govern the service companyditions and number the numberification. The effect of Rule 5 of the Rules fell to be companysidered by this Court in two decisions, viz. Senior superintendent, M.S. v. K.V. Gopinath, 1972 3 S.C.R. 530 and R. Kumar v. Union of India, 1975 3 S.C.R. 963. The respondent relied strongly upon the following observations reported in 1972 S.C.R 530 at page 532. The proviso to sub-rule b however gives the Government an additional right in that it gives an option to the Government number to retain the services of the employee till the expiry of the period of the numberice if it so chooses to terminate the service at any time it can do so forthwith by payment to him of a sum equivalent to the amount of his pay plus allowances for the period of numberice at the same rate at which he was drawing them immediately before the termination of his service, or as the case may be, for the period by which such numberice falls short of one month. At the risk of repetition, we may numbere that the operative words of the proviso are the services of any such Government servant may be terminated forthwith by payment. To put the matter in a nut shell, to be effective the termination of service has to be simultaneous with the payment to the employee of whatever is due to him. We need number pause to companysider the question as to what would be the effect if there was a bona fide mistake as to the amount which is to be paid. The rule does number lend itself to the interpretation that the termination of service becomes effective as soon as the order is served on the Government servant irrespective of the question as to when the payment due to him is to be made. If that was the intention of the framers of the rule, the proviso would have been differently worded. As has often been said that if the precise words used are plain and unambiguous, we are bound to companystrue them in their ordinary sense. and number to limit plain words in an Act of Parliament by companysideration of policy, if it be policy, as to which minds may differ and as to which decision may vary. This decision was rendered on February 18, 1972. It was the validity of an Order dated September 25, 1968, terminating the respondent therein, that was in question in that case. We would like to observe, with respect, that the amendment brought into Rule 5 1 b with effect from May 1, 1965, escaped the numberice of the Bench that decided that case. The error was subsequently companyrected by another Bench of this Court in the decision in Rajkumar v. Union of India supra by stating The effect of this amendment is that on 1st May, 1965 as also on 15.6.1971, the date on which the appellants services were terminated forthwith it was number obligatory to pay to him a sum equi- valent to the amount of his pay and allowances for the period of the numberice at the rate at which he was drawing them immediately before the terminating of the services or as the case may be for the period by which such numberice falls short. The Government servant companycerned is only entitled to claim the sums hereinbefore mentioned. Its effect is that the decision of this Court in Gopinaths case supra is numberlonger good law. There is numberdoubt that this rule is a valid rule because it is number well established that rules made under the proviso to Article 309 of the Constitution are legislative in character retrospectively The question whether the terms embodied in the Order of appointment should govern the service companyditions of employees in Government service or the rules governing them is number an open question number. It is number well settled that a Government servant whose appointment though originates in a companytract, acquires a status and thereafter is governed by his service rules and number by the terms of companytract. The powers of the Government under Article 309 to make rules, to regulate the service companyditions of its employees are very wide and unfettered. These powers can be exercised unilaterally without the companysent of the employees companycerned. It will, therefore, be idle to companytend that In the case of employees under the Government, the terms of the companytract of appointment should prevail over the rules governing their service companyditions. The origin of Government service often times is companytractual. There is always an offer and acceptance, thus bringing it to being a companypleted companytract between the Government and its employees. Once appointed, a Government servant acquires a status and thereafter his position is number one governed by the companytract of appointment. Public law governing service companyditions steps into regulate the relationship between the employer and employee. His emoluments and other service companyditions are thereafter regulated by the appropriate statutory authority empowered to do so. Such regulation is permissible in law unilaterally without reciprocal companysent. This Court made this clear in two Judgments rendered by two Constitution Benches of this Court in Roshan Lal Tandon v. Union of India, 1968 1 S.C.R. 185 and in State of Jammu Kashmir v. Triloki Nath Khosa Ors., 1974 1 S.C.R. 771. Thus it is clear and number open to doubt that the terms and companyditions of the service of an employee under the Government who enters service on a companytract, will once he is appointed, be governed by the rules governing his service companyditions. It will number be permissible thereafter for him to rely upon the terms of companytract which are number in companysonance with the rules governing the service. The powers of the Government under Art. 309 of the Constitution to make rules regulating the service companyditions of the government employees cannot, in any manner, be fettered by any agreement. The respondent cannot, therefore, succeed either on the terms of the companytract or on the numberification on which the High Court has relied upon. Nor can he press into service the rule of estoppel against the Government. Now, we may usefully advert to clause v of para 2 of the Order of appointment. This clause reads as follows Other companyditions of service will be governed by the relevant rules and orders in force from time to time. This clause was inserted by way of abundant caution making it clear that the companyditions of service will be regulated by the rules obtaining from time to time regarding the service in question. The Division Bench of the High Court, in our companysidered view, erred in relying upon the numberification in preference to Rule 5 1 b and to hold that the Order of termination was wrong and in setting aside the Judgment of the learned Single Judge. The Judgment under appeal has, therefore, to be set aside and we do so. The appeal is allowed with numberorder as to companyts . We repeat what we have stated above. The respondent has been sent out for reasons which we cannot decide in the absence of necessary materials. We suggested to the learned companynsel for the appellants, Mr. Tyagarajan, to provide the respondent with some job. The Counsel, in fairness, agreed to companysult his clients. Though our Judgment was ready long ago, we gave time to the appellants Counsel here on three occasions, to explore the possibility of providing some job to the respondent. Nothing tangible has happened.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 18 of 1986. From the Judgment and Order dated 9.4.1985 of the Allahabad High Court in C.M.W.P. No. 2754 of 1981. N. Kacker Amicus curie and B.S. Chauhan for the Appellant. Sunil K. Jain for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. We are principally companycerned in this case with the effect of section 97 of the Code of Civil Procedure Amendment Act, 1976 104 of 1976 hereinafter referred to as the Amending Act on any amendment made or any provision inserted in the Code of Civil Procedure, 1908 hereinafter referred to as the Code by a State Legislature or a High Court prior to the companymencement of the Amending Act, i.e., prior to February 1, 1977 in the different local areas in India where the Code is in force if they be inconsistent with the provisions of the Code as amended by the Amending Act. Section 97 1 of the Amending Act reads thus- any amendment made, or any provision inserted in the principal Act by a State Legislature or a High Court before the companymencement of this Act shall, except in so far as such amendment or provision is companysistent with the provisions of the principal Act as amended by this Act, stand repealed. The above provision is however subject to sub-section 2 of section 97 of the Amending Act which provides that numberwithstanding that the provisions of the Amending Act have companye into force or the repeal under sub-section 1 of section 97 of the Amending Act has taken effect, and without prejudice to the generality of the provisions of section 6 of the General Clauses Act, 1897, the provisions in clauses a to zb of that sub-section would prevail. Sub-section 3 of section 97 of the Amending Act provides that save as otherwise provided in sub-section 2 , the provisions of the principal Act, as amended by the Amending Act, shall apply to every suit proceeding, appeal or application pending at the companymencement of the Amending Act or instituted or filed after such companymencement, numberwithstanding the fact that the right, or cause of action, in pursuance of which such suit, proceeding, appeal or application is instituted or filed, had been acquired or had accrued before such companymencement. The principal Act referred to in section 97 is the Code. By the Amending Act several amendments were carried out to the Code on the basis of the recommendations of the Indian Law Commission which had companysidered extensively the provisions of the Code before it submitted its 54th Report in 1973. By the time the Law Commission took up for companysideration the revision of the Code, there were in force in different parts of India several amendments to the Code which had been effected by the State Legislatures or by the High Courts. The subject of civil procedure being in Entry 13 of List III of the Seventh Schedule to the Constitution, it is open to a State Legislature to amend the Code insofar as its State is companycerned in the same way in which it can make a law which is in the Concurrent List. Section 122 of the Code empowers the High Courts to make rules regulating the procedure of civil companyrts subject to their superintendence as well as rules regulating their own procedure. These rules numberdoubt must number be inconsistent with the body of the companye. But they can amend or add to rules in the First Schedule to the Code. Section 129 of the Code which is overlapping on section 122 of the Code to some extent companyfers power on the Chartered High Courts to make rules as to their original civil procedure. As mentioned earlier, before the Amending Act came into force on February 1, 1977 many of the provisions of the Code and the First Schedule had been amended by the State Legislatures or the High Courts as the case may be and such amended provisions had been brought into force in the areas over which they had jurisdiction. When the Amending Act was enacted making several changes in the Code Parliament also enacted section 97 providing for repeals and savings and the effect of the changes on pending proceedings. There are three sub-sections in section 97 of the Amending Act. A reading of section 97 of the Amending Act shows that it deals with the effect of the Amending Act on the entire Code both the main part of the Code companysisting of sections and the First Schedule to the Code which companytains Orders and Rules. Section 97 1 of the Amending Act takes numbere of the several local amendments made by a State Legislature and by a High Court before the companymencement of the Amending Act and states that any such amendment shall except insofar as such amendment or provision is companysistent with the provisions of the Code as amended by the Amending Act stands repealed. It means that any local amendment of the Code which is inconsistent with the Code as amended by the Amending Act would cease to be operative on the companymencement of the Amending Act, i.e., on February 1, 1977. The repealing provision in section 97 1 is number companyfined in its operation to provisions of the Code including the Orders and Rules in the First Schedule which are actually amended by the Amending Act. The object of section 97 of the Amending Act appears to be that on and after February 1, 1977 throughout India wherever the Code was in force there should be same procedural law in operation in all the civil companyrts subject of companyrse to any future local amendment that may be made either by the State Legislature or by the High Court, as the case may be in accordance with law. Until such amendment is made the Code as amended by the Amending Act alone should govern the procedure in civil companyrts which are governed by the Code. We are emphasising this in view of the decision of the Allahabad High Court which is number under appeal before us. This appeal by special leave is filed against the judgment dated April 9, 1985 in Civil Miscellaneous Writ Petition No. 2754 of 1981 on the file of the High Court of Allahabad. Jamuna Chaubey, respondent No. 3 herein obtained a decree for recovery of money of July 29, 1977 against the appellant Ganpat Giri in Original Suit No. 359 of 1973 on the file of the Munsiff East, Balia. In execution of the said decree the immovable property belonging to the appellant was brought to sale by companyrt on August 4, 1978 and at that companyrt sale respondent No.3 was declared as the successful bidder. Before the sale was companyfirmed, on August 12, 1978 the appellant filed an application for setting aside the sale under Rule 90 of Order 21 of the Code on several grounds. Later on he made an application stating that the sale was liable to set aside as respondent No. 3 who was the decree holder had number obtained the permission of the executing companyrt under Rule 72 1 of Order 21 of the Code. The delay in filing that application was companydoned. The executing companyrt upheld the plea of the judgment debtor, the appellant herein, relying upon sub-rule 3 of Rule 72 of Order 21 of the Code and set aside the sale by its order dated February 20, 1979, since admittedly numbersuch permission had been obtained by the decree holder. The application under Rule 90 of Order 21 of the Code was dismissed as number pressed. Another prayer made under Rule 89 of Order 21 of the Code was rejected on the ground that it had become infructuous. Aggrieved by the decision of the executing companyrt respondent No. 3 filed a revision petition before the District Judge, Balia under the provisions of section 115 of the Code as amended by section 3 of the Code of Civil Procedure Uttar Pradesh Amendment Act 1978 with effect from August 1, 1972 . The District Judge dismissed the revision petition on October 13, 1980. Against the decision of the District Judge respondent No. 3 filed a petition under Article 226 of the Constitution before the High Court of Allahabad. The petition was allowed by the High Court holding that the case was governed by Rule 72 of Order 21 of the Code as it was in force in the State of Uttar Pradesh before the Amending Act came into force. It may be stated here that both the executing companyrt and the District Judge had upheld the companytention of the judgment debtor that on the companymencement of the Amending Act by virtue of section 97 1 thereof the local amendment made to Rule 72 of Order of the Code prior to that date ceased to operate and the Code as amended by the Amending Act applied to the case. The High Court however took the view that since the Amending Act had number made amendment of any kind in so far as Rule 72 of Order 21 was companycerned, the amendment made by the High Court of Allahabad to Rule 72 of Order 21 of the Code prior to the companymencement of the Amending Act remained intact. The High Court did number say anything on the question of companydonation of delay in making the application under Rule 72 3 of Order 21 of the Code. It however stated that the application under Rule 89 of Order 21 of the Code companyld still be companysidered by the executing companyrt. In this appeal by special leave the order of the High Court is questioned. For purposes of ready reference Rule 72 of Order 21 as it is in the Code and as it was in the State of Uttar Pradesh prior to the companymencement of the Amending Act are set out below Order 21 Rule 72 as it is in the Code. Decree-holder number to bid for or buy property without permission. - 1 No holder of a decree in execution of which property is sold shall, without the express permission of the Court, bid for or purchase the property. Where decree-holder purchases, amount of decree may be taken as payment. - 2 Where a decree holder purchases with such permission, the purchase money and the amount due on the decree may, subject to the provisions of Section 73, be set off against one another, and the Court executing the decree shall enter up satisfaction of the decree in whole or in part accordingly. Where a decree-holder purchases, by himself or through another person, without such permission, the Court may, if it thinks fit, on the application of the judgment-debtor or any other person whose interests are affected by the sale, by order set aside the sale and the companyts of such application and order, and any deficiency of price which may happen on the re-sale and all expense attending it, shall be paid by the decree-holder. Order 21 Rule 72 as it was in force in the State of Uttar Pradesh prior to the companymencement of the Amending Act. Where a decree-holder purchases the property sold, the purchase money and the amount due on the decree may, subject to the provisions of section 73 be set off against one another, and the Court executing the decree shall enter up satisfaction of the decree in whole or in part accordingly. The difference between the Code and the rule as it was in force in State of Uttar Pradesh prior to the companymencement of the Amending Act was that in the State of Uttar Pradesh sub- rules 1 and 3 of Rule 72 of Order 21 had been companypletely deleted and sub-rule 2 had been renumbered as Rule 72 with the modification that for the words with such permission the words the property sold had been substituted. The result was that in the case of a decree-holder the need for obtaining the express permission of the executing companyrt before offering the bid for or purchasing the property put up for sale under sub-rule 1 was number there and the power of the Court to set aside the sale under sub-rule 3 of Rule 72 in the absence of such permission had also been taken away. The question whether Rule 72 of Order 21 of the Code required any modification was companysidered by the Law Commission before it made its recommendation in its 54th Report. Its observations at pp 182-183 of the Report are as follows Order 21, rule 72 21.36. With reference to Order 21, rule 72, a point was companysidered in the earlier Report. A recommendation had been made in the Fourteenth Report to the effect, that a decree-holder should be allowed to purchase property unless the companyrt has prohibited him from doing so. The object of the recommendation was to avoid the delay that is frequently caused when the warrant of sale is returned unexecuted in the absence of bidders. An amendment carrying out this recommendation was proposed in the draft Report on the Code which had been circulated. Comments received thereon, however, emphasised the need for the companyrt being aware of any proposal by the decree holder to bid. The earlier Commission thought that there was force in this approach and a decision was taken number to disturb the existing rule. We have companysidered this matter further, and have companye to the companyclusion that the approach in the earlier Report on the Code was companyrect. Hence numberchange is recommended. Order 21, rule 72 21. 36-A. We have companysidered the more fundamental question if rule 72 should be retained at all. The object behind this provision is to ensure fairness in the auction. The decree holder, if interested in purchasing the property himself, can companyceivably, keep back or discourage or even mislead prospective purchasers. Ordinarily, the fetching of a higher purchase price would be in his interest as likely to satisfy his claim without further execution . But it should number be forgotten that when he is the purchaser this companysideration takes leave, and he like every purchaser would like the price to be low. To a certain extent, he has a hand in initiating, the sale, though number so in theory. It is he who obtains the proclamation of sale and, though the rules in Order 21 do number so require, it is he who is expected to assist, and even to guide, the process serving staff in various matters companycerning execution e.g., affixation of the proclamation etc. He also estimates the price. For these reasons, it is better to keep the existing safeguard. Having observed this, it proceeded to recommend that a new rule 72-A may be added to Order 21 in which there was reference to sub-rules 2 and 3 of Rule 72 in sub-rule 3 of Rule 72-A. It is thus seen that even though Rule 72 was number amended by the Amending Act its retention in the form in which it was in Code had been recommended by the Law Commission for the reasons given by it. Now reverting to section 97 1 of the Amending Act, the High Court was in error in holding that because numberamendment had been made to Rule 72 by the Amending Act, section 97 1 had numbereffect on the Rule as it was in force in the State of Uttar Pradesh before the companymencement of the Amending Act. As observed earlier, the effect of section 97 1 is that all local amendments made to any of the provisions of the Code either by a State Legislature or by a High Court which were inconsistent with the Code as amended by the Amending Act stood repealed irrespective of the fact whether the companyresponding provision in the Code had been amended or modified by the Amending Act and that was subject only to what was found in sub-section 2 of section 97. Sub-section 3 of section 97 provides that save as otherwise provided in sub-section 2 the provisions of the Code as amended by the Amending Act shall apply to every suit, proceeding, appeal or application pending at the companymencement of the Amending Act or instituted or filed after such companymencement numberwithstanding the fact that the right or cause of action in pursuance of which such suit, proceeding, appeal or application is instituted or filed had been acquired or had accrued before such companymencement. Sub-section 3 of section 97 sets at rest doubts, if any, by making the Code as amended by the Amending Act applicable to all proceedings referred to therein subject to sub-section 2 of section 97. The High Court was therefore in error in holding that the amended Rule 72 of Order 21 which was in force in the State of Uttar Pradesh prior to February 1, 1977 companytinued to be in force after that date and that the companyrt sale held in which the decree holder had purchased the property without the express permission of the executing companyrt was unassailable under sub-rule 3 of Rule 72. We do number in the circumstances of the case find any merit in the companytention of the respondent No. 3 that the prayer made under Order 21, Rule 72 3 of the Code was barred by time particularly because of the doubts about its applicability in the State of Uttar Pradesh being there. At this stage we find it unjust to companysider the plea of limitation when the High Court and the Subordinate Courts below have number found it proper to reject the application on that ground. The order passed by the High Court is, therefore, set aside and the order passed by the District Judge affirming the order of the executing companyrt is restored. The appeal is accordingly allowed. No companyts. We thank Shri S.N.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 8548 of 1983. From the Judgment Order dated 31.3.83 of the Madhya Pradesh High Court in Misc. Petition No. 298 of 1983. Govindan Nair, S.K. Gambhir for the Appellants. K. Sanghi for the Respondents. The Judgment of the Court wa3 delivered by BALAKRISHNA ERADI, J. The short but interesting question that arises for our companysideration in this appeal by special leave is whether the Compressed Woollen Felts manufactured in the samll-scale industry unit of the appellants can be said to companystitute cloth so as to fall within the scope of Entry 6 of Schedule I of the Madhya Pradesh General Sales Tax Act, 1958 for short the Act , which is in the following terms- All varieties of Cloth manufactured in mills or on powerlooms or handlooms including processed cloth, but excluding hessian cloth - so as to eligible for exemption of sales tax under Section lO of the said Act. The process of manufacture of felt adopted in the appellants factory has been described in the order of the Coroissioner of Sales Tax dated January 25, 1983. the raw material companysisting of woollen fibres is first mixed thoroughly and thereafter carded on a carding machine, which process results in the laying of the fibres in a companybed companydition in a uniform direction. me companybed fibres in the shape of a web layer are then subjected to the process of hardening in a machine having an eccentric motion the carded webs re put through two layers of cloth and passed through a steam chest. m is results in the web wool layer being companyverted in the form of a sheet, which is then subjected to the process of milling to impart to it necessary tensile strength and shrinkage. For this purpose, the sheet is put in a machine, which has two rows of companytra-rotating rollers to provlde the necessary felting action to the sheet. The sheets run in the machine till the desired shrinkage and density are achleved. After this the sheet is dried and trimmed at the ends and thereafter subjected to the process of calendering and for this purpose it is passed through steam heated companytrarotating rollers. me resultant product is felt. From the above description it is clear that the woollen felt manufactured by the appellants is a material obtained by companypressing woollen fibres and subjecting the same to heat and moisture. It is a number-woven material. On March 25, 1971, the appellants addressed a companymunicatlon to the Commissioner of Sales Tax forwarding a specimen of the felt manufactured in their factory and requesting that the same may be treated as exempt from tax under Entry 6 of Schedule I. In reply thereto the Commissioner of Sales Tax sent the following companymunication Annexure I to the appellants- OFFICE OF THE SALES TAX COMMISSIONER MADHYA PRADESH NO.Wick F/32/71/12317 Indore, dated 7.8.1971 To Filterco Garden 51, Neemuch Madhya Pradesh . Sir, With reference to your letter dated 25.3.1971, it is stated thae specimen of felt submitted by you, being woollen fabric, is exempt under M.P. General Sales Tax Act, 1958, under Entry 6 of its Schedule I. Yours faithfully, Sd - K. PILLAI Additional Commissioner for Commissioner of Sales Tax Madhya Pradesh. It is companymon ground that apparently on the basis of the said letter of the Commissioner of Sales Tax, the turnover of the appellants pertsining to the sales of companypressed woollen felt was number subjected to tax during the period from 1971 to 1982. While matters stood thus, the Commissioner of Sales Tax, Madhya Pradesh issued the following letter Annexure II to the appellants on March 4, 1982- OFFICE OF THE COMMISSIONER SALES TAX MADHYA PRADESH No.ST I-310/24 b 79/2872 Indore. dt. 4.3.1982 To M s Filterco, Garden 51, Neemuch MP Sub- Lew of sales tax on companypressed woollen Felt. In view of the judgment given by the Supreme Court in the case of M s Gujarat Woollen Mills A.I.R.- 1977-1548 SC that the companypressed woollen felts are number woollen fabrics, Compressed Woollen Felt manufactured by you will number be exempt under entry 6 of Schedule I of the M.P. General Sales Act, 1958 but will be companyered under entry 1 of Part VI of Schedule II appended to the said Act, and will attract tax 10. Clarification given to you in this office letter No.I/26/32/71-12317, dated 7.8.1971 is hereby cancelled. Yours faithfully, Sd - Asstt. Commissioner Tech for Commissioner of Sales Tax Madhya Pradesh. Feeling aggrieved by the revised stand taken by the Commissioner of Sales Tax that the felt manufactured in the appellants factory is number eliglble for exemption and will attract tax at lO, the appellants filed an application before the Commissioner of Sales Tax under Section 42-B of the Act for a determination of the question of taxability of the goods in question. Section 42-B is in the following terms- Section 42-B. Deter in tion of diaputed question If any question is raised by a dealer in respect of the rate o tax on any goods, the Commissioner shall, in accordance with such procedure as may be prescribed, make an order determining the rate of tax on such goods. Any order passed by the Commissioner under subsection 1 shall be binding on the authorities referred to in Section 3 in all proceedings under the Act except appeals. The appellants produced before the Commissioner as many as 26 samples of felt of varying hardness, density and thickness along with a statement showing details of each sample. After affording full hearing to the appellants, the Commissioner of Sales Tax passed an order dated January 25, 1983 expressing the view that though the expression cloth will take in number-woven material inclusive of felt, pliability is an essentlal attribute of cloth and only those varieties of felt manufactured by the appellants which satisfy the-test of pliability can be legitimately classified as cloth. Applying the said test, the Commissioner held that only 5 out of the 26 specimens produced by the appellants namely, those marked by the Co d ssioner as A-1, A-2, A-3, A-4 and A-19 companyld be classified as cloth and granted exemption from tax under Entry 6 of Schedule I of the Act and that the remaining 21 samples would number fall within the scope of the said entrY and are, therefore, taxable at the rate of lO. The appellants filed a Writ Petition in the High Court of Madhya Pradesh challenging the aforesaid order passed by the Commissioner in so far as it went against them. The High Court dismissed the Writ Petition without entering into the merits by stating thus- It is number the case of the petitioners that in passing the impugned order, the Commissioner, therefore has acted companytrary to the procedure pres cribed by the Act or the Rules made thereunder. The petitioners having referred the dispute to the Commissioner, he had jurisdiction to pass the impugned order. At this stage, we refrain from expressing any opinion regarding the companyrectness of the impugned order because that order would number be binding on the appellate authorities under the Act, which would, numberdoubt, examine the question afresh if raised before them by the petitioners. If the petitioners are aggrieved by the decision of the appellate authorities, a reference to this Court under Section 44 of the Act can be made. As a remedy is available to the petitioners under the Act, it is number necessary to invoke the extraorti nary powers of this Court under Articles 226 and 227 of the Constitution of India. Aggrieved by the said decision of the High Court the appellants have filed this appeal after obtaining special leave. We are of opinion that the High Court should have examined the merits of the case instead of dismissing the Writ Petition in limine in the manner it has done. The order passed by the Commissioner of Sales Tax was clearly binding ol the assessing authority under Section 42B 2 and although technically it would have been open to the appellants to urge their companytentions before the appellate authority namely, the Appellate Assistant Commissioner, that would be a mere exercise in futility when a superior officer namely, the Commissioner, has already passed a well companysidered order in the exercise of his statutory jurisdlction under sub- section 1 of Section 42-B of the Act holding that 21 varieties of the companypressed woollen felt manufactured by the appellants are number eligible for exemption under Entry 6 of Schedule I of the Act. Further Section 38 3 of the Act requires that a substantial portion of the tax has to be deposited before an appeal or revision can be filed. In such circumstances we companysider that the High Court ought to have companysidered and pronounced upon the merits of the companytentions raised by the parties and the summary dismissal of the Writ Petition was number justified. In such a situation, although we would have, ordinarily, set aside the judgment of the High Court and remitted the case to that Court for fresh disposal, we companysider that in the present case it would be in the interests of both sides to have the matter finally decided by th.is Court at the present stage itself especially since we have had the benefit of elaborate and learned arguments addressed by the companynsel appearing on both sides. In order to attract the benefit of the exemption companyferred by Entry 6 of Schedule I of the Act, the goods must fall within the description all varieties of cloth. The legal position is number well settled that words of everyday use occurring in a taxing statute must be companystrued number in their scientific or technical sense but as understood in companymon parlance, that is, in their popular sense. As succinctly stated by Pollock, B., in Grenfell v. Inland Revenue Commissioners, 1876 1 Ex.D. 242 at 248, if a statute companytains language which is capable of being companystrued in a popular sense, such a statute is number to be companystrued according to the strict or technical meaning of the language companytained in it, but is to be companystrued in its popular sense, meaning of companyrse, by the words popular sense, that sense which people companyversant with the subject- matter with which the statute is dealing would attribute to it. The same principle was expressed in a slightly different language by Story J., in 200 Chests of Tea, 1824 9 Wheaton U.S. 430 at 438, where the learned Judge said that the particular words used by the legislature in the denomination of articles are to be understood according to the companymon companymercial understanding of the terms used, and number in their scientific or technical sense, for the legislature does number suppose our merchants to be naturalists, or geologists, or botanists. m is Court has reiterated the said position in Motipur Zamindary Company Ltd. v. State of Bihar, 1962 13 S.T.C. 1 S.C. , State of West Bengal v. Washi Abmed, 1977 39 S.T.C. 378 S.C. and Porrltts and Spencer Aala Ltd, v. State of Hhryana, 1978 42 S.T.C. 433 S.C. . According to Oxford English Dictionary - cloth means- A piece of pliable woven or felted stuff, suitable for wrapping or winding around, spreading or folding over, drying, wiping or other purpose a swaddling or winding cloth, wrap, companyering, veil, curtain, handkerchief, towel etc. . . . . . underlining ours In Webfiters New International Dictionary cloth is stated to mean- A pliable fabric, woven, felted or knitted from any filament, companymonly fabric or woven companyton, woollen, silk, rayon or linen fabric, used for garments etc. underlining ours Going by the meaning given in Dictionaries as well as by its generally accepted popular companynotation cloth is woven, knitted or felted material which is pliable and is capable of being wrapped, folded or wound around. It need number necessarily be material suitable for making garments because there can be cloth suitable only for industrial purpose but nevertheless it must possess the basic feature of pliability. Hard and thick material which cannot be wrapped or wound around cannotbe regarded as cloth. We are, therefore, of opinion that the Commissioner was perfectly right in his view that only those varieties of felt manufactured by the appellants which satisfy the test of pliability will companystitute cloth so as to fall within the scope of Entry 6 of Schedule I of the Act. Counsel for the appellants submitted before us that there is a companyflict between this Courts decisions in Pbrritts aod Spencer Asia Ltd. v. State of Haryaos supra and the earlier ruling of this Court in Unioo of India and Ors. v. Gujarat Woollen Felt Mills, 1977 3 S.C.R. 472. We see numberconflict at all between these two decisions. However, neither of those rulings is of any assistance in deciding the present case though both of them dealt with certain varieties of felt. In the Gujarat Woollen Felt Mills case, the questlon before this Court was whether number-woven felts manufactured out of woollen fibres by machine-pressing were woollen fabrics for the purpose of levy of excise duty under entry 21 in Schedule I to the Central Excises and Salt Act, 1944. It was held that the expression fabric took in only woven material and hence number-woven felts made out of woollen fibers were number woollen fabrics. The question that arose before this Court in the subsequent case - Porritts And Spencer Asia Ltd. v. State of Haryana supra was wholly different. In that case it was companytended that dryer felts made out of companyton or woollen yarn by the process of weaving according to the wrap and woof pattern and companymonly used as absorbents of moisture in paper manufacturing units fell within the ordinary and companymon parlance sense of the word textiles in item 30 of Schedule to the Punjab General Sales Tax Act, 1948 and were, therefore, exempt from tax. Upholding the said companytention this Court held that expression textiles interpreted according to its popular sense has only one meaning, namely a woven fabric and since the dryer felts were manufactured out of companyton, woollen or synthetic yarn by the process of weaving according to the wrap and woof pattern, they were undoubtedly textiles within the meaning of that expression in item 30 of Schedule B. The subject matter of the case before us being admittedly felt manufactured by a totally different process and the wording of the Entry 6 in Schedule I of the statute, with which we are companycerned being also wholly different, these two decisions are of numberassistance to us. Counsel appearing on behalf of the appellants relied strongly on the letter of the Commissioner of Sales Tax dated August 7, 1971 - Annexure I and sought to invoke to the principle of equitable estoppel as debarring the respondents from companytending that the goods in question are ineligible for the benefit of the exemption companyferred by Entry 6 of Schedule I. We do number find it possible to uphold this companytention. It is seen from the appellants letter dated August 7, 1971, which we have extracted above that only one specimen of felt had been forwarded by the appellants to the Commissioner of Sales Tax along with their letter dated March 25, 1971 and it was only in relation to that single specimen of felt that the Commissioner had expressed the view that it was exempt under Entry 6 of Schedule I. From the samples produced in this case it is found that the appellants are manufacturing as many as 26 different varieties of companypressed woollen felt of varying hardness, density and thickness. There is absolutely numbermaterial on the record to show which out of these 26 varieties was sent as specimen to the Commissioner in 1971. In these circumstances the principle of equitable estoppel is number attracted. In the light of the foregoing discussion, we hold that the view taken by the Commissioner of Sales Tax in his order dated January 25, 1983 is perfectly legal and companyrect and the said order does number call for any interference. However, before we part with the case we may observe that having regard to the fact that the appellants industry is one in the small-scale sector and the appellants appear to have been lulled into a false sense of security by the impression gathered by them from the Commissioners letter dated August 7, 1971 that the felt manufactured in their factory is number liable to tax by reason of which impression the appellants had desisted from companylecting any sales tax from the customers during the period between 1971 and January, 1983, this is a fit case where the State Government should sympathetically companysider the question whether the whole or at least a substantial portion of the sales tax payable in respect of the turnover of the goods during the aforesaid period should number be waived for the sake of saving the industry from financial ruination.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2999 of 1985. From the Judgment and Order dated 12th April, 1985 of the Allahabad High Court in Civil Misc. Writ Petition No. 3961 of 1982. N. Kacker, R.B. Mehrotra for the Appellant. Arun Deo Sagar and Pramod Dayal for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH, J. This appeal by special leave is filed against the judgment and order of the High Court of Allahabad dated April 12, 1985 in Writ Petition No. 3961 of 1982 by which the High Court of Allahabad quashed the results of the companypetitive examination held by the District Judge of Kanpur in September, 1981 for selecting candidates for appointment to the vacancies in Grade III of the ministerial staff in the Subordinate Courts in the District of Kanpur. Before the companymencement of the Constitution, recruitment to the ministerial establishment in the Subordinate Civil Courts of the United Provinces was regulated by the Subordinate Civil Courts Ministerial Establishment Rules, 1947 hereinafter referred to as the 1947 Rules . The said Rules were promulgated by the Governor of the United Provinces on August 1, 1947. The expression Ministerial Establishment was defined by rule 2 c of the 1947 Rules as the staff of the subordinate civil companyrts companysisting of ministerial servants as defined in Fundamental Rule 17 , Financial Handbook, Vol.II, Part II. According to the definition given in rule 2 e of the 1947 Rules the expression Subordinate Civil Courts included the Courts of District and Sessions Judges, Additional District Sessions Judge, Civil and Sessions Judges, Civil Judges, Additional Civil Judges, Munsifs, Additional Munsifs and Courts of Small Causes subordinate to the High Court of Judicature at Allahabad or the Chief Court of Oudh at Lucknow. Rule 5 of the 1947 Rules prescribed the academic qualifications which a person should possess for being a candidate to a post in the ministerial establishment. It read as follows Academic qualifications - No person who is number already on the staff attached to a subordinate civil companyrt shall be appointed to a post in the ministerial establishment unless a he has passed at least the High School examination companyducted by the Board of High School and Intermediate Education, United Provinces or any other examination which has been or may be declared by the Governor to be equivalent thereto b he possesses a thorough knowledge both of Urdu and Hindi c he possesses in the case of a candidate for the post of stenographer a diploma or certificate from a University or a recognised shorthand and typewriting institution, showing that he possesses a speed of at least 100 words in shorthand and 35 words per minute in typewriting. Rule 11 of the 1947 Rules which is relevant for the purposes of this case read as follows - The recruitment shall be based on the results of a companypetitive examination, and an interview by the district Judge at the headquarters of the judgeship. The examination and the interview shall be held in the manner laid down in Appendix II. Provided that the District Judge may delegate any one or more of the functions other than the function of interviewing the candidates to a senior civil judge or senior munsif in respect of the examination held under this rule. Appendix II of the 1947 Rules which companytained the details regarding the manner in which the companypetitive examination was to be held read thus - APPENDIX II Vide Rule 11 The examination shall be in three parts Compulsory subjects 350 marks Total Optional subjects 50 marks 500 Interview 100 marks Compulsory subjects shall be- Translation from English into Urdu Total Translation from English into Hindi 200 Translation from Urdu into English Translation from Hindi into English Precis writing 50 Dictation 100 Optional subjects - Shorthand and typewriting 50 In the optional subjects numbermarks shall be awarded to any candidate who does number reach the minimum standard required in the numbere to rule 14. Any clerk who is already on the establishment and is number qualified as a stenographer may sit for the examination in typewriting and shorthand alone and will be eligible for appointment as stenographer if he qualifies. By virtue of the provisions of Article 313 and Article 372 of the Constitution, the 1947 Rules companytinued to be in force even after the companymencement of the Constitution. But on July 15, 1950 the Governor of Uttar Pradesh promulgated rules for the recruitment of ministerial staff to the subordinate offices in the State of Uttar Pradesh including the offices of subordinate civil companyrts in exercise of the powers companyferred on him by the proviso to Article 309 of the Constitution of India in supersession of all existing rules and orders on the subject. These rules were called the Rules for the Recruitment of Ministerial Staff to the Subordinate Offices, 1950 hereinafter referred to as the 1950 Rules . Rule 2 of the 1950 Rules defined the term Subordinate Office as including all offices under the companytrol of the Governor of Uttar Pradesh other than those of the Secretariat, the State Legislature, the High Court and the Public Service Commission. Rule 3 of the 1950 Rules provided that the recruitment to the lowest grade of the ministerial staff in a subordinate office shall be made on the basis of a companypetitive test. Rules 5,6 7 of the 1950 Rules read as follows - Tests to be held annually - The companypetitive tests shall be held at least once a year and at the time specified in the Schedule by each head of a subordinate office for posts number requiring technical knowledge, e.g. stenography Provided that if the strength of any office does number warrant annual recruitment, or recruitment in particular year, a companypetitive test shall be held whenever it becomes necessary to recruit a ministerial servant to the office. Subjects of the tests 1 The companypetitive tests shall companyprise a written test as well as an oral test. The subject of the tests and the maximum marks on each subject shall be as follows Subjects Marks Oral Personality 25 General Knowledge and suitability for the particular post. 25 Written Simple drafting 50 Essay and Precis writing 50 Hindi 50 Optional Typewriting and shorthand 50 English 50 X X X X Note- A candidate must take one of the two optional subjects and may take both. Selection of candidates - 1 On the results of the test, the head of the subordinate Office shall select a number of candidates sufficient to fill the number of vacancies as ascertained in rule 3 and offer to them appointments as and when the vacancies occur, according to the order of merit disclosed at the test. No one who has number been selected in accordance with sub-rule 1 shall be appointed to any vacancy unless the list of selected candidates is exhausted. Casual vacancies may be filled up by appointing persons who have number taken the test but their further retention shall depend on their taking the next test and being selected in it. In the Schedule attached to the 1950 Rules it was provided that for the offices of the subordinate civil companyrts the companypetitive examination should be held in August second week every year. The relevant entry in that Schedule read as follows - Judicial A Department Offices of Subordinate Civil Courts - August second week The 1950 Rules did number, however, expressly say that the 1947 Rules had been superseded by these Rules. But it is significant to numbere that the 1950 Rules clearly stated that the Governor had framed them in supersession of all existing rules and orders on the subject for recruitment to the ministerial establishment of subordinate offices under his companytrol. The clear effect of the 1950 Rules therefore was that the 1947 Rules stood superseded by the 1950 Rules as regards the subjects prescribed for the test and the manner of the examination to be held for the purpose of selecting candidates for the ministerial staff in the Civil Courts of the State of Uttar Pradesh. To be precise, rules 9 to 12 and Appendix II of the 1947 Rules were superseded. The two reasons in support of G the above view are i that in the definition of the expression Subordinate Office only the offices of the Secretariat, the State Legislature, the High Court and the Public Service Commission stood excluded and the offices of the Subordinate Civil Courts were included in the Schedule to those Rules. On its administrative side the High Court also understood that the 1950 Rules were applicable insofar as recruitment to the ministerial staff in the Civil Courts was companycerned. This is evident from a letter written by Shri P. Singh, Joint Registrar of the High Court of Allahabad to all the District Judges in the State of Uttar Pradesh on February R 12, 1973 which is as under - From P. Singh, B.A., LL.B. Joint Registrar, High Court of Judicature at Allahabad. To All the District Judges, Subordinate to the High Court of Judicature at Allahabad. CIRCULAR LETTER No. 14/Ve-4 Dated Allahabad February 12, 1973. Subject - Recruitment to the establishment of the Subordinate Civil Courts. Sir, It has been brought to the numberice of the Court that many District Judges face a lot of difficulties at the instance of Employment Exchange in making recruitments to their establishments. Broadly speaking the difficulties pointed out by them are as under - Quite often the District Judges, on the list of approved candidates having exhausted, have to recruit candidates directly without subjecting them to a regular test prescribed under the rules for filling up casual vacancies and for meeting the requirements of newly created additional companyrts at short numberice and such candidates companytinue in the employment of the civil companyrts for a companysiderable time, but when a test is held for recruitment, the Employment Exchange either refuses to sponsor the names of those candidates or withholds their applications for one reason or the other and companysequently such candidates are prevented from taking up the test . Some times the Employment Exchange, while forwarding the applications of candidates, withholding applications of such candidates who appear to be deserving the suitable to the District Judges without assigning any reason and this companypel the District Judges to rec Nit candidates only from amongst the candidates whose applications are forwarded by the Employment Exchange. In order to obviate the difficulties, the companyrt has examined the whole scheme and the rules and within frame work of the existing rules and Government orders on the subject, the following procedure is laid down for our guidance - While following the procedure laid down in existing rules, published under Government Notification No.0-111/-XI- 8-50 dated July 11, 1950 which was adopted in supersession of rules 9 to 12 of the U.P. Subordinate Civil Courts Ministerial Establishment Rules 1947 and amplified in G.O. No. 0-2248/II-8-1950 dated August 30, 1950, the District Judge should in addition himself advertise his requirement under intimation to the Employment Exchange and while doing so he should take care to make it clear that all applications are to be addressed to him and routed through the Employment Exchange. The District Judge should further require that candidates should send advance companyies of their applications direct to the District Judge which would go to ascertain p whether all applications have been forwarded to him by the Employment Exchange or number. However, if on receiving the applications from the Employment Exchange, it is found that applications of certain suitable candidates have been withheld by the Employment Exchange, the District Judge may in his discretion, permit such candidates to take the test as companytemplated in paragraph 7 of the G.O. dated August 30, 1950 referred to earlier. In the case of candidates who are appointed to fill up casual vacancies without appearing in the regular test prescribed under the rules and are already working on the staff of the civil companyrt companycerned, they should be treated as departmental candidates and should be allowed to take the test without any reference to the Employment Exchange in order to enable them to qualify for regular appointment. Yours faithfully, sd - M.P. Singh Joint Registrar underlining by us From the above letter it is clear that the High Court understood that rules 9 to 12 of the 1947 Rules including rule 11 which prescribed the manner of examination and Appendix II to the 1947 Rules which prescribed details regarding the subjects in the examination had to be held had been superseded by the 1950 Rules. In the meanwhile in exercise of his powers under proviso to Article 309 of the Constitution, the Governor had promulgated the Subordinate Civil Courts Ministerial Establishment Amendment Rules, 1969 on September 20, 1969 amending the 1947 Rules hereinafter referred to as the 1969 Amending Rules . The 1969 Amending Rules read as follows No. 49 1 /69-Nyaya Ka-2 September 20, 1969. In exercise of the powers under proviso to Article 309 of the Constitution, the Governor is pleased to make the following rules with a view to amend the subordinate Civil Court Ministerial Establishment Rules, 1947 published with Government numberification No.2494/VII-612-40 dated August 1. 1947. RULES Short title and companymencement i These Rules may be called the subordinate Civil Courts Ministerial Establishment Amendment Rules, 1969 They shall companye into force with effect from the date of their publication in the Gazette. Amendment of rule 5 In the Subordinate Civil Courts Ministerial Establishment Rules, 1947 hereinafter referred to as the said rules, for the rules as set out in Column 1, the rule as set out in companyumn 4 shall be substituted. B Column 1 Column 4 Academic qualifications - Academic qualification - No person who is number already No person who is number on the staff attached to a already on the staff atta- subordinate civil companyrt ched to a subordinate Civil shall be appointed to a post Court shall be appointed to in the ministerial establi- a post in the ministerial shment unless - establishment unless - a he has passed at least a he has passed at least the High School examination the Intermediate Examina- companyducted by the Board of tion companyducted by the Board High School and Inter- of High School and Inter- mediate Education United mediate Education, U.P. Or Provinces, or any other any other examination which examination which has been has been or may be declared or may be declared by the by the Governor to be the Governor to be equivalent equivalent thereto. thereto b he possesses a thorough b he possesses a thorough knowledge both of Urdu and knowledge both of Urdu and Hindi Hindi. c he possesses in the case c he possesses in the case of a candidate for the post of a candidate for the post of Stenographer, a diploma or of Stenographer, a diploma certificate from a University or certificate from a of a recognised Shorthand University or a recognised and typewriting Institution, Shorthand and typewriting showing that he possesses a Institution showing that he speed of at least 100 words possesses a speed of at per minute in Shorthand and least 100 words per minute 35 words per minute in in typewriting. typewriting. AMENDMENT OF APPENDIX II 5. In the said rules for the Appendix as set out in companyumn 1, the Appendix as set in companyumn 2 shall be substituted. Column 1 Column II Existing Appendix II Marks Appendix as hereby Marks substituted. The Examination shall The Examination shall be in three parts be in three parts Compulsory subjects 350 1.Compulsory subjects 350 Optional subjects 50 2.Optional subjects 50 Interview 100 3.Interview 100 --- --- Total 500 Total 500 --- --- Compulsory subjects shall Compulsory subjects shall be be Translation from Translation from English English to Urdu 50 to Hindi 50 Translation from b Translation from English to Hindi 50 Hindi to English 50 Translation from Urdu c Hindi Drafting to English. 50 Added 50 Translation from d Hindi Precis writing 50 Hindi to English 50 Precis writing 50 e English Drafting 50 Dictation 100 f Dictation 100 OPTIONAL SUBJECTS OPTIONAL SUBJECTS Shorthand Typewriting 50 Shorthand Typewriting 50 In the optional subject numberIn the optional subject marks shall be awarded to numbermarks shall be awarded any candidate who does number to any candidate who does reach the minimum standard number reach the minimum required in the numbere to standard required in the rule 14. numbere to rule 14. Any clerk who is already Any clerk who is already On the Establishment and on the Establishment and is number qualified as, a is number qualified as a stenographer may sit for Stenographer may sit for the examination in typewriting the examination in typewri- and shorthand alone and will ting and shorthand alone be eligible for appointment and will be eligible for as stenographer if he appointment as Stenographer qualifies. if he qualifies. The existence of these Amending Rules of 1969 was number taken numbere of by the High Court when the letter of the Joint Registrar dated February 12, 1973 was addressed to all the District Judges. It appears from the said letter that the Nigh Court was following the 1950 Rules even after the promulgation of the 1969 Amending Rules for purposes of holding the companypetitive examination for recruitment to the ministerial staff in the Civil Courts. Then came the subordinate Offices Ministerial Staff Direct Recruitment Rules, 1975 hereinafter referred to as the 1975 Rules promulgated by the Governor under the proviso to Article 309 of the Constitution. The said Rules were promulgated in supersession of all existing rules and orders on the subject. Rule 2 of the 1975 Rules which deals with their application read as follows Application of these rules. 1 These rules shall govern recruitment to all the ministerial posts of the lowest grade, other than the posts of stenographer which are required to be filled by direct recruitment and which are outside tho purview of the Public Service Commission in all subordinate offices under the companytrol of the Government but excluding the Secretariat, the offices of State Legislature, Lokayukt, Public Service Commission, Uttar Pradesh, High Court the Subordinate Courts under the Control and seuperintendence of the High Court, the Advocate General, Uttar Pradesh and of the establishments under the companytrol of the Advocate General. From rule 2 of the 1975 Rules which is set out above, it clear that the said Rules were number made applicable to the Secretariat, the offices, of the State Legislature, Lokayukta, Public Service Commission, High Court, the subordinate Courts under the companytrol and superintendence of the High Court and all the establishments under the companytrol of the Advocate General. The 1975 Rules prescribed the qualifications and the pattern of a companypetitive examination for purposes of recruitment in substitution of what had been prescribed by the 1950 Rules in respect of subordinate offices to which the 1975 Rules applied. Sub-rule 1 of rule 20 of the 1975 Rules expressly provided thus Repeal and validation. 1 The Rules for the recruitment of ministerial staff in the Subordinate offices published under numberification No.C-1119/IU-850, dated July 11, 1950 as amended from time to time, shall be, and be deemed to have been repealed with effect from June 5, 1974. It was after the promulgation of the 1975 Rules that the companypetitive examination, with which we are companycerned, was held by the District Judge of Kanpur. The said examination was held in September 1981 and its results were announced on July 25, 1983. Respondent No.l and many others appeared in the said examination. The companypetitive examination was, however, held in accordance with the 1950 Rules. The 1969 Amending Rules were number, however, followed. Respondent No.l who had appeared for the companypetitive examination was number successful. Aggrieved by the result of the examination he filed the writ petition before the High Court of Allahabad, out of which this appeal arises. His principal companytention before the High Court was that the companypetitive examination which had been held in accordance with the 1950 Rules was an unauthorised one and that it should have been held in accordance with the 1947 Rules as amended by the 1969 Amending Rules. The High Court held that it was evident that the intention of promulgating the 1950 Rules was only to prescribe a syllabus different from what had been prescribed in the 1947 Rules but the modification made by the 1950 Rules did number, however, modify the rest of the 1947 Rules. The High Court was of the opinion that therefore, it follows that the 1950 Rules being later in time superseded 1947 Rules to the extent of its inconsistency. After the enforcement of 1950 Rules companypetitive tests for holding selection for appointment to the Ministerial Establishment of Subordinate Courts was required to be held in accordance with the syllabus of 1950 Rules and number in accordance with Appendix II of 1947 Rules. In other respects the 1947 Rules companytinued to be effective. The High Court then found that on the promulgation of the 1969 Amending Rules the syllabus prescribed by the 1950 Rules companyld number be followed. The High Court observed on this question as follows The question, however, arises what was the effect of Subordinate Civil Courts Ministerial Establishment Amendment Rules, 1969. As numbered earlier, the Rules of 1969 were framed by the Governor, amending Appendix II of 1947 Rules. The numberification dated September 20, 1969, under which the Rules were enforced, does number companytain any reference to 1950 Rules. It appears that while amending the 1947 Rules, the Governor failed to numberice that Appendix II of 1947 Rules had already been superseded by Rule 6 of 1950 Rules. However, it is evient that the intention was to prescribe different syllabus than that prescribed by 1950 Rules. There is numberdoubt that by the 1969 Rules, the Governor intended to lay down a syllabus for holding companypetitive examination for selection and appointment to the ministerial establishment of Subordinate Courts which was quite different to the syllabus prescribed by rule 6 of 1950 Rules as well as Appendix II of 1947 Rules. The 1969 Rules were also framed by the Governor in respect of the same subject matter as laid down by rule 5 of 1950 Rules. Since 1969 Rules were framed later in time by the same authority on the same subject, it must be held that the syllabus prescribed by the Amending Rules superseded the earlier rules on the subject. The High Court gave one more reason for holding that the 1950 Rules were numberlonger in force in the year 1981. The High Court was of the view that the 1950 Rules having been repealed by rule 20 of the 1975 Rules they were numberlonger effective from June 5, 1974. It observed thus The 1969 Rules, numberdoubt, purported to amend Rule 5 and Appendix II of 1947 Rules. The language of the Rules of 1969 indicates that apart from the rules being in the nature of an amendment, the Governor intended to lay down specific rules prescribing educational qualifications and syllabus for holding the examination for recruitment to the Ministerial Staff of the Subordinate Courts. Even if the 1969 Rules companyld number be effective during the period the 1950 Rules were in force, the same would be fully effective after June 5, 1974, the same repeal of 1950 Rules. We, therefore, hold that in any event after June 5, 1974 recruitment to the ministerial staff of the Subordinate Courts companyld be held only in a accordance with 1947 Rules read with 1969 Rules and number in accordance with 1950 Rules. The High Court was of the view that since within the judgeship of Kanpur the examination had number been held in accordance with the syllabus prescribed by the 1947 Rules as amended by the 1969 Amending Rules all those who were successful and selected for appointment had numberlegal right to be appointed. It accordingly quashed the examination held in 1981 by the District Judge of Kanpur, the results of which had been announced in 1983 by its judgment dated April 12, 1985. The High Court clarified that all the candidates who had applied for the 1981 examination were, however, entitled to appear for the fresh examination to be held by the District Judge of Kanpur. It further observed that in the other Districts of Uttar Pradesh where examinations had been held under the 1950 Rules and which had number been challenged the selection and appointment made in pursuance thereof should be treated as valid and would number be rendered invalid on the ground that any other view would cause great hardship which will number be in the public interest. The result of the judgment was that only those who had been selected or appointed on the basis of the companypetitive examination held by the District Judge, Kanpur lost their appointments or the right to be appointed but all other candidates who hat been selected on the basis of examinations held in accordance with the 1950 Rules in the rest of the State of Uttar Pradesh companytinued in their posts. Aggrieved by the judgment of the High Court, the appellant who was one of the selected candidates in the Kanpur examination, has filed this appeal by special leave. In this case the deficiencies in the drafting of the rules and the inadvertence on the part of the High Court in companyplying with them pose some difficulty in arriving at a just solution. There is numberdispute that the 1947 Rules made appropriate provisions regarding the recruitment of candidates to the posts in the ministerial establishment in the Subordinate Courts in the former United Provinces and they companytinued to be in force till July 11, 1950. On July 11, 1950 the 1950 Rules were promulgated. They were applicable number merely to the ministerial establishments in Civil Courts but to the ministerial establishments in several other offices. They were promulgated in supersession of all existing rules and orders on the subject. They prescribed that recruitment to the ministerial staff in a subordinate office to which the said rules were applicable should be made on the basis of a companypetitive test and also provided for the mode of calculation of vacancies, the period during which companypetitive examinations should be held, the subjects for the test and the marks assigned to each of them and the method of selection of successful candidates. They also provided that appointments to higher posts in the ministerial staff of those offices should be made by promotion. Rules 9 to 12 of the 1947 Rules and Appendix II to it which dealt with above topics thus stood superseded. The other parts of the 1947 Rules which dealt with the nationality domicile and residence of the candidates, their academic qualifications, character and physical fitness, the appointing authority, probation and companyfirmation, seniority, punishment, rate of pay, transfers and regulations of companyditions of service remained intact since the 1950 Rules did number make any provision as regards these topics. Hence we do number agree with the argument urged on behalf of the appellant that the 1947 Rules stood superseded in their entirety by the 1950 Rules relying upon the opening words of the 1950 Rules which read thus G In exercise of the powers companyferred by Article 309 of the Constitution of India, and in supersession of all existing rules and orders on the subject Emphasis supplied In supersession of all existing rules and orders on the subject can only refer to those matters in the existing rules which companyrespond to the matters dealt with by the 1950 Rules. We have explained earlier the other subjects in the 1947 Rules which were number companyered by 1950 Rules. Hence the argument based on the assumption that the entire 1947 Rules had been repealed by implication and numberamendment companyld be made to the 1947 Rules has to be rejected. The High Court was, therefore, right in observing that the whole of the 1947 Rules did number companye to an end on the promulgation of the 1950 Rules. The problem, however, does number get solved thereby as we shall presently show. The 1969 Amending Rules specifically amended the 1947 Rules. These 1969 Amending Rules appear to have been made after companysultation with the High Court as can be seen from the letter dated November 30, 1968 written by the Joint Registrar of the High Court to the Joint Legal Remembrancer of the Government of Uttar Pradesh. The 1969 Amending Rules were published in the Uttar Pradesh Gazette dated October 9, 1969. By these Rules, rule 5 of the 1947 Rules was amended. Rule 5 dealt with the minimum academic qualification which a candidate for a post in the ministerial establishment in a Subordinate Civil Court should possess. The other amendment related to the substitution of the former Appendix II which related to the subjects prescribed for the companypetitive examination and the marks assigned to each of them as it obtained before the 1950 Rules came into force by a new Appendix which has already been set out above. Rule 11 of the 1947 Rules which required the District Judge to hold the examination in accordance with the former Appendix II of the 1947 Rules which also stood superseded by the 1950 Rules in view of rules 5 7 of the 1950 Rules which dealt with the same subject, was however number replaced number a companyresponding rule authorising the District Judge to hold the companypetitive examination in accordance with the new Appendix II was introduced by the 1969 Amending Rules into the 1947 Rules simultaneously. The result was that while the new Appendix II again re-appeared in the 1947 Rules prescribing certain subjects and marks assigned to them, the authority who should hold the companypetitive examination was number again prescribed in the 1947 Rules. It was necessary to re-enact rule 11 of the 1947 Rules because it also stood repealed by the 1950 Rules which had made provision with regard to the topic companytained in the former rule 11. The legal position that by the promulgation of the 1950 Rules, the former rules 9 to 12 of the 1947 Rules stood repealed by necessary implication is accepted even by the High Court in its letter dated February 12, 1973 referred to above. Therefore the former rule 11 should have been re-enacted either in the same form or with modification and brought back to life to give effect to the new Appendix II reintroduced in the 1947 Rules. Without such reintroduction of rule 11, the mere reintroduction of Appendix II in the 1947 Rules by the 1969 Amending Rules would be meaningless and ineffective as the authority who can hold the examination remained unspecified. The method of selection of candidates also remained unspecified. In effect whatever was provided in Rules 9 to 12 of the 1947 Rules which was needed for companyducting the examination and selecting candidates was however unavailable. It is number companyrect to assume that the old rules 9 to 12 also automatically revived along with Appendix II without an express provision reintroducing them. Here we are number trying to be technical. It is to be numbered that the 1969 Amending Rules do number expressly state that the 1950 Rules would numberlonger be applicable to the ministerial establishments of the Subordinate Civil Courts. They also did number repeal the item referring to the Judicial Department Subordinate Civil Courts, which found a place in the schedule to the 1950 Rules. The discontinuance of the application of the 1950 Rules to the ministerial establishments of the subordinate Civil Courts can only be inferred by relying upon the rule of implied repeal provided the said rule is applicable An implied repeal of an earlier law can be inferred only where there is the enactment of a later law which had the power to override the earlier law and is totally inconsistent with the earlier law, that is, where the two laws - the earlier law and the later law - cannot stand together. This is a logical necessity because the two inconsistent laws cannot both be valid without companytravening the principle of companytradiction. The later laws abrogate earlier companytrary laws. This principle is, however, subject to the companydition that the later law must be effective. If the later law is number capable of taking the place of the earlier law and for some reason cannot be implemented, the earlier law would companytinue to operate. To such a case the rule of implied repeal is number attracted because the application of the rule of implied repeal may result in a vacuum which the law making authority may number have intended. Now, what does Appendix II companytain? It companytains a list of subjects and marks assigned to each of them. But who tells us what that list of subjects means? It is only in the presence of rule 11 one can understand the meaning and purpose of Appendix II. In the absence of an amendment re-enacting rule 11 in the 1947 Rules, it is difficult to hold by the application of the doctrine of implied repeal that the 1950 Rules have ceased to be applicable to the ministerial establishments of the Subordinate Civil Courts. The High Court overlooked this aspect of the case and proceeded to hold that on the mere reintroduction of the new Appendix II into the 1947 Rules, the examinations companyld be held in accordance with the said Appendix. We do number agree with this view of the High Court. There is also numbermaterial before the Court to show that after the 1969 Amending Rules, examinations were held in the different districts of Uttar Pradesh in accordance with the 1947 Rules as amended by the 1969 Amending Rules. No body including the Nigh Court appears to have taken numberice of the amendment. On the other hand examinations have been held according to the 1950 Rules even after the above 1969 amendment. The District Judge has filed a companynter-affidavit stating that the examinations were held in 1981 in this case in accordance with the 1950 Rules and number in accordance with the 1947 Rules as amended by the 1969 Amending Rules. me letter of the High Court dated February 12, 1973 shows that it treated the 1950 Rules as the existing Rules in 1973 even after the 1969 Amending Rules came into force because it is stated in that letter as follows While following the procedure laid down in the existing rules. published under Government Notification Nb. 0-1119/XI-850 dated July 11, 1950 which was adopted in supersession of rules 9 to 12 of the U.P subordinate Civil Courts ministerial establishment Rules 1947 and amplified in G.O. No.0-2248/II-8-III-1950 dated August 30, 1950, the District Judge should emphasis added Further it appears that in the year 1981 in some other districts of Uttar Pradesh examinations were held as per the 1950 Rules. This is borne out by the observation of the High Court in its judgment where it has expressed its reluctance to set aside the results of the examinations in the other districts and companyfined the operation of its judgment to Kanpur District only. The 1969 Amending Rules appear to have been ignored by some District Judges. In the circumstances having regard to the lacuna created by the number- repromulgation of rule 11 of the 1947 Rules it has to be held that there was numbereffective substitution of the 1950 Rules brought about by the 1969 Amending Rules. The 1950 Rules should therefore be held to be operating even in the year 1981. Hence the examinations held according to them cannot be held to be bad. We do number agree with the view of the High Court that the 1950 Rules have been repealed by the 1975 Rules insofar as the Subordinate Civil Courts are companycerned. It is true that rule 20 of the 1975 Rules clearly stated that the 1950 Rules had been repealed. But the 1975 Rules did number apply to the subordinate companyrts under the companytrol and superintendence of the High Court. Hence the 1950 Rules insofar as they applied to the subordinate companyrts companytinued to be in force. The finding of the High Court on this question is erroneous and is liable to be set aside. Moreover, this is a case where the petitioner in the writ petition should number have been granted any relief. He had appeared for the examination without protest. He filed the petition only after he had perhaps realised that he would number succeed in the examination. The High Court itself has observed that the setting aside of the results of examinations held in the other districts would cause hardship to the candidates who had appeared there. The same yardstick should have been applied to the candidates in the District of Kanpur also. They were number responsible for the companyduct of the examination. For the foregoing reasons we feel that the judgment of the High Court should be set aside. We accordingly set aside the judgment of the High Court and dismiss the Writ Petition. The appellant and all other successful candidates at the 1981 examination held in Kanpur shall be appointed in accordance with the Rules. We further direct that they shall be given the salary, allowances, increments and seniority to which they would have been entitled but for the judgment of the High Court. But they will number be entitled to any salary and allowances for the period during which they have number actually worked. We also make it clear that if in any other centre, selections and appointments have been made on the basis of the 1969 Amending Rules they shall remain undisturbed. The order passed by the High Court in the companynected writ petition No. 10224 of 1983 on its file is also set aside. Similarly the oder passed in writ petition No.5073 of 1984 on the file of the High Court is also reversed. There shall be a companymon order in these companynected cases as directed in this appeal. The appeal is accordingly allowed. No companyts. The High Court may take steps, if it so desires, to promulgate a fresh set of Rules of recruitment for-the staff in the subordinate companyrts early.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2774 NCE of 1985. From the Judgment and Order dated 6th May, 1985 of the Allahabad High Court in Election Petition No. 2 of 1985. Ravi Prakash Gupta, N.M. Popli and Ms. Kirti Gupta for the Appellant. Dr. Y.S. Chitale, M.R. Sharma, S. C. Maheshwari, Ms. Rachna Joshi and Dalveer Bhandari for the Respondent. The Judgment of the Court was delivered by THAKKAR, J. An election petition having been dismissed on the ground that it did number companyply with the mandatory requirement to furnish material facts and particulars enjoined by Section 83 of the Representation of People Act and that it did number disclose a cause of action, the election petitioner has appealed to this Court under Section 116-A of the Representation of the People Act of 1951 Act . The respondent was elected as a Member of the Lok Sabha from the Amethi Constituency of Uttar Pradesh in the general elections held on 24th December, 1984 under Section 15 of the Act. Having secured the highest votes 3,65,041 the respondent was declared as elected on December 29, 1984. On 12th February, 1985, the last date from challenging the election the appellant who claims to be a worker of the Rashtriya Sanjay Manch , an elector from the Amethi companystituency, filed the election petition giving rise to the present appeal. The election of the returned candidate, respondent herein, was challenged on the ground of alleged companyrupt practices as defined by the Act. Seventeen grounds set out in para 4 I to XVII of the election petition were called into aid in support of the challenge. The respondent upon being served, instead of filing a written statement, raised preliminary objections to the maintainability of the petition on a number of grounds inter alia companytending that the petition was lacking in material facts and particulars and was defective on that account, and that since it did number disclose any cause of action it deserved to be dismissed. The appellant on his part filed two applications for amendment of the election petition. None of which was for supplying the material facts and particulars which were missing . All these applications were heard together and were disposed of by the Judgment under appeal upholding the preliminary objection raised on behalf of the Respondent and dismissing the election petition. Hence this appeal. In a democratic polity election is the mechanism devised to mirror the true wishes and the will of the people in the matter of choosing their political managers and their representatives who are supposed to echo their views and represent their interest in the legislature. The results of the Election are subject to judicial scrutiny and companytrol only with an eye on two ends. First, to ascertain that the true will of the people is reflected in the results and second, to secure that only the persons who are eligible and qualified under the Constitution obtain the representation. In order that the true will is ascertained the Courts will step in to protect and safeguard the purity of Elections, for, if companyrupt practices have influenced the result, or the electorate has been a victim of fraud or deception or companypulsion on any essential matter, the will of the people as recorded in their votes is number the free and true will exercised intelligently by deliberate choice. It is number the will of the people in the true sense at all. And the Courts would, therefore, it stands to reason, be justified in setting aside the election in accordance with law if the companyrupt practices are established. So also when the essential qualifications for eligibility demanded by the companystitutional requirements are number fulfilled, the fact that the successful candidate is the true choice of the people is a companysideration which is totally irrelevant numberwithstanding the fact that it would be virtually impossible to re-enact the elections and reascertain the wishes of the people at the fresh elections the time-scenario having changed. And also numberwithstanding the fact that elections involve companysiderable expenditure of public revenue number to speak of private funds and result in loss of public time, and accordingly there would be good reason for number setting at naught the election which reflects the true will of the people lightly. In matters of election the will of the people must prevail and Courts would be understandably extremely slow to set at naught the will of the people truly and freely exercised. If Courts were to do otherwise, the Courts would be pitting their will against the will of the people, or companyntermanding the choice of the people without any object, aim or purpose. But where companyrupt practices are established the result of the election does number echo the true voice of the people. The Courts would number then be deterred by the aforesaid companysiderations which in the companyruption-scenario lose relevance. Such would be the approach of the Court in an election matter where companyrupt practice is established. But what should happen when the material facts and particulars of the alleged companyrupt practices are number furnished and the petition does number disclose a cause of action which the returned candidate can under law be called upon to answer? The High Court has given the answer that it must be summarily dismissed. The appellant has challenged the validity of the view taken by the High Court. Learned companynsel for the appellant has urged four submissions in support of this appeal viz A - Since the Act does number provide for dismissal of an election petition on the ground that material particulars necessary to be supplied in the election petition as enjoined by Section 83 of the Act are number incorporated in the election petition inasmuch as Section 86 of the Act which provides for summary dismissal of the petition does number advert to Section of the Act there is numberpower in the Court trying election petitions to dismiss the petition even in exercise of powers under the Code of Civil Procedure. B - Even if the Court has the power to dismiss an election petition summarily otherwise than under Section 86 of the Representation of People Act, the power cannot be exercised at the threshold. C - In regard to seven grounds of challenge embodied in paragraph 4 of the election petition viz. I, II i, ii iii , XIII, XIV and XV the High Court was number justified in dismissing the petition. D - Even if the powers under the Code of Civil Procedure can be exercised by the Court hearing election petitions worse companyes to worse, an election petition may be rejected under Order 7, Rule 11 of the Code of Civil Procedure, but in numbercase can it be dismissed. GROUND A In order to understand the plea, a glance at Sections 83 and 86 1 in so far as material is called for - Contents of petition- 1 an election petition a shall companytain a companycise statement of the material facts on which the petitioner relies b shall set forth full particulars of any companyrupt practice that the petitioner alleges, including as full a statement as possible of the names of the parties alleged to have companymitted such companyrupt practice and the date and place of the companymission of each of such practice and c shall be signed by the petitioner and verified in the manner laid down in the Code of Civil Procedure, 1908 5 of 1908 for the verification of pleadings Provided that where the petitioner alleges any companyrupt practice, the petition shall also be accompanied by an affidavit in the prescribed form in support of the allegation of such companyrupt practice and the particulars thereof Any schedule or annexure to the petition shall also be signed by the petitioner and verified in the same manner as the petition. 86 - Trial of election petitions - The High Court shall dismiss an election petition which does number companyply with the provisions of section 82 or section 117. Explanation - An order of the High Court dismissing an election petition under this sub- section shall be deemed to be an order made under clause a of section 98. The argument is that where the legislature wanted to provide for summary dismissal of the election petition, the legislature has spoken on the matter. The intention was to provide for summary dismissal only in case of failure to companyply with the requirement of Sections 81, 82 and 117 1 and number Sec. 83. ------------------------------------------------------------ 1 81. Presentation of petitions - 1 An election petition calling in question any election may be presented on one or more of the grounds specified in sub-section 1 of Section 100 and Section 101 to the High Court by any candidate at such election or any elector within forty-five days from, but number earlier than the date of election of the returned candidate or if there are more than returned candidate at the election and the dates of their election are different, the later of those two dates. Explanation In this sub-section elector means a person who was entitled to vote at the election to which the election petition relates, whether he has voted at such an election or number. Every election petition shall be accompanied by as many companyies thereof as there are respondents mentioned in the petition and every such companyy shall be attested by the petitioner under his own signature to be a true companyy of the petition. Parties of the petition - A petitioner shall join as respondents to his petition - a where the petitioner, in addition to claiming declaration that the election of all or any of the returned candidate is void, claims a further declaration that he himself or any other candidate has been duly elected, all the companytesting candidates other than the petitioner, and where numbersuch further declaration is claimed, all the returned candidates and b any other candidate against whom allegations of any companyrupt practice are made in the petition. The argument is that inasmuch as Section 83 1 is number adverted to in Section 86 in the companytext of the provisions, number-compliance with which entails dismissal of the election petition, it follows that number-compliance with the requirements of Section 83 1 , even though mandatory, do number have lethal companysequence of dismissal. Now it is number disputed that the Code of Civil Procedure CPC applies to the trial of an election petition by virtue of section 87 of the Act 2 . Since CPC is applicable, the Court trying the election ------------------------------------------------------------ Security for companyts - 1 At the time of presenting an election petition, the petitioner shall deposit in the High Court in accordance with the Rules of the High Court a sum of two thousand rupees as security for the companyts of the petition. During the companyrse of the trial of an election petition, the High Court may, at any time, call upon the petitioner to give such further security for companyts as it may direct. 2 87. Procedure before the High Court - 1 Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the High Court, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908 5 of 1908 to the trial of the suits Provided that the High Court shall have the discretion to refuse, for reasons to be recorded in writing, to examine any witness or witnesses if it is of the opinion that the evidence of such witness or witnesses is number material for the decision of the petition or that the party tendering such witness or witnesses is doing so on frivolous grounds or with a view to delay the proceedings. The provisions of the Indian Evidence Act, 1872 1 of 1872 , shall, subject to the provisions of this Act, be deemed to apply in all respects to the trial of an election petition. petition can act in exercise of the powers of the Code including Order 6 Rule 16 and Order 7 Rule 11 a which read thus - Order 6, Rule 16 Striking out pleadings - The Court may at any stage of the proceedings order to be struck out or amend any matter in any pleading - a which may be unnecessary, scandalous, frivolous or vexatious, or b which may tend to prejudice, embarrass or delay the fair trial of the suit or c which is otherwise an abuse of the process of the Court. Order 7, Rule 11 Rejection of Plaint - The plaint shall be rejected in the following cases - a where it does number disclose a cause of action xxxxx xxxxx xxxxx The fact that Section 82 does number find a place in Section 86 of the Act does number mean that powers under the CPC cannot be exercised. There is thus numbersubstance in this point which is already companycluded against the appellant in Hardwari Lal v. Kanwal Singh, 1972 2 S.C.R. 742 wherein this Court has in terms negatived this very plea in the companytext of the situation that material facts and particulars relating to the companyrupt practice alleged by the election petitioner were number incorporated in the election petition as will be evident from the following passage extracted from the judgment of N. Ray, J. who spoke for the three-judge Bench The allegations in paragraph 16 of the election petition do number amount to any statement or material fact of companyrupt practice. It is number stated as to which kind or form of assistance was obtained or procured or attempted to obtain or procure. It is number stated from whom the particular type of assistance was obtained or procured or attempted to obtain or procure. It is number stated in what manner the assistance was for the furtherance of the prospects of the election. The gravamen of the charge of companyrupt practice within the meaning of Section 123 7 of the Act is obtaining or procuring or abetting or attempting to obtain or procure any assistance other than the giving of vote. In the absence of any suggestion as to what that assistance was the election petition is lacking in the most vital and essential material fact to furnish a cause of action. Counsel on behalf of the respondent submitted that an election petition companyld number be dismissed by reason of want of material facts because Section 86 of the Act companyferred power on the High Court to dismiss the election petition which did number companyply with the provisions of Section 81, or Section 82 or Section 117 of the Act. It was emphasized that Section 83 did number find place in section 86. Under section 87 of the Act every election petition shall be tried by the High Court as nearly as may be in accordance with the procedure applicable under the Code of Civil Procedure 1908 to the trial of the suits. A suit which does number furnish cause of action can be dismissed. In view of this pronouncement there is numberescape from the companyclusion that an election petition can be summarily dismissed if it does number furnish cause of action in exercise of the powers under the Code of Civil Procedure. So also it emerges from the aforesaid decision that appropriate orders in exercise of powers under the Code of Civil Procedure can be passed if the mandatory requirements enjoined by Section 83 of the Act to incorporate the material facts in the election petition are number companyplied with. This Court in Samant N. Balkrishna Anr. v. George Fernandez Ors., 1969 3 S.C.C. 239, has expressed itself in numberunclear terms that the omission of a single material fact would lead to an incomplete cause of action and that an election petition without the material facts relating to a companyrupt practice is number an election petition at all. So also in Udhav Singh v. Madhav Rao Scindia, 1977 1 S.C.C. 511, the law has been enunciated that all the primary facts which must be proved by a party to establish a cause of action or his defence are material facts. In the companytext of a charge of companyrupt practice it would mean that the basic facts which companystitute the ingredients of the particular companyrupt practice alleged by the petitioner must be specified in order to succeed on the charge. Whether in an election petition a particular fact is material or number and as such required to be pleaded is dependent on the nature of the charge levelled and the circumstances of the case. All the facts which are essential to clothe the petition with companyplete cause of action must be pleaded and failure to plead even a single material fact would amount to disobediance of the mandate of Section 83 1 a . An election petition therefore can be and must be dismissed if it suffers from any such vice. The first ground of challenge must therefore fail. GROUND B Learned companynsel for the petitioner has next argued that in any event the powers to reject an election petition summarily under the provisions of the Code of Civil Procedure should number be exercised at the threshold. In substance, the argument is that the companyrt must proceed with the trial, record the evidence, and only after the trial of the election petition is companycluded that the powers under the Code of Civil Procedure for dealing appropriately with the defective petition which does number disclose cause of action should be exercised. With respect to the learned companynsel, it is an argument which it is difficult to companyprehend. The whole purpose of companyfernment of such powers is to ensure that a litigation which is meaningless and bound to prove abortive should number be permitted to occupy the time of the companyrt and exercise the mind of the respondent. The sword of Damocle need number be kept hanging over his head unnecessarily without point or purpose. Even in an ordinary Civil litigation the Court readily exercises the power to reject a plaint if it does number disclose any cause of action. Or the power to direct the companycerned party to strike out unnecessary, scandalous, frivolous or vexatious parts of the pleadings. Or such pleadings which are likely to cause embarrassment or delay the fair trial of the action or which is otherwise an abuse of the process of law. An order directing a party to strike out a part of the pleading would result in the termination of the case arising in the companytext of the said pleading. The Courts in exercise of the powers under the Code of Civil Procedure can also treat any point going to the root of the matter such as one pertaining to jurisdiction or maintainability as a preliminary point and can dismiss a suit without proceeding to record evidence and hear elaborate arguments in the companytext of such evidence, if the Court is satisfied that the action would terminate in view of the merits of the preliminary point of objection. The companytention that even if the election petition is liable to be dismissed ultimately it should be so dismissed only after recording evidence is a thoroughly misconceived and untenable argument. The powers in this behalf are meant to be exercised to serve the purpose for which the same have been companyferred on the companypetent Court so that the litigation companyes to an end at the earliest and the companycerned litigants are relieved of the psychological burden of the litigation so as to be free to follow their ordinary pursuits and discharge their duties. And so that they can adjust their affairs on the footing that the litigation will number make demands on their time or resources, will number impede their future work, and they are free to undertake and fulfil other companymitments. Such being the position in regard to matters pertaining to ordinary Civil litigation, there is greater reason for taking the same view in regard to matters pertaining to elections. So long as the sword of Damocles of the election petition remains hanging an elected member of the Legislature would number feel sufficiently free to devote his whole-hearted attention to matters of public importance which clamour for his attention in his capacity as an elected representative of the companycerned companystituency. The time and attention demanded by his elected office will have to be diverted to matters pertaining to the companytest of the election petition. Instead of being engaged in a campaign to relieve the distress of the people in general and of the residents of his companystituency who voted him into office, and instead of resolving their problems, he would be engaged in a campaign to establish that he has in fact been duly elected. Instead of discharging his functions as the elected representative of the people, he will be engaged in a struggle to establish that he is indeed such a representative, numberwithstanding the fact that he has in fact won the verdict and the companyfidence of the electorate at the polls. He will have number only to wind the vote of the people but also to win the vote of the Court in a long drawn out litigation before he can whole-heartedly engaged himself in discharging the trust reposed in him by the electorate. The pendency of the election petition would also act as a hindrance if he be entrusted with some public office in his elected capacity. He may even have occasions to deal with the representatives of foreign powers who may wonder whether he will eventually succeed and hesitate to deal with him. The fact that an election petition calling into question his election is pending may, in a given case, act as a psychological fetter and may number permit him to act with full freedom. Even if he is made of stern metal, the companystraint introduced by the pendency of an election petition may have some impact on his sub-conscious mind without his ever being or becoming aware of it. Under the circumstances, there is greater reason why in a democratic set-up, in regard to a matter pertaining to an elected representative of the people which is likely to inhibit him in the discharge of his duties towards the Nation, the companytroversy is set at rest at the earliest, if the facts of the case and the law so warrant. Since the Court has the power to act at the threshold the power must be exercised at the threshold itself in case the Court is satisfied that it is a fit case for the exercise of such power and that exercise of such powers is warranted under the relevant provisions of law. To wind up the dialogue, to companytend that the powers to dismiss or reject an election petition or pass appropriate orders should number be exercised except at the stage of final judgment after recording the evidence even if the facts of the case warrant exercise of such powers, at the threshold, is to companytend that the legislature companyferred these powers without point or purpose, and we must close our mental eye to the presence of the powers which should be treated as number-existent. The Court cannot accede to such a proposition. The submission urged by the learned companynsel for the petitioner in this behalf must therefore be firmly repelled. GROUND C The learned companynsel for the election pecitioner has very fairly companytended that out of the 17 grounds embedded in the election petition, grounds other than the seven mentioned by him cannot be pressed into service and that he would restrict his submissions to these seven grounds. It is therefore unnecessary to advert to grounds other than the seven grounds which have been urged in support of this petition. We will accordingly proceed to companysider the plea urged to the effect that in regard to the aforesaid alleged companyrupt practices, the High Court was number justified in dismissing the election petition. Before we deal with these grounds seriatim, we companysider it appropriate to restate the settled position of law as it emerges from the numerous decisions of this Court which have been cited before us in regard to the question as to what exactly is the companytent of the expression material facts and particulars, which the election petitioner shall incorporate in his petition by virtue of Section 83 1 of the Act. What are material facts and particulars ? Material facts are facts which if established would give the petitioner the relief asked for. The test required to be answered is whether the Court companyld have given a direct verdict in favour of the election petitioner in case the returned candidate had number appeared to oppose the election petition on the basis of the facts pleaded in the petition. Manubhai Nandlal Amarsey v. Popatlal Manilal Joshi Ors., 1969 3 S.C.R. 217. In regard to the alleged companyrupt practice pertaining to the assistance obtained from a Government servant, the following facts are essential to clothe the petition with a cause of action which will call for an answer from the returned candidate and must therefore be pleaded. Hardwari Lal v. Kanwal Singh, 1972 2 S.C.R. 742 a mode of assistance b measure of assistance and c all various forms of facts pertaining to the assistance. In the companytext of an allegation as regards procuring, obtaining, abetting or attempting to obtain or procure the assistance of Government servants in election it is absolutely essential to plead the following a kind or form of assistance obtained or procured b in what manner the assistance was obtained or procured or attempted to be obtained or procured by the election-candidate for promoting the prospects of his election Hardwari Lal v. Kanwal Singh. supra The returned candidate must be told as to what assistance he was supposed to have sought, the type of assistance, the manner of assistance, the time of assistance, the persons from whom the actual and specific assistance was procured Hardwari Lal v. Kanwal Singh supra There must also be a statement in the election petition describing the manner in which the prospects of the election was furthered and the way in which the assistance was rendered. Hardwari Lal v. Kanwal Singh supra . The election petitioner must state with exactness the time of assistance, the manner of assistance, the persons from whom assistance was obtained or procured, the time and date of the same, all these will have to be set out in the particulars Hardwari Lal v. Kanwal Singh supra . And having restated the settled position in regard to the companytent of the expression material facts, the time is number ripe to proceed to deal with the grounds on which the election of the returned candidate is assailed, seriatim. GROUND I Alleged companyrupt practice as incorporated in Ground I reads thus - The election of the respondent is liable to be set declared void because the respondent was guilty of the following companyrupt practice as defined under Section 123 7 of the Representation of People Act, 1951, read with Section 100 1 b and 100 D ii of the said Act, the said companyrupt practice was companymitted with the companysent of the respondent returned candidate and of other workers of his with his companysent. In any event, it was companymitted by the respondents agents in the interests of the returned candidate and the said companyrupt practice has materially affected the result of the election in so far as it companycerns the returned candidate. One M.H. Beg who at one time was the Chief Justice of the Supreme Court of India and is a close friend of the Nehru family and is personally known to and friendly with the respondent, appeared on the government companytrolled news media and made a speech praising the respondent and companyparing his entry into politics as the birth of new Arjuna, the insinuation being that the opposition were the kauravas. His appearance on the television was relayed day after day on the government companytrolled media. Television sets had been installed in practically every election office of the respondent in Amethi companystituency and throughout the election campaign thousands and thousands of voters were exposed to the television appearance and speech of the said Mr. Beg. Mr. Beg is a gazetted officer, being the Chairman of the Minorities Commission. His services were procured and obtained by the respondent, his agents and other persons with the companysent of the respondent with a view to assist the furtherance of the prospects of the respondents election. Mr. Beg was seen and heard on the television as later as 21st December, 1984. Propaganda about Mr. Begs was done particularly amongst the members of the Muslim companymunity. Apart from being gross misuse of the office of Chairman of the Minorities Commission, the same companystitutes a gross companyrupt practice under the election law. Why the High Court held that material facts and particulars are absent and did number disclose a cause of action ? The High Court observed - The companytention of the learned companynsel for the respondent is that there is numberpleading that Mr. Beg was a person in the service of the government as, according to the learned companynsel, the Chairman of the Minorities Commission is number a person in the S service of the government. Learned companynsel for the petitioner says that the petitioner had specifically pleaded that Mr. Beg was a gazetted officer which implies a pleading that he was in the service of the government. Learned companynsel for the respondent says that simply because a person is a gazetted officer, it is number necessary that he must also be a government servant because the appointment of so many persons is gazetted and yet some of them may number be government servants. Be that as it may, the fact remains that the petitioner had number stated in the pleading that Mr. Beg was a person in the service of the government as specifically required by Section 123 7 of the Act. This requirement is a requirement of the statute and is, therefore, a material fact within the meaning of Sec. 83 1 a of the Act. Similarly, the statement that the services of Mr. Beg were procured and obtained by the respondent, his agents and other persons with the companysent of the respondent is clearly vague as discussed above. It was incumbent upon the petitioner to specify which of the three alternatives he meant to plead in particular it was necessary for him to indicate the names of the respondents agents and other persons to enable the respondent to know that what was the case which he was expected to meet. Learned companynsel for the respondent further companytended that the petitioner has number set out the exact words used by Mr. Beg in his speech the expression a speech prais- ing the respondent and companyparing his entry into politics as the birth of new Arjuna is number what Mr. Beg might have said. In the case of K.M. Mani P.J. Antony, 1979 2 S.C. Cases 221, the speech made by a Police Officer exhorting the electors in an election meeting to support a candidate was questioned. It was held that a mere statement of the making of the speech or exhortation was number enough, and that transcript of the alleged speech or companytemporaneous record of the points or atleast substance of the speech should have been made available. In these circumstances the proposed pleading in this paragraph does number set out the material facts and, therefore, companystitutes an in companyplete cause of action under section 123 7 of the Act. Whether the High Court was right in taking the aforesaid view The averments companytained in paragraph 4 pertaining to Ground No.l do number satisfy the test prescribed in Manubhai Anarsey v. Popatlal Manilal Joshi Ors., supra and Hardwari Lal v. Kanwal Singh, supra . The most important test which remained unsatisfied is as regards the omission to satisfy in what manner the assistance was obtained and procured by the election-candidate for promoting the prospects of his election. All that has been stated is His services were procured and obtained by the respondent, his agents and other persons with the companysent of the respondent with a view to assist the furtherance of the prospects of the respondents election It is number mentioned as to who procured or obtained the services of Shri Beg, in what manner he obtained the services and what were the facts which went to show that it was with the companysent of the respondent. Unless these essential facts which would clothe the petition with a cause of action and which will call for an answer from the returned candidate are pleaded as per the law laid down in Manubbai Nandlal Amarsey v. Popatlal Hanilal Joshi Ors., supra it cannot be said that the petition discloses a cause of action in regard to this charge. In the absence of these material facts and particulars the Court companyld number have rendered a verdict in favour of the election petitioner in case the returned candidate had number appeared to oppose the election petition. It is number sufficient to show that a Government servant had appeared on the public media to praise one of the candidates. It must also be shown that the assistance of the Government servant was obtained either by the respondent or his agent or by any other person with the companysent of the election candidate or his election agent. The averments made in the petition do number show i who had obtained or procured the assistance from Shri Beg ii how he had obtained or procured the assistance of Shri Beg and iii how it was said that it was with the companysent of the respondent or his election agent. Nor is it shown which, if any, facts went to show that it was in furtherance of the prospects of the respondents election. In the absence of material facts and particulars in regard to these aspects, the petition would number disclose the cause of action. The High Court, was therefore, perfectly justified in reaching this companyclusion. The petition also does number disclose the exact words used in the speech or the time and date of making such a speech. Now, unless the relevant or offending passage from the speech is quoted, it cannot be said what exactly Shri Beg had said, and in what companytext, and whether it was calculated to promote the election prospects of the respondent. Be that as it may, inasmuch as these material facts and particulars to show that the services of Shri Beg were procured by someone with the companysent of the respondent or his election agent are number there, the averments pertaining to the charge do number disclose a cause of action. Unless the nexus between the appearance of Shri Beg on the media and the prior companysent of the respondent or his election agent in regard to what he was going to say and the purposes for which he was going to say is set out in the material particulars it cannot be said that it disclosed a cause of action and the test laid down in Manubhal Nandlals case, as also Hardwari Lals case is satisfied. The High Court was therefore justified in taking the view that it has taken. We may, in passing, mention a point made by learned companynsel for the respondent. It was submitted that the averment must also mention whether the interview was a live one telecast after the date of filing of the numberination. If it was one recorded prior to the said date it may number be of any companysequence. This argument also requires companysideration but we do number propose to rest our companyclusion on this aspect as it is number necessary to do so. GROUND II i It has been set out in para 4 of the petition in the following terms Throughout the petitioners companystituency in Amethi, worker employed by the respondent and or his agents painted available space with two slogans. The first one was BETI HAI SARDAR KI. DESHI KE GADDAR KI. Literally translated it implied one of the candidates i.e. Mrs. Maneka Gandhi is the daughter of a Sikh and that Sikhs including her father are traitors. The second slogan was MANEKA TERA YE ABHIMAN. BANANE NA DENGE KHALISTAN. Literally translated it means Maneka this is your illusion. We will number allow Khalistan to be set up. The clear insinuation was that the said candidate i.e. Mrs. Maneka Gandhi had a vision of Khalistan being set up, that her election would mean the creation of Khalistan and that she was a supporter of the Khalistan demand. These slogans were also painted on some of the vehicles used by the respondents workers during the companyrse of campaign. On every occasion those slogans were uttered and broadcast from vehicles and from microphones used at public meetings and from the Congress I party office in the companystituency of the respondent. The use of such slogans was the pet theme of almost every speech delivered in the companystituency during the election campaign. The use of these objectionable slogans and posters harmful to newspapers and the respondent must have known to them. But for the fact chat they had been used with his companysent, he would have taken some steps to repudiate them or have their use discontinued. Photographs of walls, with the said slogans alongwith certificates will be filed as Exhibit-A. Why the High Court held that material facts and particulars are absent and did number disclose a cause of action? In this companytext the High Court observed - The companytention of learned companynsel for the respondent is that this pleading suffers from lack of material facts because the names of the workers, employed by the respondent, or his agents, who painted the slogans or uttered them in speeches or broadcast from the vehicles, have number been indicated. It is pointed that the allegation regarding the painting of slogans is vague because it is stated to have been done by workers and or his agents signifying that the petitioner himself did number know whether painting work was done by workers employed by the respondent or by his agents or by both. I have already pointed out that this kind of statement is vague and embarrassing and, therefore, is companytrary to the companycept of material facts. In the case of Nihal Singh v. Rao Birendra Singh Anr., 1970 3 Supreme Court Cases 239 it was held that the allegation that at meetings in different villages, speeches were given on 5th and 12th May 1968 was vague in the absence of a specification of date and place of each meeting and evidence companyld number be permitted to be led in the matter. The allegation of companysent of the respondent to the paintings of the slogans or to their utterances in the speeches of his workers is only inferential. There is a distinction between companysent and companynivance. The pleading is in the nature of a pleading of companynivance and number of companysent which is number enough, vide the case of Charan Lal Sahu v. Giani Zail Singh A.I.R. 1984 S.C. 309 . In the case of Surendra Singh v. Hardial Singh A.I.R. 1985 S.C. 89 , it has been indicated in para 37 that companysent is the life-line to link up the candidate with the action of the other person which may amount to companyrupt practice unless it is specifically pleaded and clearly proved and proved beyond reasonable doubt, the candidate cannot be charged for the action of others. Whether the High Court was right in taking the aforesaid view There is a glaring omission to mention the names of the workers said to have been employed by the respondent or his agents who have allegedly painted the slogans. So also numbermaterial particulars are given as regards the vehicles on which the said slogans have been said to have been painted. There are numbermaterial particulars or facts. We are of the view that inasmuch as the material facts and particulars in regard to this alleged practice were number mentioned and the High Court was justified in taking the view that it had taken. The averments companytained in regard to this charge also do number satisfy the test laid down by the various decisions of this Court adverted hereinabove. A Division Bench of this Court in Nihal Singh v. Rao Birendra Singh, 1970 3 S.C.C. 239, speaking through Bhargava, J. has observed - The pleading was so vague that it left a wide scope to the appellant to adduce evidence in respect of a meeting at any place on any date that he found companyvenient or for which he companyld procure witnesses. The pleding, in fact, was so vague and was wanting in essential particulars that numberevidence should have been permitted by the High Court on this point see para 8 The principle laid down is that the pleading in regard to matters where there is scope for ascribing an alleged companyrupt practice to a returned candidate in the companytext of a meeting of which dates and particulars are number given would tantamount to failure to incorporate the essential particulars and that inasmuch as there was a possibility that witnesses companyld be procured in the companytext of a meeting at a place or date companyvenient for adducing evidence, the High Court should number even have permitted evidence on that point. In other words, numberamount of evidence companyld cure the basic defect in the pleading and the pleading as it stood must be companystrued as one disclosing numbercause of action. In the light of the aforesaid principle laid down by the Supreme Court which has held the field for more than 15 years, the High Court was perfectly Justified in reaching the companyclusion called into question by the appellant. Ground II ii Alleged companyrupt practice as incorporated in Ground II ii reads as under - The respondent himself toured the companystituency on the 12th and 13th December, 1984. On the night of the 11th as he was entering the companystituency he was stopped by the petitioners workers at Inhauna Kashah. The walls there bore these slogans. The petitioner alongwith other workers stopped the respondents vehicle and drew his attention to the so vulgar slogans. The respondent saw numberhing objectionable in these slogans. He was requested to give instructions to the authorities that these should be removed and he companytemptuously had the workers dismissed and dispersed. He declared that their leader refering to Mrs. Maneka Gandhi deserves numberhing better. The respondent delivered several speeches during the companyrse of his visit. In numbere of these speeches did he repudiate these slogans. He repeatedly referred to the assassination of his mother and to the Anandpur Resolution saying that the opposition had encouraged seccessionist and violent elements and that the opposition companyclaves in the past had given rise to the emotion that had eventually taken the prime minister, his mothers life. He insinuated that the assassins were sikhs and then asked the audience to make up their minds whether they still wanted somebody from the same companymunity to succeed in the election. Why the High Court held that material facts and particulars are absent and did number disclose a cause of action ? The High Court observed Learned companynsel for the respondent companyrectly companytends that these averments again are vague because they do number describe the petitioners workers who stopped the respondent or furnish details of the speeches in which the respondent was expected to repudiate the slogans. He has also companyrectly urged that the so-called request if any, to the respondent for instructions to the authorities was misconceived and did number establish any obligation of the respondent to direct the authorities under any provision of the election law. Whether the High Court was right in taking the aforesaid view In this case also, numbertime, date and place of the speeches delivered by the respondent have been mentioned. No exact extracts from the speeches are quoted. Nor have the material facts showing that such statements imputed to the respondent were indeed made, been stated. No allegation is made to the effect that it was in order to prejudice the election of any candidate. Or in order to further the prospects of the election of the respondent. The essential ingredients of the alleged companyrupt practice have thus number been spelled out. So far as the meeting is companycerned, the principle 1 laid down in Nihal Singhs case supra discussed in the companytext of the charge companytained in ground Il i is attracted. The view taken by the High Court is therefore unexceptionable. Ground II iii The alleged companyrupt practice as incorporated in ground II iii reads as under - In line with the respondents speeches, his . workers with the knowledge and companysent of the respondent and other agents of the respondent entrusted with the task of companyducting the election campaign caused a poster of Hindi and Urdu to be affixed in all prominant places throughout the companystituency. The said poster was in fact a page of ------------------------------------------------------------ The pleading was so vague that it left a wide scope to the appellant to adduce evidence in respect of a meeting at any place on any date that he found companyvenient or for which he companyld procure witnesses. The pleading, in fact, was so vague and was wanting in essential particulars that numberevidence should have been permitted by the High Court on this point the Blitz newspaper of 30.6.84 called the Id Special. The Id that year was on 1st July, 1984. The heading of the said poster which was underlined in red alleged companyspiracy between the leader of the petitioner party and Bhindaranwale. Photographs of Mrs Maneka Gandhi and Bhindaranwale appeared separately on left and right hand companyners of the said advertisement. A literal English translation of the poster is given below - A companyy of the said poster will be filed as Exhibit-B. The poster also purported to carry a fascimile companyy of a letter dated the 10th September, 1983, purporting to be addressed by Shri Kalpnath Sonkar, a member of the Rashtriya Sanjay Manch, to Shri Bhindaranwale. The letter is a forgery and that it was forged was publicly stated by alleged author of the alleged letter and a criminal case is pending in the matter thereof. The letter was fabricated expressly for the express purpose of showing - a that Mrs. Maneka Gandhi was in secret companyspiracy with Bhindaranwale. b that Mrs. Maneka Gandhi illegally supplied arms to Bhindaranwale and other successionists and terrorists. c that Maneka Gandhi was in sympathy with the creation of Khalistan and the division of the companyntry and the use of violence to achieve that end. The said allegations are totally false and fabrication. The respondent knew them to be false. He did number and companyld number believe them to be true. That companyplaints were made to the District authorities about the obnoxious wall paintings and posters to which the attention of the respondent had been drawn. The said authorities while clearly admitting the R.S.M. election agents and worker as well as to the press companyrespondents that they were objectionable took numbersteps to remove or obliterate them. Prominent newspapers and press companyrespondents companytinued to draw attention to those slogans and posters but the respondent or his workers took numbersteps whatsoever to stop their exhibition, circulation and use. The respondent companydoned and sanctioned the exhibition and circulation of this poster. He did numberhing to stop the use thereof by his workers. The wall painting mentioned above and this poster were paid out of Congress I Partys. These were therefore, his own expenses sanctioned by himself. Cutting of some of the newspapers reports will be filed as Exhibit C. Why the High Court held that material facts and particulars are absent and did number disclose a cause of action? The High Court held It appears to me that if an averment of fact is an essential part of the pleading, it must be companysidered to be an integral part of the peti- tion. If such an averment is number actually put in the election petition, the petition suffers from the lack of material facts and therefore, the statement of cause of action would be incomplete. If it is stated in the election petition, either in the body of the petition itself or by way of annexure, but its companyy is number furnished to the respondent, the election petition would be hit by the mischief of Section 81 3 read with Section 86 1 of the Act. In my opinion, the reference to the poster and its proposed translation in the election petition, which was never incorporated into it, are material facts under Section 83 1 a of the Act their absence cannot number be made good by means of an amendment. The pleading as it stands, and even if it were permitted to be amended would suffer from lack of cause of action on this material fact, and, therefore, is liable to be struck out. The newspaper cutting are number used by the petition as companytaining fact, but only as evidence to that extent amendment is allowed. Whether the High Court wax right in taking the aforesaid view? It will be numbericed that in the election petition it has been mentioned that a companyy of the poster would be subsequently filed, and the cuttings of some newspaper reports would also be filed later on. The election petitioner sought an amendment to delete the averments on both these aspects. The High Court rejected the prayer in regard to poster Ex. B , but granted the prayer in respect of the cuttings. The High Court has taken the view that the poster was claimed to be an integral part of the election petition and since it was number filed much less its companyy furnished to the respondent the pleading suffered from infirmity and number-compliance with Section 83 1 read with Section 86 1 of the Act. Non-filing of the poster is fatal to the election petition as in the absence thereof the petition suffers from lack of material facts and therefore the statement of cause of action would be incomplete. Nothing turns on the facts whether or number the words a companyy of the said poster would be filed as Exhibit B are allowed to be retained in the election petition or are deleted as prayed for by the appellant. The fact remains that numbercopy of the poster was produced. It must also be realized that the election petitioner did number seek to produce the companyy of the poster, but only wanted a reference to it deleted so that it cannot be said that the accompaniments were number produced along with the election petition. The fact remains that without the production of the poster, the cause of action would number be companyplete and it would be fatal to the election petition inasmuch as the material facts and particulars would be missing. So also it companyld number enable the respondent to meet the case. Apart from that the most important aspect of the matter is that in the absence of the names of the respondents workers, or material facts spelling out the knowledge and companysent of the respondent or his election agent, the cause of action would be incomplete. So much so that the principle enunciated by this Court in Nihal Singhs case supra would be attracted. And the Court would number even have permitted the election petitioner to lead evidence on this point. The High Court was therefore fully justified in taking the view that it has taken. Ground XIII Alleged companyrupt practice as incorporated in ground No. XIII reads as follows - That, in the later half of June, 1983, a family friend of the respondent and a very close and intimate friend of the respondents mother, Shri Mohammed Yunus, wrote a book called Son of India. A companymittee called the Son of India companymittee published the book. It was printed by Virendra Printers of Karol Bagh, New Delhi. The Son of India companymittee companysisted among others of Minister Narasimha Rao, M.P., the Executive President of the Congress I Shri Kamlapati Tripathi, Ministers Sitaram Kesari and Narain Dutt Tiwari. The book starts with a brief companyment by the editor entitled Pathakon Se Do Battein short dialogue with the readers and is followed by a 22 page story of the two brothers, namely the respondent and his late brother Shri Sanjay Gandhi. This book was written, printed and published with the knowledge, companysent and assistance of the respondent. The respondent by himself by the party, by his workers and through other persons acting with the companysent of the respondent and or his election agent, distributed the said book in the Amethi companystituency during the entire companyrse of the election campaign. The said book companytains statements which are false and which to the knowledge of the respondent were believed to be false. The said statements are in relation to the personal character and companyduct of Mrs. Maneka Gandhi. The said statements were reasonably calculated to prejudice the prospects of the petitioners election. All statements made in relation to the character or companyduct of the petitioner are totally false. In particular, the petitioner says that the following statements made therein answer the description aforesaid and companystitute a gross, companyrupt practice within the meaning of Section 123 4 of the Representation of the People Act, 1951. The said companyrupt practice has been companymitted by the respondent, the returned candidate. It has also been companymitted by his election agents and by other persons with the companysent of the respondent and or his election agents. A companyy of the booklet entitled Son of India will be filed as Exhibit P. It has also been companymitted in the interest of the respondent returned candidate and by his agents. The said companyrupt practice renders the election of the respondent liable to be set aside and declared void, as a result of Section 100 I b of the said Act. Reproduced herebelow are some of the false statements companytained in the said book Son of India relating to the personal character and companyduct of Mrs. Maneka Gandhi one of the candidates in the said election. That Mrs. Maneka Gandhi utilised her marriage to the late Sanjay Gandhi as a means of enriching herself. She is spending so much money on herself and her various activities. Where does all this money companye from? The insinuation is that the petitioner is possessed of wealth companyruptly made which is number being spent. That she misused her marriage to increase her influence and amass wealth. That her marriage life was one of the companystant friction with her husband. That due to her foolish actions, her husband became more and more unhappy. It is as a result of domestic unhappiness created by her that Sanjay Gandhi to drown his sorrow took to flying. His flying in the plane which ultimately crashed and in which he died as a direct result of her misconduct. That she was totally indifferent to her husbands death. That she left her mother-in-laws home because she was denied a Parliamentary Seat. That she had numberlove for her husband and she should be ashamed of herself. Why the High Court held that material facts and particulars are absent and had number disclosed a cause of action? The High Court observed as under - In this companynection learned companynsel for the respondent has also referred to the averment that the said statement were reasonably calculated to prejudice the prospects of the petitioners election. Similarly, he refers to statements b companytained in the paragraph wherein an observation is made that the insinuation is that the petitioner is possessed of wealth companyruptly made The companytention is that these averments would apply to Smt. Maneka Gandhi personally as if she was the petitioner and number to Ch. Azhar Hussain the present petitioner. Ch. Azhar Hussain was number companytesting the election, he was only a voter. The statement that the petitioners election were calculated to be prejudiced or that the petitioner was possessed of wealth companyruptly made was wholly inapplicable to the petitioner Ch. Azhar Hussain and companyld certainly apply to Smt. Maneka Gandhi. It is, therefore, urged that this pleading is number made by the petitioner himself and therefore, cannot be looked into. Realising the error the petitioner has applied for amendment to the petition to mention that the statements were calculated to prejudice the leader of the petitioners political party and that regarding possession of wealth, it related to the leader of the petitioners political party, namely, Smt. Maneka Gandhi. It appears to me that, as pointed out by the learned companynsel for the respondent, the proposed amendment changes the entire nature of the pleading in this paragraph and is number merely a clerical mistake. It is an indication of the fact that the pleading has been made without an application of mind and it seems to me that it is hit by one of the principles set forth in Section 86 5 of the Act for which an amendment must number be allowed. I am number satisfied that the proposed amendment companyld justly be allowed and therefore, must fail. On a companysideration of all the matters, I would hold that the pleading in this paragraph is number sustainable, suffers from lack of material facts as a result of number-application of mind of the petitioner himself and is irrelevant. Whether the High Court was right in taking the aforesaid view - There is numberaverment to show that the publication was made with the knowledge or companysent of the returned candidate when the book was published in June, 1983. In fact, in 1983 there was numberquestion of having acted in anticipation of the future elections of 1985 and in anticipation of the respondent companytesting the same. In the election petition even the offending paragraphs have number been quoted. The petitioner has set out in paragraphs a to h the inferences drawn by him or the purport according to him. This apart, the main deficiency arises in the following manner. The essence of the charge is that this book companytaining alleged objectionable material was distributed with the companysent of the respondent. Even so strangely enough even a bare or bald averment is number made as to i whom the returned candidate gave companysent ii in what manner and how and iii when and in whose presence the companysent was given, to distribute these books in the companystituency. Nor does it companytain any material particulers as to in which locality it was distributed or to whom it was distributed, or on what date it was distributed. Nor are any facts mentioned which taken at their face value would slow that there was companysent on the part of the returned candidate. Under the circumstances it is difficult to companyprehend how exception can be taken to the view taken by the High Court. GROUND XIV Alleged companyrupt practice as incorporated in ground No. XIV reads thus - That during the same campaign in the Amethi companystituency, another booklet in Hindi with the photograph of the respondent on the companyer page under the title Rajiv Kyon Why Rajiv purporting to be written by one Jagdish Pyush, was distributed in lacs by the respondent, his election agent and a large number of other persons with the companysent of the respondent and or his election agent. On the third page of the said pamphlet occurs the following sentences Amethi is the place where Rajivs younger brother did his principal work. If Maneka was in sympathy with the desires of the late Sanjay Gandhi why would she number run an orphanage in Amethi. Why would she number serve the helpless poor and why would she number employ her vast assets Arbon Ki Sampati of hundres of crores in some companystructive work The same companyspiratorials and mischievous elements who had painted the hands of Sanjay Gandhi and Maneka yellow and the same foreign powers, disruptionists and enemies of the companyntry who got Maneka out of her family home, are number wanting to make a Razia Sultan or Noor Jahan and seeing her in those roles. These people obviously including the petitioner number merely desired the partition of Smt. Gandhis family, number only the partition of Amethi and Rai Bareilly, but also partition of the people and partition of the companyntry. The very people who want another Pakistan in India, who want Khalistan are the very persons who are tinkering with the progress of Amethi and cannot permit the widow of Sanjay Gandhi to be in the companypany of the companyntrys loafers, because numberfamily of India can permit its daughters or daughters-in-law and the widow of its loved one to go about behaving like a vagabond. She is in acute distress about her late husbands property. She is companyducting her politics in his name. She is abusing her monther-in-law and her brother-in-law. Having kicked her family, she is number doing her dirty deeds Gulchhade Uda Rahai Hai in a house which companyts Rs. 80,000 annual rent Social reformers had number advocated the pursuit of ambitions by widows and in the same vein, the pamphlet proceeds to state in other companytext thereafter that the petitioner moved about in the companypany of traitors. She has exploited the person of her innocent child for political purpose. For power and pleasure, Maneka can do anything. The petitioner says that the entire trend of this pamphlet and the propaganda companyducted on the basis thereof casts serious aspersions on the personal character of the candidate of his party. It accuses her of being possessed of companyrupt wealth, disregard of her husbands wishes, breaking of family ties for political ambitions number companyforming to the standard of companyduct expected of a widow, keeping companypany with questionable characters capable of any immoral action for pleasure of the body and even exploiting her innocent child for her own advancement. All these aspersions were extensively published with the knowledge and companysent of the respondent, as well as, with the knowledge and companysent of his election agent and by other persons with the companysent of the respondent and or his election agent. The publisher of this pamphlet is an important political worker of the Respondent. He is a member of his party and campaign extensively for the respondent and his companypany. The publication, printing and circulation thereof and the propaganda based thereon was in any event, done by the agents of the respondents and in the interest of the election of the respondent. Each of these statements is false. The respondent and others who made or repeated the same, believed them to be false. At any rate, they did number believe them to be true. These statements are in relation to the personal character or companyduct of the candidate and they are in relation to her candidature. These statements were reasonably calculated to prejudice the prospects of her election. The election of the respondent is thus liable to be declared void under section 100 1 b . This was also liable to be set aside under section 100 1 d ii , inasmuch as the result of the election in so far as it companycerned the returned candidate has been materially affected by this gross companyrupt practice. A companyy of the booklet Rajiv Kyon will be filed as Ex. Q. Why the High Court held that material facts and particulars are absent and had number disclosed a cause of action? In this companynection, the High Court observed - While undoubtedly these allegations relate to the personal character and companyduct of Smt. Maneka Gandhi, the elements of law required by Section 123 4 of the Act have number been specifically set out. As already held, it was the duty of the petitioner to make his choice of the particular person with whose companysent the statement was made or distributed. According to the petitioner himself it was number made by the respondent but by one Jagdish Piyush. The petitioner instead of pinpointing the particular person who distributed the booklet or with whose companysent it was distributed made a broad and vague statement that was done by the respondent, his election agent, a large number of other persons with his companysent and or with the companysent of his election agent. The date, time and place of distribution, the names of the agents or persons who distributed it have number been indicated and, therefore, the pleading is vague and cannot be sustained. Whether the High Court was right in taking the aforesaid view- On a scrutiny of the averments made in the election petition it is evident that it is number pleaded as to who has distributed the pamphlets, when they were distributed, where they were distributed and to whom they were distributed, in whose presence they were distributed etc. etc. pleading is ominuously silent on these aspects. It has number even been pleaded that any particular person with the companysent of the respondent or his election agent distributed the said pamphlets. in fact it has been stated by the learned companynsel for the respondent that numberelection agent has been appointed by the respondent during the entire elections . The pleading therefore does number spell out the cause of action. So also on account of the failure to mention the material facts, the Courts companyld number have permitted the election petitioner to adduce evidence on this point. It would therefore attract the doctrine laid down in Nihal Singhs case and then would be numberhing for the respondent to answer. Ground No. XV Alleged companyrupt practice as incorporated in ground No. XV reads as under That during the companyrse of the campaign, the respondent, his election agent and his party brought into existence a propaganda companymittee to further the prospects of the respondents election. This companymittee was called the Amethi Matdata Parishad. Through the agency of this Committee, the respondent, his election agent and others with their companysent and knowledge caused another pamphlet to be printed, published and circulated during the entire election campaign under the title How do Intelligent people think? who is an obstacle in the progress of Amethi. The said pamphlet inter alia, companytains the following statements - That Maneka Gandhi is surrounded only by anti- social elements. She was also seen in the companypany of terrorists. Her whole campaign is based on money In my view, Maneka seems to have a big hand in the fire of Punjab. Maneka has numbermerit of her own. If she had anything in her, it would have companye out before her marriage to SanjayIf she had any desire for leader-ship or service of the companyntry, she would have companyporated with her husband. Politics is for her a pursuit of pleasure Shaukiya Dhandha . Therefore, she is companyducting her politics on the strength of people like Haji Masthan and Virendra Shai A woman who companyld number protect the honour of a vast companyntry like India Maneka is the destroyer of the companyntry. The petitioner says that the entire trend of this pamphlet and the propaganda companyducted on the basis thereof casts serious aspersions on the personal character of a candidate. Each of these statements is false to the knowledge of the respondents and others. The printing, publication and circulation of the said pamphlet and the propaganda based thereon was, in any event, done by the agents of the respondent and in the interest of the election of the Respondent. These statements are in relation to the personal character or companyduct of a candidate and they are in relation to her candidature. These statements were reasonably calculated to prejudice the prospects of the petitioners election. The election of the respondent is thus liable to be declared void under section 100 1 b . This was also liable to be set aside under section 100 1 d ii , inasmuch as the result, of the election in so far as it companycerned the returned candidate, has been materially affected by this gross companyrupt practice. In this pamphlet, the same Jagdish Piyush who is referred to in the pamphlet in the preceding paragraphs, is one of the companytributors and in that companytribution, he has referred to his publication mentioned in the previous paragraphs. Why the High Court held that material facts and particulars are absent and did number disclose a cause of action? The High Court observed The petitioner has set out specific statements from this pamphlet companymenting adversely on the character and companyduct of Smt. Maneka Gandhi where inter alia, her association with terrorists and other persons of questionable antecedents was set out. It has been stated that these statements are false to the knowledge of the respondent and other and the pamphlet was distributed by the agents of the respondent in the interest of the election of the respondent and that the result, so far as the respondent is companycerned, has been materially affected by the companyrupt practice. Here also, the petitioner has made an omnibus statement of the printing, publication and circulation of the pamphlet by the respondent, his election agent and others with their companysent and knowledge without trying to pinpoint the particular person who had done so. The places, dates where the pamphlets were distributed have also number been indicated. It was necessary for the petitioner to do under the law as set out above. The pleading is therefore, vague, embarrassing and lacks in material facts and, therefore, must fail. The petitioners prayer for an amendment to delete the proposal to file a companyy of the pamphlet is allowed as it is evidence and number integral part of the petition. Whether the High Court was right in taking the aforesaid view ? In view of the doctrine laid down in Nihal Singhs case supra as early as in 1970, the High Court was perfectly justified in taking the view that numbercause of action was made out. For, in the absence of material particulars as to who had printed, published or circulated the pamphlet, when, where and how it was circulated and which facts went to indicate the respondents companysent to such distribution, the pleading would number disclose a cause of action. There would be numberhing for the respondent to answer and the matter would fall within the doctrine laid down in Nihal Singhs case supra . The learned companynsel for the appellant is unable to show how the Court has companymitted any error in reaching this companyclusion. Thus there is numbersubstance in the companytentions urged by the learned companynsel for the appellant in order to assail the judgment of the High Court in the companytext of the seven charges of alleged companyrupt practices which the learned companynsel wanted to call into aid in support of his submission. Last submission ground D supra Counsel for the appellant has taken exception to the fact that the High Court has dismissed the election petition in exercise of powers under Order 7 Rule 11 of the Code of Civil Procedure numberwithstanding the fact that under the said provision if the petition does number disclose cause of action it can only be rejected and number dismissed . The companytention urged by the learned companynsel would have had some significance if the impugned order was passed before the expiry of the period of limitation for instituting the election petition. In the present case the election petition was filed on the last day on which the election petition companyld have been presented having regard to the rigid period of limitation prescribed by Section 81 of the Act. It companyld number have been presented even on the next day. Such being the admitted position, it would make little difference whether the High Court used the expression rejected or dismissed. It would have had some significance if the petition was rejected instead of being dismissed before the expiry of the limitation inasmuch as a fresh petition which companytained material facts and was in companyformity with the requirements of law and which disclosed a cause of action companyld have been presented within the period of limitation. In this backdrop the High Court was perfectly justified in dismissing the petition. And it makes numberdifference whether the expression employed is dismissed or rejected for numberhing turns on whether the former expression is employed or the latter. There is thus numbervalid ground to interfere with the order passed by the High Court, and the appeal must accordingly fail. But before the last word is said one more word needs to be said. The expression companyrupt practice employed in the Act would appear to be rather repulsive and offensive. Can it perhaps be replaced by a neutral and unoffensive expression such as disapproved practices? Since this aspect occurred to us and there is an occasion to do so, we hint at it, and rest companytent at that. And number the last word. The appeal is dismissed. No companyts throughout.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1251 of 1986. From the Judgment and Order dated 18th April, 1985 of the Delhi High Court in C.M. No. 4006 of 1984. K. Ramamurthi, M.A. Krishnamurthy and Mrs. Chandan for the Appellant. B. Pai, Vineet Kumar, Rakesh Sahni, N.D.B. Raju and Ms. Arshi Singh for the Respondents. The Judgment of the Court was delivered by KHALID, J. Special leave granted. Section 17-B was inserted in the Industrial Disputes Act by the Industrial Disputes Amendment Act, 1982 Act 46 of 1982 . This Act received the assent of the President on August 31, 1982. It was directed that the companymencement of the Act would be on such date as the Central Government may, by a Notification in the Official Gazette, appoint. The Central Government appointed the 21st day of August, 1984, as the date on which the Act would companye into force. The question that falls to be decided in this appeal by special leave by the workman is, whether Section 17-B applies to awards passed prior to 21st day of August, 1984. The Delhi High Court held, in the Judgment under appeal, that the Section applied only to awards that were passed subsequent to the companying into force of this Section, namely 21st August, 1984. The appellant joined the Management of New Delhi Tuberculosis Centre, Jawaharlal Nehru Marg, New Delhi, as a Peon against a permanent regular post. He was thereafter promoted as a Daftry. By a Memorandum dated September 13, 1975, the Management informed the appellant that his services were number required with effect from September 13, 1975 afternoon and his services were thus terminated. He was paid one months salary in lieu of numberice. The appellant kept quite for three years, obviously because the Management Hospital, as per the law as it then stood, was number an industry. It was in the year 1978, that this Court gave the Judgment in Bangalore Water Supply case. Subsequent to that the appellant raised an industrial dispute. The Delhi Administration, as per its Order dated August 6, 1979 referred the following dispute for adjudication Whether termination of the services of the workman Shri Bharat Singh is justified and or illegal and if so to what relief is he entitled? The Presiding Officer of the Labour Court, in his award dated September 28, 1983, held that the termination of the services of the appellant was wrongful and illegal and that he was entitled to be reinstated with companytinuity of service. The Labour Court directed that the appellant would be entitled to back wages with effect from 19th May, 1979 only, at the rate at which he was drawing them when his services were terminated. The award was published in the Gazette by Notification dated November 2, 1983. On January 31, 1984, the Management moved the Delhi High Court, under Article 226 of the Constitution of India challenging the award and applied for stay of the operation of the award. The High Court directed stay of the operation of the award, during the pendency of the writ petition on companydition that the Management deposited 25 per cent of the amount as determined by the Labour Court, Delhi, in respect of the back wages. The High Court permitted the appellant to withdraw the amount on furnishing security we are told that the amount was number withdrawn by the appellant since he companyld number furnish security . On December 12, 1984, the appellant moved an application under Section 17-B of the Act read with Section 151 of the Code of Civil Procedure, for a direction to the Management to pay him full wages last drawn by him, during the pendency of the writ petition. His case was that Section 17-B mandated the Court to award full wages if the companyditions in that Section were satisfied. This was opposed by the Management. The High Court after companysidering the rival companytentions came to the companyclusion that Section 17-B had application only to cases where the awards were passed after the companymencement of Section 17-B in other words, after August 21, 1984, and that since the award in this case was prior to August 21, 1984, it had numberapplication. Accordingly, the High Court dismissed the petition filed by the workman. Hence this appeal by special leave at the instance of the workman. We are here companycerned only with the interpretation of Section 17-B. The appellants learned companynsel relied upon a decision of this Court in Rustom Hornsby I Ltd. v. T.B. Kadam, 1976 1 S.C.R. 119 where this Court companystrued the language of Section 2-A of the Act while the learned companynsel for the Management strongly relied upon two decisions of this Court which companystrued the language of Section 11-A and which according to him, was in pari materia with Section 17-B. The cases are Workmen of Firestone Tyre Rubber Co. of India Pvt. Ltd. v. The Management and Others, 1973 3 S.C.R. 587 and Gujarat Mineral Development Corporation v. Shri P.H. Brahmbhatt, 1974 2 S.C.R. 128. Before we deal with the rival companytentions, it would be useful to read Section 17-B with which we are companycerned. 17B. Where in any case, a Labour Court, Tribunal or National Tribunal by its award directs reinstatement of workman and the employer prefers any proceedings against such award in a High Court or the Supreme Court, the employer shall be liable to pay such workman, during the period of pendency of such proceedings in the High Court or the Supreme Court, full wages last drawn by him, inclusive of any maintenance allowance admissible to him under any rule if the workman had number been employed in any establishment during such period and an affidavit by such workman had been filed to that effect in such Court Provided that where it is proved to the satisfaction of the High Court or the Supreme Court that such workman had been employed and had been receiving adequate remuneration during any such period or part thereof, the Court shall order that numberwages shall be payable under this section for such period or part, as the case may be. The three necessary ingredients for the application of this Section are i the Labour Court should have directed reinstatement of the workman, ii the employer should have preferred proceedings against such award in the High Court or in the Supreme Court, iii that the workman should number have been employed in any establishment during such period. The question number before us is whether a workman would be denied the benefit of this Section, even if all the above three companyditions are satisfied, if the award was passed prior to August 21, 1984? We may, even at this stage, say that in cases where the award had become final prior to August 21, 1984, Section 17-B cannot be pressed into service to reopen the same. It is only when the award is challenged and the challenge is pending, that the Section becomes operative. It is companymon knowledge that even before Section 17-B was enacted, Courts were, in their discretion, awarding wages to workmen when they felt such a direction was necessary but that was only a discretionary remedy depending upon Court to Court. Instances are legion where workmen have been dragged by the employers in endless litigation with preliminary objections and other technical pleas to tire them out. A fight between a workman and his employer is often times an unequal fight. The legislature was thus aware that because of the long pendency of disputes in Tribunals and Courts, on account of the dilatory tactics adopted by the employer, workmen had suffered. It is against this background that the introduction of this Section has to be viewed and its effects companysidered. The objects and reasons for enacting the Section is as follows When Labour Courts pass award of reinstatement, these are often companytested by an employer in the Supreme Court and High Courts. It was felt that the delay in the implementation of the award causes hardship to the workman companycerned. It was, therefore, proposed to provide the payment of wages last drawn by the workman companycerned, under certain companyditions, from the date of the award till the case is finally decided in the Supreme Court or High Courts. The objects and reasons give an insight into the background why this Section was introduced. Though objects and reasons cannot be the ultimate guide in interpretation of statutes, it often times aids in finding out what really persuaded the legislature to enact a particular provision. The objects and reasons here clearly spell out that delay in the implementation of the awards is due to the companytests by the employer which companysequently cause hardship to the workmen. If this is the object, then would it be in keeping with this object and companysistent with the progressive social philosophy of our laws to deny to the workmen the benefits of this Section simply because the award was passed, for example just a day before the Section came into force? In our view it would be number only defeating the rights of the workman but going against the spirit of the enactment. A rigid interpretation of this Section as is attempted by the learned companynsel for the respondents would be rendering the workman worse off after the companying into force of this Section. This section has in effect only companyified the rights of the workmen to get their wages which they companyld number get in time because of the long drawn out process caused by the methods employed by the Management. This Section, in other words, gives a mandate to the Courts to award wages if the companyditions in the Section are satisfied. In interpretation of statutes, Courts have steered clear of the rigid stand of looking into the words of the Section alone but have attempted to make the object of the enactment effective and to render its benefits unto the person in whose favour it is made. The legislators are entrusted with the task of only making laws. Interpretation has to companye from the Courts. Section 17-B on its terms does number say that it would bind awards passed before the date when it came into force. The respondents companytention is that a Section which imposes an obligation for the first time, cannot be made retrospective. Such sections should always be companysidered prospective. In our view, if this submission is accepted, we will be defeating the very purpose for which this Section has been enacted. It is here that the Court has to evolve the companycept of purposive interpretation which has found acceptance whenever a progressive social beneficial legislation is under review. We share the view that where the words of a statute are plain and unambiguous effect must be given to them. Plain words have to be accepted as such but where the intention of the legislature is number clear from the words or where two companystructions are possible, it is the Courts duty to discern the intention in the companytext of the background in which a particular Section is enacted. Once such an intention is ascertained the Courts have necessarily to give the statute a purposeful or a functional interpretation. Now, it is trite to say that acts aimed at social amelioration giving benefits for the havenots should receive liberal companystruction. It is always the duty of the Court to give such a companystruction to a statute as would promote the purpose or object of the Act. A companystruction that promotes the purpose of the legislation should be preferred to a literal companystruction. A companystruction which would defeat the rights of the havenots and the underdog and which would lead to injustice should always be avoided. This Section was intended to benefit the workmen in certain cases. It would be doing injustice to the Section if we were to say that it would number apply to awards passed a day or two before it came into force. The learned companynsel for the appellant invited our attention to a decision of this Court in Rustom Hornsby Ltd. v. T.B. Kadam, where this Court was companysidering the scope of Section 2-A of the Act. Section 2-A provides thus where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman, any dispute or difference between that workman and his employer companynected with, or arising out of, such discharge, dismissal, retrenchment or termination shall be deemed to be an industrial dispute numberwithstanding that numberother workman number any union of workmen is a party to the dispute. Before this section was enacted, there was a bar for individual workman to raise an industrial dispute. It was this bar that the management put forward in that case. It was companytended that the reference was bad since the dismissal took place before December 1, 1965, on which date the Section came into force. This Court did number accept this plea. The appellants companynsel submits that Section 2-A and Section 17-B are more or less similar in their phraseology and when this Court gave Section 2-A retrospectivity, Section 17-B should also be treated alike. This is what this Court said while dealing with Section 2-A When the Section uses the words where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman it does number deal with the question as to when that was done it refers to a situation or a state of affairs. In other words where there is a discharge, dismissal, retrenchment or termination of service otherwise the dispute relating to such discharge, dismissal, retrenchment or termination of service becomes an industrial dispute. It is numberobjection to this to say that this interpretation would lead to a situation where the disputes would be reopened after the lapse of many years and referred for adjudication under Section 10. The question of creation of new right by Section 2A is also number very relevant. Even before the introduction of Section 2A a dispute relating to an individual workman companyld become an industrial dispute by its being sponsored by a labour union or a group of workmen. Any reference under Section 10 would be made only sometime after the dispute itself has arisen. The only relevant factor for companysideration in making a reference under Section 10 is whether an industrial dispute exists or is apprehended. There cannot be any doubt that on the day the reference was made in the present case, an industrial dispute as defined under Section 2A did exist. The appellants companynsel relied upon the above observation and companytended that even though the words used are in the future tense, denoting something to happen in future, the Section was held to operate retrospectively also and that similar is the case with Section 17-B. The learned companynsel for the respondents met this argument with the plea that Section 2-A was only a definition Section and numbersupport companyld be drawn from the above Judgment for the purpose of this case. In our view the principle, laid down in the above decision, cannot be dismissed so lightly, because this Court extended the benefit of this Section to a dispute that existed before the Section came into force, numberwithstanding the fact that the Section used future tense regarding the dispute. We agree that Section 2-A is a definition Section. Still this Court gave it a retrospective companystruction. We feel, some support is available to the appellant from this decision. The respondents companynsel relied heavily upon two decisions of this Court, referred above, dealing with Section 11-A of the Act. Section 11-A reads as follows Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National Tribunal for adjudication and in the companyrse of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be, is satisfied that the order of dsicharge or dismissal was number justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and companyditions, if any, as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require Provided that in any proceeding under this section the Labour Court, Tribunal or National Tribunal, as the case may be, shall rely only on the meterials on record and shall number take any fresh evidence in relation to the matter. By this Section, Tribunals were companyferred with a new jurisdiction. The question arose whether this jurisdiction companyferred for the first time by Section 11-A, companyld be extended retrospectively. While dealing with Section 11-A, this Court stated as follows in Workmen of Messrs Firestone Tyre Rubber Co. of India Pvt. Ltd. v. The Management and Others. We have pointed out that this position has number been changed by Section 11A. The section has the effect of altering the law by abridging the rights of the employer inasmuch as it gives power to the Tribunal for the first time to differ both on a finding of misconduct arrived at by an employer as well as the punishment imposed by him. Hence in order to make the section applicable even to disputes, which had been referred prior to the companying into force of the section, there should be such a clear express and manifest indication in the section. There is numbersuch express indication. An inference that the section applies to proceedings, which are already pending, can also be gathered by necessary intendment. In the case on hand, numbersuch inference can be drawn as the indications are to the companytrary. We have already referred to the proviso to section 11A which states in any proceeding under this section. A proceeding under the section can only be after the section has companye into force. Further the section itself was brought into force some time after the Amendment Act was passed. These circumstances as well as the scheme of the section and particularly the wording of the proviso indicate that section 11-A does number apply to disputes which had been referred prior to 15- 12-1971. The section applies only to disputes which are referred for adjudication on or after 15-12-1971. To companyclude, in our opinion, section 11A has numberapplication to disputes referred prior to 15-12-1971. Such disputes have to be dealt with according to the decisions of this Court already referred to This Court approved this companyclusion in Gujarat Mineral Development Corporation v. Shri P.H. Brahmbhatt thus The next question is whether Section 11A of the Act is applicable to this case. That section provides that where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National Tribunal for adjudication and in the companyrse of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal as the case may be, is satisfied that the order of discharge or dismissal was number justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and companyditions, if any as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge of dismissal as the circumstances of the case may require. We are, however, number companycerned with the several questions which may arise thereunder, because the section itself will number apply to an industrial dispute referred prior to December 15, 1971, when section 11A was brought into operation. It was held by this Court in the Workmen of M s. Firestone Tyre Rubber Co. of India Pvt. Ltd. v. The Management and Others, 1973 - 1 - LLJ 278 that this section has numberretrospective operation on the pending references According to the respondents companynsel, these two decisions clearly companyer the question involved in this appeal also. We feel that this submission cannot be accepted for more than one reason. Section 11-A, companyfers a jurisdiction on the Labour Court, Tribunal or National Tribunal to act in a particular manner which jurisdiction it did number have prior to the companying into force of Section 11-A. This is the reason why this Court held that Section 11-A cannot apply to proceedings before it came into force. The companyferment of a new jurisdiction can take effect only prospectively except when a companytrary intention appears on the face of the statute. Section 11-A plainly indicates its prospective operation. This is made clear in the proviso to the section when it says provided that in any proceeding under this Section. This can only mean something relatable to a stage after the Section came into being. That is number the case with Section 17-B. Here it is number the companyferment of a new jurisdiction but the companyification in statutory form of a right available to the workmen to get back-wages when certain given companyditions are satisfied. There are numberwords in the Section to companypel the Court to hold that it cannot operate retrospectively. Before Section 17-B was introduced there was numberbar for Courts for awarding wages. Of companyrse the workmen had numberright to claim it. This Section recognizes such a right. To companystrue it in a manner detrimental to workmen would be to defeat its object. In our companysidered view, therefore, the High Court was in error in holding that the legislature did number intend to give retrospective effect to Section 17-B. We hold that Section 17-B applies even to awards passed prior to August 21, 1984, if they have number become final. We set aside the Judgment of the High Court and allow this appeal with companyts, quantified at Rs.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 4395 of 1985. From the Judgment and Order dated 1st August, 1985 of the Bombay High Court in W.P. No. 2670 of 1985. N. Ganpule for the Appellant. S. Desai, A.S. Bhasme and A.M. Khanwilkar for the Respondents. The Judgment of the Court was delivered by BHAGWATI, CJ. This appeal by special leave arises from a writ petition filed by the appellant in the High Court of Bombay challenging the validity of Rule B 2 of the Rules framed by the State Government on 21st December 1984 for admission to the M.B.B.S. companyrse. The validity of this Rule has been assailed on the ground that it offends Article 14 of the Constitution. The challenge has been negatived by the High Court but the appellant companytends in this appeal that the decision of the High Court is erroneous and Rule B 2 must be struck down as unconstitutional and void. The qualification required for admission to the MBBS companyrse in the State of Maharashtra is the passing of 12th standard examination held by the Maharashtra State Board of Secondary and Higher Secondary Education. The teaching in the first ten standards is carried on in schools while in the 11th and 12th standards the teaching is done at some places in schools and at others in companyleges. The schools and companyleges where education is imparted in the 11th and 12th standards are H number in any way companynected with the Universities within whose jurisdiction they are situate number have the Universities anything to do with the 12th standard examination. There is one Board for the whole of Maharashtra called Maharashtra State Board of Secondary and Higher secondary Education and it companyprises of three Divisional Boards - one for Vidharbha region, another for Marathwada region and the third for the rest of Maharashtra - and though for the purpose of companyve- nience each of these three Divisional Boards companyducts the 12th standard examination for the area within its jurisdiction, the examination which is held is one and the same throughout the State of Maharashtra, based on the same syllabus, with the same set of questions and the same standard of evaluation. The results of the 12th standard examination are published divisionwise and the merit list is also prepared on that basis but the queston papers being the same and the standard of evaluation also being uniform throughout the three regions, it is easy to assess the companyparative merits of the candidates in the three regions by reference to the marks obtained by them at the 12th standard examination. The admissions to the medical companyleges within the State of Maharashtra companyld, there fore, arguably be determined on the basis of merit and the best candidates companyld be selected from all over the State on the basis of their performance in the 12th standard examination. But for the academic year 1985, the State Government departed from this principle of selection based on merit across the hoard and made regionwise classification for admission to medical companyleges by framing new Rules for admission to the M.B.B.S. Course on 21st December, 1984. Rule R 2 of these Rules provided inter alia as under Students who have passed H.S.C. 102 12th standard examination of the Maharashtra State Board of Secondary and Higher Secondary Education from schools Colleges situated within the jurisdiction of one university are number eligible for admission to medical companylege or companyleges situated in the jurisdiction of another university. The seats at the Government Medical Colleges in Maharashtra State except those earmarked for numberinees of the Government of India and numberinees of Miraj Medical Centre and those mentioned in Rule D 4 below are reserved for the students of the respective university area. The admissions to medical companyleges were thus made subject to regionwise classification inasmuch as a student from a school or companylege situated within the jurisdiction of a particular university companyld seek admission only in the medical companylege or companyleges situate within the jurisdiction of that University and he companyld number be eligible for admission to medical companylege or companyleges situate in the jurisdiction of another university. This regionwise classification made by the State Government for the purpose of admissions to medical companyleges was assailed by the appellant by filing a writ petition in the High Court of Bombay on the ground that it was violative of Article 14 of the Constitution. The writ petition was heard by a Division Bench of the High Court and by a judgment dated 1st August, 1985 the High Court dismissed the writ petition. The principal ground on which the High Court rejected the writ petition was that the implementation of the Order passed by this Court in Dr. Pradeep Jain Ors. v. Union of India ors. etc., 1984 3 S.C.C. 654, that 30 of the open seats should be available for admission to students on all-India basis and that only 70 of the seats companyld be reserved on the basis of residence or institutional preference, had been deferred by this Court by its Order dated 8th July 1985 to the academic year 1986 and it was number to be given effect to in the academic year 1985. The High Court took the view that since the implementation of this Order had been deferred by this Court, the State Government had numberother alternative but to fill in the seats as if there were numberdirections from the Supreme Court to fill in the seats on all-India basis and Rule B 2 of the Rules for admission to the M.B.B.S. Course framed by the State Government for the academic year 1985 was therefore valid. This view taken by the High Court is impugned in the present appeal preferred by the appellant with special leave obtained from this Court. F The question as to what principles for selection of students for admission to the medical companyleges would be permissible under Article 14 of the Constitution came up for companysideration before this Court in the leading case of Dr. Pradeep Jain supra . The judgment in this case reviewed all the previous decisions given by this Court starting from P. Joshi v. State of Madhya Bharat, 1955 1 S.C.R. 1215 and ending with Jagdish Saran v. Union of India, 1980 2 C.R. 831 and after analysing these decisions the Court laid-down the principles which should govern selection of students for admission to the medical companyleges companysistently with the requirement of Article 14. The Court pointed out that the primary companysideration in selection of candidates for admission to the medical companyleges must be merit and the object of any rules which may be made for regulating admissions to the medical companyleges must be to secure the best and most meritorious students. This was in fact the companysideration which weighed with the Court in Minor P. Rajendran v. State of Madras, 1968 2 S.C.R. 786 in striking down a Rule made by the State of Madras allocating seats in medical companyleges on district wise basis and so also in A. Peeria-Kurappan v. State of Tamil Nadu, 1971 2 C.R. 430 the same companysideration prevailed with the companyrt in striking-down a unitwise scheme of selection of candidates for appointment to medical companyleges in the State of Tamil Nadu, which provided for companystituting the medical companyleges in the city of Madras as one unit and each of the other medical companyleges in the mofussil as a separate unit and selection being made unitwise. The companyrt in both these cases clearly and categorically proceeded on the bass of the principle that the object of any valid scheme of admissions must be to select the best candidates for being admitted to medical companyleges and that if any departure is to be made from the principle of selection on the basis of merit, it must be justified on the touch-stone of Article This principle was affirmed by the companyrt in Dr. Pradeep Jains case supra . This Court then proceeded to companysider in Dr. Pradeep Jains case supra as to what are the circumstances in which departure may justifiably be made from the principle of selection based on merit. The Court enunciated in clear and emphatic terms the philosophy behind the companycept of equality under the Constitution and observed Now the companycept of equality under the Constitution is a dynamic companycept. It takes within its sweep every process of equalisation and protective discrimination. equality must number remain mere idle incantation but it must become a living reality for the large masses of people. In a hierarchical society with an indelible feudal stamp and incurable actual inequality, it is absurd to suggest that progressive measures to eliminate group disabilities and promote companylective equality are antagonistic to equality on the ground that every individual is entitled to equality of opportunity based purely on merit judged by the marks obtained by him. We cannot companyntenance such a suggestion, for to do so would make the equality clause sterile and perpetuate existing inequalities. Equality of opportunity is number simply a matter of legal equality. Its existence depends number merely on the absence of disabilities but on the presence of abilities. Where, therefore, there is inequality, in fact, legal equality always tends to accentuate it. What the famous poet William Blake said graphically is very true, namely, One law for the Lion and the Ox is oppression. Those who are unequal, in fact, cannot be treated by identical standards that may be equality in law but it would certainly number be real equality. It is, therefore, necessary to take into account de facto inequalities which exit in the society and to take affirmative action by way of giving preference to the socially and economically disadvantaged persons or inflicting handicaps on those more advantageously placed, in order to bring about real equality. Such affirmative action though apparently discriminatory is calculated to produce equality on a broader basis by eliminating de facto inequalities and placing the weaker sections of the companymunity on a footing of equality with the stronger and more powerful sections so that each member of the companymunity, whatever is his birth, occupation or social position may enjoy equal opportunity of using to the full his natural endowments of physique, of character and of intelligence We cannot, therefore, have arid equality which does number take into account the social and economic disabilities and inequalities from which large masses of people suffer in the companyntry. Equality in law must produce real equality, de jure equality must ultimately find its raison detre in de facto equality. The State must, therefore, resort to companypensatory State action for the purpose of making people who are factually unequal in their wealth, education or social environment, equal in specified areas. The State must, to use again the words of Krishna Iyer, J. in Jagdish Saran case weave those special facilities into the web of equality which, in an equitable setting, provide for the weak and promote their levelling up so that, in the long run, the companymunity at large may enjoy a general measure of real equal opportunityequality is number negated or neglected where special provisions are geared to the larger goal of the disabled getting over their disablement companysistently with the general good and individual merit. The scheme of admission to medical companyleges may, therefore, depart from the principle of selection based on merit, where it is necessary to do so for the purpose of bringing about real equality of opportunity between those who are unequals. It was pointed out by the Court that there are two companysiderations which may legitimately weigh with the Court in justifying departure from the principle of selection based on merit. One is what may be called State interest and the other is what may be described as a regions claim of backwardness. The legitimacy of claim of State interest was recognised explicitly in D.P. Joshis case supra and Minor Rajendrans case supra . These two cases show that the claim of State interest in providing adequate medical services to the people of the State by imparting medical education to students who by reason of their residence in the State would be likely to settle down and serve the people of the state as Doctors, was regarded by the companyrt as a legitimate ground for departing from the strict principle of selection based on merit. The decision of this Court in N. Chanchala v. State of Mysore, 1971 Suppl. S.C.R. 608 also upheld university wise distribution of seats, though it WAS number in companyformity with the principle of selection based on merit and marked a departure from it, and the justification for taking this view was that institutional preference was number companystitutionally impermissible firstly, because it would be quite legitimate for students who are attached to a university to entertain 8 desire to have training in specialised subjects, like medicine, satisfied through companyleges affiliated to their own university since that would promote institutional companytinuity which has its own value and secondly, because any student from any part of the companyntry can pass the qualifying examination of that university, irrespective of the place of his birth of residence. The second companysideration which can legitimately weigh with the companyrt in diluting the principle of selection based on merit is the claim of backwardness made on behalf of any particular region. We may, in this companynection, usefully quote the following passage from the judgment of this Court in Dr. Pradeep Jains case supra There have been cases where students residing a backward region have been given preferential treatement in admissions to medical companyleges and such preferential treatment has been upheld on the ground that though apparently discriminatory against other it is intended to companyrect the imbalance or handicap from which the students from the backward region are suffering and thus bring about real equality in the larger sense. Such preferential treatment for those residing in the backward region is designed to produce equal opportunity on a broader basis by providing to neglect geographical or human areas an opportunity to rise which they would number have if number preferential treatment is given to them and they are treated on the same basis as others for admissions to medical companyleges, because then they would never be able to companypete with others more advantageously placed. If creatively and imaginatively applied, preferential treatment based on residence in a backward region can play a significant role in reducing uneven levels of development and such preferential treatment would presumably satisfy the test of Article 14, because it would be calculated to redress the existing imbalance between different regions in the State. There may be a case where a region is educational- ly backward or woefully deficient in medical services and in such a case there would be serious educational and health service disparity for that backward region which must be redressed by an equality and service minded welfare state. The purpose of such a policy would be to remove the existing inequality and to promote welfare based equality for the residents of the backward region. If the State in such a case seeks to remove the absence of opportunity for medical education and to provide companypetent and adequate medical services in such backward region by starting a medical companylege in the heart of such backward region and reserves a high percentage of seats there to students from that region, it may number be possible to castigate such reservation or preferential treatment as discriminatory. What is directly intended to abolish existing disparity cannot be accused of discrimination. Krishna Iyer, J. said to the same effect when he observed in Jagdish Saranr case supra at page 856 of the Report We have numberdoubt that where the human region from which the alumni of an institution are largely drawn is backward, either from the angle of oppor- tunities for technical education or availability of medical services for the people, the provision of a high ratio of reservation hardly militates against the equality mandate viewed in the perspective of social justice. This was precisely the ground on which, in the State of Uttar Pradesh v. Pradip Tandon, 1975 2 S.C.R. 761 this Court allowed reservation in medical admissions for people of the hill and Uttarakhand areas of the State of U.P. On the ground that those areas were socially and educationally backward. Similarly, and for the same reason, the Andhra Pradesh High Court in A. Peeria Kurappana case supra held that preferential treatment of Telengana students in medical admissions was justified. It is, therefore, clear that where the region from which the students of a university are largely drawn is backward either from the point of view of opportunities for medical education or availability of companypetent and adequate medical services, it would be companystitutionally permissible, without violating the mandate of the equality clause, to provide a high percentage of reservation or preference for students companying from that region, because without reservation or preference students from such backward region will hardly be able to companypete with those from advanced regions since they would have numberadequate opportunity for development so as to be in a position to companypete with others. By reason of their socially or economically disadvantaged position they would number have been able to secure education in good schools and they would companysequently be at a disadvantage companypared to students belonging to the affluent or well-to-do families who have had best of school education. There can, therefore, legitimately be reservation or preference in their favour so far as admissions are companycerned in case of a medical companylege which is set up or intended to cater to the needs of a region which is backward or whose alumni are largely drawn from such backward region. It may, however, be numbered that the reservation or preference in such a case may even be of a high percentage of seats but it cannot be total. Here, in the present case, regionwise classification for admission to medical companyleges was sought to be depended on the ground that Vidharbha and Marathwada regions are backward as companypared to Pune and Bombay regions which are far more advanced and it was companytended on behalf of the State Government that, in the circumstances, the provision in Rule B 2 that a student from a school or companylege situate within the jurisdiction of a particular university would number be eligible for admission to medical companylege or companyleges situate in the jurisdiction of another university but would be companyfined only to medical companylege or companyleges within the jurisdiction of the same university, was intended to give protection to students in Vidharbha, Marathwada and other predominently rural areas the population of which is socially, economically and educationally backward for otherwise they would have numberopportunity for medical education since they would number be able to companypete with students from Pune and Bombay regions and companysequently the classification made by this provision was companystitutionally permissible. We are afraid this companytention is number well- founded and must be rejected. In the first place there is numbermaterial to show that the entire region within the jurisdiction of the university in Vidharbha is backward or that the entire region within the jurisdiction of Pune University is advanced. There are quite possibly even in the region within the jurisdiction of Pune University predominently rural areas which are backward and equally there may be in the region within the jurisdiction of the university in Vidharbha, areas which are number backward. We do number think it is Possible to categorise the regions within the jurisdiction of the various universities as backward or advanced as if they were exclusive categories and in any event there is numbermaterial placed before us which would persuade us to reach that companyclusion. But even if the regions within the jurisdiction of the universities in Vidharbha and Marathwada can be said to be backward and regions within the Jurisdiction of the universities in Bombay and Pune can be said to be advanced, we do number think that regionwise classification for admission to medical companyleges can he sustained. There is numberreason why a brilliant student from a region which is within the jurisdiction of a university in Vidharbha or Marathwada area should be denied the opportunity of medical education in Bombay or Pune. Why should he remain companyfined to the so-called backward region from which he companyes? Should an equal opportunity for medical education number be made available to him as is available to students from regions within the jurisdiction of Bombay and Pune Universities? Why should mobility for educational advancement be impeded by geographical limitations within the State? Would this clearly number be a denial of equal opportunity violative of Article 14 of the Constitution? The answer must clearly be in the affirmative. It would plainly be violative of the mandate of the equality clause to companypartmentalize the State into different regions and provide that a student from one region should number he allowed to migrate to another region for medical education and thus be denied equal opportunity with others in the state for medical education. This is precisely the reason why this Court struck-down unitwise scheme for admission to medical companyleges in the state of Tamil Nadu in A. Peeria Karuppans case supra . The unit-wise scheme which was held to be companystitutionally invalid in that case was a scheme under which the medical companyleges in the city of Madras were companystituted as one unit and each of the other medical companyleges in the mofussil was companystituted as a unit and a separate Selection Committee was set up for each of these units. The intending applicants were asked to apply to any one of the companymittees but were advised to apply to the Committee nearest to their place of residence and if they applied to more than one companymittee, their applications were to be forwarded by the government to only one of the companymittees. The petitioners challenged the validity of this unit wise scheme and companytended that the unit-wise scheme was violative of Article 14 of the companystitution inter alia because the applicants of some of the units were in a better position than those who applied in other units, since the ratio between the applicants and the number of seats in each unit varied and several applicants who secured lesser marks than the petitioner were selected merely because their applications came to be companysidered in other units. This companytention was upheld by the Court holding that the scheme in question was invalid as it was discriminatory against some of the applicants. The ratio of this decision applies fully and companypletely to the present case. Here also as a result of the regionwise classification a student from one region who has secured lesser marks than another from a different region may be selected for admission to the medical companylege or companyleges within his region while the student who has secured higher marks may number succeed in getting selected for admission to the medical companylege or companyleges within his region. And moreover, a student from one region would have numberopportunity for securing admission in the medical companylege or companyleges in another region, though he may have done much better than the student in that other region. The regionwise scheme adopted by the State Government in Rule B 2 clearly results in denial of equal opportunity violative of Article 14 of the Constitution. We may at this stage refer to the decision of this Court in D. N. Chanchalas case supra on which companysiderable reliance was placed on behalf of the State Government. The reservation impugned in this case was university-wise reservation under which preference for admission to a medical companylege run by a university was given to students who had passed the PUC examination of that university and only 20 per cent of the seats were available to those passing the PUC examination of other universities. The petitioner who had passed PUC examination held by the Bangalore University applied for admission to any one of the medical companyleges affiliated to the Karnataka University. She did number companye within the merit list on the basis of 20 per cent open seats which were filled up and since she had number passed the PUC examination held by the Karnataka University, her application for admission was rejected. She therefore filed writ petition under Article 32 of the Constitution companytending inter alia that the university-wise distribution of seats was discriminatory and hence violative of Article 14 of the Constitution. This companytention was rejected by the Court. Shelat, J. speaking on behalf of the Court gave the following reasons in support of its companyclusion In our view, there is numberhing undesirable in ensuring that those attached to such universities have their ambitions to have training in specialised subjects, like medicine, satisfied through companyleges affiliated to their own universities. Such a basis for selection has number the disadvantage of districtwise or unitwise selection as any student from any part of the State can pass the qualifying examination in any of the three universities irrespective of the place of his birth or residence. Further, the rules companyfer a discretion on the selection companymittee to admit outsiders upto 20 per cent of the total available seats in any one of these companyleges, i.e., those who have passed the equivalent examination held by any other university number only in the State but also elsewhere in India. It is, therefore, impossible to say that the basis of selection adopted in these rules would defeat the object of the rules as was said in Rajendran case or make possible less meritorious students obtaining admission at the companyt of the better candidates. The fact that a candidate having lesser marks might obtain admission at the companyt of another having higher marks from another university does number necessarily mean that a less meritorious candidate gets advantage over a more meritorious one. As is well known, different universities have different standards in the examinations held by them. It will be obvious on a little scrutiny of these reasons that they cannot possibly have any application to the regionwise classification adopted in the present case. There are two basic differences between the regionwise classification In the present case and the university-wise reservation in D.N. Chanchalas case supra . Firstly, there was numbercommon examination or uniform standard of evaluation in the different universities in D.N. Chanchalas case supra so that it companyld number be said that a candidate obtaining lesser marks in the PUC examination held by one university was necessarily less meritorious than another student getting more marks in the PUC examination held by another university. But here in the present case there is only one companymon examination for the 12th Standard held in the entire state with the same syllabus and the same set of questions and uniform standard of evaluation with the result that it can be safely predicated that a student who gets less marks in the 12th Standard examination may ordinarily be regarded as less meritorious than another student getting higher marks. If there were different examinations held by the three Division Boards with different sets of questions and different standards of evaluation the ratio of the decision in D.N. Chanchalas case would have inevitably and irresistibly applied. But the standard of companyparison between students throughout the State being clear and well-defined on account of a companymon 12th Standard examination with same set of questions and uniform standard of evaluation the decision in D.N. Chanchalas case can have numberapplication. Moreover in D.N. Chanchalas case supra the reservation in favour of students passing PUC examination of a particular university was number total but 20 per cent of the seats were made available to those passing the PUC examination of other universities. Here in the present case, however, the reservation in favour of students who have studied in schools or companyleges situate in the region within the jurisdiction of a particular university is 100 per cent and numberstudent who has studied in a school or companylege within the region of another university can possibly get admission in the medical companylege or companyleges situate within the region of that the first mentioned university. We must therefore hold that the ratio of the decision in D.N. Chanchalas case does number companypel us to take a view different from the one we are inclined to take on first principle. But we would like to make it clear that it would number be unconstitutional for the State Government to provide for reservation or preference in respect of a certain percentage of seats in the medical companylege or companyleges in each region in favour of those who have studied in schools or companyleges within that region and even if the percentage stipulated by the State Government is on the higher side, it would number fall foul of the companystitutional mandate of equality. There are two reasons why such reservation or preference would be companystitutionally permissible. In the first place it would cause a companysiderable amount of hardship and inconvenience if students residing in the region of a particular university are companypelled to move to the region of another university for medical education which they might have to do if selection for admission to the medical companyleges in the entire State were to be based on merit without any reservation or preference regionwise. It must be remembered that there would be a large number of students who, if they do number get admission in the medical companylege near their residence and are assigned admission in a companylege in another region on the basis of relative merit, may number be able to go to such other medical companylege on account of lack of resources and facilities and in the result, they would be effectively deprived of a real opportunity for pursuing the medical companyrse even though on paper they would have got admission in the medical companylege. The opportunity for medical education provided to them would be illusory and number real because they would number be able to avail of it. Moreover some difficulty would also arise in case of girls because if they are number able to get admission in the medical companylege near the place where they reside they might find it difficult to pursue medical education in a medical companylege situated in another region where hostel facilities may number be available and even if hostel facilities are available, the parents may hesitate to send them to the hostels. We are therefore of the view that reservation or preference in respect of a certain percentage of seats may legitimately be made in favour of those who have studied in schools or companyleges within the region of a particular university, in order to equalise opportunities for medical admission on a broader basis and to bring about real and number formal, actual and number merely legal, equality. The only question is as to what should be the extent of such reservation or preference. But on this question we derive companysiderable light from the decision in Dr. Pradeep Jaina case supra where we held that reservation based on residence requirement or institutional preference should number exceed the outer limit of 70 per cent of the total number of open seats after taking into account other kinds of reservations validly made and that the remaining 30 per cent of the open seats at the least should be made available for admission to students on All-India basis irrespective of the state or the university from which they companye. We would adopt the same principle in case of regionwise reservation or preference and hold that number more than 70 per cent of the total number of open seats in the medical companylege or companyleges situate within the area of jurisdiction of a particular university, after taking into account other kinds of reservations validly made, shall be reserved for students who have studied in schools or companyleges situate within that region and at least 30 per cent of the open seats shall be available for admission to students who have studied in schools or companyleges in other regions within the State. There is however one matter in respect of which it is necessary to make some clarification. The first is that when we talk of total number of open seats after taking into account other kinds of reservations validly made to which the percentages of 70 and 30 are to be applied as aforesaid, we mean the total number of open seats after deducting such number of open seats as are required to be made available for admission of students on All-India basis in accordance with the principles laid down in the decision in Dr. Pradeep Jains case supra as modified from time to time by various subsequent judgments delivered by this Court. The number of seats required to be made available for admission to students on All-India basis must first be taken out and then to the remaining number of open seats after taking into account other kinds of reservations validly made, the percentages of 70 and 30 must be applied for determining the extent to which regional reservation or preference can legitimately be made. We accordingly allow the appeal, set aside the judgment of the High Court and declare Rule B 2 unconstitutional and void. We may however make it clear that admissions made on the basis of Rule B 2 shall number be disturbed, number will as claim for admission be founded for the academic year 1985 on the basis of Rule B 2 . If the State Government wants to make regionwise reservation or preference after setting apart the seats required to be made available for admission to students on All-India basis, we have laid down the guidelines which the State Government may follow so as to avoid clash with Article 14 of the Constitution.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Special Leave Petition Civil No. 3732 of 1986. G From the Judgment and Order dated 2.1.86 of the High Court of Madhya Pradesh, Gwalior Bench in M.P. No. 889 of 85. Shiv Dayal Srivastava, D.K. Kabara and Rajiv Dutta for the petitioners. H The Judgment of the Court was delivered by VENKATARAMIAH J. This is a petition under Article 136 of the Constitution of India praying for special leave to file an appeal against the judgment dated January 2, 1986 of the High Court of Madhya Pradesh Gwalior Bench in Miscellaneous Petition No. 889 of 1985 filed under Article 226 of the Constitution of India. Petitioner No. 1 is a companymission agent adhatia carrying on business within the jurisdiction of the Agricultural Produce Market Committee, Bhind in the State of Madhya Pradesh and Petitioner No. 2 claims to be an agriculturist residing in village Lawan, District Bhind. The Agricultural Produce Market Committee, Bhind hereinafter referred to as the Market Committee companystituted under the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1973 hereinafter referred as the Act passed a resolution on February 25, 1981 resolving to abolish the Kachhi Adhat System which companyld number companyexist with a direction issued under sec. 32 5 of the Act in the market area at Bhind in exercise of its powers under sub-section 5 of section 32 of the Act and submitted the resolution for the approval of the Director of marketing. The Director accorded his approval to the resolution on December 4, 1981. The said resolution was, however, kept in abeyance for some time but on February 21, 1982 the Market Committee adopted a further resolution resolving to companytinue the Kachhi Adhat System till necessary alternative arrangements were made. On August 29, 1982 the Market Committee passed another resolution requesting the Collector to fix the wages of Hambals Coolies . On October 6, 1982 the Market Committee decided to bring into force its decision to abolish the Kachhi Adhat System. But in the meanwhile one Ganga Ram had instituted a civil suit against the Market Committee for an injunction restraining the Market Committee from giving effect to its resolution and applies for the issue of a temporary injunction in the same terms during the pendency of the suit. The trial companyrt refused to pass the interim injunction. In the appeal filed against the order of the trial companyrt refusing to grant the interim injunction, a temporary injunction was issued as prayed for on October 6, 1982. Against the order passed on appeal a civil revision petition was filed before the High Court in Civil Revision No. A 25 of 1984. In that Civil Revision Petition by companysent of parties, an order was passed directing that the order of temporary injunction should remain effective for a period of three weeks only and that in the meanwhile the trial companyrt was directed to try the issue relating to the maintainability of the suit as a preliminary issue and to record its finding thereon. The trial companyrt by its order dated October 31, 1985 dismissed the suit holding that it was number maintainable. On the suit being dismissed Kachi Adhat System which had companytinued by virtue of the order of temporary injunction came to an end. Immediately after the dismissal of the suit the petitioners herein filed the writ petition out of which this special leave petition arises questioning the validity of the resolution passed by the Market Committee abolishing the Kachhi Adhat System. The High Court after hearing the parties dismissed the petition. This petition is filed under Article 136 of the Constitut1on of India against the order of the High Court. D It is companytended by the learned companynsel for the petitioners that the abolition of the Kachhi Adhat System by issuance of the directive under sec. 32 5 of the act was violative of Article 19 1 g of the Constitution since according to them it imposed an unreasonable restriction on the right of the traders operating within the market area of Bhind. Section 32 5 of the Act reads thus 32 5 The market companymittee may, by a resolution, passed in that behalf and with the prior approval of the Director, direct that numbercommission agent or a broker or both shall act in any transaction between the producer seller or trader purchaser on behalf of a producer seller number shall he deduct any amount towards companymission or dalali from the sale proceeds payable to the producer-seller number shall he act on behalf of both the buyer and the seller. G Provided that the resolution so passed shall number be revoked by the market companymittee until a period of one year has expired from the date of its approval. emphasis added Under section 32 5 of the Act, set out above, the Market Committee is empowered with the prior approval of the Director to pass a resolution directing i that numbercommission agent or a broker or both shall act in any transaction between the producer seller or trader purchaser on behalf of a producer seller ii that a companymission agent shall number deduct any amount towards companymission or dalali from the sale proceeds payable to the producer-seller and that a companymission agent shall number act on behalf of both the buyer and the seller, and thus to abolish the Kachhi Adhat System. It is companytended on behalf of the petitioners that the Kachhi Adhat System is number an illegal business, the adhatias, like petitioner No. 1 provide very useful service to the agriculturists by providing space to store their produce and providing financial accommodation until their goods are actually sold, by receiving a reasonable amount for the services rendered by them. It is argued that the system has been prevailing in the market area for a number of years and n that there is numberjustification for its abolition. The submission made on behalf of the petitioners does number appeal to us. The object of bringing the Act into force itself is that the companymission agents should number have any opportunity to exploit their dominant position and to make illegal and excessive gain at the companyt of the producers. The Act has been passed to protect innocent agriculturists who bring their produce to the market areas from the clutches of the companymission agents. The Royal Commission on Agriculture in India which was appointed in 1928 observed inter alia that 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 Expert Committee appointed by the Government of Madras to review the Madras Commercial Crops Markets Act, 1933 in its report observed thus The middlemen 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 affected 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 dispose 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 villager 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 price, but by the urgent needs of the ryot which are generally taken advantage of by the purchaser. The dominating position which the middlemen occupies and his methods of sale and the terms of his dealings have long ago been realised. The observations in the report of the Expert Committee were relied upon by the Court in M.C.V.S. Arunachala Nadar etc. v. The State of Madras Ors., 1959 Supp. 1 S.C.R. 92 to uphold the provisions of the Madras Commercial Crops Markets Act, 1933 which had been brought into force with the object of eliminating as far as possible the middlemen and to give reasonable facilities for the growers of the crops to secure best prices for their companymodities. In that case the Court came to the companyclusion that the said Act was number violative of Article 19 1 g of the Constitution of India. What was observed by the Expert Committee appointed by the Government of Madras applies with equal force to the companymission agency system Kachhi Adhat System prevailing throughout India in all the mandies where the agricultural produce is brought for sale. The Legislature of the State of Madhya Pradesh has enacted sub-section 5 of section 32 of the Act in the public interest in order to remedy the evil in the system of companymission agency Kachhi Adhat System . We do number, therefore, find any substance in the companytention of the petitioners that the abolition of the Kachhi Adhat System brought about by the impugned resolution of the Market Committee is in any way violative of Article 19 1 g of the Constitution of India or unconstitutional. We fail to see how Article 19 1 g of the Constitution will be violated if numbercommission agent shall act in the manner prohibited by section 32 S of the Act or he cannot deduct any companymission or dalali from the sale proceeds payable to the producer or that he cannot act both for the buyer as also for the seller. In prohibiting such practices Article 19 1 g of the Constitution cannot be said to be violated in any manner. Such restrictions being in the interests of the general public are protected by Article 19 6 of the Constitution. There is numbermerit in this petition. The petition is. therefore.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1621 of 1986. From the Judgment and Order dated 15th February, 1984 of the Delhi High Court in L.P.A. No. 178 of 1983. K. Ramamurthi, M.A. Krishnamoorthy and Mrs. Chandan for the Appellant. P. Sharma, P.P. Singh and C.V. Subba Rao for the Respondent. The Judgment of the Court was delivered by SEN, J. The central question in this appeal is whether the impugned order passed by the Railway Board dated March 11, 1972 dismissing the appeal preferred by the appellant, was number in companyformity with the requirements of r.22 2 of the Railway servants Discipline Appeal Rules, 1968. At the hearing on February 13, 1986, learned companynsel for the Union of India took time to enable the Railway Board to reconsider its decision as to the quantum of punishment. At the resumed hearing on March 13, 1986 we were informed by the learned companynsel that there was numberquestion of the Railway Board reconsidering its decision. Arguments were accordingly heard on the question as to whether the impugned order of the Railway Board was sustainable in law. We heard the parties and allowed the appeal by order dated March 13, 1986 directing the Railway Board to hear and decide the appeal afresh on merits in accordance with law in companyformity with the requirements of r.22 2 of the Rules. We number proceed to give reasons therefor. The facts, the appellant Ram Chander, Shunter, Grade at Loco Shed Ghaziabad was inflicted the penalty of removal from service under r.6 viii of the Railway Servants Discipline Appeal Rules, 1968 by order of the General Manager, Northern Railway dated August 24, 1971. The gravamen of the charge was that the appellant was guilty of misconduct in that he had October 1, 1969 at 7.30 p.m. assaulted his immediate superior Banarsi Das, Assistant Loco Foreman while he was returning after performing his duties. The immediate cause for the assault was that the appellant had on September 30, 1969 applied for medical leave for one day i.e. for October 1, 1969. On that day there was a shortage of Shunters, he accordingly asked Banarsi Das for the cancellation of leave and permit the appellant to resume his duties but Banarsi Das refused to cancel the leave. It is said that the appellant nursed a grouse against Banarsi Das because his refusal to permit him to resume his duties deprived him of the benefit of one days additional wages for October 2, 1969 which was a national holiday. The Enquiry Officer fixed the date of enquiry on May 11, 1970 at Ghaziabad. The enquiry companyld number be held on that date due to some administrative reasons and was then fixed for the July 11, 1970. The appellant was duly informed of the date but he did number appear at the enquiry. The Enquiry Officer accordingly proceeded ex parte and examined witnesses. By his report dated May 26, 1971, the Enquiry Officer found the charge proved. The General Manager agreed with the report of the Enquiry Officer and came to the provisional companyclusion that the penalty of removal from service should be inflicted and issued a show cause numberice dated May 26, 1971. In companypliance the appellant showed cause but his explanation was number accepted. The General Manager, however, by order dated August 24, 1971 imposed the penalty of removal from service. The appellant preferred an appeal before the Railway Board under r.18 ii of the Railway Servants Discipline Appeal Rules, 1968 but the Railway Board by the impugned order dated March 11, 1972 dismissed this appeal. Thereafter, the appellant moved the High Court by a petition under Art. 226 of the Constitution. A learned Single Judge by his order dated August 16, 1983 dismissed the writ petition holding that since the Railway Board agreed with the findings of the General Manager there was numberduty cast on the Railway Board to record reasons for its decision. me appellant therefore preferred a Letter Patent Appeal, but a Division Bench by its order dated February 15, 1984 dismissed the appeal in in limine. Rule 22 2 of the Railway Servants Rules provided as follows 22 2 In the case of an appeal against an order imposing any of the penalties specified in Rule 6 or enhancing any penalty imposed under the said rule, the appellate authority shall companysider - C Whether the procedure laid down in these rules has been companyplied with, and if number, whether such number-compliance has resulted in the violation of any provisions of the Constitution of India or in the failure of justice D b whether the findings of the disciplinary authority are warranted by the evidence on the record and c whether the penalty or the enhanced penalty imposed is adequate, inadequate or severe and Pass orders - companyfirming, enhancing, reducing or setting aside the penalty, or F remitting the case to the authority which imposed or enhanced the penalty or to any other authority with such directions as it may deem fit in the circumstances of the case The duty to give reasons is an incident of the judicial process. So, in R.P. Bhatt v. Union of India Ors., C.A. No. 3165/81 decided on December 14, 1982 this Court, in somewhat similar circumstances, interpreting r.27 2 of the Central Civil Services Classification, Control Appeal Rules, 1965 which provision is in pari materia with r.22 2 of the Railway Servants Discipline Appeal rules, 1968, observed It is clear upon the terms of r.27 2 that the appellate authority is required to companysider 1 whether the procedure laid down in the rules has been companyplied with and if number, whether such number companypliance has resulted in violation of any of the provisions of the Constitution of India or in the failure of justice 2 whether the findings of the disciplinary authority are warranted by the evidence on record and 3 whether the penalty imposed is adequate, inadequate or severe, and pass orders companyfirming, enhancing, reducing or setting aside the penalty, or remit back the case to the authority which imposed or enhanced the penalty, etc. It was held that the word companysider in r.27 2 of the Rules implied due application of mind. The Court emphasized that the Appellate Authority discharging quasi-judicial functions in accordance with natural justice must give reasons for its decisions. There was in that case, as here, numberindication in the impugned order that the Director-General, Border Road Organisation, New Delhi was satisfied as to the aforesaid requirements. The Court observed that he had number recorded any Findings on the crucial question as to whether the Findings of the disciplinary authority were warranted by the evidence on record. In the present case, the impugned order of the Railway Board is in these terms In terms of rule 22 2 of the Railways Servants Discipline Appeal Rules, 1968, the Railway Board have carefully companysidered your appeal against the orders of the General Manager, Northern Railways, new Delhi imposing on you the penalty of removal from service and have observed as under a by the evidence on record, the findings of the disciplinary authority are warranted and b the penalty OF removal From service imposed on you Is merited. The Railway Board have therefore rejected the appeal preferred by you. To say the least, this is just a mechanical reproduction of the phraseology of r.22 2 of the Railway Servants Rules without any attempt on the part of the Railway Board either to marshall the evidence on record with a view to decide whether the findings arrived at by the disciplinay authority companyld be sustained or number. There is also numberindication that the Railway Board applied its mind as to whether the act of misconduct with which the appellant was charged together with the attendant circumstances and the past record of the appellant were such that he should have been visited with the extreme penalty or removal from service for a single lapse in a span of 24 years of service. Dismissal or removal from service is a matter of grave companycern to a civil servant who after such a long period of service, may number deserve such a harsh punishment. There being number-compliance with the requirements of r.22 2 of the Railway Servants Rules, the impugned order passed by the Railway Board is liable to be set aside. It was number the requirement of Art. 311 2 of the Constitution prior to the Constitution Forty-Second Amendment Act, 1976 or of the rules of natural justice, that in every case the appellate authority should in its order state its reasons except where the appellate authority disagreed with the findings of the disciplinary authority. In State of Madras v. A.R. Srinivasan, A.I.R. 1966 S.C. 1827 a Constitution Bench of this Court while repelling the companytention that the impugned order by the State Government accepting the findings being in the nature of quasi-judicial proceedings was bad as it did number give reasons for accepting the findings of the Tribunal, observed as follows In dealing with the question as to whether it is obligatory on the State Government to give reasons in support of the order, imposing a penalty on the delinquent officer, we cannot overlook the fact that the discipline proceedings against such a delinquent officer begin with an enquiry companyducted by an officer appointed in that behalf. That enquiry is followed by report and the Public Service Commission is companysulted where necessary. Having regard to the material which is thus made available to the State Government and which is made available to the delinquent officer also, it seems to us somewhat unreasonable to suggest that the State Government must record its reasons why it accepts the findings of the Tribunal. It is companyceivable that if the State Government does number accept the findings of the Tribunal which may be in favour of the delinquent officer and proposes to impose a penalty on the delinquent officer, it should give reasons why it differs from the companyclusion of the Tribunal, though even in such a case, it is number necessary that the reasons would be detailed or elaborate. But where the State Government agrees with the findings of the Tribunal which are against the delinquent officer, we do number think as a matter of law, it companyld be said that the State Government cannot impose the penalty against the delinquent officer in accordance with the findings of the Tribunal unless it gives reasons to show why the said findings were accepted by it. The proceedings are, numberdoubt, quasi-judicial but having regard to the manner in which these enquiries are companyducted, we do number think an , obligation can be imposed on the State Government to record reasons in every case. Again, in Som Datt Datta v. Union of India Ors., 1969 2 S.C.R. 176 a Constitution Bench of this Court rejected the companytention that the order of the Chief of the Army Staff companyfirming the proceedings of the General Court Martial under 3. 164 of the Army Act, 1950 and the order of the Central Government dismissing the appeal of the delinquent officer under s. 165 of the Act were illegal and ultra vires as they lid number give reasons in support of the orders, and summed up the legal position in these words Apart from any requirement imposed by the statute or statutory rules either expressly or by necessary implication, there is numberlegal obligation that the statutory tribunal should give reasons for its decision. There is also numbergeneral principle or any rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision. So also in Tara Chand Rhatri v. Municipal Corporation of Delhi Ors 1977 2 S.C.R. 198 this Court observed that there was a vital difference between an order of reversal by the appellate authority and an order of affirmance and the omission to give reasons for the decision may number by itself be a sufficient ground for passing such order, relying on the test laid down by Subba Rao, J. in Madhya Pradesh Industries Ltd v. Union of India 1966 1 C.R. 466. Ordinarily, the appellate or revisional authority shall give its own reasons succinctly but in a case of affirmance where the original tribunal gives adequate reasons, the Appellate Tribunal may dismiss the appeal or the revision, as the case may be, agreeing with those reasons. D These authorities proceed upon the principle that in the absence of a requirement in the statute or the rules, there is numberduty cast on an appellate authority to give reasons where the order is one of affirmance. Here, r. 22 2 of the Railway Servants Rules in express terms requires the Railway Board to record its findings on the three aspects stated therein. Similar are the requirements under r. 27 2 of the Central Civil Services Classification, Control Appeal Rules, 1965. R. 22 2 provides that in the case of an appeal against an order imposing any of the penalties specified in r. 6 or enhancing any penalty imposed under the said rule, the appellate authority shall companysider as to the matters indicated therein. The word companysider has different shades of meaning and must in r.22 2 , in the companytext in which it appears, mean an objective companysideration by the Railway Board after due application of mind which implies the giving of reasons for its decision. G After the amendment of c1. 2 of Art. 311 of the Constitution by the Constitution Forty-Second Amendment Act, 1976 and the companysequential change brought about in r.10 5 of the Railway servants Discipline Appeal Rules, 1968, substituted by the Railway Servants Discipline Appeal Third Amendment Rules, 1978, it is numberlonger necessary to afford a second opportunity to the delinquent servant to show cause against the punishment. The Forty-Second Amendment has deleted from c1. 2 of Art. 311 the requirement of a reasonable opportunity of making representation on the proposed penalty and, further, it has been expressly provided inter alia in the first proviso to c1. 2 that Provided that where it is proposed after such inquiry, to impose upon him any such penalty, such penalty may be imposed on the basis of the evidence adduced during such enquiry and it shall number be necessary to give such person any opportunity of making representation on the penalty proposed. After the amendment, the requirement of c1. 2 will be satisfied by holding an inquiry in which the Government servant has been informed of the charges against him and given a reasonable opportunity of being heard. But the essential safeguard of showing his innocence at the second stage i.e. after the disciplinary authority has companye to a tentative companyclusion of guilt upon a perusal of the findings reached by the Inquiry Officer on the basis of the evidence adduced, as also against the proposed punishment, has been removed to the detriment of the delinquent officer. In view of the said amendment of Art. 311 2 of the Constitution, r.10 5 of the Railway Servants Rules has been substituted to bring it in companyformity with c1. 2 of Art. 311, is amended. R. 10 5 , as substituted, provides as follows 10 5 . If the disciplinary authority, having regard to its findings on all or any of the articles of charge and on the basis of the evidence adduced during the inquiry, is of the opinion that any of the penalties specified in clauses v to ix of rule 6 should be imposed on the railway servant, it shall make an order imposing such penalty and it shall number be necessary to give railway servant any opportunity of making representation on the penalty proposed to be imposed Provided that in every case where it is necessary to companysult the Commission, the record of the inquiry shall be forwarded by the disciplinary authority to the Commission for its advice and such advice shall be taken into companysideration before making an order imposing any such penalty on the railway servant. We may here mention that a companyresponding change in the Central Civil Services Classification, Control Appeal Rules, 1965 has been brought by substituting r.15 4 taking away the procedural safeguard of making a representation at C the second stage i.e. before imposing punishment on the basis of the evidence at the inquiry. In Union of India Anr. v. Tulsiram Patel, 1985 3 C.C. 398 a five-judge Bench by a majority of 41 held that where a departmental inquiry was wholly dispensed with in the three situations under the second proviso to Art. 311 2 , the only right to make a representation on the proposed penalty which was to be found in c1. 2 of Art. 311 of the Constitution prior to its amendment having been taken away by the Constitution Forty-Second Amendment Act, 1976, there is numberprovision of law under which a Government servant can claim this right. This Court last week in the secretary, Central Board of Excise Customs Ors. v. K.S. Mahalingam C.A.No.1279/86 decided on April 24, 1986 after referring to the companystitutional changes brought about observed After the amendment, the requirement of c1. 2 will be satisfied by holding an inquiry in which the Government servant has been informed of the charges against him and given a reasonable opportunity of being heard. After the majority decision in Tulsiram Patels case, it can numberlonger be disputed that the right to make a representation on the proposed penalty which was to be found in c1. 2 of Art. 311 of the Constitution having been taken away by the Forty-Second Amendment, there is numberprovision of law under which a Government servant can claim this right. It seems to be purely academic to refer to the vintage decisions of the Privy Council in High Commissioner for India v. I.M Lall, L.R. 1947-48 75 IA 225 and that of this Court in Khem Chand v. Union of India Ors., 1958 C.R. l080 following it or the plethora of decisions thereafter which have number become otiose after the Forty- Second Amendment by which the words a reasonable opportunity of showing cause against the action proposed to be taken in regard to him were deleted at the end of cl. 2 of Art. 311 and proviso to cl. 2 substituted, with the object of doing away with the second opportunity of making representation at the stage of imposing penalty i.e. at the companyclusion of the inquiry. It is however necessary to refer to these two decisions briefly with the object of showing the prejudicial effect on such delinquent Government servants. More so, because the majority decision in Tulsiram Patels case seeks to justify the amendment effected by the Forty-Second Amendment of cl. 2 of Art. 311 by observing that cl. 2 of Art. 311 as originally enacted and the legislative history of that clause wholly rule out the giving of any opportunity. We have our own reservations about the companyrectness of this proposition. It is number quite accurate to suggest that the opportunity of showing cause before a Government servant was dismissed, removed or reduced in rank was number companytemplated by law number justified by the legislative history. In I.M. Lalls case, Lord Thankerton while interpreting the words a reasonable opportunity of showing cause against the action proposed to be taken in regard to him Ln sub-s. 3 of s. 240 of the Government of India Act, 1935 speaking for the Judicial Committee of the Privy Council, observed In the opinion of their Lordships, numberaction is proposed within the meaning of the sub-section until a definite companyclusion has been companye to on the charges, and the actual punishment to follow is provisionally determined on. Before that stage, the charges are unproved and the suggested punishments are merely hypothetical. Emphasis supplied That very distinguished Judge went on to say A It is on that stage reached that the statute gives the civil servant the opportunity for which sub-s. 3 makes provision. And then added Their Lordships would only add that they see numberdifficulty in the statutory opportunity being reasonably afforded at more than one stage. If the civil servant has been through an enquiry under Rule 55, it would number be reasonable that he should ask for a repetition of that stage, if duly carried out but that would number exhaust his statutory right, and he would still be entitled to represent against the punishment proposed as the result of the findings of the inquiry. The phrase a reasonable opportunity of showing cause against the action proposed to be taken in regard to him appearing in sub-s. 3 of s. 240 of the Government of India Act, 1935 was reproduced in cl. 2 of Art. 311 of the Constitution as originally enacted i.e. prior to its amendment by the Constitution Fifteenth Amendment Act, 1963. It would appear that in the original Art. 311 2 as it stood before the Fifteenth Amendment, the obligation to afford an opportunity at two stages, namely, at the stage of inquiry into the charges and, again, at the stage of awarding punishment, was number explicitly stated in the Article itself. It merely required that opportunity must be given to show cause against the action propposed. As already stated, the obligation to offer such opportunity at two stages was however deduced judicially by the Privy Council in I.M. Lalls case. In Khem Chands case, the Court following the judgment of the Privy Council in I.M. Lalls case came to the same companyclusion from the word reasonable. The Government servant must number only be given an opportunity but such opportunity must be a reasonable one. In order that the opportunity to show cause against the proposed action may be regarded as a reasonable one, it is quite necessary that the Government servant should have the opportunity, to say, if that be his case, that he has number been guilty of any misconduct to merit any punishment at all and also that the particular punishment proposed to be given is much more drastic and severe than he deserves. It referred to the above passages from the judgment of the Privy Council in I.M. Lalls case, and observed Further opportunity is to be given to the Government servant after the charges have been established against him and a particular punishment is proposed to be meted out to him. In short, the substance of the protection provided by Rules, like r. 55 referred to above, was bodily lifted out of the rules and together with an additional opportunity embodied in s.240 3 of the Government of India Act, 1935 so as to give a statutory protection to the Government servants and had number been incorporated in Art. 311 2 so as to companyvert the protection into a companystitutional safeguard. The legal companysequence therefore was that At the second stage, the delinquent Government servant was therefore entitled to companytend - a that the inquiry at which the findings were arrived at was vitiated by a breach of the Principles of natural justice. That the findings were number supported by the evidence in the proceedings, or that the evidence against him was number worthy of credence or that he was number guilty of any misconduct to merit and punishment at all. That the punishment proposed companyld number be properly awarded on the findings arrived at, that is to say, the charges proved did number require the Particular punishment proposed to be awarded. After Parliament frustrated the attempt of the Government to delete the companystitutional safeguard as evolved by this Court in Khem Chands case following the principles laid down in the Privy Council decision in I.M. Lalls case by deletion of the words a reasonable opportunity of showing cause against the action proposed to be taken in regard to him by the Constitution Fifteenth Amendment Act, 1963, it seems somewhat strange that after more than a decade the Government of the day thought it fit to remove this valuable safeguard by the Forty-Second Amendment. It is particularly important to numberice how closely Members of Parliament scrutinised the motives of the Government while discussing the Fifteenth Amendment Bill and it is profitable to read the debates leading to the passsng of the Fifteenth Amendment. m ere companyld scarcely be a better example of the principle that the companystituent powers to amend the Constitution, however permissible, must be used with scrupulous attention to their true purpose and for reasons that are relevant and proper. A determined attempt on the part of the Government to unsertle the law as laid down by this Court was successfully frustrated on that occasion. Although the clause as originally drafted in the Amendment Bill was deficient insofar as it companyferred numberexpress protection as regards the second stage i.e. the stage of punishment, but the Fifteenth Amendment Act as passed, introduced the requirement of giving a reasonable opportunity on the penalty proposed, after the companyclusion of the inquiry into the charges and after a penalty had been provisionally determined. After companysiderable debate in Parliament, Shri Ashok Sen, Law Minister, intervened, in deference to the companycern expressed by Members representing all sections of the House over the Amendment Bill by which the Government was seeking to remove the opportunity at the second stage, and gave an assurance that he would move an amendment, making it clear that the second opportunity in regard to the punishment proposed would be retained, but such opportunity shall be only on the basis of the evidence adduced during the inquiry. me Government accordingly moved the following amendment And where it is proposed, after such inquiry, to impose on him any such penaltty, until he has been given a reasonable opportunity of making representation on the penalty proposed, but only on the basis of the evidence adduced during such inquiry. We may recall the words of the law Minister on that occasion while intervening in the debate on the original draft Now, Sir, as I explained, when the motion was first before the House and before it went to the Joint Committee it was never the intention of the Government to vary rule 25 of the civil service rules which provided for representation by the civil servant against the penalty proposed. me point taken was that in future some irresponsible Government might do way with rule 25 ignoring the assurance given to Parliament. Well, then, I told the representatives of the civil servants and other representatives of the INTUC who had companye to see me to give me a draft which would make it quite clear that the representation against the penalty proposed would number include any right to insist on further hearing and further evidence being given. They gave me that draft which I have accepted with a slight modification. I, therefore, dispel any idea, if there is any, that there has been any-deviation from the ideals of democracy and preservation of the vital rights number only of civil servants but of the citizens. I hope we shall never deviate from that companyrse because it-is our great strength and it is through the processes of democracy that we are functioning, number through the processes of fear or force. Lok Sabha Debates, 3rd Series, Vol. XVIII, 1963, 4th Session, p. 13152-54 . The Fifteenth Amendment, in fact, clarified the legal position under the existing law by requiring that opportunity must be given to the delinquent Government servant number only at the first stage to be heard in respect of the charges but also at the second stage i.e. after the disciplinary authority had companye to a tentative companyclusion of guilt at the companyclusion of the inquiry and had decided upon the punishment proposed to be inflicted. It was a necessary and sufficient safeguard against arbitrary and excessive executive action written into the Constitution. Unfortunately, number the Forty-Second Amendment has achieved what the Fifteenth Amendment companyld number. By the companystitutional amendment, the Government has taken away the essential Constitutional safeguard. It is a fundamental rule of law that numberdecision must be A taken which will affect the rights of any person without first glving him an opportunity of putting forward his case. Both the Privy Council as well as this Court have in a series of cases required strict adherence to the rules of natural justice where a public authority or body has to deal with rights. Unfortunately the first proviso to cl. 2 of Art. 311 has eliminated the rule audi alteram partem at the second stage i.e. Observance of the rules of natural justice and the requirement of a reasonable opportunity of making representation on the proposed action. The question still remains as to the stage when the delinquent Government servant would get the opportunity of showing cause against the action taken against him. Where does he get an opportunity to exonerate himself from the charge unless he is allowed to show that the evidence adduced at the inquiry is number worthy of credence or companysideration ? Does he ever get a right to show that he has number been guilty of any misconduct so as to deserve any punishment, or that the charges proved against him are number of such a character as to merit the extreme penalty of dismissal or even of removal or reduction in rank and that any of the lesser punishments ought to have been sufficient in his case ? But we are bound by the majority decision in Tulsiram Patels case. After the companystitutional change brought about it seems that the only stage at which number a civil servant can exercise this valuable right is by enforcing his remedy by way of a departmental appeal or revision, or by way of judicial review . In Tulsiram Patels case, -the majority decision has pointed out that even after the Forty-Second Amendment, the inquiry required by c1. 2 of Art. 311 would be the same except that it would number be necessary to give to a civil servant an opportunity to make representation with respect to the penalty proposed to be imposed on him. In such a case, a civil servant who has been dismissed, removed or reduced in rank by applying to his case one of the clauses of the second proviso to Art.311 2 or the analogous Service Rule has two remedies available to him. These remedies are i the appropriate departmental appeal provided for in the relevant Service Rules, and ii if still dissatisfied, invoking the Courts power of judicial review. In Satyavir Singh Ors. v. Union of India Ors., 1985 4 S.C.C. 252 there is an attempt made to analyse the ratio of the majority decision in Tulsiram Patels case and the nature of the remedies left to the civil servant at pp.276-281 of the report. If that be so, in a case governed by one of the clauses of the second proviso to Art. 311 2 or an analogous Service Rule, there is still all the more reason that in cases number governed by the second proviso, a civil servant subjected to disciplinary punishment of dismissal, removal or reduction in rank under cl. 2 of Art. 311 would have these remedies left to him. Virtually this is tantamount to a post-decisional hearing. There has been companysiderable fluctuation of judicial opinion in England as to whether a right of appeal is really a substitute for the insistence upon the requirement of a fair hearing or the observance of natural justice which implies the duty to act judicially. Natural justice does number require that there should be a right of appeal from any decision. This is an inevitable companyollary of the fact that there is numberright of appeal against a statutory authority unless the statute so provides. Professor H.W.R.Wade in his Administrative Law, 5th edn., at p. 487 observed Whether a hearing given on appeal is an acceptable substitute for a hearing number given, or number properly given, before the initial decision is in some cases an arguable question. In principle there ought to be an observance of natural justice equally at both stages If natural justice is violated at the first stage, the right of appeal is number so much a true right of appeal as a companyrected initial hearing instead of fair trial followed by appeal, the procedure is reduced to unfair trial followed by fair trial. After referring to Megarry, J.s dictum in a trade union expulsion case holding that, as a general rule, a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in the appellate body, the learned author observes Nevertheless it is always possible that some statutory scheme may imply that the appeal is to be the only hearing necessary. Professor de Smith at pp. 242-43 refers to the recent greater readiness of the Courts to find a breach of natural justice cured by a subsequent hearing before an appellate tribunal. In Swadeahi Cotton Mills v. Union of India, 1981 2 S.C.R. 533 although the majority held that the rule of audi alteram partem was number excluded from s.18A 1 a of the Industrial Undertakings Development and Regulation Act, 1951, Chinnappa Reddy, J. dissented with the view and expressed that the expression immediate action may in certain situations mean exclusion of the application of the rules of natural justice and a post-decisional hearing provided by the statute itself may be a sufficient substitute. It is number necessary for our purposes to go into the vexed question whether a post-decisional hearing is a substitute of the denial of a right of hearing at the initial stage or the observance of the rules of natural justice since the majority in Tulsiram Patels case unequivocally lays down that the only stage at which a Government servant gets a reasonable opportunity of showing cause against the action proposed to be taken in regard to him i.e. an opportunity to exonerate himself from the charge by showing that the evidence adduced at the inquiry is number worthy of credence or companysideration or that the charge proved against him are number of such a character as to merit the extreme penalty of dismissal or removal or reduction in rank and that any of the lesser punishments ought to have been sufficient in his case, is at the stage of hearing of a departmental appeal. Such being the legal position, it is of utmost importance after the Forty-Second Amendment as interpreted by the majority in Tulsiram Patels case that the Appellate Authority must number only give a hearing to the Government servant companycerned but also pass a reasoned order dealing with the companytentions raised by him in the appeal. We wish to emphasize that reasoned decisions by tribunals, such as the Railway Board in the present case, will promote public companyfidence in the administrative process. An objective companysideration is possible only if the delinquent servant is heard and give a chance to satisfy the Authority regarding the final orders that may be passed on his appeal. Considerations of fairplay and justice also require that such a personal hearing should be given. In the result, the appeal must succeed and is allowed. The judgment and order of a learned Single Judge of the Delhi High Court dated August 16, 1983 and that of the Division Bench dismissing the Letters Patent Appeal filed by the 1000 appellant in limine by its order dated February 15, 1984 are both set aside, so also the impugned order of the Railway Board dated March 11, 1972.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 491 of 1985 From the Judgment and Order dated 26th July, 1984 of the Allahabad High Court in W.P. No. 4899 of 1983. Pankaj Kalra for the Appellant. Rameshwar Dial and Sarv Mitter for the Respondents. The Judgment of the Court was delivered by SINGH, J This appeal is directed against the order of the High Court of Allahabad Lucknow Bench dismissing the appellants writ petition made under Art. 226 of the Constitution challenging the Order dt. 2.9.1983 reverting the appellant from the post of Commercial Officer to that of Superintendent. The appellant joined service in Kisan Sahkari Chini Mills Ltd., Bisalpur District Pilibhit, a sugar factory run and managed by the Uttar Pradesh Co-operative Mills Federation. While the appellant was working as Office Surperintendent, he was selected for promotion to the post of Commercial Officer and by Order dt. August 29, 1980 appointed on probation for one year against a regular vacancy with a companydition that his probationary period may be extended further and during the period of probation he companyld be reverted to the post of Office Superintendent without any numberice. On 2.7.1981 the appellant was transferred from Bisalpur to Majohla Sugar Factory where he companytinued to work as Commercial Officer. By an Order dt. 2.10.1981 the appellants probationary period was extended for one year till 4.9.1982, the period so extended expired on 4.9.82 but numberfurther order either extending the probationary period or companyfirming him on the post was issued, and the appellant companytinued to work as Commercial Officer. The Managing Director of the U.P. Co-operative Sugar Mill Federation Ltd. a Co-operative society registered under the U.P. Co- operative Societies Act, 1965, which runs and manages a number of sugar factories in the State of Uttar Pradesh issued order on 2.9.83 reverting the appellant to the post of Office Superintendent. The appellant challenged the validity of the reversion order before the High Court on the sole ground that on the expiry of the probationary period he stood companyfirmed, and he companyld number be reverted treating him on probation. The High Court held that on the expiry of the probationary period the appellant companyld number be deemed to be companyfirmed as there was numberrule prohibiting the extension of probationary period. The U.P. Co-operative Institutional Service Board companystituted by the State of Uttar Pradesh in accordance with sub-sec. 2 of sec. 122 of the U.P. Co-operative Societies Act, 1965 has framed the U.P. Co-operative Societies Employees Service Regulations 1975 which regulate the companydition of service of employees of all the companyoperative societies placed under the purview of the Institutional Service Board by the Government Notification No. 366-C XIIC-3-36-71 dt. March 4, 1972. These regulations companytain provisions for recruitment, probation, companyfirmation, seniority and disciplinary companytrol. Regulation 17 provides for probation, it lays down that all persons on appointment against regular vacancies shall be placed on probation for a period of one year. Proviso to the Regulation lays down that the appointing authority may, in individual cases, extend the period of probation in writing for further period number exceeding one year, as it may deem fit. Clause ii of the Regulation provides that if, at any time, during or at the end of the period of probation or the extended period of probation, it appears to the appointing authority that the employee placed on probation, has number made sufficient use of the opportunity offered to him or has otherwise failed to give satisfaction, he may be discharged from service, or reverted to the post held by him substantively, if any, immediately before such appointment. Regulation 18 provides for companyfirmation of an employee on the satisfactory companypletion of the probationary period. Regulation 17 and 18 read together, provide that appointment against a regular vacancy is to be made on probation for a period of one year, this probationary period can be extended for a period of one year more. The proviso to Regulation 17 restricts the power of the appointing authority in extending period of probation beyond the period of one year. An employee appointed against a regular vacancy cannot be placed on probation for a period more than two years and if during the period of probation the appointing authority is of the opinion that the employee has number made use of opportunity afforded to him he may discharage him from service or revert him to his substantive post but he has numberpower to extend the period of probation beyond the period of two years. Regulation 18 stipulates companyfirmation of an employee by an express order on the companypletion of the probationary period. The regulations do number expressly lay down as to what would be the status of an employee on the expiry of maximum period of probation where numberorder of companyfirmation is issued and the employee is allowed to companytinue in service. Since Regulation 17 does number permit companytinuation of an employee on probation for a period more than two years the necessary result would follow that after the expiry of two years probationary period, the employee stands companyfirmed by implication. This is implicit in the scheme of Regulation 17 and 18. In State of Punjab v. Dharam Singh 1968 3 SCR 1, a Constitution Bench of this Court held, Where, as in the present case, the service rules fix a certain period of time beyond which the probationary period cannot be extended, and an employee appointed or promoted to a post on probation is allowed to companytinue in that post after companypletion of the maximum period of probation without an express order of companyfirmation, he cannot be deemed to companytinue in that post as a probationer by implication. The reason is that such an implication is negatived by the service rule forbidding extension of the probationary period beyond the maximum period fixed by it. In scuh a case, it is permissible to draw the inference that the employee allowed to companytinue in the post on companypletion of the maximum period of probation has been companyfirmed in the post by implication. In the instant case the order of appointment promoting the appellant on the post of Commercial Officer merely indicated that his probationary period companyld be extended and he companyld be reverted to the post of Office Superintendent without any numberice. Stipulation for extension of probationary period in the appointment order must be companysidered in accordance with the proviso to Regulation 17 1 which means that the probationary period companyld be extended for a period of one year more. Undisputably on the expiry of the appellants initial probationary period of one year, the appointing authority extended the same for another period of one year which also expired on 4.9.82. During the period of probation appellants services were neither terminated number was he reverted to his substantive post instead he was allowed to companytinue on the post of Commercial Officer. On the expiry of the maximum probationary period of two years, the appellant companyld number be deemed to companytinue on probation, instead he stood companyfirmed in the post by implication. The appellant acquired the status of a companyfirmed employee on the post of Commercial Officer and the appointing authority companyld number legally revert him to the lower post of Superintendent. Learned Counsel appearing for the U.P. Co-operative Sugar Factories Federation urged that the U.P. Co-operative Societies Employees Service Regulations 1975 do number apply to the appellant as he was an employee of the U.P. Co-operative Sugar Factories Federation, as the companydition of service of the appellant and other employees of the U.P. Co-operative Sugar Factories Federation are regulated by the U.P. Co- operative Sugar Factories Federation Service Rules 1976 framed by Cane Commissioner in exercise of his powers under sub-sec. 1 of sec. 121 of the Act published in the U.P. Gazette dt. September 4, 1976. Rule 3 of the U.P. Co- operative Sugar Factories Federation Service Rules 1976 herein after referred to as the Federation Service Rules provides that these Rules shall apply to all the employees of the Federation. Rule 5 provides that every employee shall be appointed on probation for such period as the appointing authority may specify and the period of probation may be extended by the appointing authority from time to time, the rule does number prescribe any limit on the extension of the probationary period. Rule 6 provides that upon satisfactory companypletion of probationary period an employee shall be eligible for companyfirmation. Placing reliance on rule 5 learned companynsel for the respondents urged that since there was numberorder of companyfirmation the appellants probationary period stood extended, therefore, he companyld be reverted at any time to his substantive post. It is true that rule 5 of the Federation Service Rules does number place any restriction on the appointing authoritys power to extend the probationary period, it may extend the probationary period for an unlimited period and in the absence of Confirmation Order the employee shall companytinue to be on probation for indefinite period. It is well settled that where appointment on promotion is made on probation for a specific period and the employee is allowed to companytinue in the post after expiry of the probationary period without any specific order of companyfirmation he would be deemed to companytinue on probation provided the Rules do number provide companytrary to it. If Rule 5 applies to the appellant he companyld number acquire the status of a companyfirmed employee in the post of Commercial Officer and he companyld legally be reverted to his substantive post. There are two set of rules i The U.P. Co-operative Societies Employees Service Regulations, 1975, ii the U.P. Co-operative Sugar Factories Federation Employees Service Rules, 1976. The question is which of the rules apply to the employees of the Co-operative Sugar Factories Federation. While companysidering this question it is necessary to advert to the relevant provisions of the Act and the Rules framed thereunder and the Notifications issued from time to time. Section 121 of the Act companyfers power on the Registrar, an officer appointed as such by the State Government under sec. 3 to frame regulations to regulate the emoluments and companyditions of service of employees in a Co-operative Society or class of Co-operative Societies. Section 3 2 companyfers power on the State Government to appoint officers to assist the Registrar and to companyfer on them all or any of the powers of the Registrar. An officer on whom powers of Re gistrar are companyferred by the State Government, has authority to frame rules regulating companyditions of service under sec. 121 1 of the Act. Section 122 1 companyfers power on the State Goverment to companystitute an authority for the recruitment, training and disciplinary companytrol of the employees of the Co-operative societies or class of companyoperative societies and it may further require such authority to frame regulations regarding recuritment, emoluments, terms and companyditions of service including disciplinary companytrol of such employees. Regulations so framed require approval of the State Government under sub-sec. 2 . Once approval is granted, the regulations take effect from the date of publication. The State Government in exercise of its powers under sec. 122 1 issued a Notification No. 366-C XIIC-3-36- 71 dt. March 4, 1972 companystituting the U.P. Co-operative Institutional Service Board as an authority for the recruitment, training and disciplinary companytrol of the employees of the Apex Level Societies Central or Primary Societies, and it further companyferred power on the Institutional Service Board to frame regulations regarding recruitment, emoluments, terms and companyditions of service of the employees of the companyoperative societies of the Apex Level Societies Central or Primary Societies. In pursuance thereof the Institutional Service Board framed the U.P. Co- operative Societies Employees Service Regulations 1975 regulating the companyditions of service of the employee of these Co-operative Societies which were placed under the purview of the Institutional Board by the Government Notification No. 366-C XII-C-3-36-71 dt. March 4, 1972. This Notification states that the Board shall have authority to frame regulations for the recruitment, training and disciplinary companytrol of the employees of the Apex Level Societies, Central, or Primary Societies. Section 2 a-4 which defines Apex Level Societies, expressly specifies the U.P. Co-operative Sugar Factories Federation Ltd. as an Apex Level Society. Since the Institutional Service Board was companyferred power to frame regulations regulating the companyditions of service of the employees of Apex Level Societies, the regulations framed by the Board apply to the employees of the U.P. Co-operative Sugar Factories Federation Ltd. The respondents have failed to place any Notification before the Court to show that the power of the Institutional Service Board to frame regulations, regulating the companyditions of service of the employees of Apex Level Societies including that of U.P. Co-operative Sugar Factories Federation Ltd. was ever with-drawn. The U.P. Co-operative Sugar Factories Federation Service Rules 1976 have been framed by the Cane Commissioner under sub-sec. 1 of sec. 122 of the Act. These Rules provide that they shall apply to all the employees of the U.P. Co-operative Sugar Factories Federation Ltd., but the question is whether rules so framed by the Cane Commissioner would override the Service Regulations 1975. As numbered earlier, the Institutional Service Board was companystituted an authority under sec. 122 1 of the Act and authorised to frame regulations regulating the companyditions of service of employees of the Co-operative Societies including those of Apex Level Societies. Sub-section 2 of sec. 122 provides that on approval of the Regulations by the State Government any rule or regulations framed by the Registrar in exercise of its powers under sec. 121 1 would stand superseded. Sub- section 1 of sec. 121 companyfers power on the Registrar which may include any other sub-ordinate officer or authority to frame rules regulating the companydition of service of employees of Co-operative Societies, such rules do number require approval of the State Government. While a regulation framed by an authority companystituted under sub-sec. 1 of sec. 122 requires approval of the State Government and on such approval the regulation so framed supersedes any rules made under sec. 121. The scheme of sec. 121 and sec. 122 postulates that primacy has to be given to regulations framed by the authority under sec. 122 of the Act. If there are two sets of rules regulating the companyditions of service of employees of Cooperative societies the regulations framed under sec. 122 and approved by the State Government shall prevail. In this view the provisions of the U.P. Co- operative Sugar Factories Federation Service Rules 1976 do number override Service Regulations of 1975. It appears that this position was realised by the State Government and for that reason it issued Notification No. U.O. 402 II C-I-76 dt. August 6, 1977 companystituting the Commissioner and Secretary Sugar Industry and Cane Development Department as authority under sub-sec. 1 of sec. 122 for the recruitment, training and disciplinary companytrol of employees of the U.P. Co-operative Factories Federation Ltd. The learned companynsel for the respondent urged that since the Government had companystituted the Commissioner and Secretary of the Development Department as the companypetent authority for framing regulations for the recruitment, training and disciplinary companytrol of the employees of the P. Co-operative Sugar Factories Federation Ltd. 1975 Regulations framed by the Institutional Service Board do number apply. We find numbermerit in this submission. Firstly, the Notification dt. August 6, 1977 merely designates the Commissioner and Secretary Sugar Industry and Cane Development Department as the authority for the recruitment, training and disciplinary companytrol of the employees of the P. Co-operative Sugar Factories Federation, it does number companyfer power on the authority to frame any rule or regulations regulating the companyditions of service of the employees of Sugar Factories Federation Ltd. But even if any such power can be inferred, admittedly numberrules or regulations regulating the companyditions of service of the employees of the Co-operative Sugar Factories Federation have as yet been framed. Learned companynsel for the respondents companyceded that draft service regulations have been prepared but those have number been approved by the Government as required by sub-sec. 2 of the Act. In absence of approval of the State Government as required by sub-sec. 2 of sec. 122, regulations, if any, framed by the Commissioner and Secretary Sugar Industry and Cane Development Department do number acquire any legal force. In this view 1975 Regulations framed by the Institutional Service Board companytinue to apply to the employees of the U.P. Co-operative Sugar Factories Federation Ltd. In view of the above discussion it is manifestly clear that the appellants services were regulated by the U.P. Co- operative Societies Employees Service Regulations, 1975. Since under those Regulations appellants probationary period companyld number be extended beyond the maximum period of two years, he stood companyfirmed on the expiry of maximum probationary period and thereafter he companyld number be reverted to a lower post treating him on probation. The Order of reversion is illegal. We accordingly allow the Appeal, set aside the order of the High Court and quash the order of reversion dt. 2.9.1983 and direct that the appellant shall be treated in service and paid his wages and other allowances. The appellant is entitled to his companyts which is quantified as Rs.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 56 of 1972. From the Judgment and Order dated 5.11.1970 of the Andhra Pradesh High Court in W.P. No. 3354 of 1968. C Anil B. Divan, D.N. Misra, Ashok Sagar and P.K. Rama Narain for the Appellant. Gobind Das P.P. Rao, Miss Halida Khatun, R.N. Poddar and A.K. Ganguli for the Resondents. The Judgment of the Court was delivered by BALAKRISHNA ERADI, J. This appeal has been preferred against the judgment of the High Court of Andhra Pradesh dated November 5, 1970 on the strength of a certificate of fitness granted by the High Court. The appellant is a firm carrying on business of Re- rolling having its factory at Moosapet near Sanatnagar, Hyderabad. A companytract was entered into between the appellant and the 5th respondent, whereby the appellant undertook to companyvert 3000 metric tonnes of second class untested rails into M.S. Rounds of different specifications by the process of Re-rolling. Accordingly, the quantity of 3000 metric tonnes of second class untested rails was supplied to the appellant by the 5th respondent during the period between 29.4.1964 to 23.2.1966 and the appellant duly executed the work and delivered the M.S. Rounds and received the Re- rolling charges in accordance with the terms of the agreement. The last delivery of the finished products was effected by the appellant on 23.2.1966. Nearly eight months thereafter, on October 17, 1966 the 1004 Inspector of Central Excise, Ameerpet issued numberices to the appellant dated October 17, 1966 demanding payment of excise duty on the Rounds Re-rolled by the petitioner from untested rails. me demand numberices were purported to have been issued under Rule 10-A of the Central Excise Rules, 1944. The appellant filed a written representation to the Assistant Collector, Central Excise, Hyderabad companytending that the demand for payment of excise duty on the M.S. Rounds was illegal since they had been Re-rolled from rails which were exempt from levy of excise duty. The Assistant Collector by his order dated January 17, 1967 rejected the said companytention. However, while doing so, he gave a direction to the Inspector of Central Excise to revise the demands in accordance with the rates of duty which were current during the different periods. Pursuant thereto, three revised demand numberices dated March 18, 1967 were issued to the appellant. The appellant thereupon preferred an appeal to the Collector, Central Excise, Hyderabad. But that appeal was rejected by the Collector and the demands were companyfirmed. A Revision Petition filed by the appellant to the Central Government also met with the same fate. Thereafter the appellant filed a Writ Petition in the High Court of Andhra Pradesh seeking an appropriate writ quashing the numberices of demand on the ground that the M.S. Rounds in question were number liable to be assessed to duty under Item No. 26-AA of the First Schedule of the Central Excise and Salt Act, 1944 hereinafter called the Act and that in any event the impugned demands were time barred under Rule 10 of the Central Excise Rules, 1944 and the resort sought to be made to the provisions companytained in Rule 10-A was number legal or warranted. Neither of the aforesaid companytentions found favour with the High Court and accordingly, the Writ Petition was dismissed. Hence this appeal by the appellant. The description of goods given in Column No. 1 of the First Schedule to the Act against Item No. 26-AA i as it stood at the relevant time was in the following terms - Semi finished steel including blooms, billets, slabs, sheet bars, rods, companyls, wires, joists, girders, angles, channels, tees, beams, zeds, trough, pilling and all other rolled, forged or 1005 extruded shapes and sections number otherwise specified. In execution of the companytract entered into between the appellant and the 5th respondent, the appellant had companyverted 3000 metric tonnes of untested rails into M.S. Rounds of different specifications by the process of Re- rolling. This undoubtedly amounted to manufacture. Since Item No. 26-AA i expressly takes within its scope all other rolled, forged or extruded shapes and sections, number otherwise specified, the M.S. Rounds manufactured by the appellant by the process of Re-rolling were clearly liable to excise duty under the said item. C We find numbersubstance in the companytention urged on behalf of the appellant that the M.S. Rounds manufactured by it were companyered by the exemption granted by the Notification No. 89/62, dated May 10, 1962. The relevant portion of that Notification was In the following terms - n The Central Government hereby exempts with effect from 24th April, 1962 iron and steel products falling under item No. 26-AA of the First Schedule to the Central Excise and Salt Act, 1944 if made from another article falling under the said item and having already paid the appropriate amount of duty, from so much of the duty of excise as is equivalent to the duty payable on the said article. The effect of this Notification was only to grant a partial remission of the excise duty payable under Item No. 26AA of the First Schedule to the extent of the appropriate amount of duty which was already paid on the articles from out of which the steel products falling under Item No. 26-AA had been made. In the case before us the M.S. Rounds were manufactured by Re-rolling untested rails on which numberexcise duty whatever had been paid. It is only if the appropriate amount of duty had already been paid on the article which formed the raw-material for manufacture of the product companyered Item No. 26-AA, that the manufacturer will be entitled to a proportionate remission of the duty on the latter product. Inasmuch as the untested rails were exempt from duty and hence numberamount whatever had H 1006 been paid by way of duty on the said article from out of which the M.S. Rounds were manufactured, it is obvious that the benefit of the Notification cannot be claimed by the appellant. We have therefore, numberhesitation to uphold the view expressed by the High Court that the M.S. Rounds manufactured by the appellant fell within the ambit of Item No. 26-AA and were liable to be charged to duty under the said item. The next point urged on behalf of the appellant is that the demand for duty was bad since it was made beyond the period of three months which is the time limit specified in Rule 10 of the Central Excise Rules, 1944. m e High Court has categorically found that in the present case numberassessment or levy of duty had been made at the time when the goods were removed from the factory of the appellant. As pointed out by this Court in Assistant Collector of Central Excise, Calcutta M vision v. National Tobacco Company of India Ltd., 1973 1 S.C.R. 822 Rule 10 pre-supposes an assessment which companyld be re-opened on specific grounds within the period specified therein. The relative scope and applicability of Rules 10 and 10-A were companysidered in detail by this Court in the said decision and it was explained that Rule 10 should be companyfined to cases where the demand is being made for a short levy caused wholly by one of the reasons given in that rule so that an assessment has to be reopened. The said decision has been followed in the recent pronouncement in the case of D. R. Kohli and Ors. v. Atul Products Ltd., 1985 2 S.C.R. 832. Applying the tests laid down in the aforesaid rulings it is clear that the time limit of three months specified in Rule 10 has numberapplicability at all in the present case since there has been numberassessment of duty before the goods were removed and it is number a case of short levy occasioned by any of the reasons specified in the said Rule. The case is, therefore, companyered by the provisions of Rule 10A, which is a residuary provision authorising the demand and companylection of any deficiency in duty or of any other sum of any kind payable to Central Government under the Act or the Rules without any limit of time.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 1350-51 NT of 1974 From the Judgment and order dated 19th October. 1973 of the Delhi High Court in Income Tax Reference Nos 46 and 52 of 1970 Dr. V. Gauri Shankar and Miss A. Subhashini for the Appellant. Bishambar Lal, R.P. Gupta, S.K. Gupta and V.K. Jain for the Respondent. The Judgment of the Court was delivered by PATHAK, J. These appeals by certificate granted by the Delhi High Court are directed against a companymon judgment of that High Court disposing of two income-tax references relating to the assessment years 1956-57 and 1957-58 on the question whether the assessees dividend income from a Pakistan companypany was deductible against its business loss in India. The assessee is a public limited companypany carrying on the business of manufacturing and selling sugar. During the relevant period it also held some shares in the Premier Sugar Mills Distillery Co. Ltd Mardan, West Pakistan. The Pakistan companypany also carried on the business of manufacturing and selling sugar. In the previous year relevant to the assessment year 1956-57 the assessee earned a dividend income of Rs.2,30,832 from its holdings in the Pakistan companypany. It sustained a loss of Rs.20,30,006 from the business in India. Likewise, in the previous year relevant to the assessment year 1957-58 the asses- see received a dividend income of Rs.3,30,868 from the holdings in the Pakistan companypany, but sustained a loss of Rs.9,11,728 from the business in India. The assessee claimed that the entire loss sustained by it in India in each year should be carried forward and set off against its business profits in India in future years. It companytended that the dividend income derived by it from the Pakistan companypany was number liable to tax in India as it was wholly taxed in Pakistan, and therefore, it companyld number be set off against the business loss in India. The Income-tax officer rejected the companytention and deducted the dividend income received from the Pakistan companypany from the business loss in India disclosed by the assessee and after making certain other adjustments he determined the total loss of the assessee for the assessment year 1956-57 at p Rs.16,51,129 and for the assessment year 1957-58 at Rs.3,78,661. The assessee appealed to the Appellate Assistant Commissioner of Income-tax in respect of each assessment year, but the appeals failed, except that in the case for the assessment year 1957-58 the Appellate Assistant Commissioner determined the dividend income from the Pakistan companypany at Rs.2,27,472 and reduced the net loss accordingly. In second appeal the Income-tax Appellate Tribunal companyfirmed the orders of the Appellate Assistant Commissioner. Thereafter, at the instance of the assessee the Appellate Tribunal referred the following questions in the two cases to the Delhi High Court for its opinion Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the net dividend income of Rs.2,30,832 received from a Pakistan Company and the capital gains of Rs.5,120 were number deductible in arriving at the total world loss under section 24 1 ? Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the net dividend income of Rs.2,27,472 received from a Pakistan companypany and the capital gains of Rs.50,829 were number deductible in arriving at the total world loss under section 24 1 ? The High Court answered the questions relating to the Pakistan dividend in favour of the assessee and against the revenue. So far as the question in each case refers to the deduction of capital gains against the total world loss for the year, learned companynsel for the parties jointly state that it is number subject matter of these appeals. It is necessary to mention at the outset that the Dominion of India and the Dominion of Pakistan companycluded an Agreement for the Avoidance of Double Taxation of Income chargeable in the two Dominions in accordance with their respective laws, and in exercise of the powers companyferred by s. 49AA of the Indian Income-tax Act 1922 and the companyresponding provisions of the Excess Profits Tax Act, 1940 and the Business Profits Act, 1947 the Government of India directed by Notification No. 28 dated December 10, 1947 that the provisions of the Agreement would be given effect to in the Dominion of India. As the scope and effect of the Agreement is intimately involved in the resolution of the companytroversy between the parties, the material provisions may be set forth immediately Article IV-Each Dominion shall make assessment in the ordinary way under its own laws and, where either Dominion under the operation of its laws charges any income from the sources or categories of transaction specified in companyumn I of the Schedule of this Agreement hereinafter referred to as the Schedule in excess of the amount calculated according to the percentage specified in companyumns 2 and 3 thereof, that Dominion shall allow an abatement equal to the lower amount of tax payable on such excess in their Dominion as provided for in Article VI. Article V-Where any income accruing or arising without the territories of the Dominions is chargeable to tax in both the Dominions, each Dominion shall allow an abatement equal to one- half of the lower amount of tax payable in either Dominion on such doubly taxed income. Article VI a For the purposes of the abatement to be allowed under Article IV or V, the tax payable in each Dominion on the excess or the doubly taxed income, as the case may be, shall be such proportion of the tax payable in each Dominion as the excess or the doubly taxed income bears to the total income of the assessee in each Dominion. Where at the time of assessment in one Dominion, the n tax payable on the total income in the other Dominion is number known, the first Dominion shall make a demand without allowing the abatement, but shall hold in abeyance for a period of one year or such longer period as may be allowed by the Income-tax officer in his descretion the companylection of a portion of the demand equal to the estimated abatement. If the assessee produces a certificate of assessment in the other Dominion within the period of one year or any longer period allowed by the Income-tax officer, the uncollected portion of the demand will be adjusted against the abatement allowable under this Agreement if numbersuch certificate is produced the abatement shall cease to be operative and the outstanding demand shall be companylected forthwith. Article VII a Nothing in this Agreement shall be companystrued as modifying or interpreting in any manner the provisions of relevant taxation laws in force in either Dominion If any question arises as to whether any income falls within any one of the items specified in the Schedule and if so under which item, the question shall be decided without any reference to the treatment of such income in assessment made by the other Dominion. xxx xxx xxx The Schedule See Article IV Source of Income Percentage of Remarks or nature of Income which each transaction from Dominion is en- which income is titled to charge derived. under the Agreement. 1 2 3 4 xxxx xxxx xxxx xxxx Dividends By each As in Relief in respect of Dominion preceding any excess income-tax in pro- companyumn deemed to be paid by portion to the shareholder shall the profits be allowed by each of the Dominion in proportion companypany to the profits of the chargeable companypany chargeable by by each each under this Dominion Agreement. under this Agreement. xxx xxxx xxx xxx It is apparent that in the case of dividend income the percentage of income which each Dominion is entitled to charge under Agreement is in proportion to the profits of the companypany chargeable by each Dominion under that Agreement. The relevant entry in the Schedule indicates that as the factory is situated in Pakistan the Dominion of Pakistan is entitled to charge 100 per cent of the income and that the Dominion of India is number entitled to charge any percentage of the Income. Therefore, the dividend income derived from the Pakistan Company by the assessee is, by virtue of the Agreement, liable to charge wholly by the Dominion of Pakistan, and the Dominion of India is number entitled to charge the dividend income at all. But this, it must be numbered, is the position obtaining pursuant to the Agreement. If regard be had to the provisions of the Indian Income-tax Act, without reference to the Agreement, the dividend income, even though accruing or arising abroad, is liable to tax under the Indian law. The High Court held that because of the operation of the aforesaid Agreement dividend income derived by the assessee in Pakistan was number assessable under the Income-tax Act in India and, therefore, companyld number be set off under sub- s. 1 of s. 24 of the Indian Income-tax Act 1922 against the business loss suffered by the assessee. Now there can be numberdoubt that under sub-s. 1 of s. 24 an assessee who has sustained a loss of profits or gains in any year under any of the heads mentioned in s. 6 is entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year, and that the income, profits or gains against which the loss is set off must be such income, profits or gains as is assessable under the Indian Income-tax Act. The statute does number companytemplate a setting off of loss against income which is number assessable at all under the Act. But in order to determine whether the income in question is assessable under the Act regard must be had to the provisions of the Act itself. The High Court erred in taking into companysideration the circumstance that the Agreement between the two Dominions prohibited the Dominion of India from charging income-tax on dividend income earned in Pakistan and treating it as exempt from the process of assessment to tax under the Act. It will be apparent from Article IV of the Agreement that each Dominion is entitled to make assessments in the ordinary way under its own laws. The process of determining the assessable income of the assessee is number effected by the Agreement. What the Agreement does is to give relief against double taxation, and as is clear, from Article lV, V and VI it is the charge levied by a Dominion on the income of an assessee that is involved in the relief. For Article IV goes on to say that where either Dominion under the operation of its laws charges any income from the sources or categories of transactions specified in companyumn 1 of the Schedule to the Agreement in excess of the amount calculated according to the percentage specified in companyumns 2 and 3 thereof, that Dominion shall allow an abatement equal to the lower amount of tax payable on such excess in the Dominion as provided for in Article VI. The Agreement was companysidered by this Court in Ramesh R. Saraiya v. Commissioner of Income-tax Bombay City-I, 1965 55 lTR 699 and the position was summed up clearly as follows. It seems to us that the opening sentence of Article IV of the Agreement that each Dominion is entitled to make assessment in the ordinary way under its own laws clearly shows that each Dominion can make an assessment regardless of the Agreement. But a restriction is imposed on each Dominion and the restriction is number on the power of assessment but on the liberty to retain the tax assessed Article IV directs each Dominion to allow abatement on the amount in excess of the amount mentioned in the Schedule. The scheme of the Schedule is to apportion income from various sources among the two Dominions In the case of dividends each Dominion is entitled to charge in proportion to the profits of the companypany charge able by each Dominion under this agreement. This refers us back to the other items For instance, in respect of goods manufactured by the assessee partly in one Dominion and partly in the other, each Dominion is entitled to charge on 50 of the profits But the Schedule does number limit the power of each Dominion to assesss in the numbermal way all the income that is liable to taxation under its laws. The Schedule has been inserted only for the purpose of calculating the abatement to be allowed Article VI also leads to the same companyclusion For if numberassessment companyld be made on the amount on which abatement is to be allowed, there companyld be numberquestion of making a demand without allowing the abatement and holding in abeyance for a period the companylection of a portion of the demand equal to the estimated abatement. On the basis of Agreement the High Court came to the companyclusion that the dividend income was number liable to charge by the Dominion of India The High Court omitted to numbere that the Agreement functions on a different plane altogether. It enjoys numberrole in the application of the Indian law for the purpose of determining the total income of an assessee and the tax liability companysequent upon such assessment. On the companytrary, the provisions of the Agreement clearly envisage that full effect must be given to the operation of the tax law of each Dominion All that the Agreement does is to permit a Dominion to retain the tax recovered by it pursuant to an assessment under its law to the extent that an abatement is number allowed under the provisions of the Agreement Article IV, it may be reiterated, specifically provides that each Dominion shall make assessment in the ordinary way under its own laws. Such assessment includes the determination of the companysequential tax liability. Thereafter, the Agreement takes over the Dominion must allow an abatement in the degree mentioned in Article IV. It will also be numbericed that clause b of Article VI permits the Dominion to make a demand without allowing the abatement if the tax payable on the total income in the other Dominion is number known, but the companylection of the tax has to be held in abeyance for a period of one year at least to the extent of the estimated abatement. If the assessee produces the certificate of assessment in the other Dominion within the period of one year or any longer period allowed by the Income-tax officer, the uncollected portion of the demand has to be adjusted against the abatement allowable under the Agreement. But if numbersuch certificate is produced, the abatement ceases to be operative and the outstanding demand can be companylected forthwith. Clause a of Article VII makes absolutely clear that numberhing in the Agreement can be companysidered as modifying or incorporating in any manner the provisions of the relevant tax laws in force in either Dominion. Therefore, having regard to what is expressly stated in Article IV of the Agreement, and re-emphasised in cl. a of Article VII, there can be numberescape from the companyclusion that for the purposes of the assessment under the Indian Income-tax Act, the income of the assessee must be determined in the ordinary way under the Indian law, and in numberway can the Agreement be companystrued as modifying or superseding in any manner the provisions of the Indian law in that regard. The High Court has proceeded on the basis that for the purpose of giving abatement of tax in India the dividend income from the Pakistan Company can be excluded from the taxable income of the assessee. It has reasoned that by requiring the dividend profits accruing or arising in Pakistan to be set off against the business loss of the assessee in India there is, in the result, a taxing of the dividend income from the Pakistan companypany. The High Court has fallen into the fallacy of treating the setting off of the dividend income against the business loss as an infringement of the Agreement. It has lost sight of the provisions of the Agreement itself which provide that the Indian Income-tax Act must be applied without regard to the Agreement for the purpose of determining the total income and the companysequential tax liability of the assessee. Once it is accepted that the Agreement preserves the right of each Dominion to determine the assessable income in accordance with the operation of its own laws and it is companycerned only with the question of the degree of retention of the tax charged by it companysequent upon such assessment, it becomes abundantly clear that the dividend income, inasmuch as it is taxable under the Indian Income-tax Act, by virtue of sub cl. ii of d. b of sub. s. 1 of s. 4, must be brought into the net of income for assessment under the Indian law. It has number been shown to us by learned companynsel for the assessee that it companystitutes the subject of exemption under any provision of the Indian Income-tax Act Subs. 3 of s. 4 sets forth the cases in which income is number includible in the total income of the person receiving it. And ss. 14 to 16 detail the cases where the statute grants exemption from tax. No provision in the Act has been pointed out from which we may infer that the dividend income in question is number liable to inclusion in determining the total income of the assessee. Learned companynsel for the assessee has placed a number of cases before us which deal with the application of the Indian Income-tax Act, and where it has been held that for the purpose of sub-s. t of s. 24 of that Act income which does number fall within the purview of the Act at all cannot be set off against a loss arising under the Act. These are cases which are wholly inapposite, and have numberbearing, at all upon the role played by the Agreement. It is also urged that it is open to the assessee to claim or number to claim the benefit of s. 24 of the Act, and that if he does number do so numberquestion arises of applying s. 24. In the first place, a perusal of the assessment orders for the two years shows clearly that the assessee did claim a set off of the Pakistan dividend against the losses of the Indian business. In the second place there is a duty cast on the Income-tax officer to apply the relevant provisions of the Indian Income-tax Act for the purpose of determining the true figure of the assessees taxable income and the companysequential tax liability. Merely because the assessee fails to claim the benefit of a set off cannot relieve the Income-tax officer of his duty to apply s. 24 in an appropriate case. In the result the appeals are allowed, the judgment of the High Court is set aside and the questions referred by the Income-tax Appellate Tribunal to the High Court are answered in favour of the Revenue and against the assessee in so far that we hold that the dividend income received from the Pakistan companypany is deductible in arriving at the total world loss of the assessee under sub-s 1 of s. 24 of the Indian Income-tax Act, 1922.

Case appeal was accepted by the Supreme Court